New hospital ‘considerably more’ than £300m estimate

  • New hospital likely to cost more than first thought
  • States may need to borrow funding to complete it
  • Treasury Minister said that previous estimates were now likely to be out of date

THE Island’s new hospital is likely to cost more than was previously thought and the States may need to borrow funding to complete it.

Treasury Minister Alan Maclean told the Corporate Services Scrutiny Panel on Friday that there had been ‘some internal discussions’ about finding the capital cost of big projects including the new hospital.

He said that the £300 million estimate of the original plan to build on two sites, at Overdale and on the General Hospital site, had been calculated in 2013, and that it would have increased in line with inflation and rising costs.

‘My view is that it will be considerably more,’ he said.

Senator Maclean said that it had been planned to use the States Strategic Reserve to fund the two-site option but added that if plans changed this may no longer be ‘appropriate’.

‘If the hospital is costing more, that may not be the most appropriate,’ he said. ‘We have to have a debate.’

The new plans for the hospital are currently in the hands of Health Minister Andrew Green, after a Scrutiny review found the previous plans to base it across two sites ‘unconvincing’.

Several other sites have been considered and the new proposals are due to be made public before the summer.

The Treasury Minister told the Corporate Services panel yesterday that the Fiscal Policy Panel of external economists advising the States had recommended continuing to invest in large capital projects such as the hospital in the short term, until 2017, despite the threat of a structural deficit by 2019.

He said that locally there were signs of recovery, with employment rising.

‘We should not snuff that out,’ he said.

Panel vice-chairman Deputy Simon Brée asked what funding had been considered for the hospital, given its importance to the Island.

‘There are a lot of funding pressures and of course we are considering options, but I do not want to put the detail into the public domain,’ said the minister.

He added that the two main options were using the States own resources, including the Strategic Reserve, or borrowing through the financial markets.

Assistant Treasury Minister Tracey Vallois told the panel that the underlying principle of any borrowing was repayment.

‘We borrow only when we can repay, or apply charges, such as with Andium Homes,’ she said.

Senator Maclean referred to the new £40 million Les Quennevais School and said that in order to get a return on the money taken from the Strategic Reserve, other States assets would need to be sold off.

He said that this year £9 million of property assets had been identified and were under consideration.

Speaking to the JEP after the hearing, the minister said that one possibility was to consider another bond arrangement, similar to the £250 million 40-year loan used last year to fund social housing and other projects, repayable at an interest rate of 3.8 per cent.

The money was raised by issuing a bond and at the time was said to attract considerable interest from institutional investors and pension funds.

Could Overdale be the site of the new hospital?

– Four options are currently being considered for a new hospital, by a team of external advisers brought in by the States. They include:

  • Running a two-site facility, with the outpatients department moved to Overdale and the emergency, surgical and critical care remaining at a redeveloped General Hospital.
  • Relocating the entire hospital to Overdale.
  • Buying two hotels near to the existing Hospital – the Stafford and the Revere – and redeveloping the facility on one larger site.
  • Building a new hospital at the Waterfront on an area north of the Radisson Hotel, currently earmarked for a housing scheme known as Zephyrus. This option would mean bulldozing the cinema and losing a large area of the public gardens at the Waterfront

– Two further sites, one off Queen’s Road and the other at St Saviour’s Hospital, are also understood to have been initially considered but were quickly deemed unsuitable.

– A team from consultants Gleeds have been brought in to investigate the potential sites and that feasibility review is costing taxpayers more than half a million pounds.

– The four options are now being considered after the Health, Social Security and Housing Scrutiny Panel said that they were ‘unconvinced’ by the original dual-site option and recommend that the project be re-examined and brought back to the States for approval.

In America, health care is private sector funded

America – Heath care is private sector funded, with more than half from private source. Private health insurance is available through employers, the government or private schemes, however 15.3% of the population (45.7 million people) do not have health insurance.

The UK – Health care is public sector funded by taxation and some national insurance contributions. About 11% of people have private health insurance. Healthcare is free at the point of delivery, but there are charges for prescription drugs (except in Wales), ophthalmic services and dental services. However, about 85% of prescriptions are exempt, with exemptions including children, the elderly, and unemployed.

... while Germany uses a social insurance model

In addition, most people have extra private insurance to cover areas that are not eligible for reimbursement by the public health insurance system. Patients pay doctor’s bills and are reimbursed by sickness insurance funds.

Singapore – There is a dual system funded by private and public sectors. The public sector provides 80% of hospital care and 20% primary care. The system is financed by a combination of taxes, employee medical benefits, compulsory savings in the form of Medisave, insurance and out-of-pocket payments. The government subsidises basic healthcare but patients are expected to pay part of their medical expenses and to pay more for higher level of service.

Germany – There is a social insurance model of health care and people can buy their insurance from one of more than 200 private, non-profit sickness funds. The country runs a single-payment system, but instead of the government negotiating the prices, the sickness funds bargain with doctors as a group. Germans can go straight to a specialist, but may be charged more if they do.

– Advertisement –
– Advertisement –