Photo: RNZ/Tess Brunton
A private company that builds hospitals is putting its hand up to play a part in Dunedin's beleaguered public project.
The government is looking at cutting back the scope of the new hospital or breaking it into more stages to deal with cost blowouts.
Vital Healthcare Property Trust already leases some small health facilities to the government, and owns a couple of billion dollars worth across the Tasman.
Its fund manager Aaron Hockly told Morning Report it was willing to be part of the Dunedin solution.
Vital Healthcare interested in Dunedin Hospital
"We could certainly look at breaking up part of this project, acquiring part of it and leasing that back to the government for a very long term," he said.
"There'd be a whole range of contractual projections for the state, and essentially they would pay us rent."
Vital was not able to take on a billion-dollar build, but could do to $100 million, plus "there's a number of other players that may be willing to work with us on that as well".
The government would benefit from Vital's objective experience of best practice construction.
The idea to break the project up further into stages was a good one, in the face of especial resource and skill challenges at a regional build like Dunedin, Hockly said.
A build-leaseback deal might end up more expensive in the long run, he said.
"The government would need to go in with eyes wide open.
'It could be by mixing public and private together ... typically you have a cornerstone government tenant, that pays a lower rent and then you go up the chain, with higher private providers, higher costs for specialists, and so essentially the state is subsidised by private operators."
Vital's model was not the same as a standard public-private partnership - "we're a classic landlord".
By contrast, in a PPP the Crown owns the hospital asset and pays an annual fee to what is usually a consortium of builders, financiers and asset managers, to construct it then run it for 25 years. For instance, Transmission Gully motorway costs the Crown about $100m a year for a private consortium to run.
In recent days, senior government members have been asked using PPPs at Dunedin.
Infrastructure Minister Chris Bishop was non-committal when asked if a PPP might build the $45m new pathology block that is not part of the $1.88b project, saying last week, "There have been suggetions of that. We have got to grapple with that".
Act MP Simon Court who is in charge of redesigning the PPP model, said health projects needed to be part of that move, though "it may not necessarily apply to Dunedin".
He was charged with making a model to "make it much easier" for projects to use PPPs.
For the Inpatients block at Dunedin, which the Otago Daily Times has reported the main contractor is now having to be part of retendering over, things may be too advanced to change to a PPP.