Government reaches agreement for Rehabilitation Hospital

Joint statement by the Ministry of Finance, Economy And Investment and the Ministry for Health, the Elderly and Community Care

Government reaches agreement for Rehabilitation Hospital

Government announces that an agreement has been reached with the owners of St Philip’s Hospital on the lease arrangement of the same hospital for a period of 8 years.

Government also has an option to buy the facility, at the end of every year, from the third year up to the eighth year. The purchase value after three years inclusive of all lease payments has been calculated on the final negotiated price of Euro 12.4 million, with the first option to buy at year 3 starting from around Euro 11.3 million to Euro 9.8 million on the eight year. The annual lease cost starts from Euro 825,000 per annum.

 Following an Expression of Interest issued by the owners of St. Philip’s Hospital, the Ministry of Health expressed interest in acquiring a hospital which allows for the  occupation of the facilities without the need for any major infrastructural works. Following extensive negotiations with the owners by a joint negotiating team between the Ministry of Health and the Ministry of Finance, the above agreement has been reached. This arrangement gives full flexibility to the Ministry of Health to make use of 110 beds within a short amount of time.  

The value of the property was based on a detailed valuation that was carried out by the technical team of the Foundation for Medical Services (FMS) that took into consideration the state of the property, equipment and development potential.

The decision to consider the St Philip’s facility was based also on the lower cost it offered to the public purse in developing the originally planned 280-bed rehabilitation facility.  The overall assessment indicates that expanding the rehabilitation full requirements with the St Philips Hospital would be a cheaper option that to build all the facility from scratch. However, since this requires a development permitting process that has a number of uncertainties, the Government thought it wiser not to make an outright acquisition but only to do so if the planning process allows for the facilities expansion.

Government also refers to press reports claiming that this agreement would cost Government Euro 20 million. Indeed, this was the original asking price by the seller, a price which was significantly lowered by the negotiating team. With reference to comments on public acquisitions requirements and that Government was not following the regulations on procurement, it must be pointed out that according to Regulation 17(1)(f) of the Public Contracts Regulations (Legal Notice 296/10), these regulations are not applicable to the purchase or rental of land, buildings or property rights. The acquisition of the St Philips Facility has been approved by Cabinet.