Dunedin’s Private Public Hospital?

Dunedin Public Hospital is in line for a much needed $300 million revamp. It has recently been revealed (ODT Sat 11 June) that potential tenderers have been told by the Ministry of Health that a public private partnership (PPP) should be considered.

The question is why? Why would the government get a private corporation to borrow money for the costs of the revamp as well as build it? Then repay this corporation the costs of construction, plus the cost of borrowing the money, plus a generous profit margin for both. Surely it is cheaper for the government to pay for the costs of construction itself. And it would have far greater control over the rebuild, albeit with greater public accountability.

A PPP means that the people who actually work in the hospital and use it will have far less say in what sort of facility they get. The private investor will not be given a set of input specifications, rather they will get a set of service outcomes. It is up to the investor how to deliver these outcomes. Make no mistake, they will be looking to deliver them in the way that makes the biggest profit for their share holders. As the privatization of the health board food services has shown, this may well not be in the way that users and staff consider optimal, or even acceptable.

Our government blithely assumes it can hold big multinational corporations to account with its ‘outcome agreements’. This is naïve. Corporations big enough to be involved in PPPs of any magnitude can buy and sell a small country like New Zealand. They have at their fingertips advisors who can slip any number of ‘get out of jail free’ clauses into agreements to deal with such things as cost overruns or facilities that end up not quite up to scratch. KiwiRail’s experience with asbestos in its privately built trains springs to mind. As does the recent discovery that much of our imported steel may not be fit for purpose.

Of course PPPs delay handing over the money, useful for a government come election time when the pressure is on to make ‘the books’ look good. But bad news for subsequent governments and health boards who are saddled with an ongoing debt, possibly for the life of the facility, and over the odds maintenance costs. Ongoing maintenance contracts awarded the investor company are usually part of the PPP agreement. A PPP has all the hallmarks of a large credit card debt; easy money at the time, but a costly disaster in the long term.

There are many things the current government funds that do not require government funding. But healthcare is not one of them. Healthcare must be universal. It is a core government function to provide it. It must be publicly funded and that includes hospital buildings. If a government has not got the money to do that, it is a failure.

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