Netcare terminates partnership with Lesotho hospital over nonpayment

Netcare has started handing over operations at the Queen Mamohato Memorial Hospital and its four primary care clinics in Maseru to the Lesotho Government as a result of the public private partnership (PPP) agreement being prematurely terminated, with effect from 31 August.

The handover has been brought forward, however, following the ongoing nonpayment of fees due to the Tšepong consortium by the government.

“The contracted monthly unitary fees owing since March total R275 million,” said Netcare chief executive Dr Richard Friedland.

“This includes debt repayments due to the Development Bank of SA, staff and nursing salaries and payments to suppliers.”

The Tšepong consortium is the principal contractor in the PPP agreement and Netcare had been subcontracted to manage Tšepong, providing all clinical services required to operate the hospital and the primary care clinics on behalf of the consortium.

The decision to commence the handover of the facilities and operations follows the repeated failure by the government to settle the arrears for services rendered by Tšepong.

The government has been persistent in demanding that Netcare, as the subcontractor, continue to provide full services
until 31 August, notwithstanding that it is currently four months in arrears and is now into the fifth month of unpaid contractual monthly fees.

Friedland said despite “ample” written notices Lesotho was substantially in default of its payment obligations under the PPP agreement, the government has “repeatedly” reiterated that it has no intention of making these scheduled, contractual payments at this stage, and will only consider making payment after the PPP termination date of 31 August.

“In light of these circumstances, Netcare is no longer prepared to fund ongoing operations on behalf of the PPP,” Friedland said.

“The refusal by the [government] to pay the outstanding fees clearly places an unreasonable expectation on suppliers to continue providing full services at a substantial level of commercial risk to their businesses.”

In terms of the PPP agreement, Netcare is entitled to suspend its services due to a material default by the government, which in this case was triggered by the persistent lack of payment.

However, because Netcare values and upholds the sanctity of life and would never do anything to impinge on patient safety and care, the hospital will continue to treat all inpatients during the transitional period until it is deemed clinically appropriate and safe to discharge them.

The hospital will accept urgent cases and emergencies, including obstetric emergencies, and outpatient services will remain available for any unstable patients. All other patients will be referred to government clinics and facilities.

“We have made it clear to all stakeholders that we remain resolute that the safety and care of patients will not be compromised,” said Friedland.

“Netcare is leaving the hospital with exceptional credentials and we will do our utmost to facilitate a smooth transition. The hospital has been certified to provide Covid treatment. Netcare has contributed more than R1 million in personal protective equipment to protect staff, as well as testing kits to aid in the fight against Covid pandemic.”

– news@citizen.co.za