Canada's Deadly 'P3' Hospital Boondoggles
Link Address:
http://www.thetyee.ca/Views/2005/10/27/HospitalBoondoggles
Published: 2005-10-27 22:56:00
By Murray Dobbin
TheTyee.ca

Zooming costs, worse care, more deaths.

It's difficult and perhaps pointless to try to pick the most dangerous
threat to public Medicare in Canada - the drug companies' profit
margins, Alberta's ideologically-addled Ralph Klein, the Canadian
Medical Association's endorsement of more privatization, the shockingly
misinformed decision by the Supreme Court allowing for competing
private services within the public system. All of these endanger public
health care. But, perhaps, the most immediate threat is the de-facto
privatization of our hospitals through the use of public private
partnerships known as P3s.

I recently spent a week in Ontario speaking on this topic to audiences
of concerned citizens because the Ontario Premier Dalton McGuinty
recently announced that the Liberal government was planning fourteen P3
hospitals around the province - and possibly more. This, after he
explicitly attacked this very model during the last Ontario provincial
election; denouncing the previous Tory government and saying P3
hospitals were too expensive, had excessively long contracts and would
lead to US-style health care. He was right on all counts. The fact that
he has blatantly broken his promise demonstrates just how determined
private health corporations are to get their greedy mitts on billions
of health care dollars.

The fourteen hospital plan in Ontario is a massive commitment to P3s
that is being vigorously opposed by the Ontario Health Coalition. If
successful, it could open the P3 hospital flood gates across the
country. There is already one P3 hospital being built in Abbotsford and
another planned for St Paul's Hospital in Vancouver.

'Paying with your money and your life'

Most hospital P3s involve contracting a private consortium to design,
build, finance and operate the hospital, usually based on extremely
long contracts of 25 or 30 years. They "bundle" all the services not
directly involving medical staff into a single contract with guaranteed
revenue streams to a host of private service providers; from cleaning
and maintenance to food, records and laundry. It is virtually
impossible to terminate any individual contract without terminating the
whole; at a potential cost of hundreds of millions.

The mix of profits and hospitals is deadly and costly, as revealed by
McMaster University studies published in the Canadian Medical
Association Journal. "Canadian governments would pay an extra $7.2
billion in annual health care costs if Canada switched to
investor-owned private for-profit hospitals," reported the study.
According to Dr. P.J. Devereaux, the lead author of the study, "With
for-profit care, you end up paying with your money, and your life." He
based his statement on a previous study by the group that showed the
switch to for-profit hospitals would result in an additional 2,200
unnecessary deaths every year.

It could also result in massive fraud, as it has in the US. In the
mid-1990s, health-care fraud by U.S. corporate giants was estimated as
high as $100 billion annually. Washington actually started catching up
with some of these crooks by 1994 -- the year that National Medical
Enterprises paid a then-record $379 million in fines and restitution
for fraud in psychiatric services. In 1997, the mega-giant Tenet
Healthcare Corp. agreed to pay $100 million to settle claims that
patients were kept in psychiatric hospitals simply to maximize
insurance payments. Columbia/HCA Health Corp., America's largest
hospital company, agreed to pay $745 million to settle civil fraud
charges for systematically ripping off Medicare.

Pressures cause staff cuts

The record of P3 hospitals in Britain is so appalling that the Labour
government (still inexplicably committed to the model) has said it may
have to raise taxes to pay for the huge additional costs attributed to
the P3s. The P3 promise of cost-saving has been debunked so thoroughly
that most advocates no longer even make the claim. The P3 contractor
not only pays a higher interest rate for financing but also extracts a
return on investment averaging 16 percent. Add to that the astronomical
executive pay packages and you can see why costs skyrocket. The only
course left to "save" money is to decrease staff and downgrade their
qualifications. In Britain, after almost fifteen years of P3s, the
number of nurse managers was down 35 percent, registered nurses down 14
percent and untrained staff was up 24 percent.

The P3 hospital in Brampton, Ontario provides a good example of how
costs get out of control. The original price was set at $350 million.
But then the government sat down and negotiated with the overall
contractor and all the individual service providers. By the end of this
process the price was $550 million. The Abbotsford example is just as
telling. Before the 35-year contract was even signed, the payments to
lawyers and consultants were a staggering $24 million. The total cost
went from $210 to $355 million; the cost of the yearly operating
contract went from $20 million to $41 million.

Why would governments pursue such a patently idiotic path that is
designed to create ever more debt, while claiming at the same time, the
government can't give teachers a raise, fund child care, or reduce
tuition fees? Simple. Creating debt to enrich your friends is fine;
spending on the needs of ordinary citizens is not.

Murray Dobbin's 'State of the Nation' column appears twice monthly on
The Tyee.

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