Abbotsford: For-profit hospital endangers community’s health

As the true colours of Gordon Campbell’s “New Era” emerge, a city just outside Vancouver puts the government’s health care agenda into stark relief. Before the rest of the province knew what was going to hit them, the community of Abbotsford got a bitter taste of the Liberal’s medicine when secret plans to build a new private hospital were exposed.

At the time, it was Canada’s first private hospital proposal — although Ontario quickly started playing catch-up. As the BC government’s health care privatization plans were forced into the open, it became clear that the Abbotsford experiment will be the model for all future hospital construction in BC — a dangerous precedent, given the failure of privately financed and owned hospitals in Britain.

The government’s plans, exposed in October 2001 by CUPE’s Hospital Employees’ Union (HEU), were developed without any community consultation, despite the sweeping policy shift they represent. The new hospital would replace Abbotsford’s aging, outdated and crowded MSA Hospital. The previous NDP government had approved the hospital’s replacement as a public project, and plans were progressing early into 2001. HEU’s sources indicate the project went private in June 2001, around the time the Liberals implemented huge tax cuts and reduced government revenue. The hospital scheme is one of many Liberal broken promises on health care.

There’s no question Abbotsford needs a new hospital. Some services are currently being provided from portables. But the government’s proposal will bring more problems, not solutions. Importing a scheme that’s failed in Britain, the new hospital will be privately financed, owned and operated. The health region will lease space over a 30-year period,

guaranteeing the developer a significant rate of return.

The government and health region officials had been manoeuvring in secret to finalize plans for the private hospital, in an effort to prevent any community input into the decision.

Failed British model

News of the private hospital forced the Fraser Valley Health Region, now the Fraser Health Authority, to release a status report on the redevelopment of the Abbotsford hospital. The report, prepared by PricewaterhouseCoopers (PwC), points to Britain’s private financing initiative (PFI) as the preferred model for public private partnerships. PwC is a leading architect of the PFI scheme in Britain. Benefiting handsomely from PFI developments there, the firm stands to reap similar rewards in Canada by advising public bodies to privatize.

Under Britain’s private financing model, hospital construction and ownership is privatized. The local health authority leases back the hospital from the consortium through the payment of an annual fee over the life of the contract, usually 25 to 35 years. The annual payment is expected to cover both the lease payment or “rental charges” (private sector debt payments, shareholder returns and building maintenance) as well as a “service fee” covering health and facilities support services such as cleaning, lighting and laundry.

Once unleashed, it will be hard to keep a handle on any private hospital. "Once you open the doors to the private sector, you don’t have control over the private sector. Especially in this country, where there’s a lot less regulation of private health care, mostly because there hasn’t been much of a private health care sector,” says health policy expert Colleen Fuller.

Independent research has shown that British PFI hospitals have ended up costing far more than public hospitals, while bringing deep cuts in the number of beds and staff. “When they started talking about privatizing the hospital, we didn’t know what that meant. When we found out what had happened with privatized hospitals in Britain, and combined that with all the other cuts that are happening in our sector, we were quite concerned on a lot of levels,” says Teri McLennan, coordinator of the Abbotsford Transition House, a women’s shelter.

HEU and others forced the government to release a key PwC report, after months of public pressure and a Freedom of Information request. The government intended to heavily censor the report, released in March 2002. But a technical flaw in the electronic version of the document revealed the full report.

The report shows PricewaterhouseCoopers had to do some fancy footwork to make the private scheme show cost savings. The private hospital would save less than one per cent — at best — over a 30-year period compared to a publicly financed model, and that “saving” is achieved only after PwC applied a generous six per cent “discount” to the private hospital bid. The report also recommends privatizing a range of health services from housekeeping to kidney dialysis and emergency room care.

To achieve these savings, the report assumes that collective agreements will be ripped up, labour laws rolled back and various health-care related laws changed. The government continues to withhold key data, despite the financial assumptions and projections that underpin the entire house of cards and inform any legislative changes.

The HEU hired a forensic auditor to provide much-needed impartial analysis of the PwC report. The audit reviewed the original business case for the hospital replacement project and conducted a detailed analysis of the consultants’ findings.

In a report released in early May, the widely respected BC forensic specialist Ron Parks finds that even PricewaterhouseCoopers admit the accuracy of the data they base their conclusions on is “suspect.” And Parks concludes the PwC study should not be used by government as the basis for a definitive decision on whether to approve a private hospital scheme.

Parks sifts through and demystifies such complex terms as risk transfer, discount rate and competitive neutrality to get right to the bottom line. While the PwC financial modeling presents a best case outcome with marginal savings of less than one per cent, he says there is a “strong possibility” a P3 facility could be more costly than the traditional public sector alternative.

Parks questions the government tendering process through which PwC was awarded the consulting contract for the study. He suggests, “the consultants may have been working towards a preconceived conclusion rather than undertaking an unbiased evaluation.”

And on the critical issue of government oversight and independent monitoring to ensure accountability on P3 projects, Parks says the necessary oversight is not yet in place in BC — another reason why the Campbell government should not approve the Abbotsford proposal.

Deep community impact

Based on the British experience and what details have been forced out in the open in BC, a private hospital will create havoc in the community. Fewer hospital beds and reduced community service capacity will be hallmarks of the private hospital, reducing care. Contracted out health care support services will also lower quality of care. And contracting out or privatizing key support services will have economic effects that reach beyond the hospital into the broader community.

“It’s going to mean lower wages, lower benefits and a lower standard of living, less money spent in the community and more money going to the big guys,” says Terry Sachiw, who keeps supplies, food and mail moving at the hospital. “They’re going to hand the hospital to some big corporation and the investors are going to get money that was going to us and to the community.”

“Our problem is, Abbotsford needs a hospital. They’re very clever to choose us because people are in such desperate straits for a hospital,” says Abbotsford resident and senior Wil Holland. “I sure as heck don’t want to be blamed for denying seniors care. It’s very difficult.” But at the same time, he has major reservations about privatization.

“I think it’ll cost more. And I don’t like the concept of a privately-owned hospital for the simple reason that I don’t think you have the flexibility and freedom that you do in a publicly-owned hospital,” says Holland.

Holland’s concerns are borne out in preliminary blueprints for the new facility, which doesn’t provide any space for dietary and other support services. The plans show the new facility will likely contract out many key health care services. Designing a new hospital according to corporate logic and contracted-out services locks the community into a facility that doesn’t have the capacity to bring services back in-house if problems emerge.

“What they do in the new hospital could be irreparable. They will design it around a private vision, so it may not have a kitchen. Down the road when they realize what a big mistake they’ve made, they won’t have the ability to fix it,” says Joyce Giroux, who’s worked for 25 years sterilizing surgical instruments at the MSA hospital.

Hospital chaplain John Haycock says “different values will seep into our health care system” if the project goes ahead. “The private sector is governed by profit. The public sector, on the other hand, has a very different mandate. Ultimately, it’s publicly accountable in a way that the private sector is not.”

Giroux and other hospital workers — from those just starting out to those at the end of their careers — are deeply upset at the P3 hospital plans. “I’m not thinking about myself, except as a potential user of the hospital. I’m almost at the end of my career,” says Giroux, who worries about decent jobs for the daughters and sons of Abbotsford residents.

She’s angry at the complete lack of consultation. “The people who’ve done the work all these years, they weren’t even included in the decisions.”

Local media have criticized the secret manoeuvrings — and praised the HEU for doing “more to inform Abbotsford residents about what the provincial government is cooking up behind the scenes with the new hospital than any of the local politicians and health officials thrown together.”

McLennan, who works with abused women and their children, wonders how a private hospital will impact “people in very vulnerable situations. I’m worried they won’t get access to privatized care,” she says.

“People may not have access to care, and certainly women will have far fewer choices. Being battered and abused, their health risks are higher. There are drug, alcohol and mental health issues. And the kids rely on health care, too,” she says.

“Locking taxpayers into an extended contract will divert enormous financial resources away from the people that need them most, in a time when so many other community services are being taken away,” says Charito Gailling of the Women’s Resource Society of the Fraser Valley. Gailling says health care is part of the “community support team” that is vital to the region.

Eliminating good jobs

The Liberal government’s move to end union protection for health support workers is intended to clear the way for the elimination and privatization of thousands of jobs across the province. Bill 29 strips health care workers of their collective bargaining rights and removes barriers to shutting down health services. In Abbotsford and across the province, some of that work will return as low-pay, no-benefit privatized jobs.

Rehab assistant Ernie Kasper has been at the hospital for two years since graduation. “I still have loans to pay off. Getting out into the workforce and then hearing this, it’s kind of a shock.” While Kasper thinks he could find another job, it won’t be the same as the work he loves, spending time with seniors. And he thinks the impact of changes at the hospital and in other sectors will mean, “everywhere you look people are going to be losing their jobs. It’s a ripple effect.”

Those jobs may be what give women the economic independence to leave abusive situation, says McLennan. “The staff are predominantly women — think about the impact on them and their families.”

Many of the hospital support workers are single mothers with families to support, including lab assistant Sandy Whitlock. “I’m worried I’ll lose my house,” says Whitlock, who moved here seven years ago from California. “Privatization does not work — I’ve seen it. There’s no job security or security for the patients. The buck is the only thing they fall back on. They count every Band-Aid, every needle you use — the patient’s billed for all of that.”

Losing jobs or working at contracted-out wage levels will hurt Abbotsford as a whole. “If we suffer, the stores are going to suffer, the community’s going to suffer,” says lab assistant Edie Leask.

Lowering the quality of care

Nurses’ aide Kendra Hinz is boiling mad at the plans for her hospital. “I think it’s pretty disgusting. If you privatize health care in BC, we’ll have a system where only the rich can afford care.” She also worries that contracted out care will mean “they’ll have people who aren’t qualified to do the job, and there won’t be any accountability or liability anymore. It’ll start with our work, then spread through the whole hospital.”

“I don’t think people are going to school like we did to work for $9 or $10 an hour. I was going to finish my RN training, but I am really thinking twice about it now,” she says.

Some worry about new fees at the new hospital. “Of course we wonder if we’ll be able to afford these things if they’re private,” says Holland.

“For me, what’s important are the weaker sectors of Canadian society. We need to know care is going to be there when and if our families need it…If it’s private, will everyone have access to the hospital and to care?” asks Haycock.

“If patients don’t feel they have quality of life, then they may not feel they have something to live for,” says Lynn Kingston, who works with seniors at the hospital’s extended care facility. Contracting out work will likely mean fewer people doing more work, which will mean less time for patient and resident care. “Some of these people have no-one else to talk to. They’re talking to you about what’s going on in their lives and you’re there for them — mentally, as well as physically.”

The impacts of the privately owned and operated hospital may quickly spread beyond Abbotsford’s city limits. A greater role for private insurance is an almost certain outcome under any BC hospital scheme, says Fuller.

“It moves health care away from the principle of the province publicly funding providers, and replaces that with contractors. Already in BC there have been suggestions from people pushing private, for-profit hospitals that we should parcel out surgical services and move them into a fee-for-service. Once you have a fee-for-service environment, it’s easier for private insurance to move in and expand their reach,” she says.

International trade agreements could also intervene to spread the Abbotsford experiment beyond BC, as the new hospital erodes what weak protections exist for public health care in the General Agreement on Trade in Services and the North American Free Trade Agreement.

“Moving services from a publicly-funded environment to the private sector definitely has implications under the GATS and NAFTA. When you globally fund a hospital, the state can argue it meets a public purpose of good public health. When hospital services are contracted, the province will move to a competitive tendering situation. Under those circumstances, it’s difficult if not impossible to argue that it’s for the public

purpose,” says Fuller.

Taxpayer dollars, no consultation

The British experience with privately financed hospitals show huge cost overruns. Many are worried mounting hidden costs will require an increased contribution from the province, inevitably reducing access to health services in other regions. And local taxpayers are angry, too.

Abbotsford residents have been paying taxes into a fund towards a new hospital for the past decade. “I wonder, if it goes private, where is that money going to go? We have no answer yet on that,” says care aide Bernice Green. Many don’t want to see that money go into corporate pockets.

Abbotsford Mayor George Ferguson says the provincial government is breaking an election promise to publicly fund and build the new hospital. He told the community newspaper that “the provincial government is looking for someone in the private sector to pick up the bill,” describing the government’s for-profit hospital deal as a “big gamble”. Ferguson also told the Abbotsford News he believes the PwC report “is essentially one-sided, and promotes the very outcome the provincial government wanted.”

Hospital support workers are clear that there is another way to build the hospital, but “nobody asks us anything,” says long-term care aide Joy Clarke. HEU points to the higher costs when residents are denied prevention and early intervention, such as in home care. Instead of focusing just on acute care, HEU argues any new model should create an integrated network of health care in the community, relieving pressure on the hospital while providing expanded, high-quality care.

As the Abbotsford private hospital plans were unfolding, the province was restructuring health authorities, further limiting community debate. The restructuring was all about “maintaining the bureaucracy but eliminating the community input,” says Fuller. Fraser Health Region CEO Lynda Cranston sat on the Alberta premier’s advisory council overseen by Don Mazankowski that released a pro-privatization health reform report early in 2002. Cranston told the media the report, which carves out major space for the private sector in Alberta’s public health care system, didn’t go far enough.

The former treasurer of the old health authority, Hans Holst, told the media he wanted to scrutinize the private hospital numbers, and that “a hospital should not be built by any organization that is interested in making a profit. I think that’s unconscionable.”

Privatizing doesn’t make financial sense, says McLennan. “Taxpayer-wise, paying a big corporation to lease back our hospital over 30 years is short-term government planning. It doesn’t make financial sense. Higher interest rates combined with long-term payments don’t work.”

Some think choosing Abbotsford may have been a bad miscalculation. “The Campbell government was looking for a community that won’t kick up a fuss. But I think all politicians have misread the public mood on health care. Across the country they’ve prayed and prayed for some movement in public opinion on Medicare, but it hasn’t happened,” says Fuller.

Springing the plans on the community has only made people more angry. “There was no public process at all,” says Kingston. “Everything was done in secret and I don’t think they explored all the different routes. They just picked one and went with it, and didn’t tell anybody. They didn’t ask the public what they wanted,” she says.

As the implications of the Abbotsford scheme become clear, opposition is building. “The government is making people angry enough that they’re starting to put together the whole picture. I think a lot of people are just clueing in that this is not a future they would support. Regular people are putting it together,” says McLennan. In early April, health care workers delivered an 8,200-signature petition opposing the private hospital to the local MLA.

“The success of a community can be measured by how well they provide for their most vulnerable citizens. Ongoing government cuts to programs and services show a shameful neglect for the well-being of those most disadvantaged. As advocates for women and children, we must oppose the introduction of private financing initiatives into BC’s health care services,” says Gailling.

“They’re hacking at our system very deeply. And when you hack so deeply, there’s not a lot left to make it stand up,” says Kingston.

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