A flagship 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, whose report is published on Monday, 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.
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.
"Everyone wants the people of Lesotho to have the very best quality healthcare. Oxfam is first to celebrate people being saved and healed at the new hospital. But the figures don't stack up," said the charity's health policy adviser, Anna Marriott. "The IFC is opening up Africa's health sector to private business but on this evidence it's a flawed and dangerous plan."
The IFC says care has improved at the hospital. It was built to replace the Queen Elizabeth II hospital, which was badly in need of renovation. Death rates have since dropped there overall by 41%, children's deaths from pneumonia by 65% and stillbirths by 22%, although deaths on the medical wards and among female surgery patients appear to have risen. Data collection at the old hospital for comparison, however, was not always reliable.
But any improvements have come at a high and spiralling financial cost, says Oxfam. Among the reasons are inflation at 7% on repayments and a higher number of patients needing treatment than was anticipated. The Lesotho government, which introduced free healthcare for all, is billed by the Netcare-led consortium, called Tsepong Ltd, for additional patients.
The report contains statements from mostly anonymised senior figures within government and the consortium expressing growing concern at the financial burden. Lesotho is increasing its health budget in order to meet the costs of the hospital, while other spending departments such as agriculture and education are being cut. 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."
Even the operations director at the hospital acknowledged that the money spent on it could disadvantage people living in rural areas. "I don't think it is currently a financial problem but it has the potential to create a big gap in terms of healthcare funding for the rest of the country," he told Oxfam.
The report 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.
Mark Hellowell, lecturer in global health policy at Edinburgh University and an adviser to the Treasury select committee inquiry into PFIs, said: "There are some really significant risks to affordability here." Last year he visited the hospital. "I had the opportunity to speak to some people in Lesotho and had a sense of the increasing concern about how much it was costing." It is also complex to monitor and manage. "Globally it is probably the most ambitious public/private partnership in existence, significantly in advance of anything we have in the UK," he said.
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."
Geoffrey Keele of the IFC queried the figures in the report, but said in a statement: "The World Bank group shares Oxfam's concern that the health network in Lesotho is being overburdened as it attempts to fulfil greater-than-anticipated public demand for basic health services. The World Bank group is working with the government of Lesotho to strengthen the country's health system so that everyone in Lesotho, especially the poorest, can access the essential health services they need.
"IFC and the World Bank support a range of public and private sector solutions to improve health services for patients in developing countries.
"Public-private partnerships offer governments the ability to mobilise private investment and management expertise that improve services and efficiency at public hospitals. Indicators demonstrate that the Lesotho health network PPP has improved the quality of healthcare for roughly a quarter of the country's population since it went into operation in 2010-11. The World Bank group will continue to work with the government of Lesotho to ensure that demand can be met."