Prevention better than cure for €1.7bn National Children’s Hospital hospital

It is not too late for the design of the National Children’s Hospital to be amended to reduce the projected €1bn overrun on the cost of construction, says Stephen Donnelly.

THE National Children’s Hospital is breaking world records for all the wrong reasons. It will not be the biggest hospital ever built, nor the fanciest. But, per bed, it will cost more than twice as much as the most expensive hospitals anywhere.

Between 2016 and 2018, the costs increased by more than a €1bn, but with not a single additional bed.

It gets worse. The National Children’s Hospital will only have the same number of beds as the hospitals it is replacing. However, the massive overspend will pull cash in from other healthcare projects, including cash for planned new beds in other hospitals. That means that spending nearly €2bn will result in fewer hospital beds in the system.

How did we get to this point? In 2016, then health minister, Leo Varadkar, announced that the project would cost €650m. That, he said, included Vat, inflation, and a contingency for unforeseen costs. Simon Harris took over as health minister a few weeks later. By 2018, the cost had risen to more than €1.7bn.

Here’s how that compares internationally. The second most expensive hospital ever built is the New Royal Adelaide Hospital, in Australia. At €1.4bn, it cost far less than the current estimate for our National Children’s Hospital. And it has twice as many beds.

The most expensive hospital ever built is the Karolinska University Hospital, in Stockholm. It was delayed repeatedly, and mired in controversy. In the end, it cost €2.2bn. That is more than the estimate for our National Children’s Hospital, but the Karolinksa has three times as many beds.

So, per bed, the Karolinksa cost €1.6m. The Royal Adelaide cost €1.8m. Even if the costs don’t go up further, the National Children’s Hospital will cost €3.7m per bed. In other words, we are paying well in excess of twice as much per bed as the most expensive hospitals.

While the Minister for Health was informed of the €1.7bn figure in August of last year, it was not made public. In fact, when asked about the costs in September, via a parliamentary question, the minister used a much lower figure from 2017. We found out this week that it was only on December 18 that Cabinet gave the green light for the project to proceed at €1.7bn.

The Dáil had been kept in the dark since August, and had no chance to consider these staggering cost increases, nor what might be done to bring them down. The Government could have delayed its decision to proceed. It could have asked for a design and cost review; if €1bn of additional costs can be designed into a building, you can be sure that a lot of it can be designed right back out again. But this didn’t happen.

Who would act like this if it was their own money? Imagine this: you hired a project manager to build you a house. In 2016, they contracted a builder and the agreed price was €375,000. They come to you in 2018 and say the cost has risen to €1m (same percentage increase as for the hospital).

Anyone I’ve put this to has said they’d fire the project manager, stop all works on site, and, if they kept the builder, talk with them to simplify the design and get the costs back down. What the Government has done, with public money, is say, ‘fire ahead, a million quid it is’. On top of this, there appears to be no accountability.

On Wednesday, I asked the HSE and Department of Health if they accepted that paying more than twice as much per bed as the most expensive hospitals was a catastrophic failure of management. ‘No’, was the answer.

The Development Board was of a similar view the previous week. In fact, they all went further and said that if they were to start over, they would use the same approach again.

I also asked if anyone had been asked to resign; if anyone had volunteered to resign; if anyone had been fired; if any sanction of any kind has been taken against anyone involved in the project; and if any commercial contract has been cancelled? The answer, on all counts, was ‘No’.

How all of this has happened needs to be the subject of a thorough public inquiry.

How did the Government allow things to spiral so completely out of control? Why did they not set a maximum price for the hospital? Why did they not instruct that cost be designed back out?

Why have they not held anyone to account? Why did they keep the Dáil, and the public, in the dark?

AT the same time, an expert assessment is needed on the remaining risks. What is causing this to cost more than twice as much per bed as the most expensive beds ever built? Could the costs spiral even higher?

Do any personnel need to be replaced? Can contracts be reviewed? What level of complexity, and therefore cost, can be designed back out of the building?

These are the questions that would be asked on any private project, from a small extension to an entire commercial development. They must be asked, and answered, here, too.

- Stephen Donnelly is Fianna Fáil’s spokesperson on health