The Columbia Journal
P.O. Box 2633 MPO,
Vancouver, British Columbia,
Canada V6B 3W8
Scrap Private Hospital Service, Report Urges
The government should revise its plan to adopt a public-private
partnership (P3) option for the Abbotsford Hospital and Cancer Centre,
concludes a new report commissioned by the Hospital Employees' Union
and released today.
The report's author, independent researcher and consultant Lewis
Auerbach, a former director with the Office of the Auditor General of
Canada, raises several issues suggesting that the public interest may
not be paramount in a P3 arrangement.
The report cites concerns that Partnerships British Columbia, the
agency set up by the Liberals to promote privatization of public
services, has a mandate to pursue only public-private partnerships and
not publicly owned and operated facilities--even if the latter are less
It also warns that the 30-year operational contract is far too long and
places too much burden on a private sector managers to decide what
sorts of technology, upkeep and maintenance tasks would be undertaken.
“The necessity to pay the obligations in a 30-year contract might at
some point crowd out needed expenses for other health care services,
and in other parts of the region,” it said. “The length of the contract
ignores the possible impact and expenses created by a change in
government and/or legislation.”
Auerbach argues that the contract provisions for increased payments for
inflation, contingencies, and bonuses creates a danger for excess and
unwarranted additional payments, which should be subject to an
independent audit by a third party.
He observes that while the estimated cost of the hospital operations
will increase over the life of the contract, the formal Request for
Proposals for the hospital does not indicate how adequate monitoring
and audits will take place, or even if these will take place and who
will bear the costs. He is concerned that, if the project fails, the
public sector would have to assume the risk it already paid the private
sector to assume.
Auerbach concludes that more disclosure is needed for the bidding
stage, that cost savings are by no means guaranteed in a P3 arrangement
and that the current criteria for P3s do not have the public interest
as the primary goal. He adds some of the cost "savings" to government
may come out of the pockets of patients and taxpayers in the form of
payments and increased fees.
“This may not really be a savings overall--it may even be more
expensive--but rather a transfer of costs from the P3 parties to
patients. Supporters of a public health care system might not find this
outcome desirable,” Auerbach says. “Private hospital projects may cost
more than current estimates, and a 30-year agreement is unreasonably
long, may result in extra costs to taxpayers.”
Auerbach's report comes one week after forensic accountant Ron Parks
released his review of the Request for Proposals for P3 health
facilities, which concluded that further assessment of a P3 arrangement
The BC Health Coalition, an organization made up of patient groups,
public health advocates, service providers and community groups, is
applauding both reports. It advised the recent premiers’ summit not to
pursue private for-profit health services, citing declining quality and
reliability and increased costs.
“The government should drop the idea of a private health facility under
a public-private partnership and give the residents of the Fraser
Valley a public hospital,” says BCHC spokesperson Terrie Hendrickson.
“P3s didn't work for the Coquihalla (Highway) and they won't work for
the Abbotsford hospital.”
Their concerns are reflected in a recent story in the Abbotsford Times
newspaper, which reported that safety and sanitary standards at the 14
hospitals in the Fraser Valley Health Region have been severely
compromised since housekeeping services were contracted out to a
private multi-national corporation.