By Dave Wilkin and Ross Maund
MAHC’s Two New Hospital Plan – The Big Picture
MAHC’s recently published Stage 1B Capital Plan submission calling for two brand new hospitals is a significant milestone in a journey that began almost eight years ago. However, as we have written previously, we have concerns with this plan, mostly around its affordability. Nine comparable hospital projects show MAHC’s plan is triple the average cost-per-capita.
In terms of the local share portion of the total cost, it is being rationalized down and minimized. This is particularly troubling, given the cost escalations in new equipment, technology and construction. MAHC’s very experienced consulting firm, Hanscomb, on page nine of their report to MAHC, estimates our local share at $180 million of their estimated $705 million total cost (both in 2024 escalated $ costs, when construction may begin). Using this $180 million number, less $20 million from additional foundation commitments, translates to about $3,200 on average per household for the roughly 50,000 served dwellings. We hope municipal governments calculate the most likely cost of this plan for their taxpayers. Affordability (locally and provincially) explains why most hospitals (particularly of our vintage) are incrementally upgraded/expanded, not replaced.
We now turn to a bigger picture. Locally, such a massive capital project will crowd out investments in other high-priority needs, including affordable housing, Long-Term-Care (LTC), attracting new businesses, and addressing energy transition/climate change (Note – doubling of the existing hospitals’ size is not helpful to this cause).
Provincially, Minister of Health Christine Elliott is hard at work reforming Ontario’s health care system. Parts of her plan are already underway or evident, with more to come. We see an over-arching theme to bend the escalating healthcare cost curve down, without compromising quality/service levels. Clearly cost growth can’t continue at its historic pace, but instead the system faces growing structural headwinds which will accelerate it: an aging demographic, increasing longevity, and technology/construction/labor cost escalation. Healthcare spending in Ontario today is 42 per cent of all government program spending, with a forecasted growth rate over double the core inflation rate.
To that end, we anticipate the following shaping the provincial health system:
- A short-term focus on quickly opening new beds to address ‘hallway health care’.
- Reduced demand for beds by: getting people out of hospitals faster and being placed into lower cost facilities and/or home. Keeping people out of hospitals with an increased focus on prevention. This implies increased investment in local health teams, alternate levels of care, LTC, mental health and new technology.
- Clear new standards on hospital capital funding (including caps), construction standards, and clear guidelines on hospital closures and replacements. Size/cost control, equity, and accelerated decision making/results are all likely objectives.
- Standardized and aggregated purchasing of medical equipment, IT and perhaps drugs.
- A significantly trimmed down bureaucracy, and a more direct role for municipal governments in hospital governance and capital planning.
Slowing, and ultimately reversing the escalating of hospital sizes/costs is a core goal. MAHC’s plan for two new hospitals, more than doubling the size, is out of sync with this direction.
We believe this plan will eventually be rejected by the Province, lacking affordability, equity, and future direction alignment. This leads to yet more delays in getting long overdue hospital upgrades and prudent expansion.
We are simply stating important relevant facts and the clear direction before us. We are not fear mongering or being divisive, as some have suggested. Our communities are facing the single largest capital investment in history, on a service that is vitally important. We need more open and transparent discussion, based on facts, so the people can be fully aware and onboard. We can’t afford to get this wrong.
Ross Maund and Dave Wilkin are business executives and former MAHC board directors.
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