Analysis slams IH plan

A case study compiled by the Hospital Employees' Union has found no case for privatizing laundry services in the Interior Health region.
 
The Interior Health Authority has failed to establish a valid business case for privatizing hospital laundry services, Simon Fraser University economist Marvin Shaffer states in his report.

Shaffer reviewed two IH documents from 2010 that were recently obtained through a Freedom of Information media request.

Last year, IH announced it would seek bids from the private sector to take over all or part of laundry operations at hospitals in Kelowna, Vernon, Kamloops, Penticton and Nelson, along with services in six smaller communities.

An announcement on the health authority's plans for the laundry service is expected before year's end.

In the 2010 documents, IH concludes that outsourcing laundry would yield savings as compared to keeping the service in-house. But, according to Shaffer, no valid financial analysis of these options is provided.

There are also discrepancies in the cost of building a new centralized laundry facility – one of the options contemplated in the documents, the HEU said in a press release Tuesday morning.

In one document, the cost of building the facility using a public-private partnership was estimated at $20 million. Another document pegged the cost at $10 million, if it was built by the private sector.

"There is no explanation of why there should be such a discrepancy, particularly given that in both cases the facility would be built by the private sector," says Shaffer.

His analysis was commissioned by the HEU, which represents 175 laundry workers who would be impacted by the contracting-out initiative.

The health authority has acknowledged the current in-house laundry service is run efficiently, but can't afford to maintain its operations over the next decade.

In recent months, councils in Nelson, Kamloops, Williams Lake, Summerland, Vernon and 100 Mile House have passed motions opposing the privatization scheme, and more than 12,800 concerned citizens signed a petition speaking out against the loss of the service and family-supporting jobs.

Shaffer is a consulting economist, specializing in project and policy evaluation in energy, transportation and other fields. He is also an adjunct professor in the Public Policy Program at SFU, where he teaches a course in benefit-cost analysis.

He has served in senior positions in the B.C. government and has also taught at the University of British Columbia, and the Universities of Tasmania and Queensland in Australia.