It’s time to walk away from the cliff

It’s time to walk away from the cliff

Tim Thahane

THIS is an open appeal to the partners of Queen Mamohato Memorial Hospital (QMMH), the Government and Tsepong Consortium, to refrain from the sustained non-constructive negative publicity the hospital has been subjected to ever since it opened.

This publicity relates largely to internal issues  that should be solved quietly and amicably between the parties through deliberative negotiation rather that myopic posturing where each party appears to be playing to the gallery.

Since its opening QMMH, with its modern facilities and state-of-the-art equipment,has delivers affordable high quality health care services to many Basotho, especially the poor who cannot afford such expensive services in private hospitals in South Africa.

Yet QMMH has been plagued by negative publicity caused and fueled by disagreements among private shareholders of Tsepong Consortium. Instead of renegotiating the PPP Contract, the government itself appears to be joining in this destructive publicity.

Several pertinent questions should now be asked with a clear mind to understand the implications of what is happening.

What will Netcare do if this negative campaign continues? We should remember that Netcare has alternatives and is enjoying better environment in other countries.

Where should it run for cover with its wide experience of running large hospitals in South Africa, United Kingdom and elsewhere in the world? How should the many dedicated health care professionals it employs react to the bashing in the media? They can simply leave the toxic environment created because they have alternatives.

What will happen to the hospital if Netcare were to write offits investment in QMMH to reduce its reputational risk and walk away? Who will be the loser? QMMH is our highly prized national asset that delivers high quality health care services to all Basotho regardless of their economic or social status. We must protect, cherish and improve it instead of trashing it unfairly in the media.

This negative publicity is demoralizing and demotivating to the management their dedicated professional and non-professional staff. The media always gives wide coverage to the disputes between the partners and seldom find time orspace to write about the fantastic work that is being done daily to save lives and care for the sick.

QMMH was designed, built and financed through an eighteen (18) year Contractual Agreement between the government of Lesotho and the private consortium of Tsepong (Pty) Ltd. The Tsepong private consortium contributed funds as well as business, clinical and operational expertise to the project to ensure that government got value for money from the investment despite its limited resources. The Tsepong consortium is led by Netcare (Pty) Ltd,an experienced international company with successful hospital management and operations in the United Kingdom and South Africa.

In South Africa, Netcare operates Public-Private Partnership hospitals of Universitas and Pelonomi in Bloemfontein to which the old Queen Elizabeth ll Hospital used to refer patients. Netcare has an excellent 24 hour national Emergency and Evacuation services across South Africa and Africa. Private sector companies make extensive use of these services.

With Netcare as our partner, why can’t we negotiate and leverage these services rather than fight to a point where the company will walk away? Tsepong shareholders are diverse: Netcare (40 percent), Excel Health (Basotho Doctors in Lesotho) (20 percent), Afrinnai (Basotho Doctors in South Africa) (20 percent), Women Investment Company (10 percent) and Lesotho Chamber of Commerce (10 percent).

The contract says after three years Netcare will start giving the management to some of the locals and will begin diluting its shareholding after five years.

The capital expenditure for QMMH was about US$120 million (or M1.8 billion at today’s exchange rate). The government contributed 37.7 percent while Tsepong paid 62.3 percent made possible by Netcare’s guarantees and the government of Lesotho to Development Bank of South Africa which provided the loans. These financing arrangements demonstrate the positive contribution of the private sector under the PPPmodel.

Without this PPP arrangement, Lesotho would have found it difficult to finance QMMH project.

It is important to point out that because of the PPP arrangement construction of QMMH was completed on time and within budget. This also shows the efficiency benefit of involving the private company in the PPP compared to the traditional government construction projects which almost always experience delays and cost overruns. The private entity has been contracted to maintain the facilities and hand them back to government when the contract ends. Maintenance is the bane of government projects.

Three filter clinics at Ha Mabote, Qoaling, and Likotsi were also constructed/upgraded to reduce pressure on QMMH.  It was recognised at that time that Maseru will need its own district hospital. Another Gateway Clinic was built outside QMMH to triage patients who come directly to the hospital rather than go to the clinics nearest to their homes.

The government’s programme envisaged that, after 2 or 3 years of operational experience with QMMH under PPIP (Public-Private Integrated Partnership) three district referral hospitals, in Mohale’sHoek, Leribe and Maseru, would be rehabilitated/upgraded or new ones constructed through PPP arrangement. However, given this sustained negative publicity and apparent loss of trust between government and the private partners it may prove difficult to attract credible private sector operators for the three district hospitals. The private sector looks for stable predictable contractual arrangements including a clear legal and investment framework.

The question that is difficult to answer is: Why has the project generated so much controversy and negative publicity in Lesotho and so much praise from the international health practitioners and researchers?

Equally difficult to answer is why there seems to be a sustained effort to paint the hospital in bad light despite that it’s an excellent project that has been built in time, within budget and has saved government so much money in capital expenditure. Do the local media fully understand the project, its cost and benefits?

QMMH has been plagued by negative publicity and comments from people who know very little about PPPs and from people who should know better. It’s sad that people who should lead in finding solutions through quiet negotiations are now adding fuel to the raging fire.

This negative publicity began with personal accusations and recriminations because of broken trust and relationships among the Tsepong board members. The conflict even escalated to the courts.

Yet, the government which has been given ultimate responsibility for delivery of high quality health care to Basotho by the electorate, stood by and waited to see which of the parties would win, unaware that in that event, there may not be a partnership left but huge liabilities and legal fees to pay. This is how the cookie will crumble unless the government jumps to take its responsibility and seriously force the parties to resolve their differences.

 

By signing a PPP agreement, a government does not sign away its responsibility or national mandate to ensure that high quality health care services are accessible to all. Its priority remains that of ensuring that health care services are provided affordably and efficiently especially to the poor. Therefore if the disagreements among the parties are likely to affect the performance and delivery of these services, government has a duty to act decisively to bring the parties together and find a mutually satisfactory solution.

Much of the negative publicity that has befallen on QMMH can be traced back to some issues that can be resolved through dispute resolution mechanisms of the laws of Lesotho and in the precedents of a large body of international experiences with PPP’s. There are disagreements among board members of Tsepong (Pty) Ltd regarding the payment of dividends before they are earned. There is the managerial actions affecting individuals, whether professionals or auxiliaries, about their pay or their treatment by their supervisors for their inability to adhere to standards of performance. We also have individual patients who received poor services or care and relatives of patients who died at the hands of some professionals.

These issues have been generalized to the whole hospital as if they are the operational norm of the hospital. Even in the best hospitals in the world, some patients still, unfortunately, die because medical science cannot help them. This is not to say that there are no cases of negligence that management should address and that the Lesotho Medical Council should be on the lookout for.

The last of the main cause of this adverse publicity is the Oxfam Advocacy Report whose methods of data collection were questionable. The authors failed to interview those ministers who were at the centre of the decision-making processes in the rationale, selection, design, preparation, financing, tendering, construction, completion, and operation of Queen Mamohato Public Private Integrated Partnership hospital.

The report was distributed to all Oxfam offices in over 183 member countries of the World Bank group and the NGO community. No effort was made to sit down with us to discuss the financial model used or the managerial lapses in contract’s management by the government and the delays by the International Finance Corporation (IFC) to help Lesotho establish proper institutional Units to administer a large PPIP project like QMMH.

The goal of the Oxfam Report was not to help Lesotho fix any mistakes or weaknesses in the PPIP Contract but to fight its ideological battle with the World Bank and other donors. The motive is to keep the private sector out of the health care business even though PPP have been extensively used in the developed world and other developing countries. They want to see the globalization of the British National Health System, which has some very good points but is not affordable to poor countries like Lesotho.

The report tried to achieve this by using QMMH to allege that IFC imposed this costly project on the government. The government presumably did not know what it wanted or how it wanted to go about it.

The report however conveniently ignored that since the 1990’s PPP’s have been used in the United Kingdom, USA, Australia, continental Europe and Latin America to finance infrastructure including roads, bridges, power, airports,  schools, hospitals and telecommunications.

The total value of PPP investment in Europe from 1990 to 2006 totaled GBP 182.2 billion(or —in today’s exchange rate) in Europe and US$794.1 billion (or in today’s exchange rate) in developing countries. This shows the extensive experience globally that Lesotho drew on and could always draw on to resolve any problems it may have with its PPIP.

It is totally incorrect to say that the project was imposed on the Cabinet and government. The project was identified, selected, designed (approved), prepared, financed, constructed and launched by the democratically elected Basotho Congress Party (BCP) government in 1993.

BCP took power from the Military Junta that ruled Lesotho since 1986. The commitment to provide high quality care to all citizens and the replacement of the old Queen Elizabeth ll Hospital had been a key campaign platform of the BCP and it won all the seats in parliament except one.

But the project could not be built due to lack of funds. It remained on the books, unfunded until 2002.The Lesotho Congress for Democracy (LDC) government in 2002 decided to implement it.

As the new Minister of Finance and Development Planning I had to find funds.  I recommended to Prime Minister Dr. Pakalitha Mosisili that we use the PPP model to leverage the limited government funds. He agreed and we held a one- day workshop for the Cabinet at a local Hotel to learn more about the nitty-gritties of PPPs. We looked at the types, contracts, strengths, weaknesses and pre-conditions for success.

After the workshop the Cabinet decided to pilot the model by building the Ministry of Health Headquarters using a simple PPP Accommodation model. This was done successfully and Cabinet then turned its attention to the replacement of the referral Queen Elizabeth II Hospital by PPP.

IFC was selected as the Transaction Adviser and a joint team from the Ministries of Finance and Health formed to work with it and report to the Ministers of Finance and of Health, who in turn reported regularly to Cabinet. IFC guided the process and made recommendations to the joint Team of Officials but all project decisions at every stage were taken by the two Ministers of Finance and Health Social Welfare and the Cabinet.

QMMH is a valuable national asset for delivering high quality health services. Government and Basotho in general should be proud of it and cherish it. Basotho should build on its experience to extend services to the under-serviced areas in rural and urban areas instead of trashing it.  Regional hospitals to supplement QMMH are needed.

Policy makers in our region are envious of the quality of facilities, the state-of- the-art-equipment, and the professionalism of the staff that they see when the visit the hospital to see and study it. This is not to say that things are perfect at QMMH. But let us fix what is wrong and build on what is good to deliver quality care to all Basotho.

Researchers from Boston Medical Center in the US and from the Global Health Group at the University of California have found that QMMH delivers better clinical services than those delivered in traditional government-run hospitals.

Why, then, do we subject the hospital to this sustained negative publicity? What does the country and its people gain from this negative publicity? What does the world think of us? We built a good big thing but cannot fix small things that are not working well. No outsider will solve the problems QMMH faces. Let us sit down quietly, engage each other in serious deliberative negotiation and avoid myopic posturing and playing to the Galleries.

Netcare is a large international company that may soon be fed up and write off the project to reduce its reputational risk. Do we have a plan B is that happens?  I am afraid poor Basotho will be the losers.

It is not too late to retreat from the brink; sit around the table and quietly negotiate seriously to correct and improve the PPIP Contract without blaming anybody. There is enough blame to go around.

 

Thahane is former Minister of Finance and was involved in the QMMH project as minister. He writes his personal capacity.

 

 

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