Public-private partnerships (P3's) are increasingly presented as a solution to funding issues in health care. P3's are relatively new to the health care sector in Canada. However, they are not new to other areas of the Canadian public sector and in other countries - the UK being notable. What is a P3 hospital?

The hospital is designed, built, owned and operated by the private for-profit corporations. A consortium (group) of for-profit corporations including banks or financiers, architects, property management corporations and private health care service corporations forms and makes a bid to build a new hospital. All of the corporations build their profit margins into the project, including the ongoing privatization of huge parts of the hospital management and services over the life of the deal. The public leases-back the hospital from the consortium over the period of the agreement, which can last 30-60 years (a generation). The costs are paid out of the operating budget of the hospital.

Where are the savings?

The driving force behind politicians and bureaucrat's support for P3's is the desire to avoid borrowing and debt. But, P3's are not a neutral financing mechanism - it is a source of borrowing which has to be repaid - either out of the public purse or by giving the private sector a concession (eg. allowing the company to charge user fees). The Australian experience with P3 hospitals showed that in the long run, P3 hospitals could cost twice as much as publicly financed hospitals.

Where is the competition?

Private industry is supposed to be more efficient and innovative because it has to be to survive in a competitive marketplace. However, a P3 hospital essentially becomes a monopoly. There is no competitive advantage because the private consortium has an assured contract for 30 or more years.

As well, the health ministry has no flexibility. If things change in the community, labour force or health service needs, the health ministry has to renegotiate with the consortium - for any change. In New Brunswick, a P3 school would not unload furniture delivered to the school because this was not in the P3 contract and in the P3 hospital. In Durham, UK ambulance drivers had to move the patients into the wards as the for-profit consortium deemed that portering patients was not its responsibility.

Where is the accountability?

With the excuse that they don't want to jeopardize the public sector negotiating position, the government will release little or any financial information about the project and the contracts with the consortium until the deal is completed. That includes what financing guarantees are being made with the consortium or what opportunities the consortia will be given to raise revenues (Eg. using operating rooms and lab equipment for private surgeries, charging user-fees for 'non-medical' services and including boutiques or a hotel as part of the land use). There is little information on how governments will monitor the hospitals to ensure all deals are being kept as contracted.

Canadian P3 Hospitals - 15 and counting