More favourable terms should be sought in private public partnerships on residential long term care in spite of a prevailing disequilibrium between demand and supply, according to a National Audit report.

The report follows a performance audit focusing on the Żejtun, Mellieħa, Roseville and Casa Leone homes for the elderly.

The NAO said contractual arrangements were undertaken in an environment where various regulatory and policy limitations existed.

These circumstances precluded the more accurate projections of future needs, the development of new services and attracting more private sector investment in such a critical social dimension.

On a number of occasions, the department was constrained to enter into direct negotiations with suppliers, the NAO noted.

It said that although catered for in the Public Procurement Regulations, such circumstances stifled the potential benefits of competitive tendering.

“Competitiveness related issues become exacerbated as a major supplier has been entrusted with the management and operation of over three quarters of the long term care beds pertaining to the PPPs and “Buying of Beds” scheme.  

The PPP financing arrangements regarding the construction works at the Żejtun and Mellieħa Homes resulted in the department incurring estimated effective annual interest rates that substantially exceeded interest rates at the time of signing these contracts in 2003 and 2007, which could have been obtained through Government Stocks borrowing.

Opportunities to secure more favourable operational rates were similarly not always fully exploited as implied by the wide-ranging charges incurred at the four sampled Homes. Operational concerns also arose, as strong indications existed that the number of carers and nurses provided by home operators fell short of contractual obligations.

The NAO said both the PPPs and “Buying of Beds” scheme have their benefits and disadvantages and could be realistically considered in future policy developments.

However, the full potential of increasing and extending collaboration with third parties remained dependent on three core factors.

These included a robust policy and regulatory framework and organisational structure and capacity for the governmental entities responsible for implementing, nurturing and monitoring collaborative agreements with third parties to enable effective handling of the various complexities involved.

Such initiatives also had to comply with sustainability criteria in terms of encouraging further and more diverse private investment.

The full report can be read in the pdf link below.