28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India.
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Transcript of 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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
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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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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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28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
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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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
* 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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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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28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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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28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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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28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*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
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
*Win-Win situation for all
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END USERSINSURANCE COMPANY
GOVERNMENT PRIVATE SERVICE PROVIDER
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
Modernizing facilities: Andhra Pradesh
28 – 29 September 2011Vedic Village Spa Resort Kolkata, India.
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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