Putting the patient into PPP

Before joining the MUHC, Armitage was Executive Director of Peterborough Hospital in the United Kingdom, where he capped off his more than ten years of PPP experience by acting as Project Director of a $670-million, three-hospital private financing initiative (UK PPP) that achieved financial close in June 2007. Previously, he was Bid Director for a consortium that was bidding on a $1.2-billion, 1,370-bed facility for University Hospital Birmingham, an academic hospital whose tertiary care, research and teaching mission mirrors that of the MUHC. Armitage has an Honours degree in Systems and Management from London’s City University and is a former Commander in the Royal Navy, where he was in-volved in the UK’s first-ever PPP project in the defence sector.

Armitage sat down with Health Perspectives to answer questions about public-private partnerships (PPPs), the MUHC’s PPP process and what we can expect for the Glen Campus.

HP: What is a PPP?

SCA: A PPP is a process that allows new health care facilities to be designed, built, financed and maintained by the private sector while the health care institution itself retains ownership of the facilities and continues to provide clinical care and carry out research and teaching. Although it’s relatively new in Canada, the PPP process has long been popular in the United Kingdom, where it’s been used to complete more than 70 projects.

The most important thing to emphasize is that a PPP is a process; in other words, it’s a means to an end. And what is that end? Better health care. It’s as simple as that.

HP: Why did the MUHC and the government choose the PPP process for the Glen Campus?

SCA: For a project like the Glen, a PPP has several important benefits. First, it puts us in the advantageous position of having outstanding teams com-pete to earn the privilege of designing and building our facilities. Because the competing consortia are keen to win the contract, we can expect them to submit the most creative, intelligent and innovative plans for the campus, and then we’ll choose the solution that best fits our needs.

Second, a PPP transfers the risk associated with the construction, maintenance and financing of the facilities to the private sector. Once the consor-tium has signed the contract, it is its responsibility to deliver the facilities on time and on budget. In fact, it will receive no money whatsoever until the day the campus is completed, making it very much in its best interests to stay on schedule. Likewise, the quality of the construction is assured by the fact that the consortium will be the one maintaining the structures for 30 years.

Finally, a PPP allows the MUHC and the government to spread the payments out over the life of the project, with a first payment made on the project’s completion date and continuing with monthly payments for 30 years. In terms of financing, a PPP is much like a mortgage – just as it would be difficult or impossible for most of us to come up with the money to buy our house outright, the PPP saves the government the burden of borrowing funds to pay for the project all at once. Instead, the payment schedule is fixed at the beginning and the monthly payments are guaranteed to remain unchanged for the duration of the contract unless the MUHC decides to change the scope of the project.

HP: Why not use a PPP for the Mountain Campus?

SCA: In general, PPPs work best where there are no major renovations of existing facilities. This has to do with the absorption of risk by the private sector consortium that I talked about earlier. Because the winning consortium is responsible for making sure that the facilities will meet all of the various requirements of the health care centre, and because it will be the one maintaining the buildings, it’s usually reluctant to take on a project where the de-sign is constrained and the age of the buildings could be an issue. For the MUHC’s redevelopment, it makes perfect sense to use a PPP at the Glen, which will be brand new facilities on a clean site, and a conventional method for renovating and expanding the Mountain Campus.

HP: With two different construction methods, how will the MUHC ensure that the Glen and Mountain campuses are built to the same stan-dards and that their designs are harmonized?

SCA: From the beginning, and irrespective of the process used to build them, the Glen and the Mountain have always been conceived as parts of one Redevelopment Project. A single project team is overseeing both sites and the clinical plan and functional and technical program for the new MUHC encompass both sites. I work side by side with Yanaï Elbaz, my counterpart overseeing the Mountain Campus redevelopment, in order to make sure that both campuses are absolutely equivalent in terms of quality and suitability to our mission as a university health care centre.

As I said, a PPP is a process to get you where you want to go, as is a conventional construction method. Our goal for both campuses is the same: the best possible environment for our patients, visitors and staff. If you visit either of our sites in 2015 or 2020, you won’t be asking whether it was built through a PPP or a conventional method. You’ll be appreciating that you’re being cared for in an outstanding health care environment, and that’s what we intend to create on both campuses.

HP: What are the steps that need to take place before construction can begin?

SCA: Having qualified two excellent consortia last year to bid on the Glen Campus PPP, we’re now in the process of finalizing the specifications that will tell the bidders what we want the facilities to provide. These so-called output specifications must be incredibly detailed and cover every-thing from how many people will work in an office to the temperature, humidity and lighting requirements of every clinical and research space to what equipment we’ll need. We also have to indicate how everything in the facility will fit together, what areas will need to be close together and what the zoning and site regulations will be.

As you can imagine, it’s a complex process, but I’m pleased to say that, thanks to the incredible amount of work the MUHC has already done in developing an excellent functional and technical program and an outstanding clinical plan, we expect to issue our Request for Proposals (RFP) in late spring. Once the RFP is issued, we’ll enter what’s called the open bid period, which is when we closely collaborate with both consortia to ensure that we have two fantastic bids from which to choose.

HP: What can our community do to help the MUHC during this process?

SCA: First, our community can continue to support the MUHC as generously as it has in the past. Philanthropy remains a key element in ensuring that we don’t just get adequate facilities, but truly superior ones, regardless of the process that’s used to complete the project. As always, a gift to the Best Care for Life campaign can be directed to whatever area is desired: the PPP has no impact whatsoever on where money goes.

Second, and equally important, help us spread the message that the MUHC Redevelopment Project is about providing the best care for life, pure and simple. This isn’t about consortia or contracts or construction schedules or even buildings, it’s about patients.

For more on the PPP project, view St. Clair's speech, PPP: A Means to an End, which he delivered at the MUHC Foundation's Annual General Meeting.