Vitals: They came, they saw, they conquered… and left

The arrival of a renowned American healthcare group to take over the concession agreement from Vitals is good news but the early exit of the company that was to deliver three state-of-the-art hospitals has also raised questions

An artist's impression of what Vitals promised to build in Gozo
An artist's impression of what Vitals promised to build in Gozo

Health Minister Chris Fearne appeared a happy man on Thursday morning as he confirmed the takeover of the Gozo, St Luke’s and Karin Grech hospitals by Steward Healthcare.

The American company had finalised an agreement with Vitals Global Healthcare for the complete takeover of the hospitals concession at 9.30pm the day before.

Steward will be taking over the 30-year lease granted to VGH by the government in March 2016 with all the conditions attached to it.

But why was Fearne a happy man?

Steward Healthcare is a medical group that runs 34 acute care hospitals across America and is also the largest privately held, for-profit healthcare company. Unlike VGH, the new outfit has a medical track record that inspires confidence.

“This is a positive development… and for those who may have doubted the public-private partnership deal on the basis that VGH had no healthcare background, Steward Healthcare run more than 30 hospitals,” he said, when speaking to me across the boardroom table at the ministry in Valletta.

Fearne briefed journalists individually on the developments after the news of VGH’s sell out broke on this portal and others.

Health Minister Chris Fearne: It is a private deal (Photo: James Bianchi/MediaToday)
Health Minister Chris Fearne: It is a private deal (Photo: James Bianchi/MediaToday)

As a health professional himself – before getting elected to Parliament Fearne was a paediatric surgeon – the minister could appreciate the importance of having a company with a healthcare tradition.

But Fearne insisted he had no idea of the price tag demanded by VGH. “It is a private deal between the two companies and my job as Health Minister was to ensure that all conditions linked to the concession agreement are respected by the new owners,” he insisted.

The minister explained that VGH acted within the parameters of their contract with government. The contract allows a change of ownership in the first five years of the concession period as long as the government consents.

“We gave our consent because Steward Healthcare have a track record in the medical field,” Fearne said.

However, he remains cautious when asked whether the original agreement with VGH was a judicious move, given the opaque nature of the company and its lack of background in healthcare.

“When the request for proposal was issued, Steward did not bid and VGH were the best of the lot,” Fearne said.

It was a short reply and possibly with good reason. Fearne was not yet involved as a cabinet minister when the VGH agreement was being concluded. It was his predecessor, Konrad Mizzi who championed the public-private partnership after taking Godfrey Farrugia’s place as health minister.

Konrad Mizzi championed the VGH deal
Konrad Mizzi championed the VGH deal

But today’s elation at the arrival of a large US medical group does justice to the varied voices of concern, including by the Opposition, expressed when VGH was roped in to redevelop and run the three State hospitals.

The company’s shareholders were investment funds that ultimately led to the Singapore-based Oxley Group, an equity investor. The deal continued to raise suspicion when Panama Papers broke and Konrad Mizzi and the Prime Minister’s right hand man, Keith Schembri, were discovered to have opened companies in Panama soon after the 2013 election.

The multi-million lucrative deals Mizzi captained in the health and energy sectors suddenly came under renewed scrutiny.

However, government had also kept the concession agreement under wraps and when it did publish it, clauses deemed to be commercially sensitive were blacked out.

VGH was to make money from medical tourism and also from government payments for beds procured for use in the public health system. Government will have to fork out millions of euros as part of the deal.

This arrangement has always been defended by government on the basis that the capital injection of private funds would deliver state-of-the-art hospitals in Gozo, St Luke’s and Karin Grech that would create a new tourist niche while providing the public health sector with more beds.

It is unclear whether VGH ran into financial difficulty but the project appeared to have dropped a gear.

The construction of the Bart’s medical school campus in Gozo, which will eventually form part of the general hospital there, missed its deadline and the government had to fork out money to transform part of the Gozo sixth form as a temporary location for Bart’s to function from.

Fearne acknowledged that some aspects of the project had slowed down but insisted Steward were willing to prioritise those areas.

The underlying question remains: Did VGH make a killing from the concession agreement after just 21 months?

VGH's sell out to Steward Healthcare comes with an unknown price tag
VGH's sell out to Steward Healthcare comes with an unknown price tag

The price tag of the deal with Steward remains a mystery for now and Fearne insisted the government did not take a cut from the profit, if there was one.

“My job was to ensure that what was originally agreed is adhered to. Worker conditions will remain the same, the country will get improved facilities at the three sites and patients on the national health service will not pay for using beds procured by the government,” he said.

But for some, VGH’s early exit comes too close for comfort and although Steward appear to be a better proposition by far, it does raise questions as to why no healthcare companies proper submitted a bid when the government issued the request for proposals.

Was enough international scouting done to attract healthcare companies to the Labour government’s idea of a private-public partnership or was VGH a done deal?

What VGH has certainly done is a Julius Caesar Mark 2: Veni, vidi, vici… relinquo.

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