PSMI falls on hard times, faces collapse

Premier Services Medical Investments (PSMI)

EMBATTLED Premier Services Medical Investments (PSMI) shut down 120 of its 155 facilities last month as the entity battled to settle a four-month salary arrears bill in a turbulent period that culminated in the closure of its flagship West End and Claybank hospitals in Harare and Gweru respectively as workers downed tools, the Zimbabwe Independent can reveal.

The closure of the facilities has also been marked by the arrest of PSMI executives on allegations of defrauding the entity of millions of United States dollars at a time when the entity is struggling to offer services to its clients.

PSMI chief executive officer Farai Muchena, managing director Tafadzwa Gutu and other executives Victor Chaipa, Cosmas Mukwesha and Shingai Maputo in September appeared before the courts facing fraud charges.

With a subscriber base of about two million clients, the dramatic collapse of PSMI, particularly over the past four months, sources briefed this publication, is largely symbolic of the paralysis gripping Zimbabwe’s health delivery system.

A trove of documents gleaned by the Independent in a period stretching over four months shows that PSMI had only 35 of its 155 facilities still functional by October 21, 2022, when the workers declared incapacitation and subsequently stopped reporting for work.

Bribery allegations levelled against the executives have since triggered a forensic audit into the affairs of PSMI by the Zimbabwe Anti-Corruption Commission, the CID and the Zimbabwe Revenue Authority, this publication can further reveal.

Relating to the number of facilities which are still operational, a letter dated October 21 2022 by PSMI acting managing director Margret Maulana to staff members, shows that the entity, with 29 medical clinics dotted around the country had closed 21 of them, while only four of its 19 dental clinics were still functional.

In the correspondence, also furnished to the PSMI chairperson, directors, head of departments and the Premier Services Medical Association (Psmas) managing directors, Maulana noted that widespread closures were sparked by “declaration of incapacitation” by restive workers.

PSMI is a unit that was formed in 2003 in pursuit of Psmas’ blue ocean strategy to forward integrate medical insurance into medical services provision.

“The declaration of incapacitation has resulted in most PSMI units closing down as practitioners and supporting staff could not afford to continue reporting for duty.

“Owing to the closure of the units, capacity utilisation has plummeted to below 10% as at October 19 2022 as patients and clients fail to access services. The state of incapacitation was attributed to protracted salary arrears, now in their fourth consecutive month, from July to October 2022,” Maulana wrote in the correspondence.

Shedding light on the number of facilities still operating, Maulana underscored that PSMI had closed all its 13 rehabilitation clinics while the same fate befell its three rental units during a period marked by dwindling revenue streams.

Emphasising the dire situation crippling PSMI, Maulana noted that “employees have endured prolonged non-availability of contractual monthly fuel allocations and inadequate transport allowances to capacitate them to report for duty”.

As a result of those militating factors, among others, PSMI in October 2022 only had one of its 25 pharmacies dotted around the country still opening its doors to clients while 10 of its 15 optometry clinics had ceased operations.

Following the closure of its flagship hospitals, namely West End in Harare and Claybank in Gweru, sources close to the turbulence gripping PSMI told the Independent that the entity moved in swiftly to admit some of its patients from the closed facilities to hospitals in Harare, including Sally Mugabe and Parirenyatwa.

As unit closures ravaged PSMI operations, the medical enterprise also closed 14 of its 17 laboratories while only two of its 19 radiology units remained functional. This is contained in Maulana’s letter seen by the Independent.

The same letter also shows that as a myriad of headwinds buffeted PSMI in October, it also halted operations at four of its ambulance bases, while only two of its five hospitals remained open.

In yet another set of documents gleaned by the Independent, PSMI rang the alarm bell notifying one of its key clients, Psmas, of its dire situation which had rendered it almost defunct characterised by an acute deficit of working capital running into millions of Zimbabwean dollars.

About 90% of Zimbabwe civil servants who are members of Psmas are served by PSMI, which is the largest private healthcare service provider in the country. 

The PSMI managing director, Gutu, wrote to Psmas managing director Nixjoen Mapesa on July 8 2022 highlighting that PSMI is currently facing viability challenges owing to a widening working capital deficit.

“PSMI is currently generating monthly Psmas revenues averaging ZW$950 million against monthly claims payments of ZW$490 million. This disparity has affected PSMI in sustaining its operations. The current PSMI ledger balance as at June 30 2022 stands at ZW$238 billion. PSMI’s capacity to sustain its operations has been affected by inadequate cash flows from Psmas. It is, therefore, our request that Psmas immediately engages the Treasury … so that PSMI can receive meaningful cash flows to sustain the business,” reads part of the letter.


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