Nova Scotia government sells beleaguered Hogan Court health-care project

A prominent long-term care developer is relieving the Nova Scotia government of one its biggest health-care infrastructure headaches and a regular source of negative news coverage.

Health Minister Michelle Thompson announced Friday that Shannex is purchasing the property at 21 Hogan Court in west Bedford, a former hotel development that the province was renovating to become a patient care facility.

As part of the deal, Shannex will pay $46 million for the property and complete the renovations for the 68-bed site.

The company will also build a 110-bed adjoining building on the same property, a process officials said Friday would take about two years to complete.

"Shannex has demonstrated experience in providing this level of care and also in those types of construction projects," Thompson said during a news conference.

The province bought the building for $34 million in early 2023.

Health Department officials would not say on Friday exactly how much has been spent on renovations, but said the deal with Shannex would be at least break even. They said renovations at the site started to slow after the government received an unsolicited proposal from Shannex in January.

The company had already received a five-year, $67.5-million contract to operate the 68-bed site once it opened.

Shannex president Jason Shannon told reporters Friday that officials with the company started to see the benefits of combining the services planned for Hogan Court with a similar project that was planned to be built in Bayers Lake.

The combined site frees up the land in Bayers Lake for another health-care use. The Hogan Court facility will host people in hospital beds who no longer need acute care but cannot return home because they're either awaiting a long-term care placement or still recuperating.

"Integrating the two buildings, really for us, meant that it would be a better place for everyone," said Shannon.

Although final details about the arrangement are still being discussed, the government is permitting Shannex to take over construction work, which will begin next month.

Costs, operations contract still being finalized

Officials said final costs will be released when the deal is done, although they said Friday that estimated construction costs per room are $675,000. Using that math, the second building with 110 beds could cost $74.2 million.

Health Department officials say their calculations based on the Shannex proposal showed that the per-room construction cost could be about $115,000 less than those in recent tenders for long-term care rooms.

Funding for construction would follow a similar model to what's used with long-term care homes, with the provincial government paying off the cost over a period of time. Along with those negotiations, the company and government are working on a long-term operations agreement.

Shannex officials said they're asking for a 25-year contract.

There will be about 450 full-time and part-time staff at the facility, including 50 full-time registered nurse positions and 25 full-time licensed practical nurse positions.

Shannon said renovations on the first building will be complete and patients will be inside by the end of the year. He expects construction will be complete on the second building and patients will be inside in April 2026.

'Our teams are ready to go'

He's confident in those estimates, given the company's long history of building long-term care homes. Construction teams that have been working on projects outside the province will begin work here next month, said Shannon.

"Our teams are ready to go," Shannon said.

The two transitional care units were part of a major health-care infrastructure program the Tories announced in late 2022. Since then, however, the Hogan Court site has produced frustrating outcomes.

An internal report by a health-care architect said the former hotel site would not be able to care for certain types of patients, even with major and costly renovations.

Renovations were supposed to be complete and the building occupied earlier this year. A report last month by the auditor general revealed that the government did not follow best practices in its work to buy the building and that $81 million in untendered contracts that did not follow protocol were part of the development process.

The operations contract for Shannex was the largest of those contracts, but the government also spent $3 million on work to prepare the property in Bayers Lake. Officials said Friday that those plans would now be put aside.

No decisions have been made yet for how the Bayers Lake property will now be used.

Opposition leaders left with questions

Thompson noted that the addition of the second building at Hogan Court would address concerns about the ability to house certain types of patients, including those with mobility and cognitive issues.

Liberal Leader Zach Churchill said Friday's announcement amounted to Shannex bailing out the government.

"I think it's clear that the government's original plan for this wasn't a good one," he told reporters.

"[Shannex] obviously saw an opportunity here and some gaps in what the government's initial plan was and I think it's smart for them to take advantage of it."

He said he hoped the company could take what's been a negative story for the government and turn it into a positive situation.

NDP Leader Claudia Chender said she supports the transitional care model, but she's not sure why the private sector can do the work more efficiently than the public sector. She's also unsure what it will mean for overall costs.

The Tories have little to show so far for all the health-care announcements they've made, she told reporters.

"Why can't the provincial government get anything off the ground? Why can't this government, that is dedicated to building health care — to fixing health care — actually get anything fixed or built?"

Friday's announcement comes the week before MLAs on the legislature's public accounts committee are scheduled to discuss Auditor General Kim Adair's report on Hogan Court. That meeting was delayed by a month after senior government officials scheduled to testify told the committee last month that they would not be available until the end of March.