Is MAHC off-track again?
By Ross Maund and Dave Wilkin
On April 29 the Muskoka Algonquin Healthcare (MAHC) Capital Plan Development Task Force published an Engagement Feedback Summary of feedback provided by those who attended their March community information sessions on the hospital redevelopment options under consideration. As a reminder they are:
- three options for South Muskoka Memorial Hospital (SMMH) – 1. renovate existing/expand; 2. new hospital on existing site; 3. new hospital on new ‘greenfield’ site.
- two options for Huntsville District Memorial Hospital (HDMH) – 1. renovate existing/expand; 2. new hospital on existing site.
We have previously written about this important topic, and we find the latest survey results and their interpretation concerning. The survey garnered just 140 responses and showed some preference for new-build options, most obvious in the greenfield-site option for SMMH.
Subsequently, the Task Force determined the feedback showed “generally all options seem reasonable and meet the needs for future hospital care”. Our primary concern is that when the likely $110 to $120 million local-share cost is included, all the options fall into the $450 – $500 million total cost range. This was not made clear in the survey, (and with just 140 responses, the survey results are statistically invalid). Additionally, given the minimal differences in cost of the options, it’s no surprise that a preference for new builds exist. Who wouldn’t want a new house if it costs about the same as a renovation?
The problem is obvious. This capital spend will create a local share burden to residents, businesses and foundations in the $110 – $120 million range, and constitute the largest single debt in the history of Muskoka. The resulting debt would significantly escalate ratepayer taxes for decades. Some may see spinoff benefits in large capital-intensive projects in their areas, but a half billion-dollar total cost is not aligned with the best interests of local ratepayers or the financial reality of our province today.
Ontario carries a gross debt of ~$348 billion, constituting one of the world’s worst sub-national debts. In 2018 the deficit reached $18 billion and the provincial government forecasts multi-billion-dollar deficits out to 2022 (that’s assuming no recession, of course). The 2019 provincial budget allocates $17 billion over the next 10 years for hospital infrastructure capital spending, a slight decrease. With 60 major hospital projects currently in the works, competition for this limited capital will be fierce.
The Task Force option-selection decision-criteria has not been published, however their recently published seven guiding principles overlooks what are arguably some of the most important considerations: equitable, affordable and reasonable. There is only one vague sub-point that is even related: “spaces that appropriately balance cost with need” under the Facilitates Operational Excellence Principle. We can’t see how these principles meaningfully separate the various design options being considered. We’ll have to see if the criteria are any better.
By most measures, including demographics, growth rates, and scale, the costs of any of the options, as currently structured, are out-of-line. Today’s financial climate demands that major development projects be grounded in financial reality. Expecting much more than what is necessary, affordable or fair (with-respect-to other provincial capital projects) is flawed. This approach only leads to more delays in getting any capital approved for our much-needed infrastructure upgrades, and further undermines credibility. We are now seven years into capital planning yet remain in only Stage 1 of 5 stages.
A balanced and phased renovation/expansion of existing facilities, as needed, is the only viable option and approach today. It is cost-effective, fastest to bring online, creates the lowest local-share cost and aligns with the fiscal realities of Ontario for the foreseeable future.
Ross Maund and Dave Wilkin are business executives and former MAHC board directors
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Thank you, gentlemen: I concur 100%. I put a great deal of thought into answering the survey questions; and although approximately 70 responses were published to each question; nary a one of my responses was printed. I do not agree that the 140 responses were not statistically significant (as I assume that most of the respondents cared enough to attend the information presentation). However, as you point out, a preponderance of them were seduced by the shiny new alternatives; especially for SMMH. As this alternative was incorrectly costed (no property, service road, no utility costs were included).
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For some incalculable reason, the MAHC seems to be leaning toward the “pie-in-the-sky” option as their legacy. Popularity is incredibly seductive. but very short-lived when the tax bills start coming in.