Health PPPs Improving Access & Quality of Care for the Public

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1 Health PPPs Improving Access & Quality of Care for the Public

2 Public Private Partnerships in Health Wide Range of Options Design & Construction Nonclinical Services Primary Care Clinical Support Services Specialized Clinical Services Hospital Mgmt Detailed designs Building construction Medical equipment Capital financing IT equipment & services Maintenanc e Food Laundry Cleaning Security Primary care Public health Vaccinations Maternal & child health Lab analysis Diagnostic tests Medical equipment maintenan ce Ambulance services Dialysis Radiotherapy Day surgery Other specialist services Management of entire hospital or network of hospitals and/or clinics 2

3 Health PPPs PPPs differ from traditional public procurement: Rather than buying buildings, equipment or supplies, PPPs are long-term contracts for governments to buy a bundled service (facility, staff, supplies, equipment) PPPs involve annual payments over long-term after facility commissioning Payment is tied to performance not inputs/milestones Private party is typically responsible for all or part of the capital financing 3

4 Global Trends Nearly 70% of health PPPs (measured by cost) since 2003 have involved hospital construction or expansion 0.6% 0.7% 6.7% 8.7% Hospital management Medical equipment services 14.1% Ancillary medical and accommodation services block Clinical services 69.1% Clinic construction or expansion Hospital construction or expansion 4

5 New Hospital PPP Structure Private Consortium Ministry of Health or National Health Insurer $ New $ Hospital Detailed designs Capital financing Construction Medical supplies & equipment Clinical services Maintenance Non-clinical services Staffing Legal permits and authorization Reimbursement for clinical and non-clinical services Performance monitoring Medical licensing & certification 5

6 IFC Health PPP Transactions Completed (16) Mexico hospitals (2) Lesotho hospital and clinics Brazil emergency hospital Andhra Pradesh (India) diagnostic imaging centers Romania Dialysis centers (8) Imaging center in public hospital Lab in public hospital Private wing in maternity hospital 6

7 Active (9) Egypt: two hospitals IFC Health PPP Transactions India: a medical college/teaching hospital in Shillong and a lab PPP In Andhra Pradesh Brazil: primary care centers Moldova: radiotherapy center and a diagnostic imaging center in major public hospitals Uzbekistan: medical diagnostic imaging centers in four cities Macedonia: dialysis centers 7

8 Project IFC Transaction Example A PPP for the construction, equipping, financing, and management (all clinical and non-clinical services) of a new 390 bed hospital and 3 referral clinics Structure One of only a few hospital PPPs in emerging markets where the operator is responsible for all services Under the performance-based contract the Operator receives an annual global budget and must treat all patients Results Lesotho Hospital and Clinics The Government signed an agreement in October 2008 with a large South African healthcare services group Netcare, Clinics opened in Hospital nearing completion and to be opened shortly 8

9 Project IFC Transaction Example Hospital do Suburbio (Brazil) New 298-bed emergency hospital serving one million people in Salvador (state capital) Structure Construction financed by the Government Tender was for 10-year PPP contract to equip and operate (clinical and non-clinical) the hospital Payment is linked to quantitative and qualitative performance indicators. First health PPP implemented in Brazil Results Successfully tendered and awarded in February, Opened Sept 2010 Total project cost: US$ 27 million construction (Bahia Government), US$ 32 million equipping (private partner), of which US$ 23 million in 1st year 9

10 Project IFC Transaction Example Andhra Pradesh (India) PPPs for advanced diagnostic imaging centers in 4 government medical colleges/hospitals in Andhra Pradesh Structure PPP contract involves comprehensive imaging services, including refurbishment of existing facilities/new construction, equipping, capital financing and operation of imaging centers Results Awarded in June 2010 to Medall, a consortium of imaging providers with GE as the equipment partner Refurbishment of facilities ongoing with Commissioning of first site envisioned for late 2010 Upon request by government, IFC now assisting in refining a comprehensive policy framework for PPPs in the sector and follow-on transactions for laboratory services at the medical colleges 10

11 Project IFC Transaction Example Radiotherapy and Diagnostic Imaging (Moldova) PPPs under preparation for a radiotherapy and diagnostic imaging center in Chisinau. Structure Separate PPP transactions for a new radiotherapy (cancer treatment) center at the national cancer hospital (Oncology Hospital) and a new diagnostic imaging center at the national referral hospital (Republican Hospital) Under both PPPs, the operator will be responsible for design, construction, equipping, capital financing, and all services (clinical and non-clinical) Timeline Tender expected in early

12 Project IFC Transaction Example Medical Diagnostic Centers (Uzbekistan) PPPs under preparation for medical diagnostic centers (MDCs) in four cities Structure Private operator will build and/or refurbish, equip and operate (clinical and non-clinical services) The MDCs will provide range of services including: imaging, lab analysis, possibly day surgery The contract will be for 7 years with an expected investment of approx. $5m Timeline Tender expected in early

13 Project IFC Transaction Example Belo Horizonte Primary Care Centers (Brazil) PPPs for new and refurbished primary care centers in Belo Horizonte Structure Under the PPP, the operator will be responsible for the design and construction/renovation of multiple primary care clinics. The operator will also be responsible for imaging and laboratory testing, pharmacy and materials distribution, and other support services of the primary care network. Timeline Tender expected in

14 Sector Specific Issues in Health PPPs Issue 1 Does it address the country s health priorities? 2 Is it affordable for government & patients? 3 How will patient care be ensured? 4 How will the PPP operator be paid? Comments Will the PPP include treatments/services which will improve health outcomes? What will be the PPP payment as a % of MoH expenditures? Will patients pay a copayment? Need to set, monitor and enforce performance targets re: Timeliness of care Overall hospital mortality rate Readmission rates Hospital infection rates Preferable to enforce accreditation and professional licensing/certification per capita, per treatment/service, or global budget 14

15 Provider Payment Options Method Per capita (e.g. X$ per person per year) Per treatment/service Global fixed budget (X$ per year) When to Use primary care health care network (hospital + clinics) For services which are predictable and easy to cost, such as: Lab tests Diagnostic imaging Dialysis Radiotherapy / chemotherapy Ambulance services Secondary hospital Tertiary hospital, though may require supplementary payments for higher cost treatments 15

16 Designing a perfect fit Contract Design Medical service obligations Sustainable payment structure Monitoring and dispute resolution An Optimal Health PPP Project Structure Addresses a health priority Affordable for government and patients Creditworthy government purchaser Bankable project Tender Process Fair/equal treatment of investors Transparent public tender& evaluation criteria 16