Why were Vitals payments doubled before hospital sale was announced?
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Why were Vitals payments doubled before hospital sale was announced?

Health Ministry had Parliament approve €18 million increase

Minister Chris Fearne described the new concessionaire as “the real thing”. Photo: Matthew Mirabelli

Minister Chris Fearne described the new concessionaire as “the real thing”. Photo: Matthew Mirabelli

Days before the surprise announcement that Vitals Global Healthcare (VGH) were about to sell their multimillion-euro, 30-year government concession on three public hospitals, the Health Ministry obtained parliamentary approval to pay VGH an extra €18 million for 2017 over and above the €16.5 million already paid during the year, the Times of Malta can reveal.

The payment was approved by Parliament on December 18 as part of the budget appropriation Bill requested by the government for additional costs not budgeted for the year.

According to parliamentary documents seen by this newspaper, two line items in the Health Ministry vote were amended, increasing significantly the amount of funds to be transferred to VGH.

Line item 5862 increased the amount of public funds to be paid to VGH for the Gozo General Hospital for 2017 from the approved €12.5 million to €24 million.

In line item 5863 concerning Karin Grech Hospital, the government added another €6.7 million in payments to VGH over and above the €4 million budgeted and approved.

The approval was obtained during a parliamentary session in which the appropriation Bill was passed through all stages on the last day before the Christmas recess. The government approved an increase of €17.84 million to increase the annual payment for the concession to €34 million for 2017.

The PN Opposition voted against the increase in funds, as it voted also against the supplementary estimates.

The fees paid to VGH do not include the salaries and wages of staff at St Luke’s and Karin Grech Hospitals in Malta and the Gozo General Hospital, as they are paid directly from the public coffers.

The reason for doubling the payments to VGH for 2017 are unknown, and the explanation in the parliamentary document regarding the increase gives few details.

The government and VGH decline to give the cost, saying it was a private deal

The explanation appears incomplete. It reads: “As the year progressed, it transpired that the amounts shown, for which supplementary estimates are being provided, became due in terms of.”

Health Ministry reaction

Asked yesterday to explain the sudden increase in payments to VGH and to give a list related to the additional costs, the Health Ministry’s only response was that while “the costs in 2016 (€16,022,406) had covered the period as per contract ie, from June 1 2016, the 2017 payment (€33,555,815) had covered the whole year.”

The Ministry did not state why the additional funds were needed and which services were paid for out of additional public funds.

Late on Tuesday morning, after this story was published, the ministry said VGH was paid according to contract, but did not say what the contract provides for. The funds approved by Parliament are listed under 'supplementary estimates'.

It was only days after the increase of public fund payments to VGH that the news Vitals was about to sell its concession to Steward Healthcare – a US company – was made public.

READ: €1: The price VGH paid for three hospitals' contents

Asked to state why the government did not inform Parliament on the planned change of concession ownership when it came to increased payments to VGH, the Health Ministry also did not reply.

On December 21, the government said that a day earlier, a deal was signed for Steward Healthcare of the US to take over the Maltese concession agreement from VGH.

Lauding this last deal as an improvement upon what his predecessor, Konrad Mizzi, had signed with VGH in 2015, Health Minister Chris Fearne described the new concessionaire as “the real thing”.

He admitted that the government had been informed about this “transfer of business” weeks before and had given its written consent for it happen. Asked for a copy of the written consent, the Health Minister has so far not produced the document.

READ: VGH partner says it has to 'better understand' Steward deal

Both the government and VGH have declined to say how much the concession was sold for, with Mr Fearne saying that it was a “private deal”.

The Sunday Times of Malta said that despite a series of concession milestones which VGH had to deliver by specific time frames, including the building of a new medical school in Gozo and an increase in beds both in Malta and in Gozo, none of these had been adhered to.

Vitals is now claiming that this was due to the government’s failure to deliver on its promises to expedite the development permits needed.

Despite the government’s announcement about the deal with Steward, Vitals has now clarified that the deal is still at the negotiation stage.

Call to scrutinise ‘with urgency’

The Nationalist Opposition yesterday called upon the National Audit Office (NAO) to scrutinise with urgency the latest developments in the private-public partnership agreement entered into between the government and Vitals Global Healthcare.

In a letter to the NAO, the three PN MPs sitting on the Public Accounts Committee – Beppe Fenech Adami, Claudio Grech and Kristy Debono – said the Opposition was seriously concerned that public healthcare was being rendered a commodity to trade with by the government.

The MPs said that the NAO should scrutinise the deal between VGH and Steward Healthcare, approved by the government, as it involved the payment of millions in public funds for the provision of essential healthcare facilities to the Maltese public.

Addressing a press conference, the PN harshly criticised the deal, saying the latest developments showed the deal struck by former health minister Konrad Mizzi was not in the public interest.

The government cancelled out many important details of the deal when it published the concession agreement document in Parliament.

At the time, following pressure from the Opposition, the government said it had passed on the whole agreement for investigation by the NAO last year.

The National Audit Office is still investigating the agreement.

ivan.camilleri@timesofmalta.com

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