‘No one has ever lost money doing business with the government: it’s too stupid and has too much money’. Debatable? Maybe so. But somehow I don’t think Vitalis Global Healthcare (VGH) would bother to argue the toss.
VGH is the company which (with surprising speed?) successfully tendered to run three State-owned hospitals. It has now apparently surrendered – that is to say sold – this multimillion 30-year (going on 99) government concession to Steward Health Care. And it has done so for an undisclosed sum of money, barely two years into the original grant.
All signs seem to indicate that the original deal between the government and VGH was never intended to go anywhere and was nothing more than a smokescreen: a lucrative and profitable stepping stone for VGH to rake in a handsome profit and then disappear over the blue horizon.
It looks increasingly like VGH never intended running any kind of hospital, let alone committing to one for 30 years, which could explain (1) why VGH apparently signed a Memorandum of Understanding (MoU) with the government even before it had won the tender; (2) why the original contract made provision for the sale of the concession within the first five years; and (3) why the ultimate beneficiaries of VGH have remained unknown and will undoubtedly never be discovered.
Another clause in the contract (previously denied or unconfirmed or kept secret) seems to give the company the unilateral right – at least in the case of St Luke’s Hospital – to extend the 30-year grant for a further 69 years. So, 30 years suddenly become 99! Which looks like a deceptive 99.99 per cent deal.
More worrying still is that St Luke’s – which might not even be strictly bound by the agreement to operate as a hospital – is now entirely out of the government’s control. Not so Karin Grech and the Gozo General Hospital, although that’s not as good as it sounds. Yes, the government does retain a measure of control, but only at the end of those 30 years, when it can avail itself of the right to reverse the titles and buy both hospitals back for a cool €80 million. That’s roughly 12 times the value of the ground rent that the company would have shelled out to successive governments over the 30-year period of the concession!
What the VGH saga demonstrates, apart from profligate indiscipline with public money, is that gargantuan profits will be made at the taxpayers’ expense. More and more I am of the opinion that a nation’s health is far too serious a reality to be entrusted so unguardedly to private companies obsessed with (and effectively dictated by) profit-margins and shareholders.
You can see how governments fall for it – those at least committed (rightly!) to a healthcare system free at the point of delivery, according to need: the bedrock of any civilised modern country. Public funds therefore should be collected assiduously and spent well, and not be allowed to cascade lavishly into the pockets of lucky-chancing developers and shady entrepreneurs.
What the VGH saga demonstrates, apart from profligate indiscipline with public money, is that gargantuan profits will be made at the taxpayers’ expense
So we need to know, in full, the identities of all such persons, and the names of the politicians and public servants who deal with them, directly and indirectly. At every stage too there must be transparency and accountability. All facts and figures, all deals, must be out in the public domain from day one.
Yes, there need to be clear rules about how privatisation should work, and how the State should go about its dealings with the private sector. Can public services ever be made profitable as well as efficient when entrusted to market-driven commercial forces?
The challenge of finding the ideal mix of public sector loyalty and private sector incentive has bedevilled state procurement since the dawn of time. Parastatal companies are not true private entities. A fully booked luxury hotel is not the same as an overcrowded privately run public hospital. The former rides a wave of maximised profits, the latter drowns in austerity and tight budgeting. And if the guests don’t come, the hotel simply goes bust; while the hospital (still overcrowded) has to struggle on and on. And if the struggle continues indefinitely, we reach the point where the hospital’s collapse becomes both inevitable and unthinkable, and the collapse of the company running it equally so.
The recent collapse of Carillion – one of the many private companies running public services in the UK – is being viewed as one of Britain’s biggest corporate failures, jeopardising hundreds of large projects, putting smaller sub-contracted companies out of business and forcing the government to step in to guarantee vital public services.
Some things, you see, just cannot be allowed to fail and the private companies know this. Yes, they’ve got a good deal in any country that’s happy to privatise their profits and re-nationalise its own losses. Only in the case of VGH, it seems things didn’t need to reach that kind of endgame. VGH got out on the ground floor. Did it see the writing on the wall? Or, all along, did it merely speculate and sell the contract up the food chain at a tidy profit?
And what about Malta in all this? There is I think one central question to be asked. Who agreed these contracts and why? There is also an important lesson. Hopefully not too painful and humiliating, it can only be learned once the ins and outs of the VGH debacle are fully known, rigorously examined and conclusions drawn. We await that day.