Calls on province to choose lower cost alternatives, to be more accountable and transparent
TORONTO, Dec. 2, 2002 - On the heels of the Romanow report, another key report focuses on increased private sector ownership and operation of hospitals in Ontario. Released today by the Canadian Union of Public Employees (CUPE), this report concludes that public private partnership (P3) hospitals in Ontario will likely cost taxpayers millions of dollars more than publicly owned hospitals. It also raises serious questions about the impact these added financial obligations will have on the quality of care and access to other needed medical services.
The report, “Issues raised by Public Private Partnerships in Ontario’s hospital sector”, was prepared by Lewis Auerbach, a former Director in the Audit Operations Branch for the Auditor General of Canada and currently a Senior Research Associate at the Carleton University Centre for Voluntary Sector Research and Development.
“My conclusion is that these P3s are almost certainly more expensive to the tune of millions of dollars per hospital,” says Auerbach. “I expected the government to choose the less expensive rather than the more expensive way of building these facilities. I am also concerned that the size of these financial obligations will crowd out needed expenditures in other parts of the health system, particularly home care and group homes.”
“I know there is an argument that there are no government funds available for capital investments, so that P3s are the only way these facilities can be built. But this rationale is bogus and disingenuous. The absence of capital funds for publicly owned hospitals is a completely self imposed constraint.”
Auerbach explains: “Last year Ontario increased its “off the book” long term financial obligations by over $2 billion. These appear only as a footnote in its financial statements. Using accounting rules that make the leasing option appear less expensive does not change the simple fact that debt is debt. Ontario should adopt budgeting and accounting practices that put public ownership of hospitals on a level playing field with public private partnerships so taxpayers can see more clearly which one is the lower cost alternative.”
Details of the deals between the Ontario Government, the Royal Ottawa Health Care Group (ROHCG) and the William Osler Health Centre to develop hospitals in Ottawa and Brampton are kept tightly under wraps by the Eves government, citing commercial confidentiality.
“I was frustrated by the refusal of those involved to make available relevant information about this important decision. We do not even know who will own the hospitals at the end of the lease,” says Auerbach.
“The government is saying the commercial deals are confidential and that we should trust them to act in the public’s best interest in providing affordable health care,” says Steven Shrybman, with the law firm Sack Goldblatt Mitchell. “This is the same government that messed up on hydro privatization, water testing privatization and Highway 407 privatization - all of which ended up costing the taxpayers dearly.”
The Ontario government has repeatedly demonstrated a propensity for acting in haste and without performing the kind of due diligence that, as Commissioner Dennis O’Connor pointed out, played a role in the Walkerton tragedy.
“This report which asserts P3 hospitals are more costly follows studies in Britain and the US that show huge staff and bed cuts and higher mortality rates in these facilities,” says Michael Hurley, president of the Ontario Council of Hospital Unions (OCHU).
“The people of Ontario will spend more for fewer hospital staff and services under this model and more of us will die as a result. Both the Progressive Conservative government which sponsors this model and the Ontario Liberal party, which does not oppose it, need to change their policy on this critical issue,” says Hurley. “Hydro privatization is a perfect example of the mess that can result from this kind of thinking. The people of Ontario cannot let our public health care system be the target of yet another failed experiment in privatization.
Not only is the government using sleight-of-hand to argue that privatization is cheaper, it is also intent on ignoring studies that have made it crystal clear that private health care kills more people and costs nearly twice as much as our existing public system,” adds Hurley.
A copy of Auerbach’s report can be found at
http://cupe.ca/downloads/p3_auerbach_eng.pdf
What we can’t find out from Queen’s Park
Here is a list of the questions the Ministry of Health and the Hospital Boards refuse to answer.
1. Are there any studies or reports the hospital board has relied on that demonstrate that a for-profit private hospital will be more cost effective than one run on a not-for-profit basis?
2. Can you provide descriptions of the public sector alternative, if any, against which the board compared its privatization plan?
3. What is the nature of any commitments by the Ministry of Health that funding will be available to make leasehold payments for the full term of the lease (estimated to be between 30 and 60 years)?
4. What are the terms of the lease and/or contract the board plans to enter into with the private hospital corporation, including the length of the lease, the nature of the security that will be provided to guarantee ongoing lease payments, anticipated lifetime costs, and a copy of the RFP that has been issued?
5. Who will own the land upon which the private hospital will be built, and will ownership of the hospital be transferred to the board at the conclusion or termination of the lease? Or will the private owner keep this infrastructure and be entitled to use it for other purposes?
6. What contract terms will be negotiated to allow for termination of any lease and/or contract with the private hospital corporation for non-performance? If terminated, how will the needs of the hospital’s patients be met?
7. Will you limit the participation of foreign investors and health services corporations in the DBFO project?
8. Please provide any instrumental study, report or opinion that assesses the impact of privatization in light of Canada’s international trade obligations, particularly those concerning foreign investors and foreign ownership.
9. Will this privatization require changes to the hospital’s operating plan, the development of a new operating plan or a re-structuring plan that would affect the hospital’s employees and staff? Will privatization result in lay-offs or job reductions?
10. Can you provide any financial and staffing information pertinent to any such changes or developments concerning the hospital’s operating plan?
11. Can you provide the authority and the financial assurances upon which the Board is relying in entering into long term lease commitments that may require it to make payments to the private hospital provider for decades to come?
12. Can you provide any studies or research you have done that rebut the findings of increased risks of mortality associated with for-profit hospitals and clinics?
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For further information: Dean Williams, CUPE Communications, (416) 596-1707
TORONTO, Dec. 2, 2002 - On the heels of the Romanow report, another key report focuses on increased private sector ownership and operation of hospitals in Ontario. Released today by the Canadian Union of Public Employees (CUPE), this report concludes that public private partnership (P3) hospitals in Ontario will likely cost taxpayers millions of dollars more than publicly owned hospitals. It also raises serious questions about the impact these added financial obligations will have on the quality of care and access to other needed medical services.
The report, “Issues raised by Public Private Partnerships in Ontario’s hospital sector”, was prepared by Lewis Auerbach, a former Director in the Audit Operations Branch for the Auditor General of Canada and currently a Senior Research Associate at the Carleton University Centre for Voluntary Sector Research and Development.
“My conclusion is that these P3s are almost certainly more expensive to the tune of millions of dollars per hospital,” says Auerbach. “I expected the government to choose the less expensive rather than the more expensive way of building these facilities. I am also concerned that the size of these financial obligations will crowd out needed expenditures in other parts of the health system, particularly home care and group homes.”
“I know there is an argument that there are no government funds available for capital investments, so that P3s are the only way these facilities can be built. But this rationale is bogus and disingenuous. The absence of capital funds for publicly owned hospitals is a completely self imposed constraint.”
Auerbach explains: “Last year Ontario increased its “off the book” long term financial obligations by over $2 billion. These appear only as a footnote in its financial statements. Using accounting rules that make the leasing option appear less expensive does not change the simple fact that debt is debt. Ontario should adopt budgeting and accounting practices that put public ownership of hospitals on a level playing field with public private partnerships so taxpayers can see more clearly which one is the lower cost alternative.”
Details of the deals between the Ontario Government, the Royal Ottawa Health Care Group (ROHCG) and the William Osler Health Centre to develop hospitals in Ottawa and Brampton are kept tightly under wraps by the Eves government, citing commercial confidentiality.
“I was frustrated by the refusal of those involved to make available relevant information about this important decision. We do not even know who will own the hospitals at the end of the lease,” says Auerbach.
“The government is saying the commercial deals are confidential and that we should trust them to act in the public’s best interest in providing affordable health care,” says Steven Shrybman, with the law firm Sack Goldblatt Mitchell. “This is the same government that messed up on hydro privatization, water testing privatization and Highway 407 privatization - all of which ended up costing the taxpayers dearly.”
The Ontario government has repeatedly demonstrated a propensity for acting in haste and without performing the kind of due diligence that, as Commissioner Dennis O’Connor pointed out, played a role in the Walkerton tragedy.
“This report which asserts P3 hospitals are more costly follows studies in Britain and the US that show huge staff and bed cuts and higher mortality rates in these facilities,” says Michael Hurley, president of the Ontario Council of Hospital Unions (OCHU).
“The people of Ontario will spend more for fewer hospital staff and services under this model and more of us will die as a result. Both the Progressive Conservative government which sponsors this model and the Ontario Liberal party, which does not oppose it, need to change their policy on this critical issue,” says Hurley. “Hydro privatization is a perfect example of the mess that can result from this kind of thinking. The people of Ontario cannot let our public health care system be the target of yet another failed experiment in privatization.
Not only is the government using sleight-of-hand to argue that privatization is cheaper, it is also intent on ignoring studies that have made it crystal clear that private health care kills more people and costs nearly twice as much as our existing public system,” adds Hurley.
A copy of Auerbach’s report can be found at
http://cupe.ca/downloads/p3_auerbach_eng.pdf
What we can’t find out from Queen’s Park
Here is a list of the questions the Ministry of Health and the Hospital Boards refuse to answer.
1. Are there any studies or reports the hospital board has relied on that demonstrate that a for-profit private hospital will be more cost effective than one run on a not-for-profit basis?
2. Can you provide descriptions of the public sector alternative, if any, against which the board compared its privatization plan?
3. What is the nature of any commitments by the Ministry of Health that funding will be available to make leasehold payments for the full term of the lease (estimated to be between 30 and 60 years)?
4. What are the terms of the lease and/or contract the board plans to enter into with the private hospital corporation, including the length of the lease, the nature of the security that will be provided to guarantee ongoing lease payments, anticipated lifetime costs, and a copy of the RFP that has been issued?
5. Who will own the land upon which the private hospital will be built, and will ownership of the hospital be transferred to the board at the conclusion or termination of the lease? Or will the private owner keep this infrastructure and be entitled to use it for other purposes?
6. What contract terms will be negotiated to allow for termination of any lease and/or contract with the private hospital corporation for non-performance? If terminated, how will the needs of the hospital’s patients be met?
7. Will you limit the participation of foreign investors and health services corporations in the DBFO project?
8. Please provide any instrumental study, report or opinion that assesses the impact of privatization in light of Canada’s international trade obligations, particularly those concerning foreign investors and foreign ownership.
9. Will this privatization require changes to the hospital’s operating plan, the development of a new operating plan or a re-structuring plan that would affect the hospital’s employees and staff? Will privatization result in lay-offs or job reductions?
10. Can you provide any financial and staffing information pertinent to any such changes or developments concerning the hospital’s operating plan?
11. Can you provide the authority and the financial assurances upon which the Board is relying in entering into long term lease commitments that may require it to make payments to the private hospital provider for decades to come?
12. Can you provide any studies or research you have done that rebut the findings of increased risks of mortality associated with for-profit hospitals and clinics?
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For further information: Dean Williams, CUPE Communications, (416) 596-1707
