The Tribune

By NEIL HARTNELL


Tribune Business Editor


nhartnell@tribunemedia.net

THE US ambassador to The Bahamas yesterday argued that the terms of the $195m Chinese financing for New Providence’s second hospital are not “in the best interests” of this nation and pledged that the Trump administration will “help secure a better deal”.

Herschel Walker, in an official statement responding to The Tribune’s revelations that Chinese law and jurisdiction will govern the China Export-Import Bank loan covering 72.8 percent or nearly three-quarters of the hospital’s $278m financing needs, argued that The Bahamas would fare better securing “financing options that adhere to international norms”.

Suggesting the Government ought to reconsider the deal, Mr Walker said:
“It doesn’t appear to be in the best of interests of The Bahamas to submit to Chinese law and labour standards on their own soil.

“It would be better to look at other financing options that adhere to international norms. President Trump believes in fair deals that benefit both nations, and the US is committed to being the economic and security partner of choice.

“We stand ready to work with The Bahamas to help secure a better deal – whether from private or public sources - to provide the healthcare infrastructure Bahamians deserve.”

The New Providence hospital deal, and its financing terms, are thus threatening to be the first flashpoint between the Trump administration and Bahamian government during Mr Walker’s tenure. It also threatens to drag The Bahamas into what the Davis administration has always sought to avoid - the geopolitical battle between the US and China for economic and global dominance.

Mr Walker’s statement also confirmed Tribune Business revelations that China Railway Construction Corporation, the main contractor for New Providence’s second hospital, was among a group of Chinese entities that attracted Donald Trump’s attention during his first US presidential administration because of its historical origins and ties to the Chinese military.

He issued an executive order banning Americans from owning shares in these firms because of such links, and the US embassy confirmed: “The United States Department of Treasury Office of Foreign Assets Control placed China Railway Construction Corporation, the main contractor for the planned hospital, on its restricted investment list due its links to China’s military-industrial complex.”

Meanwhile, the feasibility study for the second New Providence hospital, tabled in the House of Assembly yesterday and dated March 2025, reveals the Government is eyeing plans to finance public hospital or tertiary-level healthcare in The Bahamas through the introduction, and levying of, National Health Insurance (NHI) contributions.

The report described the reliance on escalating taxpayer subsidies from the Public Hospitals Authority (PHA) as not viable, and asserted that the annual “cumulative net cash flow” for the 50-acre Perpall Tract facility “is unsustainable with the current economic model”.

It added: “The Government of the Commonwealth of The Bahamas is moving repaidly to implement universal healthcare coverage by way of National Health Insurance contributions.”

Just 3.7 percent, or an average of $2.545m, of the second New Providence hospital’s annual $68.651m operating costs is forecast to be generated from the facility’s own sources such as user fees and other charges.

Without reform, this means that the PHA’s annual taxpayer subsidy, currently pegged at $247.855m for the 2025-2026 fiscal year, will need to increase by - on average - just over $66m per year, taking it to more than $300m, due to the need to cover the second New Providence hospital’s costs.

“The analysis measured that the average annual revenue of the project - including PHA's subsidy revenue - is $76.1086m, and the financial net present value of the entire investment in the project is -$163.24m,” the feasibility study said.

“During the construction of the hospital, the Ministry of Health and Wellness will finalise the new economic model to fund tertiary health care services by way of National Health Insurance (NHI) contributions. During the operation of the project, the hospital's own operating income is relatively small, and the operation of the project relies on the Bahamas Government to make financial subsidies to maintain.”

Dr Michael Darville, minister of health and wellness, did not respond to Tribune Business questions seeking confirmation on whether the levying on NHI contributions would be in the Davis administration’s plans if re-elected; the timelines for implementation; the rates and costs; and who would pay (presumably employers and employees).

However, the minister told Tribune Business last year that The Bahamas will “eventually have to pull the trigger” on employer and employee funding for NHI but it is “premature” to do so now.

He confirmed that the NHI Act, debated and passed by Parliament last year, does “make way” for the healthcare scheme to adopt a model where it is financed by contributions from Bahamian employers, the self-employed and workers but such a move is “not on the table” at present.

Affirming that NHI will remain a government-funded scheme underwritten by Bahamian taxpayers for the foreseeable future, he added that multiple “preparatory steps” have to be implemented and completed before a scheme funded by business/employee contributions can even be considered.

These initiatives include upgrades to the existing public healthcare network’s infrastructure, the installation of new information technology (IT) systems and the time required for Bahamian private health insurers to adjust the pricing and content of existing medical policies and benefits packages to make way for the standard health benefit (SHB) introduced by the NHI Bill.

Meanwhile, the feasibility report for the second New Providence hospital revealed that it is forecast to generate a negative net financial value of -$163.24m.

“The project is in a loss position for the entire (33-year) calculation period, and the net profit of the project is $0 after considering the PHA subsidy loss,” it added.

“The project's overall financial internal return rate (IRR) is 0 percent, with a pre-tax financial net present value of -$163.24m, making the project unprofitable from an economic standpoint. The static cumulative net cash flow in year 33 is -$14.8m.

“From a dynamic perspective, the cumulative net present value of the project at year 33 is -$163.24m. This indicates that the investment will not be fully recovered during operation, both from a static and dynamic perspective.”

However, the Government’s priority for the second New Providence hospital is the Bahamian people’s health and welfare, and saving lives - especially those of mothers and unborn/newborn babies.

“Medical and health care is a public good that benefits the country, the people and society,” the feasibility study said.

“Medical and health units are social public welfare entities through which the Government carries out various welfare programmes. Its nature dictates that social advantages dominate hospital development, followed by economic benefits, and investment gains are mostly represented in social benefits.

“Several large-scale hospitals already exist in Nassau, and the hospital's expansion is hampered by a lack of medical land and beds. The building of this project will help to ease Nassau's existing medical resource shortage and boost medical treatment in the island to comprehensive and strong healthcare development,” the report added.

“This is a building project for public welfare. The project's execution will have positive social consequences, establish a firm foundation for the long-term growth of health services, provide high-quality, multi-level diagnostic and treatment services for patients, and successfully promote the level of health services in The Bahamas.

“After the completion of the project, it has a wide range of benefits and great influence in The Bahamas and even in the wider Caribbean. It is also a landmark project for the Government of The Bahamas to carry out improvement work in the field of national health. Therefore, the implementation of this project is necessary and feasible.”