Construction costs for privately-financed Abbotsford hospital skyrocket

News release

Capital costs for a new Abbotsford hospital have skyrocketed by nearly 70 per cent since the B.C. Liberal government first announced their plans to privatize the financing and management of the health care facility, says the Hospital Employees’ Union.

The Gordon Campbell government admitted today that construction costs for the 300-bed hospital are now estimated to be $355 million. That’s $144 million more than when they revealed plans to build the hospital as a public-private partnership (P3) in December, 2001.

Construction cost estimates have soared by nearly 25 per cent since the request for proposals (RFP) was issued 14 months ago and by ten per cent since Access Health Abbotsford — the only consortium to bid on the project — was picked as the preferred bidder in July.

Abbotsford P3 Hospital — Capital costs vs. Bed numbers

Feasibility study —Dec. 2001 Request for Proposals —Sept. 2003 Announcement of preferred bidder — July 2004 Construction begins — November 2004 Change from 2001 to present Capital costs $211 million $286 million $325 million $355 million 68.2 % # of beds 300 beds 300 beds 300 beds 300 beds No change

A financial analysis of the RFP commissioned earlier this year by HEU concluded that B.C. taxpayers’ will shell out more than $1.4 billion in lease payments to the private consortium over the next 33 years. As a result of increased construction costs, payments to the consortium — which includes the Dutch bank ABN Amro and French cleaning and food services giant Sodexho — will likely increase.

“The Campbell Liberals are rolling the dice with this expensive and risky private hospital scheme,” says HEU acting secretary-business manager Zorica Bosancic. “Not a single brick has been laid and costs are already spiraling out of control.

“The Abbotsford private hospital threatens to go down in the history books as Gordon Campbell’s fast ferry.”

Bosancic says escalating costs threaten to drain resources from other hospitals and services in the Fraser Health Authority.

Last month, a research study published by the Association of Chartered Accountants in the U.K. concluded that privately-financed hospitals are not affordable.

The study found that annual capital costs were more than CDN$105 million higher in privately financed hospitals than in those directly financed by government and that the de facto costs of borrowing for private consortiums were double.

British health authorities with privately-financed hospitals were more likely to be in a deficit position which has serious implications for service provision and access to health care.

You can find more background on the Abbotsford private hospital scheme at www.heu.org.