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

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

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

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 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 $16m

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 Colentinas 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 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 $5m-$10m. 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.

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

Independent Sector Treatment Centres The ISTCs 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 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.

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

Contact: Matthias Loening Senior Health Advisor European Bank for Reconstruction and Development