Minister and Steward in meeting over hospital milestones

The American concessionaire Steward has told the Maltese government it will start fulfilling its milestones for the privatisation of three state hospitals, in a meeting held between CEO Armin Ernst and health minister Chris Fearne.

The discussions were held following after Steward posted a pre-tax €6 million profit in 2020, despite its claim that its government contract was ‘unbankable’.

The fate of the concession remains in the balance over a court case filed by the Nationalist MP Adrian Delia demanding the cancellation of the contract: if the court finds in Delia’s favour, it could trigger a request by Steward for a €100 million default payment from the State.

The government has accused Steward of failing to make the necessary investments to revamp the hospital facilities and services it took over from former concessionaire Vitals Global Healthcare. And in an uncompromising excoriation of the contract, the National Audit Office said the failures of Labour’s privatisation of the state hospitals was down to the selection of VGH as the concessionaire, “a poor choice that set the stage for what was to come.”

But the Maltese government is exposed to a great deal of risk on the Steward concession: an agreement hammered out in August 2019 with former tourism minister Konrad Mizzi regaled it with “escape clause”, that turns any termination of its concession into a government default.

In the agreement signed by Mizzi and Steward Healthcare, the government agreed that should the hospitals’ concession be terminated by a court of law – for whatever reason, and even if Steward is in breach of contract – such an event would be a government default.

That would mean that all debts incurred by Steward would be passed on to the government, and the American company would still be liable for a €100 million contractual pay-out for its equity.

Steward statement

Steward Health Care Malta is committed to providing the people of Malta with first-class health care. We continue to invest in and improve our operations and staff to deliver quality care for our patients.

As the provider of health care to a significant portion of the Maltese population, we remain in frequent dialogue with the Government of Malta, including the Ministry of Health and other stakeholders in the sector. We are committed to working with the relevant authorities to stabilise the concession and to ensure that the Maltese people receive quality healthcare through investment in facilities, in people and in communities.

On our arrival in Malta in 2018, the concession was incurring heavy losses that were not visible to the public nor to the Government. The improved quality results in 2018 and 2019 onwards and positive fiscal results for 2020 are a testament to our abilities as a serious and professional operator to successfully drive an impressive turnaround. We stand by our duty to transparency and financial accountability, and are dedicated to our patients, who remain our primary priority.

While the terms of the existing concession agreement do place constraints on Steward Malta’s ability to make large-scale investments and secure financing for major projects, we are always prepared to work collaboratively to rectify the agreement’s faults. We will remain a constructive partner in any talks to overcome the structural defects of the agreement and we continue to seek an outcome that allows us to deliver the best service for the people and patients of Malta.