Shannex contract to operate transitional care site could reach $2.7B

The Nova Scotia government could pay Shannex more than $2 billion over the life of the contract to operate a transitional care facility in West Bedford, a figure senior health officials say might seem large but will actually amount to an overall savings for the system.

“We’re quite pleased and proud of the work that we’ve done … to make sure Nova Scotians are getting value and best value out of this facility financially," Derek Spinney, chief financial officer for Nova Scotia Health, told the legislature's public accounts committee Wednesday.

"Most importantly as well is the 18,000 patient days that folks didn’t have to stay in a hospital."

Spinney and other senior members of the health authority and Health Department appeared before the committee to discuss the facility, which provides beds for patients who no longer need acute care or those who are awaiting a long-term care placement.

The site’s origins created controversy for the government, which bought what was an unfinished hotel construction site for $34.5 million and poured millions more into it to convert the building into a 68-bed health-care facility.

After being selected to operate the site on a five-year contract, Shannex made an unsolicited proposal to the government to buy the property, finish construction, build an addition bringing the number of beds to 178, and operate the facility once completed.

Spinney told the committee the agreement with Shannex is for 25 years, with a 10-year option after that. Based on a cost of $685 per bed, per day, and adjusted for inflation over the life of 35 years, Spinney said the total value of the contract could reach around $2.7 billion.

But he told MLAs that it’s also important to note the operation cost of a bed at the West Bedford site is about $300 less than an acute care bed in a hospital, meaning a savings of more than $1 billion over the life of the deal with Shannex.

“We need to put it into context,” he said.

MLAs heard that in the first year of operation, the wing with 68 beds has seen more than 400 patients pass through, including people who were able to wait for a long-term care bed without taking up space in a hospital.

“The impact on the system can’t be overstated,” Dr. Aaron Smith, the executive medical director of the health authority’s central zone, told the committee.

Spinney said the expansion Shannex is building is on track to accept patients on April 1. Construction cost is slated to come in at $114 million, down from the initial estimate of $120 million, and the province has been made whole for the money it put into the property prior to getting the offer from Shannex.

Opposition MLAs have raised concerns about the government’s decision to do a deal with Shannex without going to public tender. It’s a concern the province’s auditor general also raised in a 2024 report in which Kim Adair called the government’s purchase of the site a “highly unusual transaction.”

Officials acknowledged the approach introduced new risks, but insisted they were able to mitigate and meet them to deliver a good product.