FILE PHOTO - Royal Inland Hospital.

(ASHLEY LEGASSIC / iNFOnews.ca)

Directors at the Thompson Regional Hospital District were not pleased with a surprise cost overrun at Royal Inland Hospital, probing Interior Health officials on how it happened.

Renovations on older sections of the hospital were supposed to cost $53 million, with work beginning after the new Gaglardi Tower opened. That more than doubled by November 2023 to $107 million.

Interior Health came asking the hospital district for its traditional 40% contribution, looking to have Thompson region taxpayers cover $16 million of the bill.

"Somebody signed off on these expenditures. Was that the province? Because perhaps this should be on the province, not this board," hospital district director Michael Grenier said the meeting today, March 21.

Interior Health and the province were aware of the cost overruns for months. Regional district staff noted it was hinted at during a previous hospital district board meeting more than a year ago, but no dollar figure was attached and there was no indication of how much the work might cost beyond its budget.

At the time of the fall 2022 meeting, it was simply referred to as "inflationary pressures," staff said.

It was a year later when the hospital district learned just how much the project went over budget, with those details finally becoming public this month.

"Apologies are great, but are steps being taken internally to ensure that we are never put in this position again?" hospital board director Barbara Roden said. "Because I'm sure you don't like being here with your cap in hand asking for money anymore than we don't like being asked for it."

She was one of multiple directors who questioned by Interior Health and the province were able to mull the project that went millions of dollars over its budget, while the hospital district, funding nearly half of the construction, was in the dark.

"That's a lot of money. It's a lot of money on top of our tax requisitions that our residents already get from their municipalities, from the Thompson Nicola Regional District, and now the cancer centre, which everybody desperately wants," she said. "We just want a sense it will not happen again."

The multi-phased project was approved in 2016, starting with the patient care tower, now called the Gaglardi Tower. That was done for around $340 million, but it was on a fixed contract, Sylvia Weir, Interior Health's chief financial officer said.

The second phase, which includes renovations in multiple areas around older parts of the hospital, includes multiple contracts that exploded in costs due inflation and labour pressures after the COVID-19 pandemic, she said.

"I've been in the construction industry for 25 years and I've never seen anything this bad. The construction market is a beast right now," Weir said. "In terms of communication, I think that can always be improved."

The board ultimately approved a budget that will see residents across the Thompson Regional Hospital District pay 25% more in taxes over five years.

That will help fund several projects, like the cancer centre and an urgent and primary care centre at Northills Mall. It won't, however, cover the over-budget construction.

The 5% increase this year means the average $680,000 home will pay around $210 in annual hospital taxes, which is up $6 from 2023.

If the $16 million in added construction costs were included, it would have brought the 5% increase in 2024 up to 24.5%.

Instead of splitting capital costs with Interior Health by contributing 40%, the hospital district opted to give 37% in lieu of payment from non-Band residents in Tk'emlups. For the cancer clinic, the hospital district offered even less, contributing 35%.

Weird said Interior Health will have to make adjustments to its hospital renovations without the funding boost, while looking to BC Cancer for funding options on the cancer centre.

Board chair Mike O'Reilly said it was a fair balance, given what area residents can afford to pay. He said the Cariboo Chilcotin Regional Hospital District Board approved just 30% in funding for Cariboo Memorial Hospital last year.

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