While the privatisation could save the taxpayer billions of francs in form of government subsidies, it could also usher in a regime of even more expensive medical services for the average Rwandan at the health facility.
There are hopes that, under a private management, KFH will improve service delivery, which is likely to attract patients who have been seeking medical services in neighbouring countries and abroad.
Five private firms have expressed an interest in running Rwanda’s biggest public hospital, in partnership with the government.
Details of the bids and the nature of the offers for King Faisal Hospital (KFH), one of the country’s most indebted institutions, are however scanty.
“I do not think it is the right time to talk about it,” said Hubert Ruzibiza, head of the Services Unit at Rwanda Development Board, which is handling the bidding. “We shall inform you when the process is concluded.”
However, sources in the Ministry of Health told The EastAfrican that the government was seeking a public-private partnership through which it would cede management to a private operator in exchange for investment capital and better corporate governance.
For instance, the latest Auditor-General’s Report, which was released early this year, revealed that since it became autonomous in March 2013, KFH has been operating without a board of directors.
A board is necessary for provision of overall stewardship for the hospital and oversight over the business and its day-to-day management. In addition, the AG found out that all the senior managers at the hospital were in acting positions.
While the privatisation could save the taxpayer billions of francs in form of government subsidies, it could also usher in a regime of even more expensive medical services for the average Rwandan at the health facility.
It could also improve the liquidity position of the hospital, which is struggling to meet its working capital needs despite a heavy government subsidy.
For example, although the government pumped in Rwf3 billion ($4 million) in 2012/13, the hospital still had a funding shortfall of Rwf331.5 million ($480,091). As of June 2013, it had accumulated Rwf4 billion ($5.9 million) in losses, according to the AG’s report.
As of April, the 160-bed hospital, which attracts 300 patients daily, had an outstanding debt of Rwf822 million ($1.2 million) dating from June 2012.
High hopes in PPP
Therefore, the search for private partners highlights the hospital’s inability to generate sufficient funds for daily operations and to meet its obligations.
Failure to settle liabilities within the agreed time could damage the hospital’s relationships with its suppliers and affect service delivery. Such long-outstanding balances can also be used to perpetrate fraud.
Besides, its inability to recover debts on time is a matter of concern among experts. As of June 30 last year, its debts amounted to Rwf299 million ($433).
There are hopes that, under a private management, KFH will improve service delivery, which is likely to attract patients who have been seeking medical services in neighbouring countries and abroad.
The deal, according to a Health Ministry official, comes at a time when the government has intensified a privatisation campaign either through outright pulling out of the business or through PPPs.
“The government believes in private-public partnerships, which come with quality services delivery,” said Nathan Mugume, head of the Rwandan Health Communication Centre.
One of the tasks ahead for the new investors is to turn around the hospital to make it attractive to Rwandans who have been seeking medical services abroad and hence incurring higher medical bills. It will also be able to attract patients from around the region as Rwanda seeks to become a medical tourism hub.
Human capital
This will mean introducing state-of-the-art equipment for operations and surgery and also recruiting more specialists.
Internally, the new investor will have to come up with attractive packages for the specialists, who are torn between their private clinics and seeking greener pastures.
Over time, there has been a high turnover of human capital, partly because the specialists are leaving the hospital to start their own businesses or look for jobs elsewhere.
