Public Private Collaboration Workshop in Podgorica, Montenegro Lessons from Practice Harald Maikisch, Sept , 2007

2 Vorarlberger Krankenhaus- Betriebsgesellschaft Landeskrankenhaus Feldkirch Landeskrankenhaus Bregenz Landeskrankenhaus Rankweil Landeskrankenhaus Bludenz Landeskrankenhaus Hohenems

3 Source: BAUER G. (2004/10): Austrian Hospital Journal Typical schedule line of a hospital

4 Medizinprodukteaufbereitung Vorarlberg

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7 Lessons from international experience CS 1 Shared Hospital Sterilization Services, A Abstract The study explains the foundation of a company to run a sterilization unit for 3 hospitals by a PPP model in Vorarlberg, Austria, during the year The public Vlbg. Krankenhaus-Betriebsgesellschaft m.b.H. (KHBG - the management company, which is the legal representative of the hospitals of the Land Vorarlberg) founded together with a private company (SteriLog Austria) a company (MPAV - Medizinprodukteaufbereitung Vorarlberg GmbH.), which now is responsible for the sterilization of the medical equipment for three hospitals (Landeskrankenhaus Feldkirch, Hohenems and Bludenz). The decision was made for a Greenfield project to be open for the future. It shows that a powerful partnership of the public with private organizations may help to improve the rendered services to the people of the country and at the same time achieve a more efficient structure and organization leading to a reduction of required funds. The unit was opened on 9 th of February 2007 and is up an running.

8 Lessons from international experience CS 1 Shared Hospital Sterilization Services, A Project The supervisory board of the KHBG decided, not to build three sterilization units in three different hospitals, but to build one large unit as a Greenfield project. It was decided first to reorganize the workflows and the assemblage of the medical instruments, second to assign the operational work to a private partner and as step three to found a company together with a private partner by a PPP - model. Therefore a search for a private partner was made by a European three level tender. Because step one was very successful and the private partner proved to work excellent, step two (management contract) was cancelled. The supervisory board decided unanimously to switch directly to step three and to found a company together with the private partner (ownership 51 % KHBG, 49 % SteriLog Austria). The company Medizinprodukteaufbereitung Vorarlberg GmbH. – MPAV – (conditioning of medical products Vorarlberg) was founded on the 7th December 2005.

9 Lessons from international experience CS 1 Shared Hospital Sterilization Services, A Dates and duration The process was started in December 2002 In March 2003 the supervisory board (SB) gave its O.K. for the execution of the European tender The SB approbated in December 2003 the award of contract with the private partner 26th of January official Kickoff March 2004 the SB decided to choose the Greenfield project End of September 2004 the SB decided to start the PPP December 2004 acceptance of company agreement for the PPP 2005 was mainly used for planning the new unit The new company was founded on the 7th December 2005 Start of construction 29th May 2006 End of construction January 2007 Opening ceremony 9th February 2007 Validation February 2007 Production start 26th February 2007

10 Lessons from international experience CS 1 Shared Hospital Sterilization Services, A Fiscal effects a) The KHBG does not have to provide funds for the modernization of the sterilization units in its hospitals by itself. The cumulated investments of the private company for the Greenfield project are 5,4 Mio. The investments for reconstruction of three different locations would have been a lot higher. b) The agreed payment per sterilization box is fixed at production costs. Additional external business volume could reduce the production costs per box by 26,7 % within the next 8 years. This would be equal to a reduction of 1 Mio. every year.

11 Lessons from international experience CS 1 Shared Hospital Sterilization Services, A Lessons learnt A successful public-private-partnership requires professional, dedicated experts on both sides. By implementing clear rules to the private companies, a smooth and fast transition may be achieved. An early communication with political decision makers, managing staff an operational staff is very helpful. The skills (European tender, contracts, project a.s.o.) are very high and need time. It is necessary, to define the risks and to determine which partner has the responsibility for which risk. Within the contracts one of the most important things to do is to fix the tariffs and the calculation for future increase. You need to define the level of services in a service level agreement (SLA). To invent a PPP model is in general a project of change management. So it is very important to consider the usual requirements of change management (as example J.P. Kotter), especially to come up against the fears of staff. High skilled staff is very important, so it is necessary to take care for excellent training of the staff. It is necessary to take care for the logistics, because there is a high potential for savings by structuring the workflows. Each partner brings in his knowledge, expertise, money, experience, time or other resources. Especially a specialist in his business is better informed about new technologies, future developments a.s.o.

12 Lessons from international experience CS 1 Shared Hospital Sterilization Services, A Main results The advantages for the KHBG are: - Savings on investment - Beneficiation of the budget - Faster and cheaper construction The advantages for the public hospitals are: - Higher quality offered - Conformation to international standards - Additional income from additional contracts - Reduction of administrative work - Reduction of staff related administration (qualification, payments etc) The advantages for the staff are: - Better working conditions - Better professional formation The advantages for the patients are: - Better service quality due to validated chain of functions

13 Lessons from international experience CS 1 Shared Hospital Sterilization Services, A Risks The possible negative effects of privatization of a sterilization unit are mainly the usual PPP risks: - Difficult contracts - Long time bonding - Partnership with a private partner - Acceptance of a PPP model by the staff The risks were avoided by: - High quality tender - Contracts made by experts - Special clauses for disconnection with the partner if necessary - Involvement of the highly skilled medical staff in the privatization process from the beginning of the project

14 Lessons from international experience CS 2 Danish National e-Health Portal Abstract The National e-Health portal (sundhed.dk) is a public internet- based solution that collects and distributes healthcare Information among citizens and healthcare professionals in Denmark. The portal is a unique solution that brings the entire healthcare sector together on the Internet, and thus provides a comfort table setting for citizens and healthcare professionals to meet and efficiently exchange information. Patients, their families, and the healthcare providers are able to communicate and to get an overview of correct and updated healthcare information. The National e-Health Portal is an important supplement to the Electronic Patient Records (EPR).

15 Lessons from international experience CS 2 Danish National e-Health Portal Project This public-private cooperation (PPC) is a huge project. The initiative was launched by the Association of County Councils in Denmark, the Ministries of the Interior and Health, Greater Copenhagen Hospital Board, Copenhagen Municipal Authority, Frederiksberg Municipal Authority, and the Danish Pharmaceutical Association. The Danish public health portal Sundhed.dk is one of the major elements in the national Danish eGovernment and eHealth strategy. The ambition has been to create a common framework of entrance to Danish healthcare with the intention of co- ordinating healthcare service provision, in such a way that everyone has secure access to common information and services across a decentralised healthcare system.

16 Lessons from international experience CS 2 Danish National e-Health Portal Dates and duration Project Start: February 2003 Phase I (Information Portal): 9 month till December 2003 Phase II (Collaboration Portal): 15 month till July 2004 Phase III (Application Portal): 24 month till March 2005

17 Lessons from international experience CS 2 Danish National e-Health Portal Fiscal effects Some of the greatest savings are: The average savings per message are 2,30. These messages are discharge letters, lab- results, prescriptions, referrals and reimbursements. Among 50 minutes per day in medical practices, because the electronic processes have optimized the workflow. Reduction of 66 % of all telephone calls in hospitals. On a high level, this means 60 Mio. Euro per year!

18 Lessons from international experience CS 2 Danish National e-Health Portal Lessons learnt As part of the Danish eGovernment and eHealth strategy, Sundhed.dk is a major step in making healthcare information more accessible for Danish citizens and health professionals. The project has set the ambitious goal to gather information from a highly decentralised public healthcare system and create a single entry-point for citizens offering a broad spectrum of health and healthcare information. This ambition has become reality. The portal is not limited to a simple information provider but it also grants users the opportunity to perform sophisticated health transactions from the comfort of their home. It incorporates in its functions digital signatures, which ensure the security of transactions. Sundhed.dk is an example of a service whose operation became possible by the presence of existing infrastructures that were in fact health-specific. To build an all-purpose health portal for a decentralised healthcare system like the Danish one takes some effort. Sundhed.dk has tried to put as many services as possible online and became the main portal for Danish health.

19 Lessons from international experience CS 2 Danish National e-Health Portal Main results Moving away from paper-based prescriptions from the general practitioner (GP), 81% of prescriptions today are sent electronically directly to the pharmacy. The solution is based on the full integration of electronic communications with the GPs electronic healthcare record and the pharmacy systems. Functions available for healthcare professionals: - Access to data stored in electronic patient records (1,25 Mio.!) - Access to laboratory test results - Access to editing own practice declaration (GPs) - Personalisation (own profile and customised information) - Visit data and access to confidential phone numbers - Profile areas: practice information - Regional clinical guides, consensus reports and reference programmes - National clinical guides - Access to job vacancy board for the healthcare sector

20 Lessons from international experience CS 2 Danish National e-Health Portal Risks Acceptance: Many different groups are involved Funding: Huge investment Practicability: High technical skill of project

21 Lessons from international experience CS 3 Privatization of Dialysis Care in Romania Abstract The study explains the privatization of dialysis centers in the Republic of Romania during the year Together with the International Finance Corporation (IFC), a subsidiary of the World Bank, the Government in Romania enacted a health care reform which will be realized in various steps. It shows that a powerful partnership of the public with private organizations may help to improve the rendered services to the people of the country and at the same time achieve a more efficient structure and organization leading to a reduction of required funds.

22 Lessons from international experience CS 3 Privatization of Dialysis Care in Romania Project The trend of increasing dialysis patients forced the Government of Romania to find new ways of financing the required services and to bring the service level up to European standards. It was decided to follow the spirit of the ongoing health care reform which aims at buying integrated services. Finally the decision was taken to privatize eight dialysis centers. The target centers needed to be reequipped in order to continue to provide dialysis treatment to the patients at the European quality and service standards levels. The National Health Insurance Fund (NHIF) contracts dedicate 20 million Euros per year as expenses for those privatized services. The funds are paid directly to the providers of the integrated dialysis services, thus free of charge to the patients. The awarded companies are obliged to construct a new facility within eighteen months reequipping the centers with state-of- the-art dialysis facilities and providing training to the personnel. Furthermore the companies have to guarantee the employment of the personnel.

23 Lessons from international experience CS 3 Privatization of Dialysis Care in Romania Dates and duration The project lasted from 2003 (start of the health care reform) to Nov (finalization of the privatization by means of a tender). The tender specification and bidder qualification process lasted from beginning of 2004 to mid So this was a very fast processing of a PPP.

24 Lessons from international experience CS 3 Privatization of Dialysis Care in Romania Fiscal effects a) The National health insurance fund does not have to provide funds for the modernization of the dialysis facilities in its hospitals by itself. The cumulated investments of the private companies are 12,4 Mio. The investments are realized within 18 months after awarding of the contracts. b) The additional investments required within the next 5 – 10 years in order to provide dialysis treatment to the growing patient number are estimated to reach 5 – 10 Mio. Again those funds are not provided by the NHIF but by the private companies. c) The agreed payment per one treatment of dialysis was fixed at 110 being 20 less than the amount paid to the public hospitals. The annual savings at the current number of treatments are 4 Mio. Considering that within the next 5 – 10 years the prevalence rate will reach EU levels (~ 500 patients / 1 Mio. inhabitants) the savings double to 8 Mio. per annum.

25 Lessons from international experience CS 3 Privatization of Dialysis Care in Romania Lessons learnt The major positive lesson is that a successful public-private-partnership requires professional, dedicated experts on both sides, the public and private sector. By implementing effective laws that provide clear rules to the private companies, a smooth and fast transition may be achieved for both sides. A well-designed privatization process is attractive to both the public and the private sector as it allows realizing the advantages outlined above (win-win situation).

26 Lessons from international experience CS 3 Privatization of Dialysis Care in Romania Main results The dialysis facilities are reequipped with state-of-the-art equipment. The personnel are trained. Thus the provided service is on EU level. The treatment capacities for dialysis patients are increased. The government achieved both a better service to the public and a considerable reduction in budged funds. The advantages for the staff are: - Better working conditions - Possibly higher salaries - Better professional formation The advantages for the patients are: - Better service quality The advantages for private companies are: - establish long-term business plans

27 Lessons from international experience CS 3 Privatization of Dialysis Care in Romania Risks The possible negative effects of privatization may have been only for centers outside the hospital environment (=externalized centers): - The reduction of the quality of nephrologists assistance - The emergence of tension between the externalized centers and the ones within the hospital building when referring patients for dialysis treatments - The improper use of the skilled medical staff and the loss of positions as heads of departments The risks were avoided by: - implementing independent nephrologists departments in certain cities - making compulsory a pre-contract of the departments with the private providers for the attendance of patients - Special clauses related to the medical staff (assurance of employment, training programs etc). - Involvement of the highly skilled medical staff in the privatization process by imposing conditions to the bidders

28 Lessons from international experience CS 4 PPP Psychosomatic Centre Austria Abstract In Lower Austria for an emergency hospital on the verge of being closed down a perspective pointing the way ahead by a strategic re-orientation and by means of a public-private partnership was opened up. The Psychosomatic Centre Waldviertel (PSCW) will be opened on 1st July This new unit will ensure the psychosomatic (holistic) treatment of patients from Lower Austria and the neighbor provinces. The new construction will need investments of approximately 14,5 Mio. This model is completely new to Austria. There are similar solutions in Germany. With this approach the goal is to bring in that know-how into Austria and to adapt it to Austrian needs and terms.

29 Lessons from international experience CS 4 PPP Psychosomatic Centre Austria Project The PSCW is operated by a project company composed of the hospital association Waldviertel (share: 51%), of ROMED (share: 39 %) and VAMED (share: 10 %) in the form of a public- private-partnership (PPP) model. Legal entity of the Psychosomatic Centre is the hospital association Waldviertel. The management is taken on by the project company. Within the framework of the project company, ROMED will be responsible for the operation, VAMED for planning, building and, optionally, for the facility management, and the hospital association Waldviertel will be responsible for the provision of the infrastructure. The Psychosomatic Centre Waldviertel offers capacity for 100 patients – architecture and furnishing convey the character of a hotel.

30 Lessons from international experience CS 4 PPP Psychosomatic Centre Austria Dates and duration

31 Lessons from international experience CS 4 PPP Psychosomatic Centre Austria Fiscal effects The treatment of the causes of illness shortens the patients time of suffering and leads to a relief of the cost units up to an amount of several millions of euros. Cost advantage as against conventional hospital treatment - Daily rate hospital: approximately 440,-- - Daily rate psychosomatics: approximately 250,-- - Therefore cost advantage approximately 1:2 In this model there is not more argumentation for cost effectiveness. There is still a need for scientific studies to proof the evidence of this general assumption.

32 Lessons from international experience CS 4 PPP Psychosomatic Centre Austria Lessons learnt From the sum of the order, 47 percent remain directly within the region, further 33 percent in the environs, i.e. 80 percent will remain in the Land of Lower Austria. It is necessary that the quality of the psychosomatic treatment is ensured by comprehensive quality assurance programs such as examination, securing and improvement of patient care and clinical supply. In this model the medical and economic relevance is being confirmed by an inter-university advisory board composed of high-ranking personalities active in the health system. It showed, that this was important for the politicians and the public as kind of a guarantee for the decisions. The inter-university advisory board is to develop quality standards for psychosomatic treatment and, later on, check their observance. So in the future this board will be very important for quality assurance.

33 Lessons from international experience CS 4 PPP Psychosomatic Centre Austria Main results Advantages of psychosomatic treatment: Wide-ranging studies identified statistically significant reductions in: - days of hospital treatment - outpatient consultations - drug consumption The nationwide integration of psychosomatic medicine leads to improvements in many different areas.

34 Lessons from international experience CS 4 PPP Psychosomatic Centre Austria Risks There is a far-reaching assumption of risks by VAMED, ROMED and consortium of banks. VAMED bore the technical risk of building and operating and is responsible for logistics and technical management.

35 If you want to get more information: Contact: Prok. Dipl.KH-BW. Harald Maikisch, MSc, MAS Vorarlberger Krankenhaus-Betriebsgesellschaft m.b.H. Carinagasse 41 A 6800 Feldkirch Tel.+43/5522/303/5007 Fax.+43/5522/303/76/5007 Many thanks for your attention!