FOR IMMEDIATE RELEASE

NOVEMBER 27, 2014

Royal Alex making people sick
PC solution will make the problem worse: Notley
Whats in NDP FOIP documents?
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AHS Briefing Note, July 8, 2013 (pp 1 of document package)

Alberta Health Facility Infrastructure Capital Need Summary and Priority, undated (pp 4 of
document package)
AHS ATC Bed Tower Clinical Setting Pictures of substandard physical patient space (pp 12 of
document package)
KPMG Report: Procurement Delivery Model Assessment, The Royal Alexandra Hospital, July 24,
2013, (pp 25 of document package)
Alberta Health Services, Issues and Key Messages, December 9, 2013 (pp 54 of document
package)

What do the documents say?

Patient safety compromised in current RAH
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Patient nosocomial infection rates significantly higher in current structure (pp 9)

A high proportion of multi-bed rooms (53% 4 bed rooms) risk cross patient contamination (pp
47)
Ventilation system does not meet current minimum infection control standards (pp 47)
Inadequate staff hand washing sinks (pp 47)
Patient toilets not wheelchair accessible (pp 47)

P3 construction recommended despite acknowledged shortcomings

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Alberta has never used P3 for acute care projects but current government interested in order to
spread out the cost of such projects over multiple years (pp 1 of package).
Main benefit of either Design Build Finance or Design Build Finance Operate is that payments
are deferred until completion or throughout operation (pp 37 & 38)
With P3 financing costs are higher (pp 48)

With P3 flexibility to implement public policy is lower (pp 43 of current)

With P3 strain on RAH management greater as no experience with managing (pp 44)
P3 recommended because of alleged value which arises from risk transfer to private operator
and affordability arising from having private sector finance (pp 45)

NDP concerns with assumptions in report

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1
2

Appendix in report lists Phase 1 of Alberta School Procurement as a success but fails to
acknowledge problems in Phase 2. 1
Appendix itself is drawn from a P3 advocacy document prepared by the Conference Board of
Canada.
Report puts inappropriate emphasis on pro P3 criteria while de-emphasizing P3 problems (ie
higher cost of private financing, lack of control over achieving public policy objectives).
Appendix ignores the long history of P3 failures in the Canadian context:
o In Ontario, the Harris and McGuinty governments used a P3 model for the Brampton
Civic Hospital (part of the William Osler Health Centre) in the early 2000s. This was
Ontarios first P3 hospital.
o The Auditor General reviewed the experiences with the P3 model in 2008 and noted a
wide range of problems in using P3s in the healthcare sector. In total, he found that
using the P3 model increased the costs of building the hospital by more than $394
million and resulted in long delays.2
o He found that the cost of design was $100 million higher using the P3 model and cost of
borrowing $200 million higher (because governments can borrow at lower interest
rates.) Amongst the other factors that drove up costs were that the value for money
assessment was overestimated by $634 million, construction costs nearly doubled from
traditional procurement and the value of risk transfer, which is what P3 advocates
claim to be the biggest benefit to the model , was also overestimated by over 13%.
Furthermore, the additional technical and legal expertise required added another $28
million in costs that could have been saved using traditional procurement.
o He also noted that, by privatization services, it resulted in reduced services for patients
and a lower level of patient care and safety.
o Interestingly, the Auditor General also noted that part of the difficulties and delays in
building the hospital was that willing contractors were difficult to find due to the high
costs and complexities of a hospital. Weve already seen the need to back away from
P3s in Alberta due to lack of interest from bidders.

http://globalnews.ca/news/1401800/alberta-government-scraps-p3-funding-model-for-new-schools/
http://www.auditor.on.ca/en/reports_en/en08/303en08.pdf

o
o

Prof. Matti Siemiatycki study of 28 Ontario P3s found they were on average 16% more
costly than public procurement, and using traditional procurement would have saved
the province $1.7 billion. 3
Quebec had a similar experience with the Montreal University Health Centre. The
Auditor General there found that using a P3 cost at least $10.4 million more than using
conventional procurement and that capital cost estimates were exceeded by at least
$108.4 million. 4
In British Columbias Academic Ambulatory Care Centre project, the monthly basic rent
over 30 years was 8.75% - the government could borrow at 4.7% at the time.
Forensic audit by Ron Parks found that over the course of contracts, 3 BC P3 projects,
including two health facilities, would cost the public a total of more than $800 million
more than if they had gone through a typical procurement 5

http://www.thestar.com/opinion/editorialopinion/2012/12/18/publicprivate_partnerships_good_business_but_b
ad_governance.html
4
http://www.vgq.qc.ca/en/en_publications/en_rapport-annuel/en_fichiers/en_Highlights2010-2011-CHU.pdf
5
o
http://www.inthepublicinterest.org/sites/default/files/Evaluation_of_Public_Private_Partnerships.pdf