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FOCUS: How much more “affordable” would a multi-site hospital be?

FOCUS: How much more “affordable” would a multi-site hospital be?

Tuesday 01 November 2022

FOCUS: How much more “affordable” would a multi-site hospital be?

Tuesday 01 November 2022


Since coming into office in June, Ministers’ mantra has been to identify a more “affordable and appropriate” solution for a new hospital for Jersey… So how much more affordable is the multi-site route the Government is due to take?

The answer to that question is far from simple.

What we do know is that the approved ‘Our Hospital’ plan completed by John Le Fondré’s Government was budgeted at £805m.

According to the findings of a new £30,000 review led by Infrastructure Minister Tom Binet, alongside Expert Adviser Alan Moore, that price point is no longer achievable.

Instead, the 114-page ‘Binet Review’ published today says Jersey should look to a multi-site solution for its health facilities in Jersey, which it estimates would cost nearly £170m less at £635m.

However, that figure may well change, as Express explains…

What was the previous project’s cost?

The ‘Our Hospital’ plan to create an all-in-one premises at Overdale was estimated to cost up to £804m.

While the maximum cost of building the facility was estimated to be £550m, the project carried ‘additional costs’ that were expected to reach around £255m.

Those included acquiring extra sites (£25.3m), relocating services currently operating at Overdale (£5m), demolishing the current hospital (£7m), and a chunky contingency fund (£174.3m) to account for any unforeseen issues that may arise.

Hospital Overdale inquiry.jpg 

Pictured: Building a new hospital at Overdale was estimated to cost £550m, with around £255m in 'extra costs'.

However, the new hospital review says that this price point is no longer realistic.

It predicts that, following global uncertainty generated by covid-19, Brexit and the Ukraine war, the project costs are now likely to be £70m to £115m more than previously budgeted for.

Why would a multi-site option be cheaper?

According to the Binet Review, a multi-site option – which would mean building across Overdale and Gloucester Street/Kensington Place, and retaining the ‘temporary’ health facility at Les Quennevais – would cost the island around £635m.

The reason for the significant drop in price from the Overdale project, is due to a number of savings the review predicts will be possible with a multi-site solution: 

  • “up to £50m from the reduced need for new road infrastructure and land acquisitions 
  • up to £30-60m from separating the scheme into smaller constituent parts, opening up procurement, including to more local contractors and enabling more competitive bids
  • up to £15-30m from future digital healthcare services delivery;
  • up to £15-30m from modern methods of construction for some buildings; and
  • up to £15-20m from the market value of healthcare sites no longer required.”

There is, however, a complication in this calculation of the £635m predicted cost… 

How was the £635m multi-site cost calculated?

The figures used to work out how much a multi-site solution may cost came from a document produced by the previous Government in summer 2021, and, by the review authors' own admission, “ignores inflation” since then.

binet.jpg

Pictured: Infrastructure Minister Deputy Tom Binet, who led the review alongside Expert Adviser Alan Moore.

The £635m figure also includes predicted savings from changing the tender process, and through reducing the size of the hospital and increasing use of ‘e-health’ and ‘telemedicine’. 

The report notes, however, that, far from being based on data, all of the assumptions used to come up with the figure are “subjective” and need to by “validated by further detailed analysis” before the Government officially starts pressing ahead.

The review report, however, did contain an Appendix outlining various cost estimates for a multi-site solutions prepared by external cost consultants Turner and Townsend. This pitched the total construction and client costs for a solution including expansion into Kensington Place as being between £646m and £775m.

However, the Infrastructure Minister told reporters in a press conference today that the Government was working on the basis of Mr Moore's £635m estimate.

cost consultants table

CLICK TO ENLARGE: Included as an Appendix in the £30,000 hospital review report, this table prepared by external costs consultants provides some potential price points for different options.

Notwithstanding the fact that the £635m multi-site hospital cost prediction may not be 100% accurate, another matter must also be taken into account…

Will a cheaper hospital mean better value for money?

Proponents of sticking with the agreed £800m hospital at Overdale have previously said that there is no point building a hospital on the cheap: buy a quality shirt and it will last years, but go for a low-priced option and might not survive the first wash.

After learning of the review's findings this morning, numerous States Members quizzed the Infrastructure Minister on whether certain ‘value for money’ elements had been taken into account. 

Deputy Lyndon Farnham – who as Deputy Chief Minister led the ‘Our Hospital’ project in the previous Government – wanted to know whether the cost of “duplication” with a hospital “running over four sites” as opposed to a single site had been considered.

Lyndon Farnham.jpg

Pictured: The previous leader of the 'Our Hospital' project, Deputy Lyndon Farnham, noted that there may be extra costs associated with operating multiple health sites rather than a single hospital.

Trinity’s Constable, Philip Le Sueur, asked about the ongoing cost of maintaining more than one premises, Deputy Montfort Tadier asked about the potential cost of the “lost opportunity” of not being able to develop the Les Quennevais site into homes if it is retained as a hospital ‘satellite’ site, and Deputy Sam Mézec raised the matter of compensation to the developer after the Kensington Place homes project was aborted to make way for possible hospital expansion. 

Noting that he was presenting the findings of a “review, and not a business case”, Deputy Binet conceded that there were many areas that did not have detailed costings yet. 

However, he estimated that the compensation to the developer would be “less than half a percent” of the overall project cost.

When will we know the exact cost of a multi-site project? 

In order to proceed with a multi-site solution, the Government will have to officially rescind the Overdale plan and get States Members to agree to proceed with a new one.

This is something Deputy Binet said today that he was hoping to tick off his ‘to do’ list before Christmas.

However, as several States Members made clear today, giving the official green light to pivoting to a multi-site plan is not something they’re willing to do without more data, so islanders, like States Members, should be able to expect more details before then…

READ MORE...

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