PPP initiative in the health sector
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1 PPP initiative in the health sector Stephen Batts PPP Key Consultant, EU Health Facility Day 2-3rd December 2016 EU Health Facility, Vietnam A Project funded by the European Union 1
2 2
3 Demand and Supply 3
4 Special Purpose Vehicle SPV 4
5 PPP types in the sector DESIGN AND CONSTRUCTION NON - CLINICAL SERVICES PRIMARY HEALTH CARE CLINICAL SUPPORT SERVICES SPECIALISED CLINICAL SEVRICES HOSPITAL MANAGEMENT Detailed designs Building construction Medical equipment Capital financing IT equipment & services Maintenance Food Laundry Cleaning Primary care Public health Vaccinations Maternal & child health Lab analysis Diagnostic tests Medical equipment maintenance Ambulances Dialysis Radiotherapy Day surgery Other specialist services Management of entire hospital or network of hospitals a And/or clinics EU Health Facility, Vietnam A Project funded by the European Union Public sector procures defined SERVICE at 5 defined COST
6 PPP Process 6
7 PPP Advantages Public Partner Rapid development of the health sector system without increasing the state debt and without state expenses Improved access of the population to services Quick access to private financing Employment of the new service delivery chain Increased competition among suppliers of services (improved quality, decreased prices) Private Partner Employment of funds and Business development Maximizing earnings through exploring efficiency measures in process organisation Private partner through modernization processes upgrades skills and incentives of the personnel Long term business opportunity EU Health Facility, Vietnam A Project funded by the European Union 7
8 PPP financing Government payments for the delivered services to a PPP services supplier by a public partner : Number of delivered services, (periodically) Fixed ( for the presence facility payment ) for duration of contract Pay as you go in accordance with contract Possible equity investment in SPV EU Health Facility, Vietnam A Project funded by the European Union 8
9 Type of Services to be provided through PPP Already existing services (and delivered) in public health facilities in this case we can speak about a transfer of a certain package of services to PPP, which will be provided more efficiently; or New services the state, due to objective and/or subjective reasons, cannot deliver (for example, due to a lack of financial or organizational capacity) - in this case, the state allocates certain funds out of the annual health budget to cover the expenses of the private partner and procures such services from PPP. EU Health Facility, Vietnam A Project funded by the European Union 9
10 PPP Failures Planning is essential to prevent failures Poor legal framework and enforcement Weak institutional and PPP strategy and contracts Lack of complete cost, revenue and economic analysis (feasibility study) Lack of competitive procurement Inappropriate sharing of risks Public resistance willingness to pay not assessed 10
11 The PPP Co-location Model PPP Hospital Doctor/Specialist Offices Government Hospital Inpatients and Outpatients Have a CHOICE 11
12 Mitigating measures Regulation and systems to involve the private sector need to be in place and well-functioning: licensing, accreditation, contracting with health insurance (mainly cost of service to be contracted) Contract Management and M&E system for PPP initiatives have to be established already at the design stage Government actors (public sector) need to develop capacity to draft and manage contracts, supervise implementation, asses output Risks and financial burden for the Government shall be carefully considered before launching any initiative Good governance in PPPs is a critical issue (transaction adviser, guidelines and lessons learned on governance of PPPs by the UN, EU, ADB) EU Health Facility, Vietnam A Project funded by the European Union 12
13 What the private partner looks for in a PPP? Country legal to protect assets and investment Return on Investment Reliable partners Reliable feasibility study Long-term reasonable contract More and continual business. 13
14 Need for MoH PFM PPP Unit 14
15 Thank You Questions please? EU Health Facility, Vietnam A Project funded by the European Union 15
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