Netcare’s venture in Lesotho was a “success story”, the operator of private hospitals in South Africa and the UK said yesterday, after an Oxfam report alleged it was draining the country’s health resources.
Netcare, which owns 40 percent of a group that won a contract six years ago to build, finance and run the Queen Mamohato Memorial Hospital in the capital Maseru, said the cost was about 35 percent of Lesotho’s health budget in the year to March.
Oxfam said the figure was 51 percent, adding that the public-private partnership (PPP) contributed the bulk of a two-thirds increase in government health spending.
“The project was designed to be flexible enough to ensure affordability for Lesotho,” Chris Smith, the general manager for finance at Johannesburg-based Netcare, said last week. “Any cost driver to government is from increased demand, but they get value for it.”
Netcare said the higher costs were due to an increase in demand above the contracted volumes of 20 000 in-patients and 310 000 out-patients a year.
Additional in-patients attract fees of $786 (R8 322) each, according to Oxfam, which earlier this month reported that the project was draining funds needed by rural clinics.
“This is a dangerous diversion of scarce public funds from primary health-care services in rural areas, where three quarters of the population live,” Oxfam said. “Health PPPs of this kind are high risk and costly, and fail to advance the goal of universal and equitable health coverage.”
Piet McPherson, Lesotho’s director-general of health, declined to comment.
Netcare said the new facility offered services including intensive care and neurosurgery units, that previously were not available at the old Queen Elizabeth II hospital.
“The 100-year-old facility was decrepit, dirty and unhygienic,” Netcare said in an April 14 statement, released a week after the Oxfam report.
Stripping out referrals, the new hospital and four clinics’ catchment area captures about 26 percent of the nation’s 1.9 million people, according to Netcare.
Lesotho’s government paid an annual fee to the hospital operator with additional out-patients costing $4.72 each, Oxfam said, citing the payment schedule for the R1.2 billion PPP. The government was charged $9.4 million last year for excess patients, more than double the previous year, the UK charity group said.
The Lesotho contract was signed with an expectation of generating a return of 13 percent to 18 percent, the same as on hospital investments in the UK, Netcare said.
At the end of the 18-year contract, the hospital and clinics will belong to Lesotho.
Netcare expected patient demand to decline over the next year as the Lesotho government refurbished as many as 150 clinics, Smith said.
Oxfam predicts costs to increase after a proposal for the government to top up the salaries of workers in the hospital.
Netcare’s share price gained 0.52 percent to close at R25.13 on the JSE yesterday. – Bloomberg