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Public Private Collaboration in Health Care Provision Montenegro Workshop September 2007 Matthias Loening Public Private Collaboration in Health Care Provision Montenegro Workshop September 2007 Matthias Loening

Overview l Public-Private Partnerships - Options l Case Studies – Inpatient Laboratory Services Outpatient Overview l Public-Private Partnerships - Options l Case Studies – Inpatient Laboratory Services Outpatient Dialysis Services – Radiology Services – Independent Sector Treatment Centres – Radiotherapy – Private Wing - Maternity Services l Summary l Contact

Public-Private Partnerships Options Ø PPPs can be applied to a wide range of services Public-Private Partnerships Options Ø PPPs can be applied to a wide range of services Selected Case Studies Design & Construction Non-clinical Services • Detailed designs • IT equipment & services • Building construction • Maintenance • Medical equipment • Capital financing • Food • Laundry • Cleaning • Billing Clinical Support Services • Lab analysis • Diagnostic tests • Medical equipment maintenance Specialized Clinical Services • • Hemodialysis Radiotherapy Day surgery Other specialist services Hospital Management • Management of entire hospital or network of hospitals and/or clinics

Inpatient Laboratory Services Colentina Hospital • A 1, 000 -bed general public hospital • Inpatient 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 Services • IP and OP dialysis services are provided in approx. 40 Outpatient 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 $16 m

Inpatient Radiology Services Colentina Hospital • A 1, 000 -bed general public hospital • Inpatient 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 Services Malopolska Voivodship (Province) • The province wished to locate a new radiotherapy Radiotherapy Services Malopolska 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 $5 m-$10 m. 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.

Radiotherapy Services Patients PPP Contract Facilities & Non-Clinical Services Radiotherapy Clinic Hospital Patients Payment Radiotherapy Services Patients PPP Contract Facilities & Non-Clinical Services Radiotherapy Clinic Hospital Patients Payment Facilities Maintenance Services Funds Project Company Banks/Bond Investors Repayment Payment Dividends Facilities Management Provider Support Service Provider (s) Support Services Construction Builder Equity Funding Equity Providers

Independent Sector Treatment Centres • The ISTC’s are projected to deliver care for 250, 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 Services Polizu Hospital • The public hospital had spare capacity Private 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.

Summary l Public-private partnerships can allow for – Increased access – Lower costs – Summary l Public-private partnerships can allow for – Increased access – Lower costs – Improved quality of the facilities and services l l 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 Buy Services Not Equipment !

Contact: Matthias Loening Senior Health Advisor European Bank for Reconstruction and Development Email: loeningm@ebrd. Contact: Matthias Loening Senior Health Advisor European Bank for Reconstruction and Development Email: [email protected] com