Monday, April 07, 2014

Healthcare = Profits in Lesotho

A hospital built in Lesotho using public/private financing with advice from an arm of the World Bank threatens to bankrupt the impoverished African country's health budget.

More than half the country's entire health budget (51%) is being spent on payments to the private consortium that built and runs the hospital in the capital, Maseru, led by South-Africa-based Netcare, the biggest private healthcare provider in the UK.

Oxfam says the healthcare of the poorest people is at risk, as the Queen Mamohato memorial hospital draws off money that is badly needed for clinics in rural areas. The government is spending $67m a year on the hospital complex, which includes several primary care clinics, in loan repayments and the cost of patient care. It quotes the minister of development planning, who said: "Health is increasing but this will be at the expense of something else. We may be able to treat people if they get ill but we will not be able to ensure they have enough to eat."

Public/private partnerships to build hospitals have a poor track record even in the wealthy west. PFIs (public finance initiatives) have proved a heavy financial burden on the NHS in England, where 22 hospital trusts in 2012 said repayments were endangering their clinical and financial future and one has since gone into administration because of PFI debts.

Oxfam says this is a dangerous model for low-income countries in Africa. In Lesotho, it warns that the situation is unsustainable. It is sharply critical of the International Finance Corporation (IFC), the private sector arm of the World Bank, which advised Lesotho on the deal and is now discussing similar projects with Nigeria and Benin. Oxfam says the IFC has acted irresponsibly, "both in terms of its role as a transaction adviser to the government of Lesotho and in its marketing of the Lesotho health PPP as a successful model for other low-income countries to replicate." It quotes a senior ministry of health official, who said: "The IFC were transaction advisers. We're in this because of them. They should have done better and they must help us to get out of this mess."

The contract runs for 18 years, at the end of which the hospital passes into government ownership. Tsepong Ltd's return on its investment is 25%. The IFC received a fee of $723,000 for its work on the deal.

Lehlohonolo Chefa, director of the Lesotho Consumer Protection Association, which is joint author of the report, said: "Our government is piling more money into healthcare but not enough of it into rural areas where most people need it. It's going instead into this otherwise important tertiary facility in the city and from there into private pockets including of one of the world's biggest health companies. Lesotho was promised a better health service for the same price – and that just hasn't happened. Other countries in Africa and indeed all over the world need to look closely at this experiment in Lesotho and be very wary of repeating it."

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