St Philip's Hospital is to be leased to the government for eight years with the government holding an option to buy the facility, the Finance Ministry has confirmed.

The hospital, in Sta Venera, belongs to Frank Portelli. It closed some time ago and the government intends to use it for operations and rehabilitation, easing the load from Mater Dei Hospital.

It intends to raise bed capacity to over 200, doubling its current capacity.

The hospital has four operating theatres and MRI equipment.

In its statement, the ministry said that it has the option to buy the hospital at the end of every year, from the third year up to the eighth year. The purchase value after three years inclusive of all lease payments has been calculated on the final negotiated price of €12.4 million, with the first option to buy at year three starting from €11.3 million to €9.8 million on the eighth year. The annual lease cost starts from Euro 825,000 per annum.

"Following an Expression of Interest issued by the owners of St. Philip's Hospital, the Ministry of Health expressed interest in acquiring a hospital which allows for the occupation of the facilities without the need for any major infrastructural works. Following extensive negotiations with the owners by a joint negotiating team between the Ministry of Finance and the Ministry of Health, the above agreement has been reached. This arrangement gives full flexibility to the Ministry of Health to make use of 110 beds within a short period of time," the ministry said.

The value of the property was based on a detailed valuation that was carried out by the technical team of the Foundation for Medical Services (FMS) that took into consideration the state of the property, equipment and development potential.

"The decision to consider the St Philip's facility was based also on the lower cost it offered to the public purse in developing the originally planned 280-bed rehabilitation facility. The overall assessment indicates that expanding the rehabilitation requirements with St. Philip's Hospital would be a cheaper option than to build all the facility from scratch. However, since this requires a development permitting process that has a number of uncertainties, the Government thought it wiser not to make an outright acquisition, but only to do so if the planning process allows for the facilities' expansion"

The ministry also referred to press reports claiming that this agreement would cost Government €20 million. This was the original asking price by the seller, a price which was significantly lowered by the negotiating team, the ministry said.

With reference to comments on public acquisitions' requirements and that Government was not following the regulations on procurement, the ministry pointed out that according to Regulation 17(1)(f) of the Public Contracts Regulations (Legal Notice 296/10), these regulations are not applicable to the purchase or rental of land, buildings or property rights. The acquisition of the St. Philip's Facility has been approved by Cabinet.

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