|Special Report (Oct. 20, 2011): Still waiting: $100 million and growing (Health Care, part 2)|
|Written by By JASON SMITH|
|Friday, 17 February 2012 13:43|
Premier Ralph O’Neal and Opposition Leader Dr. Orlando Smith don’t always agree on politics, but on one government policy the men, and most other legislators, have been united for decades: The territory needs a bigger, better hospital.
But for years, governments led by both men have failed to deliver on their promise to replace Peebles Hospital with a new facility. What began as a $13.2 million expansion proposal in 1994 has ballooned into a project costing more than $100 million, with no firm completion date in sight.
There isn’t a simple explanation for the delays and cost overruns, but officials involved with the project at various stages have indentified several causes: allegedly shoddy work by contractors; inadequate funding; improper supervision of consultants; and multiple design changes.
The Treaty of Versailles ended World War I on June 28, 1919 and with it, the United Kingdom government gave army officer Major Herbert Peebles a new job: administrator of the Virgin Islands. Among his priorities was creating the territory’s first hospital, which he did by combining three wooden structures to create what came to be known as the cottage hospital. Although his first creation blew down during a hurricane on Aug. 24, 1924, its replacement, finished in November 1926, forms the basis of the existing hospital, according to a history of the building written in 1976 by Dr. H. P. Watson, the territory’s then-chief medical officer.
In a magazine produced for the hospital’s 50th anniversary, Dr. Watson wrote that although the then-34-bed hospital had been improved multiple times in 50 years with a new laboratory, dispensery and X-ray equipment, it was time to modernise the facility.
“For some years now it has been apparent that Peebles Hospital in its present form is inadequate to supply the needs of the people of the British Virgin Islands,” he wrote. He also stated that the UK government had dedicated $1 million to add an 18,000-square-foot wing to the facility. That new wing was dedicated about six years later, on Dec. 6, 1981, but further population growth in subsequent years put more and more demands on the building.
By 1994, plans for improved facilities had evolved into a two-phase expansion, the first part of which was a planned $3.2 million, 12-bed psychiatric wing. That proposal had been under consideration since the early 1970s, Dr. Smith said in March 1994. A second phase was to follow, designed to expand the emergency room, labs and other facilities at the existing hospital at a cost of about $10 million.
Theodore Fahie, then the permanent secretary in the Ministry of Health, Education and Welfare, said at the time that negotiations with the UK government for funding were under way. Julian Fraser, then a private architect, began designing plans for the facility while Optima Consultants Ltd. began completing mechanical and engineering studies.
“We’re hoping it will be done by the end of the year,” Mr. Fahie said in June 1994.
But then in July 1995 the $1.2 million UK development aid funding fell through. VI government officials couldn’t agree on construction plans, which would have needed to be approved and completed by March 31, 1996 in order receive the aid. To avoid losing the funds, officials decided instead to fix several leaky water pipes in Road Town, repair the Queen Elizabeth II Bridge and build the Virgin Gorda Administration Complex.
Expansion plans were still under consideration in May 1995 when Alred Frett replaced Louis Walters as minister of health, education and welfare. Mr. Frett, the founder of B&F Medical Clinic, said in a June 2011 interview that he had very strong feelings at the time that the territory needed a new hospital, not just an expansion.
“To talk about renovating an old hospital for futuristic services, it just made no sense. I probably upset quite a few persons because I stopped it, and I said, ‘No, we got to get a new hospital,’” he said this year.
Mr. Frett added that during his time in the post the ministry crafted a $26 million plan to build a new hospital and started initial excavation works on the site near the existing building. This reporter was unable to independently verify the claim. Then a VIP member, Mr. Frett said he was fighting with members of his own party over his vision for the hospital.
After Mr. Frett served 21 months as HEW minister, Mr. O’Neal, the chief minister, fired Mr. Frett from the post in 1997, alleging later that Mr. Frett didn’t work well with backbenchers. Mr. Frett disputed that claim, but he was replaced by Eileene Parsons (R-at large).
Two months later, Mr. O’Neal called the new hospital project a “primary concern” and placed a $5 million allocation for it in the 1998 budget, rolled over from the previous year. However, during the budget debates in December 1997, Mr. O’Neal faced criticism from two opposition members who questioned why construction hadn’t started and alleged the hospital received a lower priority than the $1.7 million plans to build the Little ‘A’ Race Track in Sea Cows Bay.
Mr. O’Neal later said he didn’t agree with criticism that the horse track had been given more priority and announced plans in March 1998 to expand the hospital’s laboratory and offices. He also said that Steve Brown, an Antigua-based architect, had visited the territory to evaluate sites for a new facility.
The James Todman Construction Company was named lead contractor for the 26,000-square-foot expansion. Building started on a $270,000 addition, but policymakers soon revised those designs into a $2 million plan that included an accounts and medical records division, a pharmacy, an emergency department, an X-ray facility and a morgue. But 18 months later, after a partially completed structure of concrete slabs and rebar was erected near the original hospital, Ms. Parsons called a stop to construction.
At a Sept. 10, 1999 Legislative Council meeting, Ms. Parsons announced that construction had temporarily ceased because more planning was needed to determine the territory’s health care needs for the long term. Architects, private consultants and representatives of the Pan American Health Organisation had devised the original plans, but those plans were to be independently assessed by Hornagold and Hills, a UK-based consulting firm, to ensure that the facility would meet the territory’s needs for 30 to 40 years, Ms. Parsons said at the time.
“I know that some will ask, ‘Why stop now? Why did we not plan ahead?’ The truth is we do have plans in place,” she said. “We stand to benefit much by having an independent assessment and review of those plans.”
The consultant began a review of the territory’s health care system in 1999 and strongly criticised the hospital’s services, according to the audit report.
“The hospital provides accommodation of a very poor standard in modern day health terms, both in terms of environmental and functional suitability,” the audit stated.
‘Conflict of interest’
In order to improve the existing health care system and prepare hospital staff for the new building, Hornagold and Hills recommended another consultant, Medical Overseas Holdings, be granted a $1.95 million, three-year contract to directly manage Peebles Hospital.
According to the audit report, the Executive Council waived the normal tendering process to directly award MOH the contract despite an “apparent conflict of interest.” The H&H consultant, Simeon Lovegrave, also simultaneously served as managing director of MOH, the audit report stated. Ms. Parsons said at the time that the tender process was waived because of a lack of local expertise.
The change in hospital management did not go over well. Peebles Hospital staff almost immediately objected to MOH’s restructuring plans and suggestions that two existing managers retire. Hospital staff denied MOH employees access to the records they needed to draw up the business plan for the new hospital and as a result of the conflict, many of the objectives MOH was supposed to accomplish weren’t met, according to the audit report.
“Failure on the part of the ministry to adequately involve key hospital personnel early in the change process led to uncertainty and distrust among the hospital’s administration and staff as to the role of MOH,” the audit report stated.
Eight months after MOH was hired, PAHO advisors were brought back in to evaluate government’s contract with MOH. The PAHO team found that the contract’s terms were “extremely favourable” to MOH. PAHO recommended that MOH’s management role be reduced to an advisory one. This step was taken, although the $1.95 million contract was not reduced to reflect the consultant’s more limited role, the audit report stated.
At the same time MOH was at work, H&H focused its $144,482 contract on determining where to build the new hospital. According to a 2002 value-for-money audit of the project performed by the Audit Office, finding a suitable location in Road Town for the hospital immediately posed problems, as suitable land had either been taken by other projects or was vulnerable to natural disasters.
H&H listed building a new hospital on a new site as the most ideal option, but because this wasn’t possible it recommended building a new hospital near the existing one, according to the audit.
MOH predicted that the “small steep site would necessitate the incurrence of significant costs in site preparation because of its inaccessibility,” according to the audit. Before digging could begin, though, officials spent months choosing contractors and consultants for the project. After receiving the reports from H&H and MOH, Mr. O’Neal announced in February 2000 that PageSoutherlandPage, a Texas architectural firm, would be paid $726,000 to design the new hospital, a planned 89,000-square-foot, 60-bed structure.
In its 1999 report, H&H stated that the existing Peebles Hospital received a “D” ranking, an assessement of the lowest possible, from the UK’s National Health Service based on the building’s physical condition, fire safety and efficiency in supporting service delivery.
The consultants’ reports, which were presented at a series of public meetings, indicated that Mariner’s Hospital, a 44-bed facility in Tavernier, Florida that serves 26,000 people, would serve as a suitable model for the new hospital.
Ms. Parsons announced in June 2000 that her ministry had started the tender process for a project manager to oversee construction. The no-bid contract for project management and quantity surveying, the field of predicting and monitoring construction costs, was awarded to the firm BCQS Limited in July 2001 at a fee of six percent of total construction costs, then estimated to be about $30 million, according to the audit report.
But before construction started, Mr. O’Neal, the chief minister, changed the leadership of the Ministry of Health, Education and Welfare, dropping Ms. Parsons from her post. She subsequently crossed the floor to join the NDP government. Mr. O’Neal then created a separate Ministry of Education led by Andrew Fahie, and replaced Ms. Parsons with Ethlyn Smith, naming her minister of health and welfare.
Little progress was visible and little was said publicly about the project for several months. But during a LEGCO meeting on July 17, 2001, Ms. Smith broke the silence about the project with news that PAHO consultants were devising operational policies for the hospital and PSP architects were revising their designs to include government’s wishes that the existing hospital building be retained and not demolished as originally planned.
She said that after the designs were complete, construction could begin and would be completed by the first quarter of 2004. A month later, designs were unveiled for a 120,000-square-foot facility with 70 to 80 beds — 35 percent larger than the one Mr. O’Neal had announced 16 months earlier. PSP’s plans called for the facility together with the annex to be 190,000 square feet. Plans also called for a two-level parking garage, four delivery rooms, an intensive care unit, and an emergency room built for 18,000 cases per year. Designs also included three operating rooms, a helipad on the roof and an 8,100-square-foot canvas awning shaped like a sail to fly in front of the 220-foot-tall building.
Ground was broken as scheduled on Sept. 17, 2001, an occasion Mr. O’Neal said was worth rejoicing.
The construction project was supposed to unfold in three phases. First, thousands of pounds of dirt and rock had to be removed from the site and retaining walls had to be constructed. Then the new building and related external works would proceed, followed by completion of the aborted annex.
But the excavation works on the steep slopes proved MOH’s fears true. VI contractors found that difficult soil conditions and crumbly slopes of earth made excavation difficult, according to the audit report.
“There are solutions available, some of which cost a lot of money, but I’d like a geologist’s and an engineer’s opinion first,” BCQS project manager Neville Patterson said in June 2002 when digging was about 90 percent complete. The excavated fill was removed to “Mount Peebles,” a large pile on Waterfront Drive that drew complaints from residents.
The problems, a geologist speaking on condition of anonymity told the Beacon at the time, were caused because the original studies declaring where bedrock would be found were faulty. BCQS project manager Sanjay Amin denied that claim at the time and said work would resume in a few days. It didn’t.
But at the one-year anniversary of the ground breaking, Ms. Smith held a press conference at the construction site, where she told reporters that 90 percent of the excavation – work costing $1 million – had been performed. The next steps required retaining walls to be built and an equipment plan to be prepared, she said. Soon after, though, construction was still stalled, as officials struggled to get the project funded.
To fund the project, legislators had approved a deal in principle to borrow $45 million, allowing government to procure a loan from four of the territory’s commercial banks, the Development Bank of the VI, and the Social Security Board.
Mr. O’Neal said in November 2000 that he would bring the precise terms of the loan, the interest rate and repayment schedule back before LEGCO for members’ approval. At the time, Mr. O’Neal revealed that the new estimate was $15 million higher than the original estimate because it included equipment costs. Despite unresolved questions, lawmakers approved the loan unanimously.
Speaking a week after the Sept. 11, 2001 terrorist attacks, though, and fearful of an economic slump, Dr. Smith said the project’s cost should be reviewed.
“It is not too late to be asking whether or not we should go ahead and build on the present site or whether we should cut our losses for a much greater savings,” he said.
In November 2002, Mr. O’Neal said the Ministry of Finance was still negotiating with lenders over the loan.
“I cannot say definitely that I have funding in my hands now,” he told LEGCO at the time.
The problem was the UK. Officials with the Foreign and Commonwealth Office, which had to approve any loan, returned the territory’s application with a number of concerns regarding the project’s overall cost, the impact on the recurrent budget, and staffing costs. The FCO’s refusal to grant permission stalled the project, according to the audit report. The project included the half-finished hospital annex, which was to be completed ahead of the new facility and be funded with $5 million in local funds, Ms. Smith said in May 2003.
But the same month, Ms. Smith said that the annex project would have to wait on the loan funds and the local funds would go towards improving the existing building. She offered few details, like Mr. O’Neal, who referred to the annex as an “integral part” of the project but did not elaborate.
Change of government
Amid the funding difficulties, the shifting political climate brought more changes in the project. The National Democratic Party, which campaigned heavily on “modernising” the territory’s health care system, came to power in the June 16, 2003 election with plans to review the entire project. The NDP government made the annex a priority, awarding a $5.2 million contract after a tender process to ADC Construction Ltd., a partnership of locally based Autland Heavy Equipment and the Caymanian firm Arch and Godfrey Ltd. Ronnie Skelton, the new government’s minister of health and social development, said in October 2003 that the annex would double the hospital facility to 60,000 square feet. The expansion was to house lab facilities, offices, a restaurant and space for up to 20 beds. It was slated for completion by May 2004. That didn’t happen.
As the deadline approached, Floyd Stoutt, government’s clerk of works for the project, attributed the delay to changes in the proposed uses of the building. These included a new pharmacy, larger units for the casualty ward, a diagnostic lab and imaging departments. New mechanical drawings had to be ordered, and heavy rains also delayed the project, Mr. Stoutt said a month after the deadline had passed.
Nine months later, the annex still resembled a construction site when Princess Anne, the daughter of Queen Elizabeth II, officially dedicated it on her visit to the territory. By that time, the annex’s planned uses further evolved to include an eight-bed accident and emergency trauma unit, a comprehensive diagnostic laboratory, a morgue, and a dialysis unit. The changes resulted in the delays and an additional $3 million cost.
Currently, the annex is 60 percent occupied, according to Pat Malone, the director of hospital services.
At the same time the annex was being completed, officials reconsidered plans to build the new hospital. Mr. Skelton announced in January 2005 that the NDP government went back to the architecture firm PageSoutherlandPage and asked for a cheaper hospital. The architects came back with a plan that was 15,000 square feet larger, with 48 more beds, that cost $20 million less than the previous design, he said.
“We now have a design that is less costly to build, less costly to cool, and less costly to outfit than the original design,” Mr. Skelton said at the time.
The architects were able to do this because they found “efficiencies” with a square building design as compared to the original design, Bennet Smith, the project manager, said in an October interview.
With the new plans in hand, policymakers in 2006 began the process of choosing the lead contractor for the project. For large capital projects like the hospital, the ministry managing the project typically works with technical experts to produce a tender document detailing the requirements, Mr. Smith said. That document is published, and interested firms submit their bids and documentation, which may include a certificate of good standing from the Social Security Board, annual financial statements and a list of prior projects.
“You usually ask them to provide information that would give you some idea of what their experience is and what their financial capabilities are,” Mr. Smith said.
For the hospital project, finance officials received four bids ranging from $63.9 million to $94.4 million. These included Manhattan Construction [Bahamas] Limited and two Puerto Rican firms: Three O Construction S.E. and Omega Engineering S.E. But the lowest bid – at nearly $11 million less than the next cheapest bid – was submitted by a joint venture of three companies: the Florida-based Carimex, LLC, the VI-based Quantum Construction, and Mirsand Town Planning and Architects Ltd., which has offices in Tortola and the Dominican Republic.
At a Jan. 22, 2007 signing ceremony, Jose Ramon Brea, Carimex’s CEO, promised to fulfil the terms of the contract, and to have the hospital built within 18 months.
“We acknowledge in the name of the construction [company] our task: to do our job in time and within the current budget,” Mr. Brea said at the time.
It didn’t turn out that way.
The day of the hospital contract signing, concerns were raised about Carimex’s experience in a fax sent to the Chief Minister’s Office and to media outlets. It was sent from a group that called itself the “International Citizens for Responsible Government.” In an e-mail reply to the Beacon, the group declined to identify who its members were. The fax alleged that Carimex, a limited liability company first registered in Florida in 2002, had no record of completing any construction projects in the United States.
At the time, company officials declined to comment on whether Carimex had ever built anything in the US, but at the Feb. 19, 2007 groundbreaking ceremony, the then-chief minister, Dr. Smith, defended the company’s record in the Dominican Republic. Mr. Skelton, the minister of finance, health and social development, had visited the company’s Profesor Juan Bosch Traumatology Hospital in Boanao, Dominican Republic in 2006, Dr. Smith said. He added that the facility was an example of the firm’s track record.
That hospital is a 145-bed facility that was built for $48 million in 2005, according to the website of IBT Group, the Florida-based parent company of Carimex. Despite the contractual disagreements that were to follow, government continued to do business with another branch of the IBT Group.
In July 2009, government awarded a $5.4 million no-bid contract to IBT, LLC, which Florida incorporation records list as another subsidiary of IBT Group, to build two 24,150-square-foot greenhouses at Paraquita Bay and South Sound, Virgin Gorda. Neither greenhouse is functioning, despite government officials’ pledges that they would be operational in mid-2010.
As Carimex’s employees mobilised on the hospital construction site, LEGCO members approved borrowing $35 million from the SSB in March 2007 to fund the project. Over the next several months, work progressed on the building’s framework. Meanwhile, the government had changed again in August 2007, when the Virgin Islands Party swept back into power. Weeks later the new premier, Mr. O’Neal, publicly criticised Carimex officials for allegedly not paying payroll taxes for their workers. He also alleged that the company had fallen behind schedule.
It was a sign of things to come. By January 2008 the project was five months behind schedule and only 30 percent of the job had been completed, said Deputy Premier Dancia Penn, the new minister of health and social development. Ms. Penn added that the ministry was recommending some design changes.
“It was always thought that the emergency unit would have been transported to the new building on the third floor,” Project Manager Bennet Smith said at the time. “It was the convenient place because there is ground access on the third floor. Ambulances will have direct access, and patients will not need to use the elevator.”
Work on the building continued throughout 2008, but came to a halt that December when contractors walked off the job temporarily due to “financial issues,” a Government Information Services press release stated. The release offered little further explanation, but days later the contractor returned to work.
In the following months, government officials went back to the SSB to secure another $15 million loan to help fund the project. In a May 2008 HOA meeting, the premier said the project’s cost had risen to $75 million and could rise to “close to $100 million.”
As work continued during 2009, tension between the contractors and government continued to grow. Hospital maintenance employees and architects who were observing the construction began to make reports of alleged “deficiencies” in the hospital’s mechanical, electrical and plumbing works, Petrona Davies, the permanent secretary in the MHSD, said in a July interview.
“It was mounting and we would bring these issues to the contractors’ attention and basically they would say, ‘Well, we’re not finished,’” Ms. Davies said. “And we would say, ‘Well, you can’t wait till you’re finished to redo the whole thing; you have to correct it as you go along. And they kept saying, ‘It’s incomplete work and we haven’t presented it to you.’”
Government issued a suspension notice to the firm on Nov. 27, 2009.
To review the work, the MHSD hired two construction consultancy firms, Hill International and Arup, to independently test and inspect the MEP works. After Arup came back with a report alleging deficiencies and Carimex responded again that the work was still incomplete, government officials decided to terminate the contract, Ms. Davies said.
For its part, Carimex disputed the allegations and Arup’s conclusions and hired its own consultants to review the MEP work.
“The independent evaluations further concluded that the [MEP] works installed at Peebles Hospital were above average in quality compared to US health care construction standards,” the company stated in an advertisement printed in the Beacon on March 25, 2010. “In follow-up meetings with government, Carimex and their consultants requested that Arup be present in order that the information contained in their report could be openly discussed and debated. Government chose not to have Arup attend.”
Having reached an impasse, government terminated the company’s contract on April 15, 2010 after a 144-day standoff. Ms. Davies called the termination “very unfortunate,” but necessary.
“We couldn’t justify to the people that we finish this building, cut the ribbon and be biting our fingernails hoping that something doesn’t go terribly wrong,” Ms. Davies said in July. “We needed to be confident that what we finished was a healthy building.”
The Carimex consortium has been paid $62.8 out of its $63.9 million contract, according to a report on last year’s Standing Finance Committee deliberations. The premier said in May that before the situation with Carimex can be resolved — before the company can be paid or charged any additional money — the hospital has to be finished.
Though officials are still working to resolve the issues posed by the allegedly faulty works, the commissioning process – the operational changes needed to ready the staff for the new facility – has already begun. Officials signed a $2.1 million contract in February 2010 with InterHealth Canada, a health care management firm, for the commissioning process, which company officials said at the time would take 13 to 18 months. A community needs analysis and a clinical services plan have been developed to finalise what specific services will be offered, said Ms. Davies, the MHSD permanent secretary.
Now the second phase of the commissioning process — getting staff ready to operate the new facility — has started, she said.
“It will mean recruiting some new people, it would mean training — you know, that sort of thing — so now that we have the plans to tell us what kind of equipment we’ll need and what kind of staff we’ll need, we’re going to hire a few additional staff and whatever else we need to make the hospital functional,” she said.
Because the last phase of commissioning works backward from the anticipated opening date, the process has paused until there is a projected completion date, Ms. Davies said. That could take a while longer. Workers from James Todman Construction, which was hired in May at a cost of $4.17 million, are still repairing windows and installing drains, handrails and canopies needed to complete the “external works” at the facility.
Those external works, though, can’t be entirely finished until the internal works are complete. That’s partly because a large hole in the building’s side needs to stay open to allow medical and construction equipment to pass through, said Bennet Smith, the project manager. Internal works have been tendered but no bid has yet been awarded, Mr. Smith said.
Cost estimates for this stage of the project are difficult to derive because “it’s tricky when you’re dealing with existing work. You’re not really sure about something until you start to pull it apart,” he said.
But, he added, if the works begin soon, then it may be possible to complete them by the end of 2012.
Despite the challenges in finishing the hospital, Ms. Davies said she predicts that the facility will greatly improve the territory’s health care and meet the public’s demands “well into the future.”
“There’s quite a bit of shelf space. People see a huge building and they think we’re going to occupy that huge building as soon as we open. We’re not,” she said. “There’s quite a lot of room for expansion.”