Hospital may need to finance $45 million for new facility

About $45 million dollars may have to be borrowed to get the North Bay Regional Health Centre built, Glen Scanlan says.

Scanlan, chief operating officer of the North Bay General Hospital, says there is a $45 million “shortfall” in financing documents submitted to the Ontario Ministry of Health and Long Term Care.

$20 million deficit
The number includes a $10.5 million gap between the $24.4 million area and Northern municipalities have been asked to contribute to the project and what they’ve committed.

So far the commitments amount to $13.9 million, with North Bay in for $11.9 million, paying $1 million a year over 20 years.

There’s also a $20 million shortfall between the anticipated cost for construction of the general hospital portion of the project, $176.8 million, and the anticipated funding, $157 million.

The remaining amount is related to offsite infrastructure and bridge financing, Scanlan said.

“We’ve been completely honest with the ministry regarding where we stand from a financing perspective,” Scanlan said.

Organizational liability
So far, though, the ministry has yet to approve the financing plan.

“They’re cautious and rightfully so when you get into a risk management issue. It’s an organizational liability and the liability is then transferred to the Ministry of Health because if they allow us to go forward they are ultimately assuming the too,” Scanlan said.

“Cash flow is cash flow and if you’re assuming a debt you want to make sure you’re able to meet those debt payments and pay it down in a reasonable period of time, so we’re going through a due diligence process with them and reviewing our plan.”

Pay for itself
The financing plan, Scanlan said, takes into consideration “the savings we’ll realize once we’re under one roof.”

Consultants have stated those savings to be in the range of $5-$7 million, Scanlan said.

“Those recoveries will go toward offsetting the financing requirements,” Scanlan said, “so that’s in there, as our savings through operations and design, and those are the two primary aspects that will help the new facility pay for itself.”

An on-site co-generation power plant included in the plans would generate $900,000 in annual savings as well a 900,000-ton reduction in emissions per year.

Funding policies
As well Scanlan is hopeful the hospital will be able to receive take advantage of preferred rates through the Ontario Strategic Infrastructure Financing Authority.

“That’s what we’re counting on for assistance with offsite infrastructure costs,” Scanlan said.

He also said Health Minister George Smitherman was “anxious” for infrastructure funding policies like OSIFA to kick in “because those are part of making this and other hospital projects fly.”

Significant commitment
Although things are in a holding pattern—the ministry has yet to approve the new hospital going to tender—Scanlan believes the new facility will be built.

“We spent around $25 million and they have matched our expense stream to date, and our $40 million from the SuperBuild Fund is still sitting in the bank collecting interest and that interest will go toward our equipment needs,” Scanlan said.

The hospital is now working on revising its equipment list, Scanlan added.

“We’re aiming to have it to the ministry by the first or second week of September to finalize that, which is a significant commitment from the province.”