FOR IMMEDIATE RELEASE NOVEMBER 27, 2014

Royal Alex making people sick PC ‘solution’ will make the problem worse: Notley

What’s in NDP FOIP documents?

- 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

- 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

- 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

- 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 Ontario’s 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. We’ve already seen the need to back away from P3s in Alberta due to lack of interest from bidders.

1 http://globalnews.ca/news/1401800/alberta-government-scraps-p3-funding-model-for-new-schools/ 2 http://www.auditor.on.ca/en/reports_en/en08/303en08.pdf

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

o 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

o In British Columbia’s 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.

o 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

3 http://www.thestar.com/opinion/editorialopinion/2012/12/18/publicprivate_partnerships_good_business_but_bad_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