Is Malta’s controversial hospital deal a model for the world to follow or a dangerous step towards full privatisation of healthcare? It’s too early to tell, but it’s certainly time to start paying attention.
Armin Ernst is loving his time in Malta. You can tell by his smile, but his words also do the trick.
“There is a unique opportunity here. I am really glad I took it and I wouldn’t change spot with anybody else in the world right now,” he says.
Opportunity is right. He’s been chosen to lead a company that’s just signed a 30-year contract with the government of Malta to run three public hospitals. And if this project works out, it could be used as a model to sell the idea the world over.
Critics may have labelled Vitals Global Healthcare a startup – it was incorporated only last year – but it’s a startup that’s well positioned to disrupt healthcare, one of the largest and fastest-growing industries in the world. In many ways, Malta will be the prototype.
Here’s how it works
Hospitals are usually run by governments, NGOs or businesses. In Malta, we now have a public-private partnership, where a company is paid to run the hospitals and profit from them but everything still belongs to the government. VGH will return the hospitals in 30 years’ time and then the government can decide whether to run them itself, find a new operator, or extend VGH’s contract.
Public-private partnerships are common across various industries, but Dr Ernst can’t name a single country that has adopted this model with healthcare before. Malta, however, could “be a showcase for other countries to do this as well,” he says.
Government’s big idea
Prime Minister Joseph Muscat loves public-private partnerships and so does Konrad Mizzi, who ran the Energy and Health Ministry until he was named in Panama Papers and was rather gently demoted to Minister without portfolio.
Almost two years ago, Dr Muscat and Dr Mizzi launched Projects Malta whose aim was to develop the concept of public-private partnerships to its full potential and “open completely new horizons” for the Maltese economy. So far PPPs had only been set up for the embellishment of roundabouts and elderly homes. But they wanted to go further.
This is where Vitals Global Healthcare comes in. The company was chosen from only three submissions to a Request for Proposals issued by Projects Malta for the “Redevelopment, Maintenance, Management and Operation of St Luke’s Hospital, Karin Grech Rehabilitation Hospital and Gozo General Hospital”.
“This is one of those opportunities of a lifetime,” says Dr Ernst at the beginning of our interview. “It’s not often that you have an opportunity to really help redesign a healthcare system.”
But does Malta need to redesign its healthcare system? After all, it’s the fifth best in the world according to the World Health Rankings. The US, where Dr Ernst spent most of his professional career, ranks a measly 37th.
So, why does this country need him?
“Excellent question,” he says, somewhat taken aback. “Maybe it’s an advance for me rather than for the country. I’ve moved up from 37th to 5th,” he laughs. I laugh awkwardly back, unsure how to react.
“Well, let’s say this,” he tries again. “I think those rankings are important on the one hand but one needs to realise that there are holes and gaps and opportunities everywhere. I do think I have a certain skill set when it comes to bringing different people together and bringing pieces of the puzzle together to work as a whole.”
But what is the problem we need him to solve?
“The core problem,” he says, “is the physical infrastructure… If you look around at some of the facilities, yes we have high-quality people and high-quality care but the facilities are clearly crumbling.”
“Mater Dei is a new hospital but Mater Dei alone cannot provide the healthcare for the islands,” he says.
This is where the whole thing could start to sound like a construction project instead of a healthcare one. But Dr Ernst insists there is much more to it. And it lies in the fact that governments have too much to do to run a complex system like healthcare properly.
“I don’t have to provide a police force. I don’t have to provide external security for the country. I can concentrate on running hospitals. And I can do this with more focus and more efficiently than a government that has so many other things to do that are unrelated.”
“This is not really privatisation.”
The big hope is that the government can minimise its long term health costs by paying a private company to invest in the buildings, run things more efficiently and develop profit-making side ventures like health tourism. “This is not really privatisation,” he says.
So what would success look like?
“I think the mark would be if in 10 years’ time the country asks itself: Why didn’t we do this 20 years earlier? And you would say that because you have the facilities you want, you don’t see any waiting lists any more, the need to leave the country for healthcare services goes down and people go to hospital and talk about their experience in a positive manner,” he says.
And this is where the opportunity grows. If Dr Ernst and his people deliver on their promises, it is not only other countries that may want to sign up. The Government of Malta might also pass on more aspects of the island’s healthcare. Perhaps this is what Dr Ernst meant when he said he was being tasked with redesigning the entire health system.
Does he want to take Mater Dei too?
“Mater Dei is very well run. It is concentrated on high-end cases so the economics and everything there are slightly different. But who knows what the discussion will be in 10 years? It doesn’t have to be Mater Dei. We are certainly focused on the task at hand… What that will translate to down the road, we’ll have to see.”
A project of this scale is bound to attract tough scrutiny. And this one certainly has.
The Nationalist Party has been vociferous. Under pressure, the government published its contract (or at least a redacted version) and sent it to the Auditor General for further scrutiny. You can’t blame the PN for asking questions when you know Konrad Mizzi was involved.
The Konrad Mizzi factor
I asked Dr Ernst what it was like to realise his company was in negotiations with somebody who was so tainted politically around the world after his hidden company structures were discovered in Panama. Didn’t he worry this could tarnish his reputation?
“No. I have to really tell you no because I felt strongly that I’ve done this for a long time, the people we’ve brought on board have done this for a long time and what we will build here will speak for itself.”
Questions have already arisen in the press about how much VGH has been paid so far and what deliverables there have been, given that things don’t look any different on the ground.
What we’ve paid so far
Dr Ernst denies that the company has already made €20 million, but said he doesn’t know the real figure off-hand. After the interview he tells me the real figure is €16 million, of which only €11 million have been paid to date.
“That is money to maintain operations. We have made a lot of investments in the background. But these things become visible when buildings come down and buildings go up. And that will not start before March.”
One of the key innovations currently ongoing is an overhaul of the IT system which will eventually see patients have iPad-like access to their information wherever they are.
“Innovation in my mind means that you’re willing to look at things differently, and don’t just look at what worked yesterday but you figure out where you want to be going forward and then really rethink design and solutions.”
“It’s not often that you have an opportunity to really help redesign a healthcare system.”
A businessman or a doctor?
This German pulmonologist could be sitting on a goldmine. So is he more of a businessman or a doctor?
“Excellent question,” he says disarmingly, yet again.
“I think there are two kinds of physicians who run healthcare businesses. There are physicians who fall into administration and there are administrators who happen to be physicians. I’m a physician who turned into administration. I’m a doctor first. For me, the patient comes first.”
But aren’t the roles conflicting at times?
“In the end, if you make a decision that is bottom line before the patient, it hurts you in the long run. What is important is that you do right by the patient.”