The paradox at the heart of the delayed and increasingly expensive national children’s hospital is that it was a rushed job with a sloppy start. It was amusing of Mary Lou McDonald to accuse the Taoiseach Leo Varadkar of a “hands-off approach” in the Dáil this week. The part of the process that was meticulously planned was the governance.
In April 2015, when he was minister for health, Leo Varadkar unveiled the design of the hospital and its satellite centres. The hospital would be among the very best in the world. It would accommodate our sickest children and ensure parents were well cared for over long stays and repeat visits. The good news is that this will happen.
The bad news, which has undermined confidence, involves delays and increased costs. This week’s decision by Government to increase the budget to €2.24 billion, up from €1.73 billion, was long expected but itself delayed. The key comparator figure in the so-called Definitive Business Case estimated that the amount required was €983 million. That was the number Varadkar’s successor as minister for health Simon Harris brought to Cabinet in April 2017. Lower numbers had been bandied about before that but those were guesstimates only.
Three things came together at that juncture. Firstly, the Government announced what it was prepared to pay, which was far too much information to give to the market it would then go to for tenders. It went to that market based on a tender that separated the design from the build, which subsequently became a labyrinth of disagreement about costs with the chosen contractor, BAM. Thirdly, the governance structure ensured that most of the responsibility, but little of the power, ended up with the National Paediatric Hospital Development Board (NPHDB), which was effectively intended to be a mudguard for responsibility – and so it has transpired. In that respect, everything went to plan.
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The current challenges will seem simple compared to the fitting-out of the hospital and the fitting-in of doctors, nurses, and others from three different institutions. That will be the greatest herding of cats in Irish industrial relations history
On site, but at the bottom of the food chain, the development board reports to the HSE and the Department of Health. Beyond that three-legged contraption is the Department of Public Expenditure, which ultimately holds the purse strings. Finally, there is Government itself, which on Tuesday approved the latest tranche of additional funding. The NPHDB is the first such vehicle of its kind – and, I think it is safe to say, likely the last. It is responsible for building the hospital which is 90 per cent there. But as anyone who has done a kitchen extension knows, the last 10 per cent can be challenging.
They will then hand over to Children’s Hospital Ireland (CHI). CHI comprises what until 2019 were the separate entities of Crumlin, Temple Street and Tallaght children’s hospitals. It is effectively the client of the hospital development board. The current challenges will seem simple compared to the fitting-out of the hospital and the fitting-in of doctors, nurses, and others from three different institutions. That will be the greatest herding of cats in Irish industrial relations history. It is ultimately the battle readiness of Children’s Hospital Ireland that will be critical. The Government would be very wise to closely review its capacity before it gets to the starting line.
The convoluted governance structures, however, are pure genius and have far exceeded their hoped-for value. It would be cynical to say it was intended to provide responsibility avoidance. It partly had its origins in the debacle in 2012 of An Bord Pleanála refusing planning permission for the new hospital at site of the Mater hospital in Dublin. That project was HSE-led, and the source of indignant fury within Government. In a world where it is easier to paper over problems than to solve them, when the move to the St James’s site came, the HSE was elevated to a supervisory rather than an implementation role and the hospital board was slotted in instead.
It was political pressure that firstly created and then used and abused a governance structure that makes the production processes in Willy Wonka’s chocolate factory seem simple
Its finest hour came in 2019 when then-minister for health Simon Harris came within an inch of his political life with the revelation that the hospital would by then cost €1.7 billion. A blame game about who knew what and when broke out, but happily for the Minister he was well camouflaged in the long chain of command. PwC was brought in to do a report, which was damning. There things sat – until now, when another half a billion euro, on top of the €1.7 billion, was put on the table. That will be fought over between the hospital board, the contractor and Children’s Hospital Ireland. There could be a quick solution or there might be long-term and costly litigation.
To add to the merriment, Oireachtas committees will busy themselves again with torturing representatives of the hospital board about the overrun. Politically it is the Oireachtas committee on Health, the Public Accounts Committee and Government generally that is responsible for public procurement. No commercial entity would ever go to the market with a prior announcement about how much it was prepared to pay. It was political pressure that firstly created and then used and abused a governance structure that makes the production processes in Willy Wonka’s chocolate factory seem simple.
It is not the most expensive hospital ever, that is just political hyperbole. But it is getting more expensive. The nub of the problem is not an overrun, it was a gross underestimation of the cost in a rush to make an announcement which included all the information the market needed to squeeze the Government.