The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The leading advocate for a consortium that would provide all the Public Hospitals Authority’s (PHA) medical supplies yesterday said it was “unfortunate this has become political”, adding that his plan would save $2 million in equipment maintenance costs alone over a four-year period.

Pedro Roberts, the CDM Group’s chief executive, told Tribune Business the proposal would create up to 30 well-paying Bahamian jobs, as medical maintenance technicians earned salaries of between $40,000-$45,000 annually.

Mr Roberts was speaking after this newspaper obtained a ‘concept paper’ for the proposed consortium, which would take the form of a public-private partnership (PPP) in supplying all the equipment and medical supplies for the Princess Margaret Hospital’s new Critical Care Block.

The concept paper estimates that the proposal could cut the PHA’s annual medical equipment maintenance costs by 15-20 per cent.

Mr Roberts said that the consortium would “be able to address 25 per cent of needs immediately”. With the PHA spending $2.5 million on medical equipment maintenance annually, he projected that the consortium maintenance plan would save $2 million over 48 months.

The head of the CDM Group, formerly Commonwealth Drug & Medical Supplies, told Tribune Business that “all” other Bahamas-based pharmaceutical and medical equipment suppliers had been approached to see if they were interested in participating in the consortium.

This, though, did not appear to be the case based on Tribune Business inquiries, indicating that the ‘consortium’ proposal - if accepted by the PHA and the Government - has the potential to split the industry down the middle.

One large medical equipment supplier, speaking to this newspaper on condition of anonymity, told Tribune Business that it was “not aware” of the proposal.

Its conversation with this newspaper marked the first time it had learned of Mr Roberts’s plan, and it questioned whether the ‘consortium’ would be able to meet the PHA’s Critical Care Block and overall supply needs.

This is because many medical equipment manufacturers and drug suppliers have exclusive arrangements with Bahamian distributors, yet the ‘concept paper’ appears to contemplate the consortium purchasing whatever the PHA desires.

The paper, seemingly written by Mr Roberts as it bears his signature, says: “The proposed structure of a lease agreement would be for the consortium to provide the PHA’s medical equipment based on the PHA’s specifications, inclusive of brand selection.

“Where appropriate, the consortium would provide its advice on equipment selection, but would leave the final decision to the PHA.”

This indicates, in effect, that the consortium would be the exclusive PHA supplier, squeezing out all other distributors that are not participants, and ignoring their existing supplier relationships.

One rival supplier, speaking on condition of anonymity, said this threatened to cost the Government and Bahamian taxpayer more money, and increase healthcare costs in this nation, as the consortium would be unlikely to access the “discounts” provided through existing Bahamian suppliers.

And, in a further sign of how sensitive PHA supply contracts have become, Basil Barnett, a director of Bahamas Medical and Surgical Supplies, told Tribune Business he had been advised by his attorney not to speak publicly on the issue.

“Our position has been that we don’t want to comment on anything associated with these activities,” Mr Barnett told Tribune Business.

This newspaper was told that the medical equipment tender for the Critical Care Block was issued in January 2013 - meaning that 18 months have elapsed with no contracts awarded.

Several medical industry sources suggested that various competing proposals, and political factors, were delaying the process to the detriment of the Bahamian people and their access to quality healthcare.

Tribune Business understands that the PHA situation was among those the US State Department’s 2014 Investment Climate report had in mind, when it wrote of complaints made to the Nassau Embassy and a lack of transparency in public procurement.

Mr Roberts, though, denied that the contracts situation or his ‘consortium’ proposal was a factor in the delay.

He suggested that “other factors” were in play, namely the difficulty in recruiting qualified Bahamian nurses who were being lost to the US “faster than we can produce them” due to the higher salaries on offer.

The CDM chief said the likely savings generated by his proposal would help to combat that problem, adding that the consortium had “enough” members to “make it work”.

He declined, though, to identify any of them, saying this would be “premature”

“We don’t have agreement, but it’s under serious consideration by the powers that be,” the CDM chief said of the Government and PHA approach to his proposal.

Mr Robert’s consortium offer recommends that the PHA lease all medical equipment from it for a five-year period, rather than purchase what it needs.

He argues that by leasing, instead of purchasing, the PHA (and, by extension, the Government and Bahamian taxpayer) will save millions of dollars on the upfront acquisition cost, plus maintenance and depreciation.

Once the five-year lease expires, the PHA would have the option of negotiating new rental terms for the equipment, or returning it to the consortium - which would then lease it a new model.

Mr Roberts likened this to the Government choosing whether to lease or buy a vehicle for an official, pointing out that under the latter option it would have to cover maintenance costs and be exposed to depreciation on its value after five years.

Yet under a lease agreement all maintenance costs were covered by the dealer, and no depreciation was incurred.

Mr Roberts said some of his competitors did not want to change the existing supply model for the good of the country.

“They want to turn this into a political issue,” he told Tribune Business. “That’s quite unfortunate, as it’s opposite to what my intentions were.”

Mr Roberts suggested that some opponents of his consortium plan were motivated by self-interest and their own bottom line, as his proposal - if successful - would prevent them using their distributorships to charge “exclusive fees”.

He explained that the Christie administration’s approach to awarding the Critical Care Block supply contracts was in marked contrast to its predecessor.

A committee appointed by the former Ingraham administration had selected GBA as the equipment consultant, with a mandate to recommend the products that should be installed in the Critical Care Block.

“What really happened is that decisions were made to contract quality equipment, but not through a competitive process,” Mr Roberts said.

Declining to identify the companies he was referring to, the CDM chief said there were “primarily two” complaining because under the process initiated by the previous government they would have obtained “the lion’s share of the business”.

“The two groups that are claiming they’re being mistreated, they’re welcome to be a part of the consortium,” Mr Roberts added. ‘They both rejected it.

“That [the proposal] was taken out of context because a few are benefiting from purchases through a direct negotiation process. That’s how it went off. I was disappointed, not surprised. The persons involved are extremely competitive, and not team players.”

Another medical supply industry source, though, said the consortium proposal was “really against everything the consultants” appointed by the former Ingraham administration had recommended.

Mr Roberts, though, said the main motivation behind his proposal was to ensure “a sustainable industry” against the backdrop of the Government’s fiscal challenges.

He estimated that the repairs and maintenance for 80 per cent of the existing equipment at the Princess Margaret Hospital were being outsourced abroad, adding that the consortium’s plan would retain such spending at home by creating 24-30 biomedical technician posts to perform this work.