FAQs

BHB has implemented a plan to ensure we can meet the payments to our private partner. BHB is funding payments for the new facility through government-approved fee increases, internal operational savings and a contribution from the Bermuda Hospitals Charitable Trust (BHB’s independent fund-raising arm).

The cost to upgrade the existing KEMH will be borne by BHB itself. The construction cost of the new facility will be borne by BHB’s private partner. BHB will only begin repaying the private partner after construction of the new facility has been completed in accordance with BHB’s specifications, in 2014.

After the building is complete, BHB will pay the private partner back over 30 years. The payments include the cost of financing, construction and construction management as well as the cost of maintaining the new facility. The payments for the thirty years are set at the point the contract is agreed, prior to construction.

BHB has approval to construct new space to house various acute care services, including 90 single-patient rooms, a new emergency department, diagnostic imaging, ambulatory care services including oncology, same-day surgery and dialysis, and a central utility plant over the next several years on the King Edward VII Memorial Hospital (KEMH) site. At the same time BHB will upgrade the existing hospital building. Together, the new and upgraded facilities will offer the additional acute care space required to provide Bermuda with the acute care services it needs. The entire project is called the KEMH Redevelopment Project.

The Johns Hopkins Medicine International (JHMI) Phase II Report reviewed BHB’s 2005 Estate Master Plan and advised that Bermuda needed more space for its acute care services in order to provide the quality and range of services Bermuda requires over the long term. The report is available in full on this website.

The newly constructed space will contain 90 single-occupancy en suite rooms. This standard of care is in line with international leading practice to help prevent the spread of infection and improve patient dignity, privacy and comfort. The new facility will house a larger emergency room and a diagnostic imaging department. Out-patients will have new areas to provide convenient access to testing, treatments and educational advice. A new central utility plant (CUP) will also be contained in the new facility, which provides services like chilled water, steam generation and waste treatment. It will handle the needs of both the renovated and the new facility. Once complete, the new build will allow BHB to re-assign space in the renovated KEMH building. This gives BHB more options in terms of providing high-quality health care to our patients.

BHB hired KPMG, a leading financial services firm, to develop a business case that, among other things, assessed traditional and Public Private Partnership (PPP) delivery models for the new build. The delivery model KPMG recommended is a form of PPP called Design, Build, Finance and Maintain.

Following a competitive procurement process, BHB will enter into an agreement with a preferred private partner. This is a way of managing very complex project risks around a major construction project so that no one group bears the full risk of the project, and responsibility for certain risks is placed with either BHB or the private partner, whichever is best placed to manage them.

In this project, the private partner assumes most of the design and construction risk associated with the project. For example, cost over-runs would be borne by the private partner, not BHB or Government.

BHB retains ownership and control of all land, buildings and all clinical services.

A Request for Qualifications (RFQ) was issued on schedule on 29 June and closed on 19 August 2009. After an extensive evaluation, three bid teams were shortlisted from the evaluated submissions. A Request for Proposal (RFP) was issued to shortlisted bidders on the 23 December 2009, on schedule.

The preferred private partner will be selected following a rigorous and competitive process based on international procurement best practice, and the partner offering the best value to BHB and Bermuda will be selected.

To view the shortlisted bid teams´ membership, please see the press release on this site "BHB Releases Request for Proposal to Shortlisted Bidders" dated 23 December, 2009.

Local:

– KPMG—business and finance

– Conyers & Associates—architecture

– Onsite Engineering—engineering

– Bermuda-Caribbean Engineering Consultants—town planning

– Atlantic Building Consultants—quantity surveying

– Conyers Dill and Pearman—legal

International:

– KPMG—business and financial

– Mott MacDonald—clinical

– Stantec—technical

– Davis LLP—legal

Following a competitive procurement process, BHB expects to enter into an agreement with a private partner late in 2010, which would be followed by groundbreaking. It is expected that the first patients will be served in the new facilities in 2014.

o Request for Qualifications (RFQ) issued: summer 2009 (COMPLETE)

o Request for Proposals (RFP) issued: late 2009 (COMPLETE)

o Proposals submitted and evaluated: summer 2010

o Preferred bidder named: fall 2010

o Commercial/Financial close: fall 2010

o Design and construction: winter 2010 ‐ winter 2013

o Operating phase commences: 2014

PPP stands for Public Private Partnership. Essentially it means BHB will enter an agreement with a private consortium (“partner”) to develop the new facilities at KEMH for a period of 25 to 35 years. This is a way of managing the very complex project risks around a major construction project so that no one group bears the full risk of the project, project risks are allocated to the party best able to manage those risks and all parties are focused on delivering quality buildings on time and on budget. KPMG has developed a business case which assesses the delivery options and recommends PPP as the preferred delivery model.

The particular form of PPP that is to be used is called Design, Build, Finance and Maintain (DBFM). The DBFM delivery model was chosen for the development of the new facilities after a rigorous assessment. Some key benefits of DBFM are:

- The first payment for the new facilities is in about five years, once the buildings are completed to BHB’s specifications

- Many of the risks associated with the project are largely transferred to the private partner, including potential construction delays or cost-overruns

- The new buildings are constructed to BHB’s performance specifications which means it will meet Bermuda’s long term healthcare needs

- BHB retains ownership of the facilities and maintains direct control over all operations that touch the patient, allowing BHB to improve patient care

- Payments are spread over many years, easing the financial burden of such a large project on the island’s population.

- The quality of the buildings are maintained by the PPP partner at a mutually agreed standard over a lengthy concessionary period, giving the partner a vested interest in building quality facilities

This is Bermuda’s first DBFM project and Bermuda Hospitals Board considers it a flagship for other infrastructure projects in Bermuda that are suitable for PPP delivery.

The Project Board that will advise BHB regarding the addition of new facilities at KEMH is chaired by BHB Chairman, Mr. Herman Tucker. Mr. Tucker’s role on both Boards establishes a clear and strong line of authority through the BHB to the Ministry of Health, underlines the importance BHB places on the governance of the building project and will instil confidence in the international PPP bidders market. Other Board Members are Mr. Warren Jones, Permanent Secretary, Ministry of Health; Mr. Anthony Manders, Assistant Financial Secretary, Ministry of Finance; Mrs. Wendy Augustus, Executive Director of the Bermuda Hospitals Charitable Trust and Mr. David Hill, CEO of Bermuda Hospitals Board (non-voting).

BHB is currently in Phase 1 of the KEMH Redevelopment Project, the project initiation stage. BHB is in the process of identifying clinical advisors, with other advisors still to be sourced. Phase 2 will include further developing the output specifications, developing commercial terms for the project and planning the overall procurement strategy.

We are about two years away from groundbreaking. Between now and groundbreaking, BHB will finalize clinical and technical specifications and undertake an international selection process to identify the private partner that offers the best value to Bermuda.

Phase 1 Spring 2009 - Project initiation • Set governance structure • Establish project development plan • Assemble project team

Phase 2 Summer 2009 - Develop business, regulatory and procurement model • Resolve policy, commercial, technical and legal issues • Refine project definition • Develop proposed risk allocations, payment mechanism etc.

Phase 3 Summer 2009 - Drafting • Project agreement, procurement documents, technical specifications

Phase 4 Summer 2009 - Request for qualifications

Phase 5 Autumn 2009 – Summer 2010 - Request for proposal and selection of preferred bidder

Phase 6 Autumn – Winter 2010 - Transaction finalisation and closing, groundbreaking

First of all to review our Estate Master Plan which was drawn up in 2005. We then asked Johns Hopkins to recommend a phased development of our acute care hospital site over the long term. They also revisited the option of renovating our current facility and building new patient wings as a possible shorter term project to ensure that we can provide the quality and range of healthcare services needed by Bermuda.

We now have a long term development plan for KEMH, and the overall Estate Master Plan has been structured as a series of smaller projects which is more manageable for BHB and Bermuda.

The first improvements will be the renovation programme at KEMH, most significantly our four medical and surgical wards. We are still right at the start of the new build project, and expect to be about two years away from breaking ground.

We are at least 18 months away from final designs, because we are at such a preliminary stage of the new build project. We need to establish a project team, undertake detailed studies of our site and find a developer.

The construction costs of the new builds (the Ambulatory Care Centre, Patient Tower and Central Utility Plan) are estimated to be about $260 million. Renovations to KEMH will cost about $55 million.

Our plan is to renovate MWI over time. Areas of MWI such as the new Child & Adolescent Services wing have shown what can be achieved. Now that the review is complete we will be working on a plan of renovations, which will be funded by Government grant over time as the renovations at MWI today are.