Public Private Collaboration Public Private Collaboration in Health Care Provisionin Health Care Provision

Montenegro Workshop Montenegro Workshop September 2007September 2007

Matthias LoeningMatthias Loening

Overview Overview

Public-Private Partnerships - Options

Case Studies

– Inpatient Laboratory Services Outpatient Dialysis Services

– Radiology Services

– Independent Sector Treatment Centres

– Radiotherapy

– Private Wing - Maternity Services

Summary

Contact

Hospital Management

Hospital Management

Specialized Clinical Services

Specialized Clinical Services

Clinical Support Services

Clinical Support Services

Non-clinical Services

Non-clinical Services

• Detailed designs

• Building construction

• Medical equipment

• Capital financing

• Lab analysis

• Diagnostic tests

• Medical equipment maintenance

• Management of entire hospital or network of hospitals and/or clinics

• Hemodialysis

• Radiotherapy

• Day surgery

• Other

specialist

services

• IT equipment & services

• Maintenance

• Food

• Laundry

• Cleaning

• Billing

Design & Construction

Design & Construction

PPPs can be applied to a wide range of services

Public-Private PartnershipsPublic-Private PartnershipsOptionsOptions

Selected Case Studies

Inpatient Laboratory ServicesInpatient Laboratory Services

Colentina Hospital• A 1,000-bed general public hospital• Approx. 40,000 inpatients and 600,000 in-house lab

tests year Transaction Structure

• Hospital tendered for a private operator to take over, centralize, renovate, equip and operate all laboratory services for the hospital

• Operator would be reimbursed according to a specified fee schedule

Tender

• Bidders were required to meet specified prequalification criteria evidencing lab experience

• Winning bidder selected on the basis of proposed largest price discount to fee schedule

• Costs for hospital for lab tests have been reduced by 60%

Outpatient Dialysis ServicesOutpatient Dialysis Services

Dialysis Services

• IP and OP dialysis services are provided in approx. 40 public hospitals

• Dialysis supplies are purchased by the NHIF and equipment is purchased by the Ministry (if funds available) and allocated to the hospitals

• Backlog of patients and facilities in need of upgrading and expansion

Transaction Structure

• NHIF tendered for experienced private dialysis operators to take over and upgrade dialysis centers in 8 different public hospitals across Romania

• Operator to assume full responsibility service provisioning

Tender

• NHIF conducted simultaneous tender for 8 dialysis centers

• Winning bidders selected on basis of highest investment commitments

• Total investment commitments amounting to over $16m

Inpatient Radiology ServicesInpatient Radiology Services

Colentina Hospital

• A 1,000-bed general public hospital

• Lack of suitable imaging/radiology equipment (no MRI and one CT machine in need of repairs)

• No capital funding available to buy or repair radiology equipment

Transaction Structure

• Hospital tendered for a private operator to install and operate full range of radiology/imaging equipment for Colentina’s inpatients

Tender

• Hospital conducted a public tender to select the Operator

• All bidders bid on identical contract specifications and requirements

• Winner selected on the basis of bidder who bid the largest discount to a specified fee schedule. Winning bidder proposed a 35% discount to fee schedule

Radiotherapy ServicesRadiotherapy ServicesMalopolska Voivodship (Province)

• The province wished to locate a new radiotherapy clinic at St. Lukasz Hospital to provide radiotherapy to cancer patients of the Tarnow area.

• The proposed PPP did not go forward, however the transaction model is illustrative of the same model that IFC is attempting to replicate in other countries.

Transaction Structure

• A PPP contract for design, construction, financing, equipping and operation of the Radiotherapy Clinic.

• The expected capital expenditure for the project was $5m-$10m.

Tender

• The tender could be based upon least subsidy (per treatment) with a minimum volume level contracted.

• The operator may be allowed to provide services to private patients.

Facilities Management

ProviderBuilder

Equity Providers

ProjectCompany

RadiotherapyClinic

Banks/BondInvestors

Support Service

Provider (s)

Payment Payment

SupportServices

Construction

Funds

Dividends

Equity Funding

Repayment

Payment

PPP Contract Facilities & Non-Clinical Services

Payment

Facilities Maintenance Services

Hospital

Patients

Patients

Radiotherapy ServicesRadiotherapy Services

Independent Sector Treatment CentresIndependent Sector Treatment Centres

Independent Sector Treatment Centres

• The ISTC’s are projected to deliver care for 250,000 patients each year

• Part of the drive to decrease waiting times for elective surgeries, offer patients greater choice, allow for much needed capital investment and alleviate staffing and management bottlenecks

Transaction Structure

– NHS tendered for specified outpatient (volume) contracts with initial contracts for 5 years

– NHS patients will be treated free, paid by the NHS

Tender

• Initially 7 private health care providers received 19 tender awards in the fall of 2003 • Wave 2 currently in process for additional 250,000 patients per year

Private Wing – Maternity ServicesPrivate Wing – Maternity Services

Polizu Hospital

• The public hospital had spare capacity and needed additional funding for current operations.

Transaction Structure

• 25 year concession of OB-GYN services in a public hospital that includes: an outpatient clinic; medical diagnostic and imaging center; ambulatory surgery clinic; laboratory; and inpatient facility.

• The private operator would be responsible for renovating and equipping the facility.

• The private wing is completely separate from the public hospital with full market and financial risk taken by the private operator.

Tender

• Bid price based upon annual lease payment to the public hospital.

Public-private partnerships can allow for

– Increased access

– Lower costs

– Improved quality of the facilities and services

PPP’s can take many forms, each with a different degree of private sector responsibility and risk

However, there is a general trend within all of these case studies and the message is clear

SummarySummary

Buy Services Not Equipment !

Contact:

Matthias Loening

Senior Health Advisor

European Bank for Reconstruction and Development

Email: loeningm@ebrd.com