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GOB Considers Proposal to Merge KHMH & Universal Hospital
(December 4, 2006)
The face of public healthcare in Belize could be changing radically, and soon! 7NEWS is reliably informed that tomorrow Cabinet will consider a proposal to amalgamate Universal Health Services and the KHMH.

The details of the proposed amalgamation are difficult to ascertain, but the decision, as we understand it, is forced by the cash crisis that Universal and, by extension, government is facing. Universal continues to be very indebted to the Belize Bank, with a principal debt of $17 million and subsequent debts reportedly in the vicinity of another $10 million. It's a private debt, but it's publicly guaranteed, in this case by the DFC. Never mind that Universal also owes the DFC another $12 million.

For the Belize Bank, a DFC guarantee means a government guarantee, so now, under pressure from Michael Ashcroft's Belize Bank, government has to come up with a solution. As we understand it, the proposals is to swap Universal's $12 million debt to the DFC for equity. With that government would write off what Universal owes DFC and take over two-thirds ownership of Universal.

The idea is that government would then somehow make Universal into a going concern, one that would be able to service its debt to the Belize Bank. So how can government do what private management could not? Well the idea, as we understand it is, to let Universal specialize in critical care, and make the KHMH do general care.

Again, this is a very general outline that we have pieced together from a number of government insiders. We could not reach Minister of Health Joe Coye who is taking the proposal to Cabinet. But in its present form, the proposal is sure to generate great opposition from the KHMH staff and management, who for the past 5 years have been pitted in a battle against Universal.

It's a developing story that bears watching and we will continue to do so pending Cabinet deliberations tomorrow.

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Joined: Oct 1999
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Marty Offline OP
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The worst of both worlds
Author: Frankie Rhys

So, here we go again, another "private" company has had its loan guaranteed by GOB. The Universal Health Services saga is another sorry story in a whole long list of sorry stories - the DFC, the SSB, the BTL mess, BWSL, the "sweetheart" arrangement between BEL and BECOL, the BELIPO deal, the "sale" of the Government Print Shop etc. GOB can't seem to make up its mind about "privatization".

The Wizard is winding up like the two mythical Eskimos who were out in a kayak one day. Feeling rather chilly, they lit a fire in the kayak, which burned through the hull, sinking the boat, proving again that you can't have your kayak and heat it too!

The situation with Universal Health Services was publicly "dealt with" in the usual inept manner. Joe Coye's attempt at "explaining" the plan revealed instantly that he had no idea what he was talking about; neither did anyone else for that matter. What didn't change was the "shove it in your face, it's a done deal, no meaningful consultation" approach which does so much to [#%!] people off. The CEO of Karl Huesner learned about the "merger" on the 12:30 news, as did board members, doctors, nurses and other staff.

There is obviously a pattern here, and I'm not talking just about the mega-stealing that has accompanied so much of GOB's "business" of late. GOB's "economic policy" is, and has been schizophrenic from the get go.

In a communist system, the state owns the "means of production". That means it owns almost all the essential and important businesses. In a capitalist system, those businesses are privately owned. In practice, neither economic model is purely one or the other. China, one of the last remaining countries that still professes to call itself "communist," has opened up its economy to all kinds of private enterprises, while many "capitalist" economies recognize the need for government oversight in order to try to "level the playing field" somewhat, knowing what can happen if business is not regulated in any way, shape or form.

What GOB has been doing, though, defies description. GOB grants what they call a "sovereign guarantee", which means that if the business in question defaults on its financing arrangement, GOB promises that it will pay off the debt! The "reason" for this arrangement, according to the Wizard, is that creditors won't lend money to Belizean enterprises without the guarantee. That same argument is used to justify GOB policies in regards to our "privatized" utilities, only in this case, the catchphrase is "a guaranteed rate of return."

Government, any government, has only one way to get money. Governments collect taxes. Borrowing is simply a way of delaying payment. It's Master Card and Visa on a mega-scale. The money still has to be paid back from future taxes, just like the credit card borrower has to pay back his or her loans from future income. The arguments advanced for "sovereign guarantees" and "guaranteed rates of return" are just so much crap. They are false arguments that essentially invite those beneficiaries of such policies to have a party at the taxpayers' expense. Here's why.

Experience has taught me that the first principle of building a successful business, in addition to all the incredible effort and crazy hours of work, is that "you pay yourself last." No matter how good your market research, no matter how good your business plan, failure is always a possibility, and, if there is little or no money left for you the owner after all the bills are paid and payroll for your employees is made, so be it! Success requires self-sacrifice and sound management.

A "sovereign guarantee" or a "guaranteed rate of return" is an open invitation to poor management and outright abuse! Why not pay yourself a huge salary? Why not buy expensive vehicles and charge them, the fuel they use and the parts they need, to the company expense account? Ditto with other "business expenses" such as meals and airline tickets. Use the company phones extensively; the company pays the bill, and on and on.

When the roof finally falls in, and it will inevitably fall in under this kind of management, what, me worry? If I have a "guaranteed rate of return", I just hike the rates so that I make a nice profit regardless. If it's a "sovereign guarantee", the taxpayers will foot the bill for the bad loan. If the whole shebang collapses, I simply create a new company and never look back. If the company stays afloat with the assistance of the government, I still make out like a bandit because I still own it!

This whole situation appears to be crazy. Government pays the bills in the end but has no say in running the company? Would you agree to be Government under these conditions? Why would anyone want to be reduced to the role of check writer and funds disburser for a company that they don't own and supposedly won't profit from?

Maybe "ownership" in some of these cases is not as clear as GOB would like to have us believe. Could it possibly be that there are people in this government who have "hidden interests" and shares in some of these "privately owned" businesses? Is that why GOB is so quick to guarantee their loans? Maybe GOB would rather have us believe that they are "crazy" and "stupid" while many of them are really laughing all the way to the bank. If this is the case, money is also being skimmed off the top to pay the "hidden owners" in addition to all the poor management and abuse that is going on, and if the registered owners are just a front, they don't actually own anything anyway, so why not "get theirs" right away? It's all they will get since they are owners in name only.

As far as Ashcroft is concerned, we know what's up. He gets paid handsomely in return for his campaign contributions! What do we get in return? Rates are exorbitant and service, to put it mildly, sucks. You don't believe me? Consider the following. Kelly James, the climber whose body was recovered on Mount Hood in Oregon, was able to make a cell phone call to his wife from a snow cave 10,000 feet up on the mountain in a raging blizzard! We can't get a connection in the Cayo hills.

KHMH doesn't need Universal Health Services. What it needs are the funds to upgrade its equipment and its level of service to the public. It appears that KHMH won't get any funds even though it is a public facility, because public money is now allocated to rescue a "privately owned business", just as other taxpayer dollars have gone to rescue or to enrich those favored "private" citizens who have a connection with GOB through the PUP.

This economic "policy" is a dead horse. It could never be anything else. Huge chunks of public money are wasted on poorly managed "businesses" while "The Group" skims off the top in much the same way as the Mafia used to skim (some say that it still does) from the Vegas casinos. Some of these "business" ideas boggle the mind. Rooms at UHS cost $550.00 per day. How many prospective Belizean patients can afford the nut?

It appears to me that UHS had to have been designed for foreign patients, not Belizeans. Maybe it could work that way, but that becomes a whole other scenario. If UHS wants to serve the foreign market, it would have to rely on a massive advertising campaign, in the US market.

Doing this is risky. Belize doesn't have an international reputation for high quality medical care that is more affordable than the care that is available in the US market. Maybe it could develop that reputation, but this takes commitment, money and time. There is no indication that any of UHS' capital was used that way and, in any case, time would not have been on Universal's side.

Now we have another big loss that GOB intends, as usual, to fob off on us long-suffering taxpayers. The reality is that we don't even know what the exact amount of the bailout will eventually be. Nobody is in a hurry to show us taxpayers the numbers in situations like this.

So our infrastructure goes begging while GOB tries to squeeze every last dollar from poor and middle class Belizeans so that it can reward itself and its friends. I was disappointed with the business community. They could have (and they still can) forced GOB to straighten up somewhat, if they had the balls to refuse to pay taxes. Government would have no alternative but to negotiate. Obviously, they don't. Maybe they just need somebody to go first. Interesting, isn't it?

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