Total cost of QEII redevelopment will be about $2 billion

The Nova Scotia government has decided to partner with a private company to replace the Victoria General, Centennial and Dickson buildings at the QEII hospital complex in Halifax.

Province opts for P3 model to replace aging Halifax hospital buildings

The original plan was to close and tear down the Centennial (shown in photo) and and Victoria General buildings in Halifax, but the government has since added the Dickson building to the list of structures that need replacing. (Robert Short/CBC)

The Nova Scotia government has decided to partner with a private company to replace three aging buildings at the QEII hospital complex in Halifax, part of a $2-billion redevelopment of the Maritime region's major hospital system.

The McNeil government will begin the search for that partner this fall by issuing a request for qualifications, and the province expects to have an agreement in place with their selected partner in 2020. 

The original plan was to tear down the Centennial and Victoria General buildings, but the province has since added the Dickson Building to the list of structures that need replacing. A private partner would be tasked with designing, constructing and maintaining the new buildings that would replace them.

The decision to use a public-private partnership model also applies to an outpatient clinic that is being planned for the Bayers Lake business park and is geared toward patients from outside the Halifax region.

Replacing the Dickson Building will see the creation of a new cancer care centre located at the Halifax Infirmary site. Nova Scotia Health Authority CEO Janet Knox said the change is a direct result of consultation with staff who said patients would receive better and more collaborative treatment if they weren't being moved between the Victoria General and Infirmary sites, which are several city blocks apart.

"I can't stress enough how having all cancer services in one place benefits everyone," Dr. Drew Bethune, medical director of the provincial cancer care program, told a news conference in Halifax on Thursday.

Bethune called the plan "a quantum leap forward in how we think about and how we deliver cancer care."

Other parts of the project include a new outpatient clinic to be constructed on the site of the former CBC building on Bell Road, which will also include a new eye care centre.

A first in Nova Scotia

Making that quantum leap won't be cheap.

Premier Stephen McNeil revealed for the first time that, while it will be a while before the project has an exact cost, it's estimated that all the work — including what's already been completed — will cost about $2 billion.

"We have not built something like this in our province in a very long time, if ever."

It's one of the key reasons the government opted to go with the P3 model, said McNeil. The government believes it gives the greatest certainty for work to be done on budget and as ordered.

While all health-care services will be delivered publicly, the private partner will be tasked with maintaining the buildings and delivering them back to the province in 30 years in the same condition as the day they open, said McNeil.

The premier said P3 also gives the government more flexibility for continuing with the rest of its capital plan for projects such as schools and roads.

The province will pay 50% of the cost of the project when it reaches "substantial completion" then pay the balance in regular payments to the private partner over the course of the 30-year agreement. 

The accounting firm Deloitte conducted a study of the public-private partnership model and reported back to government earlier this year.

Deloitte was tasked with assessing the market to see if there is any private-sector interest in replacing the hospital buildings. The firm assessed the merits of using a government-led approach versus a public-private model for the construction and maintenance of the buildings over a 30-year period.

The province has repeatedly refused to release that report. McNeil says the report will be released once the private partner is chosen, since revealing it now could negatively impact the competitive process and resulting negotiations.

Aside from the new cancer centre, the redevelopment of the hospital complex also includes an inpatient care centre with more than 600 beds and 28 operating rooms, and a new learning centre to train new doctors and nurses.

This week, cabinet approved spending another $151 million for more detailed planning and pre-construction work, bringing the total amount of money approved for the project to $350 million.

Criticism over public-private partnerships

The use of public-private partnerships has come under fire from auditors general in Canada.

In 2014, Ontario's auditor general revealed that public-private partnerships to build hospitals, schools and roads in that province actually ended up costing taxpayers more money.

Over a nine-year period, the partnerships cost $8 billion more than if they were managed by the public sector.

Chris Parsons, provincial co-ordinator of the Nova Scotia Health Coalition, said there's plenty of evidence to show P3 projects can quickly turn into "disasters."

"No one who ever gets ripped off thinks they're getting ripped off," he said. "If you get ripped off, you think you're getting a good deal. And we think this is another case here. Every jurisdiction has thought they could get the better of the private industry and in reality we've seen cost overruns."

Jason MacLean, the president of the Nova Scotia Government and General Employees Union, criticized the move in a news release Thursday.

"While we are glad to hear that the public and our members, who deliver care in these buildings each and every day, will finally have safe, new facilities to work and receive treatment in, it is deeply disappointing that this government has decided to allow private companies to profit off of our public health system."

MacLean noted even the province's former deputy minister, Dr. Peter Vaughan, highlighted challenges with the approach in a report he wrote.

Plans for Dartmouth General Hospital

The expansion of the Dartmouth General Hospital is also part of the government's overall plan to renew and expand the province's health network.

Work on the third and fourth floors of the hospital has been completed and construction continues on the fifth floor. Taxpayers alone are funding that work.

Work has already been complete at the Hants Community Hospital, where a second operating room was opened and the existing operating room was renovated. The government said the changes in Windsor will result in an additional 800 surgeries a year.

Major capital campaign planned

It was also announced Thursday that the QEII Foundation is preparing for the largest health-care campaign in the history of Atlantic Canada.

Lydia Bugden, the foundation's vice-chair, said that while the group has not established a target yet, groundwork is being laid and conversations are already happening with major donors.

McNeil said the project will require provincewide support and asks would also be going out to neighbouring provinces that use the QEII's services.

About the Author

Jean Laroche

Reporter

Jean Laroche has been a CBC reporter for 32 years. He's been covering Nova Scotia politics since 1995 and has been at Province House longer than any sitting member.

With files from David Burke