Funding Concerns for New Children's Hospital

Plans for the National Paediatric Hospital (NPH) will be submitted to Dublin City Council next month, with building due to begin next year. 
 
At a cost of €650 million, it is one of the most important capital projects in the history of the state’s health service. But many medical professionals continue to have serious concerns about the space constraints of the new site and the capital deficit that needs to be buttressed by some €200million in funding from private organisations.

The saving is undoubtedly good news for the exchequer, but the funding model deserves some closer scrutiny.

 
When the design of the hospital was unveiled in October 2009, the government pledged €400 million from the exchequer.
 
An additional €50 million is due to come from the Health Service Executive (HSE). That leaves the NPH with the unenviable task particularly given the economic climate of securing some €200 million from philanthropic, commercial, research and education organisations.
 
If the NPH has locked down any of that money, it certainly has not said so and it declined to respond to queries from this newspaper regarding any commitments it may have received from private or not-for profit groups.
 
The Sunday Business Post understands that the NPH is seeking over €130 million from the National Lottery and some €17 million in funding from the capital’s universities, in addition to €23 million from research bodies including the Children’s Medical and Research Foundation, the fundraising umbrella for both Our Lady’s Children’s Hospital, Crumlin, and the research centre. ‘‘That raises major issues about donor intent," said one hospital consultant at Crumlin hospital.
 
‘‘If people in Kerry paid to take part in a golf classic for Crumlin or medical research, do they want to see that funding diverted to get a foothold in a new public hospital?"
 
The head of one organisation that was approached for funding said the NPH had to raise a ‘‘phenomenal’’ amount of money. ‘‘There is a serious shortfall. We had to tell them ‘at the end of the day we are a charity. We are not a bottomless pit."
 
Counting the cost
 
The total spend on the project, according to the NPH ,will be some €100million less than the €750 million originally envisioned. The saving is undoubtedly good news for the exchequer, but the funding model deserves some closer scrutiny.
 
The approximate rule of thumb for recent builds and a number of the proposed co-located hospitals is a spend of up to €1 million per bed - meaning €450 million would be more in line with expectations.
 
The children’s hospital did not have to buy the land and does not have to factor financing costs into its equation. It will also be 16 storeys high, and given that surface area is the biggest determinant of construction costs, that should have worked in its favour.
 
Its proximity to an adult hospital will undoubtedly help achieve economies of scale with regard to the running costs of the children’s hospital, but those economies of scale would also apply at the more spacious site at St James’s Hospital in Dublin.
 
Construction work has not begun on the project, but some €23 million has already been spent on contracts, ranging from business services and project design to public relations.
 
That represents just 3.5 per cent of the total capital spend of €650 million. 
 
An inordinate amount of work has undoubtedly been done and the consensus from a number of senior private hospital figures was that the figure - when taken as a percentage of the overall cost - was not out of line with the industry norm.
 
However, looked at in isolation, some believe the figure to be high.
 
‘‘The industry norm is €8million or €10 million at that stage of development. Granted it is for hospital projects that are considerably smaller in size, but even still, that does not explain such a huge cost differential," said one senior industry source.
 
(source: Sunday Business Post)