Construction industry bolstered by billion-dollar hospital restructuring: officials have pegged the net economic benefit of hospital construction in the North at $3 billion once all projects are complete. (Construction & Comm Real Estate).

Hospital construction in five of the North's largest cities will have a total net economic benefit, including construction costs, of $2.5 billion to $3 billion, economic development officials estimate.

Hospitals are under construction in Sudbury and Thunder Bay, and three more have been approved for Sault Ste. Marie, North Bay and Parry Sound with the total construction cost nearing the $1-billion mark.

Economic development professionals in the North say it is difficult to provide an exact estimate of the economic impact of hospital construction in any of the five communities, except North Bay where a detailed study has been completed.

"There are so many variables, you almost have to conduct a forensic study of each case," says Richard Pokier, a development officer in Thunder Bay.

North Bay's new health centre, estimated at a cost of $209.9 million, underwent an economic benefits study by Price Waterhouse Coopers. North Bay, according to the benefits study, will receive additional economic benefits, beyond construction costs, of $156 million to $231 million during the four-year development and construction phase.

The study also found that, during the development phase, an estimated 60 per cent value of labour, and 11 per cent of the materials, can be secured locally.

For every dollar invested by the North Bay community, another $4.50 will be invested by the provincial government.

When the province's Hospital Services Restructuring Commission (HSRC) began the process of examining what was needed, the provincial government madeit known that it was opposed to "brick and mortar" expenditures. Most of the five cities have old hospital structures that are costly to operate.

The government, through the HSRC, wanted scarce health dollars spent on amalgamation, refurbishing and hospital expansion, rather than building a new facility.

Community and regional leaders in the five cities rejected this concept and successfully pushed for new state-of-the art facilities that they say will attract much-needed physicians and specialists to the North.

New modern hospitals under construction in Sudbury and Thunder Bay are considered one of the deciding factors in establishing a northern medical school.

Greater Sudbury economic development manager. Doug Nadorozny says hospital construction has had a significant impact on the local market.

"I understand that both the local sub-trade sector and the construction supply sector have been able to actively participate in the building process, Nadorozny says.

"There is no question the large subtrades are benefiting from the hospital construction," says Harold Lindstrom, manager of the Construction Association of Thunder Bay.

The small sub-trades in Thunder Bay are also benefiting.

"They are bidding on projects that normally would be handled by the large sub-trades," Lindstrom says.

Lindstrom says large projects in Dryden and Kenora are putting a demand on the district's sub-trade companies.

Construction costs for the new City of Greater Sudbury and Thunder Bay hospitals have ballooned, and in both cases have almost doubled from original estimates.

When the Sudbury hospital project initially began the cost estimate was $143 million and now the project is valued at $209 million.

"Based on the construction market at the time and our expectation of a three-year construction time frame, PCL (the contractors) believed that $143 million was justified," said Vickie Kaminski, president and CEO of the Sudbury Region Hospital, during a chamber of commerce meeting last year. "That decision, combined with unforeseen circumstances and the decision to (go the direction of) construction management gave rise to the situation we find ourselves in today."

Thunder Bay Regional Hospital's original estimate for construction at $93 million has grown to more than $200 million. Hospital spokesman Don Edwards says an increase in square footage from 470,000 to 686,000 accounts for the increase in cost.

North Bay General Hospital has hired Marshall and Murray Quantity Surveyors of London to keep its cost estimates "refined and renewed on an ongoing basis," says hospital spokeswoman Pat Stephens.

All five new hospitals will be open by 2007.

North Bay.

North Bay's two hospitals, St. Joseph's General and North Bay Civic, merged boards of directors in 1995, long before other communities in the North saw hospital boards merge.

A new 265-bed general hospital costing $136 minion has been approved for North Bay. The new facility that is scheduled to open in 2005 will have 151 acute-care beds, 29 rehabilitation beds, 42 complex continuing care beds and 30 acute/sub-acute beds. The hospital will also have a separate pavilion for long-term mental health with 26 forensic beds.

It is the only hospital site in the province that will combine a specialized mental health unit and an acute general hospital, says Pat Stephens, hospital spokeswoman.

The new hospital win be built adjacent to Canadore College and Nipissing University and will replace both St. Joseph's and North Bay Civic.

The Northeast Mental Health Centre will cost $81.6 million and the acute mental health component win cost $7.9 million. The provincial government is paying the entire cost of these two facilities. The provincial government will also pay 70 per cent of the cost of the new general hospital, with 30 per cent being picked up by the community.

Sudbury

When completed in 2004, the Sudbury Regional Hospital, at the former Laurentian Hospital site, will replace the St. Joseph's Health Centre and the Memorial Hospital.

In 1998 the province's Health Services Restructuring Committee recommended the merger of the three hospital boards.

The new 530-bed hospital, down from 600 beds, will cost $210 million, up from the original estimate of $143 million.

There is also a $17-million long-term care facility planned, to be run by the Sisters of St. Joseph, and a $24.5-million expansion of the Northeastern Ontario Regional Cancer Centre. It will be the largest Cancer treatment facility in Northern Ontario. Neither of the two latter projects are part of the new hospital construction program.

The first phase of the hospital project, which represents 50 per cent of the project, is nearing completion and will be ready for occupancy later this summer. Occupancy planning is currently underway.

The second phase is about to go out to tender, hospital officials say.

Greater Sudbury will contribute $19.65 million to the hospital project and the hospital foundation will contribute $17.5 million. The Ministry of Health is expected to contribute the rest of the money.

Parry Sound

"Parry Sound was the first community directed to build a new hospital by the province's Health Services Restructuring Commission," says Norman Maciver, chief executive officer, West Parry Sound Health Centre.

The Parry Sound District Hospital, providing acute care, and the St. Joseph's Hospital, providing chronic care, merged in 1995.

"We are waiting for the Ministry of Health to approve our tender documents before going to tender," Maciver says.

Site development is nearing completion, Maciver says, and the contractor will move on to a site that is fully serviced.

The new hospital, scheduled to open in 2004, will cost an estimated $63 million and contain 70 acute-care beds, 90 long-term care beds and 20 "elderly capital assistance program" beds.

The community is being asked to contribute $17 million to the project.

Thunder Bay

The Thunder Bay Regional Hospital came about as a result of a merger of the McKellar Hospital and the Port Arthur General Hospital. The province's Health Services Restructuring Committee originally announced it was recommending refurbishment of the Port Arthur site, but the provincial government changed its mind after extensive lobbying for a new hospital by local and regional leaders.

The new 375-bed hospital is under construction the geographical centre of the city near Lakehead University. It will be ready or occupancy in late 2003. With additional al square footage being added since the announcement, costs have escalated from the original estimate of $93 million to approximately $200 million.

The City of Thunder Bay will contribute $25 million through a tax levy and the hospital foundation will contribute $15 million.

The hospital is negotiating with ministry officials about the cost overruns.

Sault Ste. Marie

A new $175 million hospital project was approved for Sault Ste. Marie in mid-December 2001. In 1999, the Health Services Restructuring Commission recommended closure of Plummer Memorial Hospital in favour of expanding Sault Ste. Marie Regional Hospital.

The two hospital boards devised their own plan that called for closing the two existing hospitals and constructing a new hospital on property owned by the F.J. Davey Home, along-term care facility.

The two hospital boards are finalizing governance issues.

Two satellite hospitals, the Mathews Memorial Hospital on St. Joseph's Island and the Thessalon Hospital will continue to operate after the new hospital is completed in 2007 or 2008.

An 18- to 24-month planning phase is underway for the new hospital, says Brady Irwin, Sault Ste. Marie Regional Hospital spokesman.

Sault Ste. Marie and area residents will need to raise $52.5 million for the new hospital. The city has proposed its share at $22.5 million, with $11 million coming from a tax levy, and the other portion, $11.5 million from casino revenues.