Volume Nine, Number Two    April 2004    www.columbiajournal.ca

Scrap Private Hospital Service, Report Urges


Marco Procaccini

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 expensive.

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 was needed.

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.