Hospital upgrades, property taxes, and a ‘broken system’

With Fraser Health spending much more to upgrade hospital equipment, much of the cost may come from local property taxes

By Tyler Olsen | April 26, 2022 |5:00 am

Fraser Health has plunked down $14 million to buy a large property next to Abbotsford Regional Hospital. Meanwhile, after missing out on the bulk of the health authority’s capital spending last year, Chilliwack’s hospital is in line for a suite of upgrades, while a primary care clinic is getting a new location nearby.

The moves are part of another wave of improvements in local hospitals. But they come amid a warning from Mission’s mayor that the current funding system may be broken, with Fraser Health spending first and asking local politicians to pay their share of the projects only afterwards.

The big buy

Last August, Fraser Health spent $14 million to buy a 1.7-acre vacant lot on Marshall Road, just east of Abbotsford Regional Hospital.

That purchase was among several major projects revealed in new requests for funding to the Fraser Valley Regional Hospital District. A new facility for Chilliwack’s Primary Care Clinic is also in the works.

The newly acquired Marshall Road property is next to Abbotsford’s hospital. The health authority says the site will be used to allow the hospital to expand, to “address parking pressures,” and for other health care expansions in the future.

It’s unclear whether the site is being eyed as a potential home for a new long-term care facility. Last month, The Current reported that Fraser Health plans to build new long-term care homes in Abbotsford and Chilliwack at a potential cost of $150 million or more. (The local hospital board, which pays 40% of the cost of such projects, has been asked to prepare to spend $60 million.) Details and the locations for those long-term care homes have not been formally announced.

In the same document that revealed the property acquisition, Fraser Health disclosed that it plans to spend $5.4 million to outfit an Evans Road property to house the Chilliwack Primary Care Clinic. The clinic currently operates out of Chilliwack General Hospital. The new location would be at 7955 Evans Rd., a large commercial building just north of Highway 1.

The two projects will be funded entirely by the province and Fraser Health. But the health authority is also seeking millions more from property taxes to fund a range of smaller capital purchases, upgrades, and replacements.
But local politicians have shown hesitancy about delivering more money than budgeted to the health authority.

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The equipment

Many upgrades are slated in Chilliwack General Hospital, which last year had missed out on the bulk of the capital spending, to the consternation of hospital district board chair (and Chilliwack councillor) Jason Lum, who pointed out that only $64,000 of the nearly $12 million in spending was going to the facility in his city.

This time around, Chilliwack’s getting a larger chunk of cash, with at least $4.4 million slated for the hospital.

The largest Chilliwack project—the renewal of the plumbing and sanitary system of a hospital wing—will go mostly unseen by patients. But the facility’s mammography room is getting a $1 million renovation that will make procedures better for some patients.

The hospital will also have its boiler electric panels replaced and moved. That will increase resilience in the event of a flood, since the current equipment is “six feet below grade and at high risk to flood exposure,” according to Fraser Health.

In Abbotsford, Fraser Health must replace several pieces of equipment bought when the hospital first opened in 2008. The biggest cost is the replacement of the chemistry autoline that serves the hospital’s busy lab.

Mission Memorial Hospital has already been promised a CT scanner, but it will also have its main elevator upgraded, which is now more than 50 years old. A new elevator will be speedier, Fraser Health says. It will also be less likely to trap occupants. (It’s unclear how often, if ever, entrapments do occur, but the new one will supposedly “reduce the risk.”)

Property taxes, disrespect, and a broken system

Although the federal and provincial governments jointly fund most ongoing health care costs, property taxes collected by local hospital districts provide a large chunk of funding for new hospital projects.

The hospital district is usually on the hook for about 40% of the costs to upgrade or replace hospital equipment. And as Fraser Health has spent big to replace aging equipment in the last two years, it has come to the hospital district for significantly more money.

Historically, the hospital district has pledged $1.8 million per year for such projects. This spring, it finalized its budget to deliver that sum to Fraser Health.

But it has now returned to the hospital district asking for another $4.2 million. It’s the second straight surprise ask from Fraser Health; last year, the health authority asked for $4.8 million. If the hospital district votes to fulfill the extra request later this week, it will take the extra money out of the $5.5 million it sets aside each year for major projects.

That reserve is currently designated to help the hospital district pay $60 million toward the cost of the upcoming long-term care homes. In addition to the money banked in the reserve, the hospital district had planned to borrow upwards of $25 million for those two homes. Diverting money from the reserve would likely increase the amount the district needs to borrow—and the amount property taxpayers must repay.

The hospital district’s board could also choose to reject the funding request altogether.

That would be a rare step, but that’s what the regional district’s health working group recommended last week, with local politicians and hospital district staff expressing frustration toward Fraser Health.

If the request is denied, it may not affect whether the projects go ahead. Because of differing fiscal years, some of the money may already have been spent by Fraser Health, which is now trying to recoup its costs.

Abbotsford Coun. Patricia Ross, who sits on the working group, said the hospital equipment was all necessary, but that she was “frustrated” by the lack of explanation for the higher-than-normal request, which came with no prior notice.

“I sort of feel a little bit disrespected because there wasn’t more of a conversation about it or an explanation,” she said.

On Thursday, the entire health board will vote on whether to ante up.

If the hospital district declines to meet Fraser Health’s request and only provides $1.8 million, it would leave the province and Fraser Health to decide who will ultimately bear the cost for the projects. Whatever happens, Mission’s mayor says the issue illustrates a need for more information.

“I think the system is broken,” Mission Mayor Paul Horn said last week. “We ran into this with the RCMP and integrated services, where they would go and spend without checking with us. And that fundamentally misses a very important step.”
Horn said the hospital board could adjust its budgeting plans going forward and should consider whether it needs to increase the money it sets aside for such projects.

The money will need to come from somewhere, though. Currently, the hospital district increases its tax requisition by around the rate of inflation. If it needs more money to fulfill Fraser Health’s requests, the hospital district would likely turn to its chief funding source: property taxes.

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Tyler Olsen

Managing Editor at Fraser Valley Current

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