Netcare: Handover of Queen ‘Mamohato Memorial Hospital and clinics to Lesotho government

Organisation: Position: Deadline Date: Location:

Netcare has begun the handover of Queen ‘Mamohato Memorial Hospital and primary care clinics to Lesotho government, according to a news release from Netcare.

The handing over by Netcare of the Queen ‘Mamohato Memorial Hospital (QMMH) and its four primary care clinics in Maseru to the Government of Lesotho (GoL) is as a result of the public private partnership (PPP) agreement being prematurely terminated, with effect from 31 August 2021.

A Netcare statement says: The handover has been brought forward, however, after the ongoing non-payment of fees due to Tšepong by the GoL.

The Tšepong consortium is the principal contractor in the PPP agreement and Netcare has been sub-contracted 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 begin the handover of the facilities and operations follows the repeated failure by the GoL to settle the arrear payments for services rendered by Tšepong. The GoL has been persistent in demanding that Netcare, as the sub-contractor, continue to provide full services until 31 August 2021, notwithstanding that it is currently four months in arrears and is now into the fifth month of unpaid contractual monthly fees.

In its capacity as a shareholder of Tšepong, and as the major provider of services to Tšepong, Netcare has continued to act in good faith and provided ample written notice to Tšepong and the GoL, as well as follow-up reminders that GoL is substantially in default of its payment obligations under the PPP agreement. The GoL 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 2021.

In light of these circumstances, Netcare is no longer prepared to fund ongoing operations on behalf of the PPP. Netcare has provided financial support on numerous occasions over recent years to enable continued operations at the hospital and primary care clinics when the GoL failed to make timely payment for services. The refusal by the GoL 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.

At a meeting on 9 July 2021, the GoL agreed to Netcare’s proposal to establish a joint oversight committee to ensure the effective and orderly verification and transfer of properties and equipment, stocktaking and handover, as well as the transfer of employees and sub-contractors to the GoL. Netcare will ensure that the transfer process is managed with the support of the labour unions and external in-country lawyers to protect the interests of employees and sub-contractor staff through a seamless transition.

A draft handover agreement, based on the provisions contained in the existing PPP agreement, has been presented by Netcare to the GoL and the Board of Tšepong. Netcare and the GoL furthermore agreed that the transfer of assets, equipment and stock will be overseen by an independent external auditor.

Recent reports in the media and on social media that Netcare had withdrawn from QMMH and the primary care clinics last week are factually incorrect and intended to mislead. There are also spurious allegations that Netcare has removed assets from the hospital, which belong to the PPP.

These assertions are inaccurate. Only property belonging to Netcare, and which is not involved in providing patient care, has been removed. Both the hospital and the clinics remain fully functional and adequately resourced to continue providing quality healthcare to patients.

At the meeting called by the GoL on 13 July 2021, the GoL reiterated its refusal to settle the outstanding fees at this stage and instead said it would assemble a team on 14 July 2021 to start the handover process and would assume all liabilities, including the payment of salaries to employees.

Under the PPP agreement, Netcare, as the sub-contractor, is entitled to suspend its services due to a material default by the GoL, 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 all urgent cases and emergencies, including obstetric emergencies, and outpatient services will remain available for any unstable patients. All other patients will be referred to GoL clinics and facilities.

Netcare CEO Dr Richard Friedland said, “We have made it clear to all stakeholders that we remain resolute that the safety and care of patients will not be compromised. We are proud of having consistently scored above 95% in the key assessments and performance indicators as measured by the Independent Monitor. These standards of service delivery have been maintained over the past eleven years of managing the hospital, and we do not intend lowering our high benchmark.”

Under Netcare’s stewardship, the QMMH is one of only four public hospitals in Africa to have achieved accreditation by the Council for Health Service Accreditation of Southern Africa (COHSASA). It is also gratifying that the recently released Second Endline Study performed by Boston University’s Centre for Global Health in the USA has reflected the value that has been added to the community.

Netcare was instrumental in leading a consortium of investors to form Tšepong, which concluded the PPP agreement with the GoL. Netcare worked closely with partners and other stakeholders to procure the financing, which led to the successful construction, refurbishment and day-to-day operation of this world-class hospital, which is the first and only facility of its kind in the Kingdom of Lesotho.

Friedland continued, “I am pleased that Netcare is leaving the QMMH with exceptional credentials, and we will do our utmost to facilitate a smooth transition to the GoL. Furthermore, the hospital has been certified to provide COVID-19 treatment,which is desperately needed during this difficult and challenging time. To this end, Netcare has personally contributed more than R1 million in personal protective equipment to protect staff, as well as testing kits to aid in the fight against COVID-19, to cater for the increased demand. We are also pleased about the extent of our contribution toward the Basotho community development over the past eleven years.”

The consortium of Tšepong shareholders comprises Netcare, which holds a 40% interest, while the remaining 60% shareholding is held by Afrinnai Health (Pty) Ltd (20% – South African based), Excel Health Services (Pty) Ltd (20% – Lesotho based), D10 Investments (Pty) Ltd (10% – Lesotho based), and Women Investment Company (Pty) Ltd (10% – Lesotho based). The respective entities represent consortiums of their own shareholders and are clustered to represent shareholders with common interests.

“In financial terms, the contribution from the Lesotho PPP is not material to the Netcare Group’s earnings and there is no impact on any other parts of the Netcare business,” added Friedland. “Netcare will be handing over the hospital and the primary care clinics to the GoL as fully operational facilities.”

Issued by Netcare


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