The Re-development of the Royal Ottawa Hospital
Questions &
Answers
Updated September 15, 2003
Following approval from SuperBuild to
begin, an ROH Project Implementation Management Team, PIMT, issued a formal
Request for Proposals, accepted responses, rated potential private sector
partners, a consortium of designers, builders, financers and operators)
and have chosen a preferred consortium to negotiate a comprehensive set of
project agreements.
The private sector consortium will
design, build, finance and operate the new facility, which will be leased to the
ROH for an 25 -year term. The land the new facility is built on is
owned by the ROH and will be leased to the consortium for site re-development
and revenue generation, a portion of whose profits go back to the Royal
Ottawa health care Group. At the end of the lease agreements, upon the
retirement of the financing obligations, the ownership of the new facility and
all re-development of the site will revert back to the ROH.
The PIMT will manage the public-private partnership on behalf of the hospital over the life of the partnership.
At an estimated cost of $100 million,
this redevelopment will allow us to finally deliver the highest possible quality
of mental health care to people in North Eastern Ontario, save at least 4% on
annual operating costs, create better working conditions for staff and is
expected to create both direct and indirect jobs over the construction period as
well as millions of dollars in industrial benefits to the
region.
3. What will the hospital's role be
in this project? Will it be in charge or will the Province run this
P-3?
The hospital's Project Implementation Management Team will manage the public-private partnership on behalf of the hospital, ensuring high standards in quality of construction, operation and maintenance and protecting the fiscal interests of the hospital and taxpayers. The private sector partner will be accountable in all its activities and deliverables to the Board of the Royal Ottawa Health Care Group. This is a public Board and the ROH remains a public hospital.
Traditional funding by the MOH is possible, but with $8 billion of capital needed to re-develop Ontario hospitals, the Board of the ROHCG suggested a pilot project with a P3. It was also deemed the best option if we want to fulfill our new and expanded health care mandate and get on with our job of providing the best possible quality of mental health care to the people of Eastern Ontario. This innovative partnership will save the hospital and taxpayers money, build the new facility faster, save on annual operating costs and create a facility that will be both patient- and staff-friendly and support wellness.
The Board of the ROHCG proposed this
innovative partnership model to ensure that we can provide the best possible
quality of mental health care to our patients and in response to the new and
expanded mandate the hospital has been given as a result of provincial health
care restructuring efforts.
6. Isn't this just the thin edge of the privatization wedge - what next? Is the Royal Ottawa on its way to becoming the first privately owned and operated hospital in Ontario?
It is very important that the public understand that although the Royal Ottawa Hospital will be designed, built, and maintained by our new private sector partner - the delivery of all health care services will remain a public responsibility. The Royal Ottawa Hospital itself will remain a public hospital as defined by the Canada Health Act, but with outsourced non-clinical activities such as construction, design, facility maintenance, linen, dietary, and security - similar to what many hospitals across Canada are already doing. In fact, the Royal Ottawa Hospital has already been successfully outsourcing these services to one private sector partner for over seven years. Patients will continue to be covered by OHIP as with all hospitals in Ontario. Funding to operate the hospital will continue to be provided by the Ministry of Health and Long Term Care. The private sector partner will be accountable, in all its activity and deliverables, to the Board of the Royal Ottawa Hospital, which has always been, and will continue to be, a public board.
This is still public health care. The real difference with this hospital re-development is that it will be delivered in record time, with a guarantee of high quality construction and facility maintenance. A model like this deserves a chance to prove it can work.
Renovating won't save money or time, just
the opposite in fact. In 1999, renovating the existing antiquated facility would
have cost $115 million, taken seven years to complete, generated an additional
$4 million in operating costs over the seven year period and cause seven years
of service disruption and, at the end of the day, you'd have a facility that
would still say "asylum" to the people who entered it.
Our proposal to build a new facility will cost $100 million,
take only three years to build, save $4 million a year in operating costs, cause
no service disruptions because the buildings will be erected in front of the
existing facility, and, at the end of three years, will be both patient- and
staff-friendly and support wellness.
8. If provincial health care
restructuring changed the hospital's mandate, why shouldn't the province
pick up the tab for the new building?
At this point most of us in the health
care community and the citizens of Ontario understand that the public resources
available for these kinds of capital projects fall way short of demand.
We've proposed an innovative and cost-effective partnership to build a much
needed mental health facility to save public money and reduce public risk, while
ensuring that we can provide the best possible quality of mental health care to
the people of Eastern Ontario.
9. The MOH says you only need to
spend $11 million to upgrade the hospital to meet your new, expanded
mandate. You say you need to spend $85 million. How do you account
for the $74 million difference?
I know the MOH is supportive of the ROH redevelopment project and that it supports the hospital's plans to ensure that it can provide the best possible quality of mental health care to the people of Eastern Ontario.
This is a better way to fund a redevelopment project for a number of reasons:
11. The ROH initial privatization
efforts resulted in significant job losses. How many jobs will be lost as
a result of this project?
This re-development will actually create
new jobs, not only in the construction phase, which will generate direct and
indirect jobs, but also in the long-term as the hospital fulfills its new
research mandate and grows to meet the needs of an anticipated increase in
patients requiring in-patient and out-patient mental health services.
12. Seven years ago, your hotel
services were farmed out to a private sector partner, who cut staff by 50% and
now staff says that the hospital isn't as clean or well maintained as it used
to be. Is that true?
We're pleased with the quality of the
maintenance of the hospital and in general with the relationship we enjoy with
our private sector partner. That said, the age and state of this facility make
it a very difficult place to maintain. The fact is that we must have a new
facility if we are to provide an improved quality of care to our patients and
create a more positive working environment for the dedicated staff that cares
for them.
13. What kind of return will the
successful RFP winner owner/operator make from the
deal?
The ROH's goal is to negotiate the best
possible deal on behalf of the hospital, in order to minimize costs and maximize
benefits to the Royal Ottawa. In turn, we expect our private sector partner will
earn a fair and reasonable rate of return and to design, build, finance and
operate our new mental health care facility to high
standards.
14. Isn't it true that the only way
the private sector partner can make money is by slashing operating costs
at the facility - and doesn't that mean slashing more
jobs?
No, it isn't true. The $4 million in
anticipated annual savings in operating costs will be generated from (list
sample efficiencies) and for the record, the PIMT, on behalf of the ROH, will
demand a high standard of quality in the operation and maintenance of the
facility and secure such standards in the partnership agreement and through the
ongoing management of the partnership.
15. You've already reduced operating
costs by 25% with your private sector partner. How much more "efficiency"
can be carved out of the Royal Ottawa?
The fact is that we estimate the new facility will cost $4 million less each year to operate, given a range of factors, including new building efficiencies, and by establishing three levels of facility activity - for example, the in-patient section of the hospital will operate 24/7, the out-patient areas will operate from morning till later in the evening, and the administrative offices will operate five days a week, essentially from 8 am to 5 pm. These areas will therefore have different ventilation,light, security and hotel services requirements allowing for major efficiencies.
17. How much does the hospital
expect to pay each year in leasing costs and how much of that will
represent profit to the private sector partner?
These details are being finalized now.
What I can tell you is that the negotiations have been based on a solid
principle: that the arrangement will cost less than its public sector
comparator, with a high standard of facility design, construction and
maintenance. This partnership will save public money, reduce the risks
associated with ownership to the hospital and to taxpayers and deliver the new
project faster and with no disruptions to patient service. Most important, in
the long-term, it will ensure that we can deliver the best possible quality of
mental health care to the people of North Eastern Ontario and that we can
effectively meet our new and expanded health care mandate as a specialized
tertiary facility with a focus on research and community care.
18. Why has the deal been so secretive?
Doesn't the public have the right to know how one of its public hospitals is
being funded?
Like all public hospitals, ROH annual financial statements are available to anyone interested in seeing them, now and into the future. Like all public hospital re-development projects, the RFP phases, and the terms and conditions of the design, build, construction with the winning bidder is confidential. All Procurement processes for capital re-development, whether traditional or with the private sector, are always confidential - to ensure fairness and a strong competitive process.
The dedicated people who work at the ROH
every day are in the best position to tell you why we so desperately need a new
centre and what it will mean to them to be able to care for patients in a
modern, patient-friendly facility. Over the short and long-term, ROH management
and the Board will be working closely with staff and all our stakeholders to
inform and involve them on and in the project, to tell them exactly what it
means to them as employees and dedicated mental health care workers and to keep
them up to date on project developments.
19. Is there any possibility that
the new Premier will pull the plug on this project?
No, that's very unlikely. This project
enjoys the support of a wide range of stakeholders both inside and outside
government and it makes sense on every level: it delivers a new facility quickly
and more cost-effectively than through traditional funding methods, and it
reduces public risk while ensuring that the ROH can provide the best possible
mental health care to the people of North Eastern Ontario and meet our new and
expanded health care mandate.
20. Do the Opposition parties
support this project, or might it be at risk if the government changes
after the next general election?
Local MPPs, from the Minister of
Community and Social Services to the Leader of the Opposition have been strongly
supportive of this project. Given that it protects the interests of the public
and will greatly improve the quality of care we can provide to those in need of
mental health care from across North Eastern Ontario, I am confident it will
continue to enjoy a high level of support from all
quarters.
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Contact: Kathryn Hendrick