The US company taking over the running of three State hospitals will have to absorb a €900,000 loan the previous concessionaire had taken out, along with a number of other debts, industry sources said on Saturday.
Steward Healthcare will be in Malta to take over the running of the St Luke’s, Karin Grech and Gozo General hospitals from Vitals Global Healthcare on Tuesday.
Industry sources said that the US healthcare giant had been left with no choice but to take on hefty debts left behind by Vitals after the latter started facing mounting financial difficulties.
One such debt is a €908,000 loan that Vitals took out from AgriBank plc, a Malta-based bank specialised in lending money to British farmers.
Sources on Saturday said the loan was believed to have been taken out to help facilitate VGH’s day-to-day operations and make good on outstanding debts after it experienced cash flow problems.
The loan has raised eyebrows, particularly as it places the 30-year concession agreement to run the three hospitals as collateral. This, financial sector sources said, theoretically meant that if Vitals failed to repay its loans, the entire concession agreement could be put up for auction by the bank to make good on the deal.
Other industry sources however played this down as “not necessarily unusual”.
“This has been known to happen in concessions. The real issue would be whether this loan was taken out due to serious financial problems and if these existed before the party entered into the concession agreement,” one source said.
News of the loan was broken by journalist and blogger Manuel Delia, who put a copy of the hypotec up on his blog Truth Be Told on Friday. The document carries the date of December 21, 2017, the same day the government announced the deal with Steward. Questions sent by this newspaper to Vitals, the Health Ministry and Tourism Minister Konrad Mizzi, who had signed the hospitals over to VGH, were not replied to by time of writing.
Questions on VGH’s finances and performance have been met with scant replies in recent weeks. Just last week the Times of Malta reported how the government was dodging questions on the €9 million performance guarantee VGH had bound itself to make soon after signing the hospitals agreement in 2015.
It was still unclear whether Vitals actually honoured its commitment given its financial situation, health industry sources said.
When asked for explanation and for proof that Vitals did in fact make the bank guarantee covering the government in the eventuality of any mishaps in the contract’s implementation, the Health Ministry failed to reply.
Dr Mizzi later assured journalists at a press conference that the guarantee had been made.