On December 21, 2012 Infrastructure Ontario and Providence Care of Kingston announced a request for proposals (RFP) to design, build, finance and maintain a new hospital – Providence Care Hospital – to replace St. Mary’s of the Lake Hospital and Providence Care Mental Health Services. Critics charge the $350 million project could cost as much as an extra $100 million as a result of being a P3 hospital instead of a publicly funded, not-for-profit hospital. A P3 hospital would then result in fewer medical and nursing care services and lost employment.
In a word – cost. P3s are Public-Private Partnerships designed to fund big capital projects such as hospitals and schools. They involve complicated long-term deals between government bodies and corporate groups called consortia to design, build, finance and maintain the capital asset. The evidence has consistently shown that P3s cost taxpayers a lot more money than traditional methods of government procurement. A study conducted by Matti Siemiatycki, a professor with the University of Toronto, found they cost on average about 16 per cent more. A review of the Ontario Auditor General’s report on Brampton’s William Osler Hospital P3 suggests that it cost at least 20 per cent more. That finding was all the more alarming because at the beginning of that project, cost savings of 10 per cent were actually projected.
A major disadvantage of P3s is the much higher borrowing costs in the private sector. Add to that the high transactions costs of the complex deals – a real boon to consultants, but a big hit to taxpayers. Furthermore, the additional bureaucracy of a P3 creates on-going costs. Because these deals are long-term and complex, they create risk. Naturally the companies involved in the deal build in large margins in order to ensure enough profit to justify the risk. Finally, the bargaining power lies on the side of the few large corporate groups with their teams of negotiators experienced in complex P3 deals.
Lack of transparency and accountability are also inevitable with P3 contracts. Kingston residents have been expecting a new hospital for years, yet only in mid 2012 did they discover it was slated to be a P3. As the roll out continues, many are very concerned with ballooning costs and the implications of having parallel clinical and non-clinical administrations, which create obvious conflicts of interest and reduced accountability that can jeopardize patient care.
Please help change the proposed Providence Care Hospital from a costly P3 into a traditional public hospital. Below is a note you can edit and then submit to government officials. The note will be sent to the following elected officials: