Ministry, Steward silent about hospital contract milestones, associated penalties

Both the Ministry for Health and Steward Health Care have remained tight-lipped about the concession milestones and associated penalties for the works to be completed as part of the controversial hospital concession deal.

Steward Health Care, the US company that took over the 30-year government concession to manage three hospitals, was also tasked with the building of the Barts Medical School in Gozo, the addition of beds in Karen Grech and St Luke’s Hospital, the building and renovation of Gozo General Hospital (GGH) and the addition of medical tourism beds at St Luke’s hospital.

The original deal was signed with Vitals Global Healthcare Ltd (VGH) – a completely unknown healthcare company then registered in the British Virgin Islands – in 2015 by then Minister for Health, Konrad Mizzi on behalf of the government.

The concession milestones for the completion of major parts of the infrastructure to be put in place by VGH formed part of the original contract. The milestones, however, were blacked out when it was published in Parliament in 2016, citing commercial sensitivity.

The timelines for VGH to submit the designs for the sites, and the nursing college at St Luke’s Hospital, as well as the timelines for the written approval of the designs, were also redacted.

This newsroom questioned the reason for the redaction of the timelines, noting they are not commercially sensitive information, however, the Ministry did not reply.

The concession milestones were eventually revealed by The Sunday Times of Malta in 2017. The dates reported show that most projects tasked to VGH should have now been completed.

Table above: Concession milestones, as revealed by Times of Malta, as per the “original” VGH contract.

 

It was also reported that when Steward Health Care took over the concession, just 21 months after the original deal with VGH, in 2017, several conditions in the original contracts were changed.

This ran contrary to the government’s original pledge that the projects started by VGH would be delivered according to the original contracts.

This newsroom asked the Ministry why these “updated” contracts were not published, as was done with the original ones, however, it did not reply. A copy of these contracts was also requested, as well as which conditions in the contracts were changed after the takeover by Steward Health Care. No reply was received.

Local media also reported that one of the amended conditions was the milestones by which St Luke’s Hospital and Karen Grech, as well as the Gozo General Hospital, were to be completed. It was noted that the dates were pushed back by several years.

A spokesperson for Steward had confirmed with The Times of Malta that changes to the concession had been agreed with the government and that timelines had to be reset.

She had also noted that then, on November 2018, the government and Steward Health Care had numerous meeting to establish ambitious yet realistic outlines for the hospital renovations and new construction, which both parties would be announcing jointly.

This newsroom asked the Ministry to confirm this, and also why the public was not informed of the new milestones, however, no replies were forthcoming.

Steward Health Care was also asked to confirm that new milestones were set when they took over the contract and to provide this newsroom with the “new” timelines. They too remained mum on the matter, despite reminders being sent.

Despite the concession milestones being part of the original contract, on 5 September 2019, Health Minister Chris Fearne announced, during a meeting with the General Workers’ Union, that the timelines of the works, including the completion date, for St Luke’s hospital would be announced this month. Asked why timelines are still being discussed, the Ministry did not reply.

Sources, however, confirmed that timelines are still being negotiated between the Ministry and Steward Health Care. They also confirmed that Steward will be presenting the timelines to the Ministry.

When asked to provide the milestones, as per the “updated” contract, for the Barts Medical School, Gozo General Hospital (build and renovation) and Karin Grech the Ministry replied that

“Following an investment by Steward Healthcare of around €26 million, the new Bart’s Medical School at the Gozo General Hospital is now complete. At the moment internal furnishings are being finalised for transfer to Bart’s in the coming weeks. The new medical school is a purpose-built, state-of-the-art building with all the latest teaching facilities including multiple simulation laboratories.

“Meanwhile detailed plans for the new GGH hospital and the refurbishment of St Luke’s Hospital have been presented to the government. The new plans – on government’s request – have taken onboard environmental and aesthetic considerations.

“Thus at GGH, the originally proposed hospital tower has been replaced with a more visually acceptable low lying building. Similarly at St Luke’s the plans have undergone major changes to emphasise and conserve the beauty of the original St Luke’s Hospital building.”

The Ministry, however, did not confirm if the “new” timelines are being adhered to. Steward Health Care was also asked for the new timelines, and if they were being adhered to, but all questions remained unanswered.

 

Penalties related to milestones

The schedule which includes the list of completion milestones for all works to be carried out by the concessionaire in the VGH contract also listed a clause stating, “in the event of milestone failure, the Concessionaire agrees to pay…” The amount requiring VGH to pay was redacted.

Asked why this amount was redacted, the Ministry did no reply. It also remained tight-lipped when asked if any penalties, related to milestone failure, have been paid to the government. The latter question was also put forward to Steward Health Care.

The Tourism Ministry was also asked about redactions and milestone related penalties, considering Minister Konrad Mizzi was Health Minister between 2014 and 2016.

A spokesperson for the Ministry for Tourism noted that whilst Mizzi did not occupy the post of Health Minister when the contracts were tabled in Parliament, he confirmed no milestone penalty became due by VGH to government during Mizzi’s tenure as Minister responsible for health.

 

EPC Contractor also redacted from contract

EPC stands for Engineering, Procurement and Construction and is a prominent form of contracting agreement in the construction industry.

The engineering and construction contractor generally carries out the detailed engineering design of the project, procures all the equipment and materials necessary, and delivers a functioning facility or asset to their clients. Companies that deliver EPC projects are commonly referred to as EPC contractors.

The original contract with VGH referred to an EPC contractor, however, in the version presented to parliament, the name of the contractor was redacted. When asked why this was so, the Ministry did not reply.

The contract also noted that VGH was to provide the government with evidence that the EPC Contractor has been engaged to carry out the works, by providing a copy of the contract between VGH and the EPC contractor.

The Ministry and Steward Health Care also remained mum when asked who EPC Contractor is, if it is the same one who was originally engaged by VGH, and if this newsroom could have a copy of the contract between Steward Health Care and the EPC contractor. No reply was forthcoming.