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Lesotho hospital public private partnership: new model or false start?

A new $120m privately financed hospital in Lesotho capital Maseru, the first in Africa to be built through a “Public Private Investment Partnership” (PPIP), and claimed a “success” by the World Bank, is already mired in controversy.

Just days after finally opening its doors the showpiece 390 bed Queen ‘Mamohato Memorial Hospital, which replaced the crumbling 450 bed Queen Elizabeth II Hospital in central Maseru, hit the headlines when it turned away an expectant 24-year-old woman, Metsana Rapotsane.

The incident triggered an investigation by the Ministry of Health, amid public questions over arrangements for urgent care and emergencies at the new hospital – which according to the World Bank is supposed to “operate as the national referral hospital as well as the district hospital for the greater Maseru area”. 
 
From the outset this project has received significant backing from the World Bank. The private sector arm of the World Bank Group, the International Finance Corporation (IFC), which describes itself as “a pioneer in the implementation of public-private partnerships in health” has supplied technical assistance, and a World Bank International Development Assistance (IDA) grant of US$6.25 million was provided through the Global Partnership on Output-Based Aid. Since before the hospital was built the World Bank’s marketing machine has been in action, showcasing this ‘truly exciting’ partnership as a successful model to be replicated elsewhere in Africa. These claims seem dangerously premature.

The Queen ‘Mamohato Memorial Hospital is built and run by a consortium headed up by South African private medical giant Netcare. The company is struggling to free itself of the disgrace caused by its involvement in the sale of kidneys between 2001 and 2003 – a number of them purchased from children – for which Netcare was fined £700,000 last year, with the possibility of further court action.

The 18-year government contract with Netcare involves the building of the new 390-bed hospital to replace the 450 in the closed Queen Elizabeth II, the provision of clinical services at the hospital and three filter clinics, and the ongoing training of health staff. In addition to the new hospital the PPIP scheme also financed the construction of a deluxe 35-bed private patient unit to serve Lesotho’s wealthy elite. The private unit will be run separately by Netcare who will keep all of the profits.

In return, the Lesotho government will pay a US$32.6m index-linked annual “unitary charge” to Netcare for the hospital and services. Given that the annual budget for the QEII hospital and the filter clinics in 2007/08 was less than $17m this represents a massive 100% increase in costs and throws into doubt claims that the project is ‘cost neutral’. This is at a time of sharply falling government revenues and after the government has already invested $62m ($51m in capital up front and another $11m in infrastructure costs).

The Queen ‘Mamohato Memorial Hospital is “to treat all patients who present at the hospital” – up to “a maximum of 20,000 in-patient admissions and 310,000 outpatient attendances annually”. This seems a very low cap for the country’s main hospital when official figures show a national hospitalisation rate of 3.2% of the population each year, equivalent to 64,000 patients. Patients treated above this agreed maximum will presumably have to be paid for either by the government or patients themselves thus further adding to the cost of the deal. The annual charge for the hospital, soaking up a third of Lesotho’s recurrent health budget[1], also threatens to distort national health spending and likely put desperately needed expansion of primary health care for Lesotho’s majority rural population beyond reach.

The unfavourable terms of the contract can be traced back to a lack of relevant expertise among those in Lesotho negotiating the contract terms and an apparent failure of the IFC, who acted as consultants on the project, to provide sound advice. A “Baseline study” by the Lesotho-Boston Health Alliance warned in 2009 that: “At present, sufficient expertise in hospital operations, financial oversight and analysis and systems analysis to manage the PPP contract in the interests of the Government and people of Lesotho does not exist.”

This was very much to Netcare’s advantage and under the existing agreement its consortium members can profit in several ways:

  • a guaranteed profit on the capital investment,
  • plus a very healthy 10% guaranteed return on its operating budget,
  • plus payment for any additional patients treated above the contract maximum (with no information available to the fees Netcare will be able to charge).
  • an effective government subsidy for the building of a 35-bed private wing at the hospital – with all profits kept by the consortium.
  • Netcare as the largest operator of private hospitals in South Africa can make more money by sending patients for specialist treatment not covered by the PPIP contract, including  radiotherapy to its hospital in Bloemfontein or elsewhere. There appears to be no limit on numbers, or the prices that can be charged for these externally treated patients, and no incentive for Netcare to reduce referrals[2] 

The problems with the PPIP deal are not unique to Lesotho. In the UK, where 100 hospitals have been built through various “private finance initiatives”, £11 billion worth of new hospitals are set to cost UK taxpayers £65 billion – far more than just borrowing the capital. In August this year a UK House of Commons Select Committee report concluded that private financing is an ‘extremely inefficient method of financing projects’.

The new referral hospital is a good deal for Netcare but less good for Lesotho. It also appears inconsistent with the IFC’s commitment, as part of the World Bank Group, to wider values of equity and calls into question whether the World Bank really works in the interest of efficient and equitable public spending for health.

There is no question that a new hospital was urgently needed to replace the QEII. However, did anyone ask whether this could have been better financed through a low interest World Bank loan? The details of the Lesotho PPIP contract have so far been shrouded in secrecy but given that this is the first major hospital built in Africa through a “Public-Private Investment Partnership” a rigorous evaluation of the initiative – including complete transparency about the costs – will be essential.

As it stands it seems a sizeable and growing share of Lesotho’s health budget will be locked in to a scheme that guarantees payments and profits to Netcare and other shareholders at the expense of Basotho patients and taxpayers.

John Lister is a freelance journalist with over 27 years’ experience in analysing health policy for pressure group London Health Emergency, and now senior lecturer in Health Journalism at Coventry University. His PhD is in global health policy, and his books include Health Policy Reform, Driving the Wrong Way? (2005) and The NHS After 60, for patients or profits? (2008).

[1] The recurrent health sector budget in 2010/11 was just over $100 million. Budget Speech to Parliament for the 2010/11 fiscal year.
[2] In 2006/07 FY $24.8 million was spent on 3,281 external referrals, of which 55% were oncology cases. Lesotho Health Systems Assessment 2010, p.22

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Saving mothers’ and children’s lives: What lies ahead in 2012?

Margaret Bangura with her grandson Hassan in Sierra Leone. Credit: Aubrey Wade/Oxfam As 2011 draws to a close, it’s time to take stock of the global action on maternal and child health this year. With a woman dying from pregnancy or childbirth every two minutes in the developing world, turning the tide on this global scandal can’t come soon enough.

Most notably, this September marked the one year anniversary of the United Nations Secretary General’s initiative to drive action on maternal and child health. The initiative, Every Woman Every Child, called on a range of stakeholders to accelerate action on MDGs 4 and 5 ahead of the looming 2015 deadline. Its birthday party was a moment to celebrate the additional pledges that have trickled in over the past 12 months: 33 more governments signed up – both donor and developing countries, along with 12 multilaterals and partnerships, 40 NGOs and 15 members of the business community. With an $88 billion funding gap[1] to meet MDGs 4 and 5 by 2015, commitments to promote women’s and children’s health are not just welcome; they are vital.

But what policies will ensure that every woman and every child is able to access lifesaving care? How should money be invested to meet the needs of poor women and children for generations to come?

The truth is that there is tons of evidence of what works. Many players, including the World Health Organisation, rightly argue that governments invest in public health systems in order to ensure quality care to women and children. Evidence also illustrates that free access to health care is vital in ensuring the poorest women don’t end up with catastrophic bills they cannot pay. Oxfam’s Blind Optimism Report argues that previous cutbacks in public health provision and increasing reliance on the private sector in many countries have been associated with an increase in unattended home deliveries as well as women and children delaying care due to the high costs involved. This is particularly important in societies where the subordinate position of women and girls translates into little control over the purse strings. Back in 2009, Amnesty International found that high costs for care in Sierra Leone balanced against the low priority women were given around the allocation of scare resources within the family, meant they did not seek or obtain care when they needed it. That’s why it’s great news that the Government of Sierra Leone has since worked to remove fees for pregnant women and children under five.
 
As part of the Every Woman, Every Child initiative, lots of governments committed to increase overall spending on health care in 2010, and more signed up over 2011. It was encouraging to see Senegal’s commitment to increase recruitment of state health workers. And this year many more governments have pledged free health care provision through the removal of certain user fees in their contribution to the initiative – including Cameroon, Chad, Cote d’Ivoire, Gambia, Guinea, Kyrgyzstan and South Sudan. Now donors must step up the resources to help implement these policies by providing the budget support desperately needed.

But looking back at the initiative as a whole, many policy commitments are too vague to be translated to real changes for poor women and children.  It’s time for governments, and donors, to set out clear plans on how they will strengthen public provision of health services, ensure women have access to them and support countries in removing user fees. A report produced by the Partnership for Maternal Newborn and Child Health (PMNCH) points to the general lack of clarity in many commitments and encouraged governments (and other stakeholders) to publish their commitments in greater detail. More governments now need to specify these details.

The PMNCH also identified that as we move forward with the initiative, stakeholders must do more to address the barriers to gender equality that restrict women’s access to quality health care.  Women should be enabled to be active in planning and implementing services. Moreover, interventions for women’s health need to be broad in scope: last year, part of Niger’s commitment to the initiative was to introduce legislation to increase the legal age of marriage to 18 and improve female literacy.  Congo committed to pass a law to ensure equal representation of Congolese women in political, elected and administrative positions. This year Guyana committed to work on gender based violence and teen mother initiatives. Transformative changes in women’s health will require coordinated action to empower women and raise their voices across multiple sectors.

There have also been high-profile private sector contributions to the Every Woman, Every Child initiative. But generous contributions from companies like Merck and Johnson and Johnson must be measured against stark realities; for example they are two of only three companies holding patents for HIV medicines that have not yet entered formal negotiations with the Medicines Patent Pool. 

There’s something to be said for the real momentum and range of parties signed up to the Every Woman Every Child initiative. Let’s just make sure in 2012 that all energies are used to help the poorest women and children today and into the future.

Caroline Green works for Oxfam GB as a Gender Policy Advisor

[1] In 2010 the Global Strategy for Women’s and Children’s health identified the additional funding required in 2011-2015 in 49 low-income, high-burden countries to improve access to essential interventions as US$88bn (including the direct and health systems costs of programmes targeting women and children)


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Global Health Check is edited by Anna Marriott, Health Policy Advisor for Oxfam GB, and welcomes contributions from different authors. If you would like to write an article for this site or if you have any queries please contact: amarriott@oxfam.org.uk.