MAHC’s hospital redevelopment plan is too expensive and unrealistic

Don’t read this if you agree with rapidly escalating taxes
By Ross Maund and David Wilkin

As all ratepayers are aware, local property taxes include the District of Muskoka, your designated municipality and various levies and the Board of Education. It is with some confidence that we say that the various levels of local government spend considerable time each year engaged in council debates to determine our ultimate property taxes for the year ahead.

The recent announcement by the Muskoka Algonquin Health Care (MAHC) board during a presentation to the Town of Gravenhurst council comes as a dangerous missile. When non-public elected entities, such as the MAHC board, are testing support for local levies that constitute the largest single debt servicing by the Muskoka district and municipalities in history, something has gone seriously wrong.

MAHC’s board representatives have begun a process to garner support of local governments for an investment of $129 million, representing the local financial share portion of MAHC’s planned redevelopment. The capital cost facts as presented by the MAHC Board Chair and his associates are:

• Bracebridge hospital capital investment = $284 – $296 million
• Huntsville hospital capital investment = $284 – $296 million
• Total project capital investment = $568 – $592 million
• further, MAHC specifically stated that “while the entire local share of hospital redevelopment could reach 25 per cent, early estimates have limited the amount to roughly 17 per cent” (which means the local share will likely be even higher than the $129 million being requested)

Even allowing for the $20 million that is to be covered by the hospital foundations (a questionably aggressive ask, given that there is already a $10 million hospital equipment deficit), and inclusive of public sector borrowing costs, this overall local share of the debt to ratepayers will be almost $1 million per month (using MAHC’s 15-year time horizon), pushing local debt repayment (total cost-of-capital) cost to about $158 million. Clearly, this would be by far the largest single debt burden ever considered by our local governments, and if supported, would significantly increase property taxes through municipal and district tax levies for decades.

If these numbers seem significant and unsustainable in a community of approximately 65,000 residents, then you would be right. When compared with other recently completed Ontario hospital infrastructure capital projects, MAHC’s planned total capital cost estimates of almost $600 million lacks credibility and demonstrates a complete lack of accountability to the provincial funder and to local taxpayers. As several of our public articles have expressed before, MAHC’s capital project costs are within range of the recently completed Burlington and Milton hospital development projects – in communities that are up to four times bigger than Muskoka. These huge and unrealistic capital costs are not only reckless but come at a time when the provincial funder is less likely to approve the irresponsible spending requests, unlike previous administrations.

Over the past several years, many have worked to inform our local communities of the need for MAHC’s board of directors to be more pragmatic, locally accountable and realistic in planning our local hospitals’ future. Doing this while ensuring for future capacities, service requirements and evolving changes within healthcare standards.

A pragmatic approach would:

• renovate and expand the two existing hospital sites
• limit total invested capital requirements to $250 to $300M
• allow for development in phases that fast track development (users realize benefits faster)
• have more innovative redevelopment thinking that overcomes a number of MAHC’s solvable renovate/expand option barriers

For more information see related articles ~
A balanced and phased renovation/expansion of existing hospital facilities is the best way to proceed
Commentary: Another odd MAHC decision
MAHC’s most recent survey signals a continued lack of understanding the community’s issues, needs and priorities

It is certainly time for the residents of Muskoka – East Parry Sound to engage in letting the MAHC’s board of directors, municipal mayors and councillors, district leadership and council members and our provincial MPP know that capital cost estimates by MAHC must be realistic and aligned with the expectations of local users and fiscally-minded local taxpayers. MAHC’s hospital redevelopment process has been underway since 2012 and the MAHC board continues to struggle in the early planning stages. Seven-plus years of hospital planning and here we are with a MAHC plan that is unacceptable.

So, if you agree with rapidly escalating local property taxes on the horizon for decades ahead, just ignore the issue that currently exists.

Ross Maund and Dave Wilkin are business executives and former MAHC board directors

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