No valid economic case made for contracting out laundry service says economist

Union opposed to move commissions SFU economist to check out documents that talk about the privatization plan.

The union fighting Interior Health’s plan to privatize laundry services at 11 hospitals and care centres in the region, including Kelowna General Hospital, says the health authority has not made a valid business case for the move.

That’s the conclusion of Simon Fraser University School of Public Policy economist Marvin Shaffer.

Shaffer reviewed two IHA documents from 2010 pertaining to the plan and says based on information they contain and says while the health authority cays it will save money by contracting out the services, no financial analysis was provided.

The documents were obtained by the Hospital Employees’ Union through a recent Freedom of Information request.

Last year, Interior Health  announced it would seek bids from the private sector to take over all, or part of, its laundry operations at KGH, as well as hospitals in Vernon, Kamloops, Penticton and Nelson and at at six smaller community facilities.

In addition to no valid financial analysis of the options included, Shaffer found unexplained discrepancies in the cost of building a new centralized laundry facility—one of the options contemplated in the documents.

In one document, the cost of building the facility through a public-private partnership was estimated at $20 million. The other document pegged the cost at $10 million, if 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,” said Shaffer, who was commissioned by the union to review the documents.

While the health authority has conceded the laundry services are well run and efficient now, it says moving forward provincial money will be needed to maintain the operation over the next 10 years, money Victoria is not willing to provide.

The union says 175 laundry workers in the southern Interior would be directly affected by a move to contract out the service to a Lower Mainland or Alberta company.

A decision about the future of laundry services in the region has been postponed several times over the last year and is now expected to be made by the IH board before the end of 2015.

 

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