Province counting on spadework to avoid pitfalls in hospital construction
Jean Laroche | CBC News | Posted: October 6, 2018 9:00 AM | Last Updated: October 6, 2018
'This is a very different model than what we did around the P3 schools,' says premier
The Nova Scotia government is counting on an ounce of prevention being worth a pound of cure.
It is banking on all the work it has done to date, and plans to do over the coming year, to ensure the partnership it forms with the private sector to build new hospital buildings in Halifax doesn't become a fiscal fiasco.
This past week, cabinet approved spending $151 million simply to get the design and legal documents ready to put to potential partners.
Premier Stephen McNeil Friday promised his government would "do the hard work to ensure that design is where it needs to be before we actually put it out and start building."
The aim is to avoid the kind of criticism that has been levelled at the most high-profile use of the public-private partnership, or P3, model in Nova Scotia — the construction of 39 schools in the 1990s.
The 20-year leases and eventual purchase of 37 of these schools drove up the cost to taxpayers to more than $1 billion.
Lapointe noted weaknesses
In 2010, provincial auditor general Jacques Lapointe noted "significant weaknesses" in the contracts that were signed and in the monitoring of those contracts.
Six years later, current auditor general Michael Pickup chastised the Education Department for failing to "appropriately manage P3 decisions to date."
"This is a very different model than what we did around the P3 schools," said McNeil.
The criticism within Nova Scotia, and failed P3 projects outside the province, adds fuel to the NDP's philosophical objection to public-private partnerships.
McNeil's steadfast optimism does little to dampen NDP leader Gary Burrill's skepticism.
"The premier's claim that it is more cost-effective to redevelop the QEII by means of a P3 model is straight out the back of a horse," he told reporters Friday after listening to McNeil defend private-public partnerships.
"We know that according to this model the private sector is going to be doing the financing," noted Burrill. "In what world does the private sector get as advantageous financial rates as the government of Nova Scotia does?
"It cannot be done."
Officials working with consultants
Inside government, which is said to be armed with a confidential Deloitte study recommending a partnership over the province going it alone, officials are working with outside consultants. The government wants to make sure, unlike the school contracts, the details are spelled out and responsibilities are crystal clear — down to the exact size and speed of hospital elevators.
An official closely associated with the project told CBC the province provided Deloitte with 30 projects completed by the Department of Transportation and Infrastructure Renewal for comparison, including the construction of the Cobequid Community Health Centre, the Halifax Infirmary and various schools.
That official also said the job of monitoring the maintenance contract, to ensure promises made were kept, would fall to one of three government entities — either the Nova Scotia Health Authority, Nova Scotia Lands or the Department of Transportation and Infrastructure Renewal.
There are those in government who remember all too well how kids were unable to use the gyms in their brand new schools because the privately-owned buildings were locked after hours. They remember how technological upgrades didn't come as often as promised.
That's not to say the province has always been successful building under a traditional model. The Colchester East Hants Health Centre in Truro started out as a $104-million project. By the time the auditor general's office investigated in 2011 the price tag had reached $184 million.
In that report, Lapointe said: "This budget was not a realistic estimate of the expected costs to build the new hospital and was not sufficient to complete construction.
"It was based on assumptions that were unreasonable or unsupported."
Some projects would be done by province
Lapointe highlighted the fact that a decision by one PC government to dump a proposed MRI machine, only to have it reinstated by another PC government, added $5 million to the cost of the project.
As it stands, the redesign of the QEII Health Sciences Centre involves what McNeil called a hybrid model.
Some projects, notably renovations of the third and fifth floor of the Halifax Infirmary, would be done by the province. The province would hire a company, or group of companies, to design, build and maintain the following new buildings:
- QEII Cancer Centre (all cancer services/treatments).
- Outpatient Centre (12 clinics or units, including dialysis, eye care and diagnostic imaging).
- Inpatient Centre (180 patient beds, 28 operating rooms, 48 critical-care beds).
- Innovation and Learning Centre (three labs for medical students/grads).
Along with the expansion of the Dartmouth General Hospital, it's $2 billion worth of work.
Political history and electoral volatility suggest neither McNeil, nor any of his cabinet ministers will be around to cut the ribbon when these new buildings open, but taxpayers will be left to pay for the choice they made this week to pursue a P3 partner.
McNeil remains confident he will be able to protect those taxpayers from any nasty surprises by being diligent up front before any contract is signed.
"When that document gets rolled out, it will clearly identify who is responsible for what," he said Friday.
"If there are changes that they make or something happens that'll be their responsibility to cover that cost."