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Ontario Auditor General slams P3 hospital financing

Total of $394 million more to build Brampton through private consortium; audit sought for Royal Ottawa's P3 deal.

The hugely expensive Brampton Hospital would have been cheaper as a fully public project.OTTAWA, January 25, 2009 — Health experts are demanding an investigation of the Royal Ottawa Mental Health Centre, after Ontario's auditor general said the province's first privately financed hospital in Brampton would have cost millions of dollars less if it had been publicly built.

Auditor general Jim McCarter found that cost estimates for a government-built hospital were inflated to justify building the $614-million Brampton Civic Hospital through a private consortium. The consortium — the Healthcare Infrastructure Company of Canada — is the same group that built Royal Ottawa and runs its non-medical services.

Brampton Civic, which was conceived as a 716-bed hospital, opened with 479 beds in October 2007. Two months later, public protests over medical deficiencies and shortages of beds and staff forced the Ontario government to appoint a supervisor to run the hospital.

The auditor general found that allowing a private consortium to build the hospital and operate its non-medical services cost Ontario taxpayers $194 million more (in 2003 dollars) than if it had been publicly built and run. As well, taxpayers would have saved $200 million over the life of the 25-year lease, if the government had borrowed money at the lower interest rate of 5.45 percent to build the hospital, instead of the higher rate paid by the private consortium.

Experts say the auditor general's findings make such disturbing reading, the provincial government should suspend its P3 projects until a full-scale assessment of their value is undertaken. Lewis Auerbach, a P3 consultant and former director in the office of the auditor general of Canada, is worried that with the federal government set to unleash infrastructure spending that could include public-private partnerships, vast sums could be wasted.

More immediately, however, experts and critics alike say a full audit of the Royal Ottawa is imperative. They contend that if the Brampton hospital turned out to be such poor value for money, it is only prudent to subject the Royal Ottawa to similar scrutiny, particularly because the hospital has been very secretive about its P3 contract. . .

To read further. . .

Links and sources
  Audit on Royal Ottawa sought, by Mohammed Adam, The Ottawa Citizen, January 25 2009

Posted: January 29, 2009

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