An analysis of Providence Care’s redevelopment agreement shows the real costs of using a for-profit consortium to finance the new Providence Care Hospital is 116-million-dollars, or 3.9-million-dollars per year, more than if the government had financed the new building itself.

Providence Care Hospital’s audited statements show that the 2016 Development Accountability Agreement with ProjectCo, using the Bank of Nova Scotia as its financing lead, provided 30-year financing at 5.74% while Ontario Government’s 30 years bonds for the same time period only cost 2.9%. The extra interest paid on the 197-million-dollar construction costs over the 30 years is 116,179,943 dollars, or 3.9-million-dollars a year.

With either government financing or private financing, the province guarantees the repayment of the capital on the mortgage.  The documents show that Providence Care receives a direct payment from the province which it then passes onto ProjectCo paying off the principle on the mortgage. The extra interest payments come directly from Providence Care’s operating budget taking money away from other services.

The Kingston Health Coalition estimated that the cost using the for-profit financing proposal in its 2014 campaign against using a P3 model to finance and maintain the new hospital, would be 100-million-dollars more than using public, non-profit financing.  At that time, ten thousand Kingstonians voted, in a community referendum, against using the P3 model. The government ignored the population’s concerns, forced Providence Care to use the for-profit model, and now we are all paying for it.

The community was correct: this is a bad deal for Kingston’s health care.

The 3.9-million-dollars per year paid to international financiers could be better used on other urgent community health care needs, for example:

• It could have been used to cover Providence Care’s 4-million-dollar COVID pandemic shortfall without having to consider service or maintenance cuts.
• It could be used to pay the operating expenses of a new community primary care clinic.
• It could be used to provide supportive housing for the many unhoused in the Kingston area.

These are some of the local health care needs that could be met rather than paying 3.9-million-dollars per year in excess profit to very wealthy companies and shareholders.

The excess cost at Providence Care is the second finding by the Kingston Health Coalition showing private for-profit health care costs more.  Earlier this year, the Coalition found that for-profit cataract surgeries in Kingston cost $247 dollars more per surgery, or about $2-million-dollars more per year, than if the same surgeries were done at the Kingston Health Sciences Center Hotel Dieu Hospital site.