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When the Tim Hortons at Newfoundland’s Health Sciences Centre opened in 1995, the hospital’s administrator predicted the shop would turn an annual profit of up to $300,000 and pay for seven nurses — or 11 support staff, or maybe even pay for the increase in chemotherapy drugs for cancer patients.

Instead, the coffee shop at the St. John’s hospital lost about $260,000 last year, offering what critics say is a cautionary tale of what can happen when the public sector gets involved in things better done by private enterprise.

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On Tuesday, the Eastern Health authority announced it would turn the location squarely over to the private sector, where the average Tim’s owner reportedly rakes in $265,000 in profits.

“Let me tell you why [the hospital franchise loses money],” Vickie Kaminski, the authority’s president and CEO, told reporters on Tuesday. “We charge you a buck-ninety-four for that large coffee, but we insist that the staff who are pouring the coffee are Eastern Health staff, and they get paid $28 an hour. No Tim Hortons pays that.”