28 – 29 september 2011 vedic village spa resort kolkata, india

28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.

Health PPPs Improving Access & Quality of Care for

the Public

Global Experience and Lessons

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Introduction to IFC

PPPs in Healthcare

PPP Case Study


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* International Finance Corporation

IFC is the private sector arm of the World Bank Group which comprises five agencies

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* IFC’s Investment and Advisory Services

Technical assistance and advice to governments and businesses

World’s largest multilateral provider of financing for private enterprises$30+ billion in outstanding investment commitments

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Introduction to IFC

PPPs in Healthcare

PPP Case Study


*Headline issues: Access, Affordability, Quality

Inadequate Infrastructure

Inadequate utilization of existing infrastructure

Availability of specialists, technicians, staff

Governments are facing increasing demand for health care services, but also rising costs (medical technology, changing disease patterns)

Mixed experience with NGOs and CSR initiatives

Governments are looking for new, sustainable models to respond to these challenges

PPPs can mobilize private finance, increase access, introduce efficiencies in the delivery of

public health services, and improve health outcomes.

Need for new models for health service delivery


*What is a Public Private Partnership

“A cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.”

The Canadian Council for Public-Private Partnerships

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*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


*Different solutions for different needs

Management of hospitals or networks of hospitals and/or clinics

Country examples: Brazil

Clinical Services

Management Contracts

Infrastructure PPP (PFI)

Contracting out services such as dialysis,

radiotherapy, day surgery etc.

Country examples: Romania, Peru, UK

Contracting a private provider to design, build

and manage facilities

Country examples: UK, Spain, Italy, Mexico,

South Africa, France, Australia

Non-clinical Services

Contracting out works and services such as IT

equipment and service, cleaning, catering, maintenance, etc.

Country examples: global

Contracting a private provider to design, build, and manage facilities as

well as deliver clinical services

Country examples: Portugal, Lesotho, Spain,

Turks and Caicos

Infrastructure and Services PPP


*Model for a healthcare PPP

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PPP Service Provider

Department of Health/ Medical

EducationGovernment Hospital

ACCREDITATION BODIES (NABH, JCI

etc)

Public Insurance

Scheme

Higher Income Patients

• Concession Agreement• Referrals for uninsured

emergency• Contract Management• Performance Monitoring

Invoicing

Payments

Out of Pocket/ Private

Insurance Payments

Publicly Insured Patients

Service

Accreditation

Service

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Introduction to IFC

PPPs in Healthcare

PPP Case Study


* ANDHRA PRADESH ADVANCED RADIOLOGY PPP

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Andhra Medical College, Vishakhapatnam

Rangaraya Medical College,Kakinada

Kakatiya Medical College,Warangal

Kurnool Medical College,Kurnool


*The Scenario

The teaching hospitals are located at the heart of the towns with very good access and approach

The radiology departments were short of either equipment or doctors or technicians.

Medical Council of India had de-recognized PG courses in radiology due to lack of equipment

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*Working hours were 3-4 hours in a day and machine down time was in months at a stretch

*Patients had to wait for weeks to get an CT Scan wherever the machine existed


*The Scenario….

Private diagnostic centers providing servicesObsolete/ low quality equipment used e.g. 0.35 T MRI, Single slice CT machine

Exorbitant prices for scans

Payments from Government backed insurance for BPL patients(Aarogyasri scheme) were made to these private centers

It was suspected that the price of these scans were high due to the informal referral system (kickbacks)

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*Objectives of the parties involved

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GOVERNMENT OBJECTIVES•Make healthcare services accessible to every strata of society

→ Need of availability of equipment and manpower

•Provide free & quality services to the under - privileged population of society at low cost to Govt.

→ Need of efficiency and excellence in operations

•Regulate Market Price of services in the private sector

→ Need of competition to existing private service providers

PRIVATE PLAYER OBJECTIVES

•Expansion of operations in tier II and tier III cities and towns

→ Need of local partners in these places

•Sustainable cash flows from the project

→ Need of volumes i.e. large number of patients

•Low initial investment to make the project viable at low tariffs in small towns

→ Need of funds to make the project viable


*Structure of the PPP

7 year concession contract between the Government and the Private investor/operator (Concessionaire)

Government to provide land/building and funds for fixtures & civil works

Private investor construct, install equipment, arrange for staff, operate and maintain facilities

Equipment based on the technical requirements provided by the Government

Private investor to be paid service fees on per scan basis from the Government for patients referred by the hospital doctors. Extra revenues can be taken by private patients.

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*Structure of the PPP

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ANDHRA RADIOLOGY PPP

PILLARS FOR THE PPP

VIABILITY•The Government to provide ‘Viability Gap Funding’ in form of land, building and civil work costs

SUSTAINABILITY•Exclusivity to the PPP: All patients of the hospital referred only to the PPP facility for radiology services

•Payments made by Govt. on a monthly basis

•Covenants for penalties in case of non performance of service by private player or non payment of fees by the Government


*The Tender Process

Around 15 private firms expressed interest in bidding for this project

This included global equipment manufacturers, national diagnostic services providers and corporate hospital chains

A transparent and competitive bidding process was conducted

The bidding criteria was Average rate per scan for a simple menu of scans

Outcome of the bidding process: Bid won by a global major in equipment manufacturing together with a strong domestic service provider.

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*Impact of the PPP

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Private player gets returns on its investments

BPL patients served within hours

BPL patie

nts

served w

ithin

hoursHigh-end equipment installed

High-end

equipment

installe

d

High-end

equipment

installed

Aarogyasri payments routed to Govt Hospitals

Aarogyasri

payments

routed to Govt

Hospitals

Meet MCI regulation

Price per scan for private patients 30 – 50% lower than existing private service providers:

Market price goes down


*Win-Win situation for all

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END USERSINSURANCE COMPANY

GOVERNMENT PRIVATE SERVICE PROVIDER


Modernizing facilities: Andhra Pradesh

Project

• Ministry of Health, Meghalaya, retained IFC as lead transaction advisor for a project to address lack of any medical college in the state of Meghalaya and to address healthcare needs of low-income & uninsured populace

Structure

• The scope of the project was:

o Greenfield teaching hospital of 650 beds (550 public, 100 private)

o Greenfield Medical college to admit 100 MBBS students each year

o Design, construction, partial finance, full operation for 30 years with significant risk transfer to the Private Operator.

Results• Project Transaction Structure has been approved by GoM.

Bidding procedure to commence in September/ October 2011.

• Capex ~ USD 55 million. Government capital contribution of 40% of capex.

• Patients will get services at no additional cost as present.

• First batch of MBBS students will be admitted in August 2013

IFC Transaction ExampleMeghalaya Medical College PPP (India)

*THANK YOU

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28 – 29 september 2011 vedic village spa resort kolkata, india

Documents

services ppp slide

private provider

health service delivery

health care services

publicprivate partnerships

private enterprises

private finance

private party