Cabinet has approved a new management framework for Dr Neville Fernando Hospital, combining Treasury ownership with management by the Sri Lanka Air Force.
Under the framework, ownership and assets of the hospital are to be transferred to a company in which the Treasury holds 100% of the shares.
Management of the hospital will be conducted by the Sri Lanka Air Force.
The arrangement therefore should not be described simply as privatisation or as transferring ownership of the hospital to the Air Force.
Eleven-member board
The Secretary to the Treasury is to appoint an 11-member Board of Directors based on recommendations from the Ministry of Defence.
The framework follows an earlier joint proposal involving the Ministries of Finance, Defence and Health together with the Sri Lanka Air Force.
The Government says the arrangement is intended to provide a shared management and control structure for the hospital.
Treasury support through 2028
The General Treasury is expected to provide funding for staff salaries and operational expenses during 2026, 2027 and 2028.
After that period, the hospital is intended to operate as a self-financing institution.
This is an intended financing model rather than evidence that financial self-sufficiency has already been achieved.
Free and paid services
The Government says the hospital will continue to provide both free and fee-charging services.
Medicines, medical supplies and consumables valued at Rs.125 million annually are to be provided through Health Ministry allocations for services offered free of charge to the public.
The framework covers both inpatient and outpatient services.
Background
Cabinet had previously approved placing the hospital under the Ministry of Health in 2017.
The latest decision establishes a different operational structure involving a Treasury-owned corporate entity and Air Force management.