LONG PUNTED as an ideal mechanism to alleviate the burden on South Africa’s beleaguered public health sector, public private partnerships (PPPs) not only have a significant socio-economic impact but also considerably enhance broad-based black economic empowerment.
“As southern Africa’s largest private hospital group, Netcare actively pursues PPP opportunities in joint ventures with emerging and existing empowerment companies and communities. We don’t only partner Government but also actively involve the community and local black-owned SMMEs to help with the construction and other service delivery outcomes of every PPP project,” says Dr Victor Litlhakanyane, Netcare’s director for group stakeholder relations.
Netcare is currently involved in long-term, co-location commitments through three formal PPPs: - ment, a special purpose vehicle (SPV) company that entered into a concession agreement with the Free State Department of Health in 2001. This PPP entails the co-location of private beds, theatres and ICU facilities at the Universitas and Pelonomi public hospitals in Bloemfontein for a period of 21 years. SPV – entered into a PPP agreement with the government of Lesotho for Africa’s largest healthcare PPP in that country, a project that entails building a 390-bed hospital to replace the ageing Queen Elizabeth II in Maseru, refurbishing three primary clinics and the running of primary and tertiary care clinical services. SPV company that in May 2007 entered into a PPP agreement with the Eastern Cape Department of Health to rebuild and refurbish the Port Alfred and Settlers hospitals respectively. Mari Bruwer, MD of Netcare’s PPPs, says: “The other 50% shareholding in Nalithemba are Eastern Capebased health professionals and local entrepreneurs. As much as 40% of the construction and 50% of the ongoing operational expenditure will go to blackowned or empowered enterprises.”
Bruwer explains the advantages of empowerment: “First, the equity share of your empowerment partners provides them with a long-term investment opportunity that will deliver an attractive return. The partners usually also serve as directors on the boards of the SPV and hold management posts in the PPP structure. From there the empowerment positives 1lter down even further to the many opportunities created for empowerment contracting companies and subcontractors in the locality of the PPP, the training and transfer of skills to community members and job creation in areas where not many employment opportunities usually exist.
“Revenue is increased for local contractors, who can now extend services – such as plumbing and electrical services – to further unrelated projects. It also encourages the local sourcing of basic products, which provides further opportunities for increased revenue for local businesses.”
Bruwer adds: “We have to develop and ‘up-skill’ shareholders in terms of directorship responsibilities, such as 1duciary duties, management in the SPV and managerial posts within the hospital. A great deal of skills’ transfer also takes place relating to the construction process, as hospitals and clinics have very speci1c building requirements, and with relation to specialists services, including laundry, cleaning and catering.”