The Province of Ontario has announced that Cabinet has given approval to proceed with public private partnerships (P3s) that will build and provide all but medical services in two new hospitals in Ontario, the new Royal Ottawa Hospital and the William Osler Health Centre in Brampton. Commitments approaching a half billion dollars have been or will soon be made.
What little information and research there is, suggests that accountability for quality of services and cost containment will be reduced and costs to taxpayers will be higher than they would have been if the hospitals were built in the traditional manner of public tender, private construction, and public ownership and operation.
These are not new issues. The Auditors General of the United Kingdom, New Brunswick, and Ontario have each raised concerns about similar kinds of projects in the health and education sectors, finding that public sector ownership would generally have been more economical. The British and Canadian Auditors General are also concerned about diminished accountability, due to diminished availability of financial, audit, and performance information from the new non-government entities that are formed by these arrangements.
In the case of the Royal Ottawa Hospital, bundled into the financial justifications for private ownership of the facility is a significant reduction in inpatient beds and greater reliance on outpatient group home care. There has been little public discussion about the long-term impact of both of these significant decisions on patients, the community, and on the overall allocation between hospitals and community care facilities of scarce dollars for the health care system.
Public Private Partnerships in Ontario Hospitals • December 2002 2 Why then use these partnerships? The argument made by the hospitals and the province is that without private sector partnerships, the province could not afford to build them. However, Ontario government accounting practices disguise the probable higher cost of these partnerships and bias decision-making against public ownership and in favour of long-term contracts and leases with the private sector. If more appropriate accounting for the investments in these hospitals were used, the decision whether to have public or private ownership would be made on a more even accounting playing field and the result would probably be that provincial debt would likely be increased by a higher amount as a result of private sector ownership of the hospitals than with public ownership. If this is indeed the case, then from a financial perspective alone, the wrong decision has been made.
Given the significant risks of higher costs, diminished accountability and negative financial impacts on the non-hospital sector, a prudent and lower risk course of action would be for the government to reverse its decision to use P3s and to build the hospitals instead on the existing public ownership model.