PUBLIC PRIVATE PARTNERSHIPS IN CANADIAN HEALTHCARE A CASE STUDY OF THE BRAMPTON CIVIC HOSPITAL PREPARED FOR THE OECD MARCH 2011 PROFESSOR DAVID BARROWS PROFESSOR IAN MACDONALD PROFESSOR ATIPOL SUPAPOL OLIVIA DALTON-JEZ SIMONE HARVEY-RIOUX 1 TABLE OF CONTENTS EXECUTIVE SUMMARY ...........................................................................................................6 EVALUATING P3'S -- WHAT IS SUCCESS? ..............................................................................................................7 PPPS IN HEALTH CARE............................................................................................................................................8 THE CANADIAN HEALTH CARE SYSTEM ...............................................................................................................8 METHODOLOGY..........................................................................................................................................................9 CASE STUDY............................................................................................................................................................. 10 A NEO-INSTITUTIONAL ECONOMIC FRAMEWORK FOR ANALYSIS ................................................................ 12 THE AUDITOR GENERAL’S REPORT, STAKEHOLDER INTERVIEWS AND THE SURVEY ............................... 14 RESULTS BASED ON NIE FRAMEWORK .............................................................................................................. 15 FACTOR ANALYSIS.................................................................................................................................................. 21 NIE ANALYSIS AND KEY IMPLICATIONS ............................................................................................................ 22 CONCLUSIONS.......................................................................................................................................................... 26 RECOMMENDATIONS ............................................................................................................................................. 27 INTRODUCTION..................................................................................................................... 28 METHODOLOGY..................................................................................................................... 30 CASE STUDY ANALYSIS.......................................................................................................................................... 30 INTRODUCTION TO PUBLIC PRIVATE PARTNERSHIPS (PPP) ............................... 32 TYPES OF PUBLIC PRIVATE PARTNERSHIPS...................................................................................................... 34 PPPS AND NEO-INSTITUTIONAL ECONOMICS ............................................................. 36 SOCIALITY AND POLITICAL RHETORIC ............................................................................................................... 37 RISK .......................................................................................................................................................................... 39 EQUITY, ACCESS & IMPROVED PERFORMANCE ................................................................................................ 41 2 GOVERNANCE .......................................................................................................................................................... 41 AGENCY THEORY .................................................................................................................................................... 42 TRANSACTION COSTS ............................................................................................................................................ 43 PROPERTY RIGHTS ................................................................................................................................................. 44 EFFICIENCY.............................................................................................................................................................. 45 EVALUATING PPP – WHAT IS SUCCESS?............................................................................................................. 46 PUBLIC-PRIVATE PARTNERSHIPS IN HEALTHCARE................................................. 48 HEALTH CARE IN CANADA.................................................................................................................................... 48 HISTORY OF PPP PROJECTS IN CANADA............................................................................................................ 50 COMPLEXITY OF PPP IN THE CANADIAN HEALTH CARE SYSTEM................................................................. 52 CASE STUDY ............................................................................................................................ 53 PURPOSE/AIM OF THE STUDY ............................................................................................................................. 53 THE BRAMPTON CIVIC HOSPITAL PROJECT ...................................................................................................... 55 Decision to Build and Contractor Procurement ...................................................................................55 Building/Construction.....................................................................................................................................56 Initial Opening ....................................................................................................................................................57 ANALYSIS ................................................................................................................................. 62 NIE ELEMENT 1: SOCIALITY & POLITICAL RHETORIC.................................................................................... 67 NIE Element 1: Implications of Analysis..................................................................................................75 NIE ELEMENT 2: RISK .......................................................................................................................................... 75 NIE Element 2: Risk Implications................................................................................................................87 NIE ELEMENT 3: COST REDUCTIONS................................................................................................................. 88 NIE Element 3: Cost Reduction Implications .........................................................................................92 NIE ELEMENT 4: EQUITY, ACCESS AND PERFORMANCE IMPROVEMENT.................................................... 93 3 NIE Element 4: Equity, Access & Performance Improvement Implications .............................99 NIE ELEMENT 5: GOVERNANCE........................................................................................................................100 NIE Elment 5: Governance Implications............................................................................................... 100 OTHER FACTORS...................................................................................................................................................101 THEMES..................................................................................................................................102 CONCLUSIONS.......................................................................................................................103 GLOSSARY..............................................................................................................................109 APPENDIX I – FACTOR ANALYSIS TECHNICAL APPENDIX.....................................110 SURVEY DESIGN....................................................................................................................................................110 SAMPLE ..................................................................................................................................................................111 TABLES, FIGURES AND SELECTED ANALYSES .................................................................................................111 SAMPLE OF SURVEY .............................................................................................................................................130 APPENDIX II – SELECT NEWS COVERAGE OF BRAMPTON CIVIC HOSPITAL....144 SUMMARY OF NEWS AND MEDIA COVERAGE OF BRAMPTON CIVIC HOSPITAL........................................144 SELECT NEWS ARTICLES.....................................................................................................................................145 APPENDIX III – PUBLIC PRIVATE PARTNERSHIPS...................................................151 PURPOSE OF PUBLIC PRIVATE PARTNERSHIPS...............................................................................................152 TYPES OF PPP ARRANGEMENTS .......................................................................................................................155 APPENDIX IV - PPP BEST PRACTICES...........................................................................160 VALUE FOR MONEY..............................................................................................................................................160 ACCOUNTING