Hospital break-up: ‘Netcare, Health Department must explain’

  • It’s final, says Netcare: no more private-ward admissions from this Friday
  • It’s not final says the Health Department – we haven’t agreed to end the relationship
  • Doctors frustrated at lack of communication from DoH
  • ‘Lack of demand’ for private facilities is far from the truth, doctors say
  • Private ambulance service Gardmed will stay
  • Netcare still consulting with 72 staff members about their future.

The Department of Health, Netcare and Nalithemba must come clean on the breakdown that will see the private wards at Settlers and Port Alfred hospitals close three days from now, says public service watchdog PSAM. The Public Service Accountability Monitor made the call this week, warning that the move jeopardises people’s constitutional right to access health services in Makhanda and Port Alfred. They have called for the national health department and National Treasury to urgently intervene.

Netcare, which manages the private sections of the public-private partnerships at state hospitals Settlers and Port Alfred, this week confirmed that on Friday 6 December they will close the private sections of these facilities. However, the Department of Health says there has been no formal agreement to terminate the relationship and that the matter of Netcare’s withdrawal has not been finalised. Meanwhile, local doctors are frustrated at the Department’s lack of response to questions and a proposal they sent nearly three weeks ago. And private ambulance service, Gardmed, says they’re staying and believe their services will be needed more than ever.

The Department of Health has been in a public-private partnership with consortium Nalithemba at Port Alfred Hospital and Settlers Hospital in Makhanda since 2009. Netcare is a 50% shareholder in Nalithemba and operates the private facilities at those hospitals. Settlers has 32 private beds (of 251) and Port Alfred 31 (of 60). These are the only private facilities operated by Nalithemba Hospitals.


National Treasury explains the difference between PPP’s and traditional government projects as follows:

A PPP is defined as a contract between a public-sector institution and a private party, where the private party performs a function that is usually provided by the public sector and/or uses state property in terms of the PPP agreement. Most of the project risk (technical, financial and operational) is transferred to the private party. The public sector pays for a full set of services, including new infrastructure, maintenance and facilities management, through monthly or annual payments. In a traditional government project, the public sector pays for the capital and operating costs, and carries the risks of cost overruns and late delivery.
– Source: PSAM

According to a group of local specialist doctors and general practitioners, the operating theatres at Settlers are in use daily and the private consulting rooms well utilised by several visiting and permanent specialists in General Surgery, Orthopaedics, ENT, Psychiatry, Anaesthesiology, Urology and Paediatrics

The doctors in private practice in Makhanda have sent a proposal to the Department that would see them support public health interests, while continuing to provide their patients private care. In a letter to the Department dated 15 November 2019, they asked for clarity on the future plans for the private ward, rooms and theatres at both private facilities and offered their assistance to ensure services to the community continued uninterrupted.

“If the Netcare partnership ends can you confirm that the ECDOH will continue to offer ward and theatre facilities for our medical aid and fee-paying patients, so we as private practitioners can continue to look after them in hospital and as required refer them to specialists locally in Makana?” they asked in their letter. “This was how it worked prior to the introduction of the public private partnership. If the public private partnership with Nalithemba does end, we will continue to care for our community, but without the Netcare banner.”

Far from the truth

But while the doctors support a constructive solution, some also smelt a rat.

“The claim that Netcare is withdrawing because of lack of demand for private healthcare is far from the truth,” one Makhanda doctor told Grocott’s Mail this week. “Last week the private ward at Settlers was full – there wasn’t a bed available – and we’re admitting patients there daily.

“It is definitely not the case that this hospital isn’t working well. It’s really well utilised. They can’t say they’re not getting the necessary turnover. There are other issues behind their withdrawal unrelated to the demand on those facilities.”

Grocott’s Mail last month reported that the Eastern Cape Department of Health has strongly refuted allegations of non-payment to Nalithemba. “There is absolutely no truth to the allegations that we have not paid our obligations to the PPP,” provincial spokesperson Sizwe Kupelo was reported saying.

This week, Grocott’s Mail sent questions to Netcare regarding speculation that Netcare has up to now been servicing a substantial loan to Nalithemba for the construction of infrastructure and facilities at Port Alfred and Settlers hospitals. We asked about the repayment, the amount currently owed, and whether Netcare’s withdrawal from Settlers and Port Alfred was because of Nalithemba’s possible failure to repay Netcare the rumoured loan.

In an emailed response, Chris Smith, Netcare General Manager Finance and consultant to the Nalithemba board, said in reply, “We are not in a position to respond to [those]questions… as that information is confidential.”

Not finalised

But while Smith confirmed that 6 December was the last day Netcare/ Nalithemba would operate in Port Alfred and Makhanda, the Department of Health says this is not so.

Provincial spokesperson Sizwe Kupelo told Grocott’s Mail, “The matter of Netcare’s withdrawal is not finalised and there has been no formal agreement to terminate the relationship.

“The doctors and other parties are speculating regarding the status of the agreeement and therefore the department is not in a position to respond to these questions until parties to the contract have formally agreed in writing on the terms and conditions to the changes to public private partnership.”

Smith confirmed that the expiry date for the original public private partnership agreement between DoH and Nalithemba is October 2024 “subject to the premature termination provisions”.

“Nalithemba Hospitals has, for the past decade, supported the operations at significant cost,” Smith said. “In the absence of any evidence that there would be a change in the current circumstances, it was decided to return the management of facilities to the Eastern Cape DoH so that they can be optimised in the best interests of delivering care to the community.”

Asked what would become of the equipment, including specialised theatre and ICU facilities installed at the hospitals, Smith said this would be negotiated between Nalithemba and the DoH as part of the handover plan.

“This discussion will only take place in the New Year,” Smith said.

Of the future of the 72 staff members currently working at the two hospitals, Smith said, “The termination of private admissions after 6 December 2019 does not impact the staff consultation process, which is still ongoing.  It is at this stage premature to comment on the options being offered to and selected by the staff members of these facilities.”

First prize

Local doctors remain positive about the future of health care in Makhanda, however.

“At the end of the day this is not a train smash,” said one GP. “Before the introduction of the PPP we  used to do our private patients using state facilities, and they had access to specialists.

“Hopefully, the first prize is if the Department allows us to continue to use the private ward for private patients for their financial gain. That’s what we did before Nalithemba came.

“Nalithemba has left us with excellent X-ray, casualty and theatre facilities and we believe this can be resolved in the best interest of Makhanda.

“What’s frustrating is that the Department of Health hasn’t spoken to us at all.”

Constitutional rights

The Rhodes University based Public Service Accountability Monitor says citizens deserve a proper explanation.

Director Jay Kruuse said, “The EC Department of Health, Netcare and Nalithemba need to provide the public with clear and detailed facts and reasons for the breakdown in this Public Private Partnership which will surely impact negatively on people’s constitutional rights to access health services in Port Alfred and Makhanda.

“The public have a right to know what facts and reasons prompted Netcare and Nalithemba to take a decision to withdraw from the PPP. The PSAM calls upon the parties to the PPP to be transparent and to act in the public’s interest, given their legislated responsibilties.”

Kruuse said while the PSAM had yet to obtain access to the actual PPP/contract between the parties, it would surely contain mediation and arbitration clauses to assist where there had been a breakdown in relations.

“It’s probable that one or more of the parties has breached the terms of the PPP,” Kruuse said.

“While this may support a drastic course of action, including withdrawing from the PPP, surely the parties are contractually obligated to explore ways to avoid a complete breakdown. Under the current circumstances, the PSAM calls upon the National Department of Health and National Treasury to intervene and try to assist in resolving the breakdown in relations between the parties.”


Gardmed is the main private ambulance service operating in Makhanda, where two of its fleet, along with staff, are based. It also operates in Port Alfred. With private hospital facilities closed, will it be viable for Gardmed to continue operating ambulances used almost exclusively by private patients?

“I think they’re going to need us now more than ever,” said Managing Director Dave Gardner. “We’ll probably need to change our business model: a lot of the patients who would be admitted at Settlers or Port Alfred will probably have to go to PE.”

Asked if Gardmed would increase their fleet to make sure they had enough local capacity while servicing the Makhanda-Port Elizabeth route, Gardner said, “We can’t do that at the moment. It takes three months to commission a vehicle – to buy it, kit it out and get it licenced.”

The business’s headquarters is in Port Elizabeth.

“PE is our backup,” Gardner said. “We have lots of vehicles there and if we need to use Grahamstown vehicles to move patients, we’ll bring up one of those.”

But while there’s uncertainty and they’ll need to adapt, Gardmed has no plans to leave.

“We’re definitely not going anywhere,” Gardner said. “Actually, more than ever, we have to stay.

“We’ll see what happens.”

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