Presentation on theme: "1 CASE STUDY: PPP in Italian Health Sector Massimo Ricchi Presidency of the Council of Ministers Department for Economic Policy Coordination and Planning."— Presentation transcript:
1 CASE STUDY: PPP in Italian Health Sector Massimo Ricchi Presidency of the Council of Ministers Department for Economic Policy Coordination and Planning PPP Task Force, Italy Geneva, 21-24 February 2012
2 UTFP activity “ on the field ” : institutional framework The Task-Force – Organization Inspired by the UK PFI Taskforce Established by law Previous consultation with the main parties involved Group of 11 professionals: Legal, financial, technical expertise selected from both private and public sector.
3 UTFP activity “ on the field ” : institutional framework (2) The Task-Force - Mission Educational Role Promoting PPP techniques Developing a PPP Methodology Identifying workable PPP projects to be repeated Database of successful PPP deals Assistance Role Assistance to central, regional and local administrations From the identification of suitable projects to the evaluation of offers Multidisciplinary skills and expertise “Policy Making” Role Improvement of legal framework “Best practices” (standardisation of practices and contracts) Check PPP Contract for National Bureau of Statistic Analysing risk distribution in the contract in order to put public investment on or off the public budget
4 Project Finance in the Health sector in Italy since 2004 Initiatives: 15 initiatives currently planned (0,8 billion €) 53 concession awarded (3,7 billion €) 15 initiatives at bidding stage (0,65 billion €) 61 initiatives quitted (1.950 billion €) Public contribution in capital expenditure (grant amount): Average grant amount: 55% of Capex Average procedure duration to conclusion: Public initiative procedure: 13,4 months Private initiative procedure: 36,8 months Source: Finlombarda 2011 Some figures: ca. 5,15 billion euro total investment ca. 17.300 beds 240.000 – 300.000 € average cost of bed
5 20062007200820092010 Conventional Proc.232292239511141 PPP Proc.346590287187260 Capex Healt Sector578882526698401 Source: Finlombarda 2011 Project Finance in the Health sector in Italy since 2004 (2)
6 PPPs in the Italian Heath Sector 2004-2011 21 3 41 >10 projects 5-10 projects 3-5 projects 1-2 projects 9 5 4 3 3 2 1 1 1 2 5 3 5 2 Source: Finlombarda 2011 North 47 Centre 7 South 20 Project Finance in the Health sector in Italy since 2004 (3)
7 PPPs in the Italian Health Sector can do What the private sector can do: Providing non- medical services Estate maintenance Supply of energy and fluids (heat, air conditioning, water, medical fluids, etc.) Medical equipment maintenance Cleaning services of building and clinical equipment Laundry Waste disposal Catering for patients and personnel Security services Housing services (Reception, booking, management of hotel facilities, etc.) IT services Commercial services (bar, newspaper, restaurant, shops, etc.) Parking facilities Laboratories and Radiodiagnostic service management (occasionally) cannot do What the private sector cannot do: Providing medical services No nursing and clinical services delivery No medical ruling of the hospital Project Finance in the Health sector: fundamental principle
8 Lombardy's procurement approach 6 hospitals in Lombardy 4 hospitals in Calabria Project Finance in the Health sector: strong contracting authority
9 The Innovative procurement approach THE FOUR TUSCANY HOSPITALS THE NEW MESTRE HOSPITAL THE CANCER THERAPHY CENTER MESTRE Project Finance in the Health sector: catch the innovation
10 The new Mestre Hospital PROJECT DATA Project Name: The new Mestre Hospital Category: DBFO (Design Build Finance & Operate) Awarding Authority: Unit à Sanitaria Locale 12 Venice (NHS Local Authority) Procedure: Concession under private initiative Number of beds: 680 Number of Op. Rooms: 16 Number of Intensive Care Rooms : 24 Parking Spaces : 1092 ( incl. 557 for visitors) Total investment : € 245 million (VAT included) Public contribution: € 105 million (45%) Concession length: 29 years (incl. 4 years of construction) Project Characteristics The project concerns the construction of a new hospital to replace an inadequate existing hospital to consolidate and improve specialist hospital services (e.g. oncology, cardiology, eye-surgery).
11 Mestre Hospital: a case of success January 2008 Official Opening of the new Mestre Hospital
12 What to improve No specific risk assessment or risk analysis realized in the early stage of the project through a matrix of risks Case studies prepared by the promoter Difficulties in comparing proposal in the different stage of the procurement process Need to revise some financial aspects of the concession
13 The Cancer therapy Center PROJECT DATA Project Name: Cancer therapy centre Category: DBFO (Design Build Finance & Operate) Awarding Authority: (NHS Local Authority) Procedure: Concession under private initiative Bidders: 3 Project awarded: choice of the private partners Total investment : € 168 million (VAT included) Public contribution: No public contribution ex ante THE CANCER THERAPY CENTER: Project Characteristics The project concerns the construction of a Cancer therapy center. The new center will be part of an existing hospital to consolidate and improve specialist hospital services. The project was awarded and the contract signed.
14 Risk assessment procedure: the new approach in the concession notice A greater attention to risk assessment procedures through specific additional requirements apart from those provided by law. In particular, the promoters taking part in the bidding process had to: 1) Provide information on risks Present a matrix of risks; Specify who is taking each risk; Specify in which contract clause the risk is managed and how; Specify the mitigation instruments provided. Concession Notice: UTFP regulatory advices The risk matrix prepared by the promoter and agreed on by the administration presents the following structures: 1.Design of the project (6 risks) 2.Constructions (30 risks) 3.Management phase (12 risks) 4.Costs of management phase (6 risks) 5.Revenues (8 risks) 6.Resolution of the contract (6 risks) 7.Technology (2 risks) 8.Return of the infrastructure (1 risk) 9.Other risks (12 risks)
15 2) Present a Financial plan making a distinction between the costs of services + VAT and the charge required for the coverage of construction costs. 3) Present the electronic version of the Financial Plan. 4) Present a validation of the project ’ s input from the certifying bank Other tips by UTFP for better valuation of the bids in concession notice Concession Notice: UTFP regulatory advices (2)
16 CONTACTS UNITA ’ TECNICA FINANZA di PROGETTO Presidency of the Council of Ministers Head Office - Via della Mercede, 9 – 00187 Rome, Italy Tel. +39 06 6779 6512 – Fax. +39 06 6779 6573 – www.utfp.it Massimo Ricchi – Lawyer and member of UTFP Tel. +39 06 6779 6520 Mob. +39 347 225 3268 E-mail: email@example.com