The McGill University Health Centre will surely remain a public-private partnership. Twelve years after authorities announced the bilingual teaching hospital would be built, PPP contracts have been signed and work has started. It's too late to turn back, and, frankly, nobody could stomach any more delay. Most people are just glad the MUHC train has finally left the station, as MUHC head Arthur Porter puts it.
But it may not be etched in stone that Centre hospitalier de l'Universite de Montreal project will go ahead as a PPP, following Lachance's latest broadside.
The auditor-general, who has no ideological axe to grind, calculates that a PPP will cost Quebecers more than if the government were to build the hospital in the traditional way. (In a PPP, a contractor builds the facility and maintains it for, say, 50 years, in exchange for a long-term lease to government.)
This week's report was Lachance's fourth on the new hospitals, whose combined cost has ballooned to $5.2 billion. The PPP approach looked better to government decision-makers, he says, only because cost comparison between PPPs and government-alone projects were distorted through "conceptual errors."
PPPs have worked well in the U.K. and elsewhere, but the errors Lachance cites here are striking: The only way the PPP plan is cheaper is if you assume an outrageous rate of depreciation and add in the extremely unlikely scenario of no cost over-runs.
Lachance pointed out other serious flaws in the public-private financing for the much-delayed teaching hospitals, too. Quebec has agreed to pay equipment replacement costs for the second half of the 30-year contract, something the private partners had originally promised to cover. In much the same vein, the province has granted more than 400 contract exemptions to the consortiums, to help them to keep their prices down.
In its early days, the Liberal government of Jean Charest was full of enthusiasm for PPPs, convinced they would revolutionize infrastructure work. Now the agency set up for the purpose has been folded into Infrastructures Quebec, and the PPP approach, while still possible, is no longer given priority.
The advocates of the PPP system truly believed in its merits, and they were not completely wrong. Public-sector unions and their political allies opposed the whole notion, largely for the wrong reasons.
The endless delays on our hospitals do not disprove the PPP model, but they do demonstrate how badly it can work when poorly handled.
Building big new hospitals is never easy, but it should not have been this hard.