Vital Healthcare calls on new government to fast-track long-term leases with private facilities

Vital Healthcare calls on new government to fast-track long-term leases with private facilities | Insurance Business New Zealand

Life & Health

Vital Healthcare calls on new government to fast-track long-term leases with private facilities

Fund manager discussed the possibility of co-ownership with public entities

Life & Health

By
Kenneth Araullo

Vital Healthcare Property Trust, a major player in the hospital property market, is urging the government to expedite its involvement in building healthcare facilities.

Vital, listed on the sharemarket and one of New Zealand’s largest hospital landlords, is eyeing opportunities arising from the National’s coalition agreement with ACT. This agreement includes exploring long-term leases with private health facilities while keeping health service delivery public.

Aaron Hockly, Vital’s fund manager, discussed the potential for government collaboration in a recent interview with RNZ. Hockly expressed Vital’s interest in partnering with the government to provide quicker access to healthcare across New Zealand.

Hockly acknowledged the political sensitivities around constructing full-scale hospitals but suggested the possibility of co-ownership with entities such as ACC, New Zealand Super, and iwi. This approach, he believes, could address public concerns about private entities owning public healthcare facilities.

Vital is actively seeking partners for two expansion projects in Auckland and Christchurch. Hockly noted that government participation as a cornerstone tenant could accelerate these developments. The ACT party’s health policy, which supports public-private partnerships (PPPs) in healthcare infrastructure, aligns with this approach. This policy marks a shift from the previous Labour-led government, which had banned PPPs in health and education.

While National has expressed interest in finding alternate funding sources for hospital construction, including tapping into ACC, the Superannuation Fund, and KiwiSaver funds, it has yet to formalize plans for private funding in healthcare infrastructure.

According to Hockly, Vital can construct and manage hospital buildings more cost-effectively than the government. He pointed out the potential for quick progression on projects like a new outpatient day-stay facility in Christchurch if the government takes a partial stake. Additionally, Vital’s plans to expand its private Ormiston hospital in South Auckland could benefit from public investment.

Despite raising this issue with the previous government for four years, Hockly noted no progress was made. However, he is optimistic about the new government’s leaseback policy, which aligns with Vital’s expertise. Yet, he acknowledged challenges in engaging with decision-makers due to the ongoing restructure within Te Whatu Ora, the national health entity.

Te Whatu Ora confirmed their awareness of the government’s consideration of different funding models but noted they had not yet discussed infrastructure specifics with ministers. ACC declined to comment on potential investments.

Vital already leases a portion of its billion-dollar New Zealand portfolio to Te Whatu Ora. However, in its Australasia-wide operations, public services constitute only 3% of its health space valued at over $3 billion.

What are your thoughts on this story? Please feel free to share your comments below.