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Doin' it differently
Private participation in healthy health care

by Timothy Fitzsimmons and Terry Collins

Like them or not, public-private partnerships (P3s) in Ontario's health care system will become a more common feature of future government planning as policy makers look to avoid the spiraling costs of what's come to be seen as a birthright - high-quality, universal medical coverage. But P3s, which present a potential way out of the provincial health-care crisis, are the subject of strenuous debate.

Among supporters of P3s is Hilary Short, vice president of policy and public affairs at the Ontario Hospital Association (OHA). She cites a recent Ontario commission estimate that it would take $3 billion to restructure the province's system, a number her association thinks would be more realistically stated at $7 billion due to rising costs of construction and other factors.

"The information technology alone will cost around $2 billion," she says. "That's why we support these new initiatives. The numbers don't support any other way we need a new approach."

"There is probably not a province that wouldn't agree that health care is a problem. In a couple of provinces, it is a crisis," says Jane Peatch, executive director of the Canadian Council on Public-Private Partnerships (CCPPP). "That is why we are starting to see these sorts of considerations. In situations where there are limited resources, such as the health care sector, public-private partnerships provide a way to overcome financial limitations."

But many experts remain unconvinced that P3s represent the promised land, arguing they constitute a false economy that save short-term funds but wind up costing more down the road.

Dr. Raisa B. Deber, professor in the University of Toronto Department of Health Policy, Management and Evaluation, is one such skeptic. "It is momentarily attractive. The cost is not in the budget and you off-load the initial expense. [However], because of increased operating costs, in the long run they become more expensive. In England, where there is heavy criticism of these sorts of partnerships, they are spending far more than they should be and it turned out to be unsustainable. We may run into similar problems here."

Deber warns that privatization in the health care system may create the same sort of problems that led to the Walkerton fiasco, where responsibility for water quality sampling was off-loaded by the province with deadly consequences. "The assumption was that we were paying for comprehensive lab tests. This new group came in and the for-profit lab did the tests nicely, but no one on staff knew what the results meant."

"There is remarkably little data out there," says Deber. "What exactly is the aim here? How are these [P3s] more efficient? How are you going to deal with labor unions? Why have the profit motive? Why can good management not do the same thing that a for-profit can do?"

Some useful insights are offered from the experience of the UK, where Private Financing Initiatives (PFIs) have been used to build 85 percent of the country's new hospitals since 1997.

In one such enterprise, doctors formed a partnership to purchase the property for a Family Healthcare Centre in Cheltenham, in Gloucestershire. It opened in April 1999 with five practices, 26 general practitioners, nurses and staff. The 5.8 million project was financed through a privately arranged loan plus a 843,000 grant from the Department of Health. The centre now serves 46,000 patients.

Such developments are seeing major resistance from UNISON, Britain's largest health care union. In a document delivered to a British House of Commons health committee, UNISON called on the National Health Service to institute a moratorium on and review all its PFIs, provide sufficient public capital for 29 planned new Diagnostic Treatment Centers, exclude all services and staff from PFIs, and limit PFIs to non-service areas and provisions of equipment.

The union cited problems with facilities in seven UK municipalities. Specific inadequacies listed included the space between beds, too little X-ray records storage space, too small ambulance bays, poor plumbing, parking and telephone facilities, improper ventilation and air conditioning, poor lighting, generator failures and flooding.

UNISON also voiced concern that the transfer of employees to the private sector, in addition to being divisive from the union's perspective, may result in inadequate staffing.

The union isn't the only critic. A July 1999 paper published in the British Medical Journal questioned the economics of PFIs, citing repayment schedules and lower borrowing rates available to the government. The authors estimated PFI projects for hospital construction were 18-60 percent more expensive than traditional government-funded capital projects.

P3s in the health care sector are still in their infancy but many sectors (water, transportation, waste management) offer lots of examples of P3s that can guide government.

In Ontario, the commitment to developing P3s can be traced to the creation of the Health Services Restructuring Committee (HSRC) in April 1996, established to deliver "binding decisions on restructuring Ontario's hospitals," and provide recommendations to the Minister of Health.

A March 2000 recommendation was the inauguration of "telephone triage," described as "an important enabler of comprehensive coverage." Acting on that suggestion, the Ontario government launched Telehealth Ontario on February 15, 2001, with a $45 million contract to Clinidata Corporation, a private firm started in 1987, that today employs over 250 nurses and physicians. The service is provided without direct charge to Ontarians; the province pays the tab.

Ontario's SuperBuild Corporation, launched in December 1999, has likewise been a catalyst for P3s and serves as what the HSRC calls a 'buffer' between the government "and the immediate political ramifications of the difficult decisions that have to be made if Ontario is to stay the course of change."

According to SuperBuild, health care sector P3s undertaken in Ontario include a $21.7 million redevelopment of South Muskoka Memorial Hospital in Bracebridge that partnered the Ontario government with private foundations, community organizations, local business and industry, and donations, and the $44.8 million expansion of the Children's Hospital of Eastern Ontario (CHEO), a partnership with the CHEO Foundation. Efforts to date have been limited almost exclusively to joint fundraising, among the simplest, least risky forms of P3s.

Jacques Huot, SuperBuild's vice-president of public-private partnerships, says his organization is taking its time determining the type of P3s appropriate to the Ontario health-care system. "When the UK designed their model it took more than a decade from start to the construction of a P3 hospital. We are in the data collection stage. But we are saying, let's define the needs, as opposed to simply designing a solution. When a government moves ahead with designing a solution, that's when there is trouble. But if we define our needs and determine how they can be met in new and strategic ways, that will bring successful results."

Prescriptions for a successful P3 arrangement typically include a high level of communication with all stakeholders, including the public.

"We believe the public is quite ready for this," says Hilary Short. "People recognize that health care is very expensive. In order to preserve the existing system, we have to find a new way that is more palatable. We don't want two-tier health care and the public does not view P3 that way. They want one-tier with private sector involvement."

The issue is on the radar of the Commission on the Future of Health Care in Canada, headed by former Saskatchewan Premier Roy Romanow. A spokesperson says P3s will be dealt with "under the broader themes of the commission," including "collaborative relationships."

Richard Norment, executive director of the National Council for Public-Private Partnerships in Washington, D.C., says P3s are inevitable if the public wants the quality of services maintained or expanded when budgets are fixed. "They look to the creativity and innovations developed in the private sector."

"There is a lot of misinformation, but if the stakeholders are informed, this substantially reduces the confusion about partnerships," Norment says. "For example, rumors start, like, 'All the workers are going to get fired.' In most cases, that is not remotely true. Management structure will change, different skill arrangements will be made, but there will probably be no reduction in workforce. Of course, the private sector is profit driven but not at the expense of the people, the skill sets, the efficiencies, the training."

"The whole thing is in the early stages of development and I think that there is a sense of that same confusion in the public at large," says Jane Peatch at the CCPPP. "I think there is a perception that there are more services delivered by the public sector than there actually are. I have come to the conclusion that the only way of achieving and maintaining the desired levels of service in health care is through public-private partnerships. Problems may arise but only if you have unsophisticated parties putting them together. P3 arrangements are going to be as good as the government and the private sector make them."

Timothy Fitzsimmons is a Toronto writer and editor. 
Terry Collins is a Toronto consultant and journalist.



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