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Hello and goodbye: Vitals is selling Malta hospitals concession to American company

Just 21 months after securing 30-year lease to operate Gozo, St Luke’s and Karin Grech hospitals, Vitals Global Healthcare is selling its concession to Steward Healthcare

kurt_sansone
Kurt Sansone
21 December 2017, 8:57am
Health Minister Chris Fearne (right) and Vitals Group Healthcare director Ram Tumuluri
Health Minister Chris Fearne (right) and Vitals Group Healthcare director Ram Tumuluri
It was a short-lived relationship with Malta for Vitals Global Healthcare after the company is now on the verge of selling its concession to US-based Steward Healthcare.

MaltaToday is informed that talks between the two companies have been going on for almost a month and the deal is now imminent.

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Steward Healthcare set up a Malta company last November, soon after the departure of former CEO Armin Ernst from Vitals.

Ex Vitals CEO Armin Ernst is believed to have attracted Steward Healthcare to Malta
Ex Vitals CEO Armin Ernst is believed to have attracted Steward Healthcare to Malta
Ernst had returned back to the US and is understood to have convinced Steward Healthcare to buy out Vitals in Malta. Ernst is now employed by Steward Healthcare.

Steward Healthcare describes itself on its website as “the largest private hospital operator in the United States” and operates 36 community hospitals in 10 US states. The company employs approximately 37,000 people.

It is understood that the government sat on the deal to ensure all concession obligations would be adhered to by the new company.

In March 2016, Vitals had concluded a 30-year lease agreement with the government to operate the Gozo, St Luke’s and Karin Grech hospitals.

VGH was entrusted with revamping the St. Luke's (pictured), Karin Grech and Gozo hospitals
VGH was entrusted with revamping the St. Luke's (pictured), Karin Grech and Gozo hospitals
The company had to invest €220 million over the following two years to transform the hospitals into state-of-the-art facilities to attract medical tourism.

As part of the public-private partnership, the government bound itself to buy a number of beds to be used as part of the public healthcare system.

The deal was mired in controversy since the company behind Vitals, Singapore-based Oxley Capital, had no background in the health sector. Additionally, the government had kept the deal under wraps and when it did publish it, certain parts, deemed to be of a commercial nature, were blacked out.

As part of the concession agreement, all 1,600 employees working at the three facilities remained on the public payroll. Additional employees that were to be taken on in the future had to be employed directly by VGH.

According to the Budget 2018 estimates, the hospital concession agreements with Vitals to run the Gozo and Karen Grech hospitals will cost taxpayers more than €40 million.

The government will be paying the private company €28.2 million for the running of the Gozo general hospital in 2018, which represents an increase of almost €16 million on the amount government is expected to fork out by the end of 2017.

The concession agreement for the Karen Grech rehabilitation centre is expected to cost taxpayers €12 million next year, an increase of €8 million on what government will fork out this year.

The Nationalist Party lambasted the new deal as a confirmation of the failure of the PPP with Vitals, and dubbed the government an "incompetent" over the privatisation "caprice".

"Once again news of the sale of the hospitals' company Vital creates uncertainty amongst workers and the patients in these hospitals. This fiasco confirms what the PN always said from the very start, that the healthcare sector is too important to hand it to a company with hidden beneficiaries and without proven experience.... This agreement will have cost over €2.1 billion of taxpayers' money."

In a statement, the government said the agreement would continue to deliver "free and world-class healthcare facilities in Malta and Gozo". It said it was assured that the projects started by Vitals Global Healthcare will all be delivered as stipulated by the original contracts.

"The agreement between Vitals Global Healthcare and Steward Health Care guarantees the continuation of work started by the former, in line with the standards the government set out in the PPP agreement. The agreement will be preserved in its entirety. The insertion of a new operator in our healthcare system will in no way affect its main pillar: our healthcare service was and will remain free. In addition, Steward Health Care is bound, as was VGH, to retain the same conditions of work for all staff.  Furthermore, all agreements with unions will be retained."

kurt_sansone
Kurt Sansone is Online Editor of www.maltatoday.com.mt. He was formerly deputy editor of ...