David Hill CEO of the Bermuda Hospital Board gave us and update on the new hospital facility on the King Edward site.

The delivery model we are using to build this new facility – a public private partnership is a new delivery model for Bermuda, even though it has been proven over many decades in other jurisdictions.  It is, however, different to how any other major capital project has been delivered here in Bermuda.

As this is Bermuda's largest construction project to date, I feel a duty to ensure we are absolutely up front on why this delivery model was chosen, how it will help us get the best value for Bermuda, and how we will choose our private partner to design, build, finance and maintain this new facility. The particular procurement method means a private partner designs, builds and finances the new building, and also maintains the structure for a defined period of time. The private partner in a Design, Build, Finance and Maintain PPP pays all costs from the beginning of the bidding process, including designing the new hospital, to the end of the construction phase.  BHB pays nothing until the new acute care building has been completed in accordance with our specifications. BHB has no payment obligation until then.  This is a clear benefit of this delivery model. 

BHB implemented a rolling five year financial strategy two years ago that is building a fund to meet its payment obligations that begin three years from now. These obligations will be met through a combination of a contribution from BHB through increased efficiencies, and by an additional 1% increase over inflation in hospital fees over five years.  This increase has been applied over the last two years, so there are three more.  This means the total estimated impacted on your healthcare premiums over the next five years is less than 3%.  This is important to remember, as there is understandably concern about the cost of this project to Bermudians at a time of rising healthcare premiums and economic hardships.  So just to repeat the total impact to you should be about 3% in premiums in total.  This period without payment obligations also gives the Bermuda Hospitals Charitable Trust, BHB's fundraising arm, time to fully execute against a capital campaign in support of BHB's payment obligations for the new facility.

Repayment to the private partner begins with a lump sum payment when construction is completed to BHB's specifications, and then monthly payments for the 30 year repayment term.  For clarity, BHB enters into a contract with the private partner before construction starts, with a repayment mechanism that will be spread over 30 years only once construction is completed to our satisfaction. In addition to the capital construction costs, the payments also cover design costs, financing costs, maintenance for the 30 year operating period, and lifecycle costs for refurbishment and replacement of all major systems as necessary.

However, the heart of this project is not about public private partnership delivery models, it's not about design; it's not primarily about money.  It's about meeting the long term healthcare needs of Bermuda.  It is about being able to care for you, your families, your friends and the many people who visit or come to work on this beautiful Island and provide the right breadth of services at a recognised international standard.   Quite simply, the need for this new building is urgent if we are to provide the right services at the right standard in the near future and in the years to come.  Anyone who has been to King Edward-and there are very few who never have occasion to go there- knows we are cramped. We have healthcare professionals sharing offices, up to four patients in public rooms sharing bathroom facilities, waiting areas are squeezed and lack privacy, even basic new equipment requires extensive and sometimes costly modernisation renovations, and the journey for patients through the hospital is unacceptable.  Above all, our lack of space means we are unable to provide the full breadth and depth of services Bermuda needs, and that can be safely provided on-island

Johns Hopkins Medicine International who undertook a review of our Estate Master Plan in 2007 to 2008.  They said that we needed an additional 50% of clinical space in order to meet Bermuda's needs and provide the quality of healthcare required.   What is exciting today is that we are closing in fast on having that space.  By 2014 we should have our new facility.  There is a lot to do - but a lot that has been achieved.

So, by early 2009 BHB had approval to construct a new building to house various acute care services, including 90 large, single-occupancy, in-patient rooms, all with en-suite facilities, a new emergency department, diagnostic imaging department, ambulatory care services including oncology, same-day surgery and dialysis, and a central utility plant, over the next several years on the King Edward VII Memorial Hospital (KEMH) site.  The new facility would be delivered through a Design Build Finance Maintain Public Private Partnership.  At the same time BHB would upgrade the existing hospital building, but would do so using traditional procurement methods.  Together, the new and upgraded facilities will offer the additional acute care space required to provide Bermuda with the acute care services we need over the next two to three decades.  The entire project is called the KEMH Redevelopment Project.

 BHB's Redevelopment Project team is currently sequestered while evaluating each of the teams' submissions.  Each bid team was given the same specifications and evaluation criteria in the Request for Proposal in December of last year.    Each of the three designs will be unique, each team will bring expertise to bear regarding how best to build it, each will have a unique financing structure, and each will have a maintenance plan that will see the bid team maintaining what they've built for 30 years. (I have to stop here for a moment...Imagine if the contractor who built your house had to maintain his work for 30 years...chances are he'd build it very well indeed.)  Of course, each team will have a different price for their bid. That's where competitive tension is good for Bermuda and Bermudians.  The teams are competing to build to BHB's specifications, and BHB will look at each team's bid based on pre-established evaluation criteria, and the price tag for each over the 30 year contract period.  The team that meets our specifications while providing best value for money will be the front-runner....BHB's preferred bidder.  Remember, however, that there are three in the running. If the front-runner stumbles before the post for any reason, the next best placed bidder is well placed to take the lead.

At Bermuda Hospitals Board, our vision is to be the first choice for health and wellness.  That may sound odd, because you all know we have the only acute and mental health hospitals on the island. But we want people to want to come to us for care.  We want them to trust that they'll get the best care if they come through our doors.  Some of those doors will be brand new.  Some will be refurbished. But inside, there will-come 2014-be the state-of-the-art facility our dedicated staff needs to provide a world class service.