Public Values

P3 hospitals cost taxpayers more money, offer fewer services at lower quality

New report highlights how and why public hospitals are far superior.

by the Canadian Union of Public Employees (CUPE)

April 20, 2011: P3s — no, not a parking level — but a type of private for-profit service. Governments and corporations call them "public-private partnerships" but they really aren't partnerships at all — they are a way for corporations to profit from public tax dollars, while giving all of us higher costs and lower quality. As well, P3s usually mean job cuts especially in rural areas!

The provinces of Ontario, Quebec, British Columbia and New Brunswick have built or are building nearly 50 P3 hospitals and other provinces are "on watch"!

A new CUPE research report, The wrong direction, can help in the fight to keep hospitals in the public system and to bring P3 hospitals back into the public system.

Report highlights

•Taxpayers across the country stand to lose billions of valuable health care dollars if P3 hospitals continue, since Auditor Generals (BC and Ontario) have found P3 hospitals waste more than $100 million each time they are built.

•P3 hospitals: 1) Waste valuable health care tax dollars 2) Are secretive and serve to undermine the country as local firms lose out to large multinational corporations 3) Mean fewer hospital beds and poorer hospital quality, especially as P3 hospital contracts can be 30 years and are difficult to alter, even as technology and health care rapidly change

•CUPE calls on the provinces to consider tearing up existing P3 hospital contracts and to using federal funding and public bonds to fund public hospital building, and for Auditor Generals to investigate thoroughly all existing and potential P3 hospitals.

Executive Summary

Canadians want public health care. They know care should not depend on how wealthy a person is, but rather, on how much a person needs health care, including hospital care. A recent national poll found 89.9 percent of Canadians support or somewhat support universal health care.

Canadians need access to good public hospitals. In some areas, new public hospitals need to be built, while many public hospitals need major renovations. Canada's population is aging, and it is also increasing at a steady rate. As of October 1, 2010, the population reached more than 34.2 million, up from just over 31 million in December 2001.

Hospitals that operate as public?private?partnerships (P3s) are a form of private for?profit "care" that erodes Canada's universal health care system. Profit becomes the focus of the service instead of health care. The first twelve P3 hospital projects in the United Kingdom earned an average return, or profits, of 58 percent. Huge P3 profits are related to the overly high cost of private (for?profit) borrowing. Economist Hugh Mackenzie in his June 2009 paper "Bad Before, Worse Now" found private borrowing for P3s to be 83 percent more expensive than public sector borrowing.

This report examines how and why public hospitals are far superior to P3 hospitals. Taxpayer funds are wasted on P3 hospitals, while a lack of transparency and democracy is evident with a P3 hospital system. Hospital renewal through the public sector promotes the Canadian economy. The paper also explores how public hospitals can offer better quality overall than for?profit P3 hospitals.

If Canada continues to open 29 more hospitals as P3s as planned in Ontario, British Columbia, Québec and New Brunswick, this report shows that we stand to lose about $2.9 billion in valuable government hospital funding to the profits of large multinational consortiums. This figure does not include the funding that continues to be lost from the 18 operating P3 hospitals in Canada in Ontario, British Columbia, Québec and New Brunswick.

Health care workers, patients, families and activists in Canada and other countries are lobbying for public, non?profit hospital care. CUPE is among other unions and organizations from a wide cross?section of Canadian society that are demanding the continuation of public hospitals — not P3 hospitals. In Québec, anti?P3 hospital coalitions involve workers and citizens including students, feminists, environmentalists and construction industry experts. The Ontario Health Coalition has gathered thousands of signatures in favour of public hospitals. Activists in BC have worked hard to end P3 hospital plans. The British Medical Association in the UK has warned Canadian governments to stop pursuing P3 hospitals since they have reduced health care access and quality.

Public Hospital Building Block One: Public hospital funding is more efficient

P3 hospitals mean profits for multinational corporations and extra administration costs are taken out of taxpayer funding. Public hospitals operate and are financed without profit. Governments in Canada can borrow financing for public renewal at far cheaper rates than through private P3 hospital consortiums. The Canadian federal government should be involved in public hospital renewal. Public hospital bonds could help.

Public Hospital Building Block Two: Public hospitals are more democratic and serve to build Canada

Public hospitals are ultimately accountable to elected politicians. If the public hospital system is failing, Canadians can change their government officials through elections. Private P3 hospitals operate undemocratically, often in secret, without full public scrutiny within contracts that can be 30 years or longer. Auditor Generals need to investigate all P3 hospitals in Canada.

Public hospitals require local construction industry workers and hospital staff. Taxpayers' health care funding can go toward providing good public jobs in order to achieve high quality care in public hospitals. P3 hospitals often use large multinational companies that undermine the local construction industry. Money is taken for profits and extra administration costs, away from hospital care with P3 hospitals. Local hospital jobs are often cut as P3 hospitals take more public health care dollars from the area.

Public Hospital Building Block Three: High quality public non-profit hospitals are accessible

As P3 hospitals take up much of provincial health care budgets, overall hospital bed-count can actually decrease, reducing hospital access. Smaller, more rural public hospitals can close as more regionalized new P3 hospitals are built. With the P3 hospital model, rural patients and families must travel great distances. In some areas, bed-to-population ratios are decreasing when P3 hospitals are built. P3s also often open too late — long past their original completion date.

The P3 hospital model can reduce hospital quality. Private for-profit hospital care in the United States, where it flourishes, has been found to be poor. A review of 20 years' worth of data and 149 studies of for-profit and non-profit health care in the USA found that the majority of the studies (88) concluded that non-profit health care performed better. P3 hospitals are a type of for-profit hospital. Poor care conditions are created as builders and designers do not consult with hospital care staff, while innovations can be difficult. For-profit hospital working conditions are often poor, which worsens quality of care, especially through high staff turnover. Not enough cleaning staff in P3 hospitals can lead to poorly-cleaned hospital areas. Proper cleaning is needed for infection control.

Related individuals, organizations and significant events
CUPE Research Report P3 Hospitals: The wrong direction

Links and sources
  Report: P3 hospitals — the wrong direction
  P3 Hospitals: The wrong direction — Executive summary

Posted: April 27, 2011

  Health care
  Public services
  Front lines

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