Nova Scotia strikes deal with private company for renovated health centre

HALIFAX -

A provincial health-care renovation project that has drawn pointed criticism from Nova Scotia's auditor general is being turned over to a private company.

Health Minister Michelle Thompson announced Friday that long-term care company Shannex will pay the government $46 million to take over Hogan Court -- an unfinished hotel that is being converted into a facility for patients who no longer need hospital care.

Thompson said Shannex made an unsolicited proposal and will take over renovations of the building in the Halifax suburb of Bedford next month. It will also build a 110-room addition, bringing the total number of rooms to 178.

The minister told reporters that the expansion of the project will enable the facility to offer a wider range of care than originally anticipated through the hotel renovation.

"I think this is an evolution of the project," said Thompson, who added the Shannex proposal will mean a "more efficient and more exciting model than we had envisioned on our own."

Officials said the addition would include space for physio and occupational therapy, ceiling lifts and suites for bariatric care, although the entire design is not complete.

The expansion of the Bedford project means a transitional care facility planned for Bayers Lake in the Halifax area won't be built, leaving health officials to rethink further use for the province-owned land.

The Health Department bought the hotel property from Cresco Holdings in January 2023 for $34.5 million. Officials said to date, the purchase and renovations at Hogan Court have cost taxpayers just under $46 million.

In a scathing report released last month, auditor general Kim Adair called the initial purchase an "unusual arrangement" that lacked appropriate due diligence. She also said original estimates of a $15-million renovation cost had risen to $17.4 million, while the number of beds had been reduced from as many as 80 to 68.

The auditor took aim at about $81 million in untendered contracts for the development of both of the planned transitional care facilities, saying they didn't comply with government procurement protocols. That figure included a five-year, $67.5-million contract that was awarded to Shannex to operate Hogan Court.

Thompson has consistently defended the purchase, saying it was needed to help alleviate overcrowding pressures in hospitals and emergency departments.

Liberal Leader Zach Churchill said he believes Shannex is "bailing the government out" on a project plan that "wasn't a good one."

"I think they were fortunate to have Shannex come in and hopefully clean up this mess and turn it into something that's going to be really valuable for patients," said Churchill.

But NDP Leader Claudia Chender questioned turning over a facility that was originally meant to be built and owned by the province to a private entity.

"I think Shannex is a good company, they've got a great record but we have a public health-care system," Chender said, adding that the government should stick to its commitment to deliver health care.

Under the new deal the renovated existing building is scheduled to open by December, while the addition to the facility is expected to be completed by April 2026. Officials said final costs would be released when the deal is done, although they estimate construction costs per room will be $675,000.

Under the transitional care model they will serve patients who no longer need a hospital bed, as well as people waiting for a long-term care bed who can't live at home.

This report by The Canadian Press was first published March 22, 2024.

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