NKTI's Presentation to ADB on Hemodialysis Project (Public-Private Partnership)
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Transcript of NKTI's Presentation to ADB on Hemodialysis Project (Public-Private Partnership)
A Model for Health of the Public-Private Partnership
January 2013
National Kidney and Transplant Institute
Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views
or policies of the Asian Development Bank( ADB), or its Board of Governors, or the governments they represent. ADB does
not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.
Terminology used may not necessarily be consistent with ADB official terms.
NKTI Overview
Rationale for the Public-Private Partnership of the
Hemodialysis Center Project
Operational Concerns
Financial concerns
Dialysis Center financial performance
Effect on the overall financial performance of NKTI
Renewal of the project after 5 years
Tertiary medical specialty center for renal
diseases
Government owned and controlled corporation
Three-fold mission:
Service, Training and Research
1st Government Hospital to be ISO 9001:2000
certified
The lead government agency in renal care
NKTI HEMODIALYSIS SERVICES
NUMBER OF
HD
MACHINES
NUMBER OF DIALYSIS
SHIFTS PER DAY
(each machines is
used for 4 hours)
MODE OF
PROCUREMENT
1983 5 1 Negotiated
purchase
1998 16 2-3 Bid/purchase
2000 20 3 Bid/purchase
OPERATIONAL CONCERNS
Hemodialysis slots were immediately filled
1-2 patients per day were turned down for treatment
Emergency cases were not accommodated
immediately due to a lack of available HD machines
OPERATIONAL CONCERNS
Increasing patient’s dissatisfaction because they are displaced from their regular HD schedules by patients requiring emergency dialysis/treatment delay due to water treatment breakdown and morbidity due to water treatment contamination
Delayed technology upgrades on equipment
and services because of insufficient fund availability
OPERATIONAL CONCERNS Long machine down time due to
Frequency of repairs for old HD machines
HD machine replacements delayed due to either lack of funds for capital expenditures or lack of available spare parts
Bureaucracy in processing repair work
Frequent breakdown of an old water treatment facility
Occassional contamination of water treatment facility
Problems with storing a large (3-month) inventory of HD supplies: storage facility, ordering time and forecasting
Led To A Decline In Patient Services
FINANCIAL CONCERNS
Major concern: Rising cost of repairs and maintenance of HD equipments/water treatment facility
Frequency of downtime in machine operations including corresponding lost of revenue resulted in high cost of repairs
Reduced revenue: High repair costs and reduced number of HD sessions due to down time
FINANCIAL CONCERNS
Expected increase in capital expenditures
Limitations in funds to accommodate technology
upgrades
Insufficient storage space for old, poorly functional HD machines
Difficult disposal proceedings for junked machines
FINANCIAL CONCERNS
Inventory Management problems
1. Cost of money
2. Inventory losses
3. Poor inventory monitoring & control system
4. Insufficient storage area (3-month inventory)
OTHERS
Very poor customer satisfaction survey results
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What is the appropriate procurement
process that is affordable by a
government – controlled corporation
to upgrade the NKTI’s HD facilities into a
World-class HD Center
Text in
here
Public Private
Partnership
(PPP)
application to the
healthcare industry
SOLUTION:
Mandate: Secure permission from
Department of Health / Board of
Trustees
Legal: Seek the advice and clearance
from government corporate counsel
Request for assistance and
guidance of the BOT office of the
Dept of Trade & Industry
1
2
3
CONCEPT
A COOPERATIVE COLLABORATION
BETWEEN
a government-
owned
corporation
Private
corporation
AND
NKTI
Provide the space, staff
and utilities requirements
Maintain quality
performance in
accordance with
international standards
Ensure compliance with
government regulatory
policies
Prompt payment to
provider
PROVIDER
• Supply all HD equipment including state of the art water treatment and dialyzer reprocessing machines
• Provide maintenance / service technicians at all times
• Ensure availability of HD supplies at all times
• Provide regular training of staff
• Maintain and upgrade technology
CHALLENGE
Formulate TERMS OF REFERENCE (TOR)
to include all the excellent
features of HD machines
without excluding any of the major players
BIDDING INITIATED AND COMPLETED
1. Technical Working Group (TWG) was created with
members from NKTI, BOT Center, OGCC and a
representative from Commission on Audit was
invited to observe.
2. TWG formulated the TERMS OF REFERENCE that
included detailed features of the HD machines,
water treatment, dialyzers as well as other
furniture, fixtures needed to start the operations of
the HD center. Two separate HD Centers were
required for In-patient and Out-patient HD services.
3. Hospital Bids & Awards Committee conducted the
bidding with 3 Principal Bidders:
Fresenius Medical Care
B. Braun Phils
Gambro
4. TWG performed the post-bidding evaluation
5. Contract awarded to the bidder that submitted the
most responsive bid proposal: FRESENIUS
MEDICAL CARE
DIALYSIS UNIT DIRECTOR/
NEPHROLOGISTS/ DIETICIANS
ADMINISTRATIVE SERVICES
(ACCOUNTING, HR)
UTILITIES (WATER AND ELECTRICITY)
INTERIOR DESIGN, AIRCONDITIONING,
CABLE TV
NURSING SERVICES
BUILDING MAINTENACE / JANITORIAL /
SECURITY SERVICES
PATIENT MARKETING
CENTER INFRASTRUCTURE
DIALYSIS CHAIR AND CENTER FURNITURE
TECHNICAL SERVICES
DIALYZER, TUBINGS, FISTULA NEEDLES,
DRESSING KITS
REPROCESSING MACHINES AND
MAINTENACE
EDUCATIONAL UPDATES
WATER TREATMENT SYSTEM AND
INSTALLATION
EMERGENCY CART AND OTHERS
HEMODIALYSIS MACHINES AND
MAINTENACE
Conceptualization to Award of Contract
TOR
Preparation
4 months
Bidding
Activities
1 month
Post
Evaluation
1 month
Awarding of
Contract
1 month
Cooperation Period – 5 years
PROJECT TIMELINE
Diagram
IMPLEMENTATION
OF THE
HEMODIALYSIS
CENTER
PPP-PROJECT
✪
“THE FIRST IN HEALTH”
OUTCOME :
The NKTI offers a state of the art HD Center with the
highest standards at a reasonable cost
Patient satisfaction guaranteed
Continuous training of government personnel
Minimal funding released by NKTI
Competitive HD rates
1983 1998 2000 2003
# OF HD
MACHINES 5 16 20 40
# OF
DIALYSIS
SHIFTS PER
DAY *
1 2-3 3 4
MODE OF
PROCURE-
MENT
BID/
PURCHASE
BID/
PURCHASE
BID/
PURCHASE
BID / LEASE
FEE PER
TREATMENT
* EACH SHIFT LASTS 4 HOURS
First two ( 2 ) years
• High nurse turn over
• Training of personnel
to keep pace with the
demand
• Intensified nurses’ training
program
• Improved the rotation of
nursing staff
CHALLENGES STRATEGIES
IMPLEMENTED
First three ( 3 )
months
• Filling up the slots
• Maintained competitive HD
rates
• Liberalized the acceptance of
service (subsidized) patients
FINANCIAL IMPACT
OF THE
HEMODIALYSIS
CENTER
PPP-PROJECT
✪
Increased revenue contribution directly
from the operations of the HD Centers.
Increased revenue from the other
ancillary services units: laboratory,
radiology, nuclear medicine, physical
rehab, etc.
0
10000
20000
30000
40000
50000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2005: Start of
4th shift
2007: Resistance
to the 4th shift 2010:
PCSO
issues
2003: Start of
partnership with
Fresenius
Hemodialysis Center:
Revenue against Lease Charges
0
20000
40000
60000
80000
100000
120000
140000
160000
2003 2004 2005 2006 2007 2008 2009 2010 2011
2010: New
contract,
lower rate
Lease fee/ treatment to Provider:
2003: $41
2010: $38
Hospital Rate/treatment:
2003: $58
2010: $63
CONTRIBUTION OF THE HD
CENTER REVENUE
TO THE OVER-ALL
FINANCIAL PERFORMANCE
OF NKTI
✪
0
500
1,000
1,500
2,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Revenue Subsidy QFS
2002 2009
NUMBER OF HD TREATMENTS
15,185 41,701
GROSS INCOME USD $ 997,202 USD $ 3,101,402
NET INCOME USD $ 293,738 USD $ 358,038
PHP 43: USD 1.00
22% increase in net income
2010 2011
GROSS INCOME USD $ 2.96 Million USD $ 3.34 Million
NET INCOME USD $ 374,976.00 USD $ 516,095.00
38% increase in net income
PHP 43: USD 1.00
DUE TO THE SUCCESS
OF THE 1ST PPP PROJECT,
AT THE END OF THE
CONTRACT
ANOTHER BIDDING WAS
UNDERTAKEN
FOR A 2ND CONTRACT
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TECHNICAL
ISSUES
Most advanced HD machine
Capable of HEMODIAFILTRATION
with on-line fluid substitution
• More advanced type of dialysis
• Uses BOTH convection and
diffusion to remove large
molecular weight poisons from
the blood
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TECHNICAL
ISSUES
Enhanced computerized database
system of HD treatments.
Provision of a single-needle HD
machine, and HD machine that does
continuous dialysis (24 hrs).
Portable water treatment (reverse
osmosis) machines to provide
additional HD treatments, anywhere in
the hospital, during calamities when
there are epidemics requiring
emergency HD.
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OPERATIONS
The lease-fee-per-treatment that is
the basis of payment to the winning
proponent, is ADJUSTABLE, in
case of fluctuations in the US dollar
to peso exchange rate, reflecting
an improved peso value.
Transfer of expenses related to
laundry and garbage disposal
(sharps, tubings, dialyzers) to the
winning proponent.
2003 2010
2003
CONTRACT
2010
CONTRACT
TOR
PREPARATION 4 months 2 months
BIDDING
ACTIVITIES 1 month 1 month
POST-
EVALUATION 1 month 1 month
AWARDING OF
CONTRACT 1 month 1 month
Cooperation Period – 5 years
• 3 proponents participated in the bidding
• 3 proponents participated in the bidding
The bid of Fresenius Medical Care emerged as
the most responsive bid
2nd contract became effective in March 2010
SUMMARY
• After 2.5 years of the 2nd
contract, the HD
Centers continue to increase its revenue
• The highest quality and most advanced typed
of HD therapy is provided for all Filipinos,
especially the underprivileged, at one third
the cost of delivery of the same treatment in
other hospitals
SUMMARY
• The success of the HD Project has
paved the way for PPP for another
NKTI project –
–Radiology-Oncology Center