Upgrading hospital through PPPs in Eastern Cape province in South Africa: A case study Iain Menzies The World Bank St. Petersburg- May 23, 2008

Overview Introduction An Eastern Cape Health Perspective 5 Myths / Realities Health PPPs in Eastern Cape Hospital Co-location Projects Lessons Learned

An Eastern Cape Health Perspective History –Three administrations –Lack of infrastructural maintenance –Provincial inequity –Access to health services –Inadequate budget

An Eastern Cape Health Perspective (Cont.) Service Delivery Model –92 Hospitals –714 Clinics and Health Centers –25 Districts –3 Regions –7 Programmes –9 CSCs

Introduction Strategic Plan –PPP –Staff recruitment and retention PGDP 2010 Department of Public Works

5 Myths / Realities PPPs are just another form of privatization Private Sector is the winner, and the public the loser (services, costs/budget, inequities, institutional capacity, unsolicited bids, etc.) Employees of the affected institutions will lose their jobs Users of the services will no longer be able to afford them No opportunities for local communities to participate in the economic spin-offs

Co-location PPPs The model :

Structure of Co-location PPP Private Party upgrades & maintains facility and provides non-core services; Public sector serves public patients (doctors, nursing & pharmaceuticals) Private party serves private patients in dedicated wards Each party has own exclusive use areas (eg. Theatres) Shared facilities for joint use (eg. Admissions) Cross servicing for some services at agreed charge per use (eg. Maternity)

What does Department need? Upgrade existing hospital facilities to modern specifications; Improved medical equipment; On-going maintenance to keep to above at high standard; Provision of certain non-core services; Transfer of skills All = IMPROVED HEALTH FACILITIES FOR ALL

Non-core Services Required Estate maintenance. Ground and gardens. Cleaning. Patient catering. Security. Waste control. Pest control. Utilities management (rates and services). Life-cycle asset management.

Human Resource Impact Only non-clinical posts are to be affected Department position = no retrenchments Unions informed and support PPP process Looking for innovative solutions from partner

What does Department offer? Right to establish co-located private hospital facilities on premises Unitary payment: –Fixed component; –Variable component; and –Profit share to Department

Humansdorp District Hospital

Background Maintenance backlogs – competing needs Population growth – more beds needed Private patients traveling to P.E. for services Tourist destinations of Jeffreys Bay – increased seasonal demands Shortage of Medical professionals

Goals Improve hospital services for public patients by: –improving the condition and maintenance of buildings, grounds and equipment –improving the supply of water, electricity, gases –improving patient management and/or clinical care –Improving the hospital and info. Management systs Provide private hospital services for private patients who are presently inconvenienced by having to go outside the district for care Improve PHC services for HIV/AIDS and TB prevention and care..

Goals (Cont.) Assumptions: No differentiation between public and private patients when it came to clinical care. No negative impact on public sector labour. the hospital budget will increase or be maintained at necessary levels revenue should be taken in kind where possible.

Benefits to Stakeholder for departments – PPPs must be an accessible, relevant, viable and beneficial service delivery option for the users of services – PPPs must result in accessible, affordable and safe services that meet acceptable quality standards for society – PPPs must promote goals such as social equity, economic empowerment, efficient utilisation of scarce resources, and protection of the environment for private parties – PPPs must be sufficiently rewarding in relation to the investment required and the risks undertaken.

Why PPP? A Public Private Partnership (PPP) was seen as providing the opportunity to revitalise, & upgrade the district hospital, generate revenue from the private sector via shared services and create additional beds within the district.

Procurement process Advertised in 1999 for Expressions of Interest ( 3 responses received) TAs appointed with Equity funding Pre- regulation 16 ECDOH project officer appointed in October Concession agreement signed in June Site handed – over July 2003

Project outputs Rehabilitation/Upgrading of existing public sector facilities including all electrical and mechanical items, building and services and decorative finishes : – 60 to 80 beds. 20 Maternity(16), 20 surgical(16), 24 Medical(20) and 16 Paediatrics(8). Build two new theatres, one each for each of the parties who will be responsible for equipping and managing their own theatre upgrade and reconfigure the Casualty / Outpatients Department for the public sector

Outputs specified Construction of a 33 bed private facility on the public sector property – incl. 3 High-care beds. The Department and Private Party will have exclusive use areas, comprising the male, female, paediatric and maternity wards for the public sector and a new 33-bed facility for the private sector: the Department will provide birthing facilities to Private Party patients (including ante-natal, delivery and, if required, nursery accommodation for the babies) as well as serve private patients in the paediatric ward;

Obligations The parties will jointly manage the administration facilities and catering services for the benefit of both parties Private party will be responsible for the facilities management for the Concession Period, including all: – maintenance & repairs, –security, –gardening, –cleaning & domestic and –waste removal;

REHABILITATION, UPGRADING & CONSTRUCTION Central block –Building of a second theatre. –New CSSD –Laboratory. –New radiology department. –New casualty/OPD section –New Private Pharmacy and Dispensary

REHABILITATION, UPGRADING & CONSTRUCTION (Cont.) West wing (surgical and maternity wards). –Upgrading and renovations. –Expanding maternity section with 8 beds. –Upgraded reception area.

REHABILITATION, UPGRADING & CONSTRUCTION (Cont.) East wing (medical and paediatric wards) –Upgrading and renovations –Renovations to kitchen Private ward (Isivivana hospital) –Thirty bed private wing with a 3 bed high care unit.

REHABILITATION, UPGRADING & CONSTRUCTION (Cont.) Other areas New roads, parking areas and gas bank. Renovations and upgrading of different out buildings to accommodate a laundry sorting area, refuge area, workshop, medical waste holding area, general stores and ring road. New pharmacy and ARV clinic outside the PPP (ECDOH funds).

Terms of Concession Agreement Period –20 yrs plus construction period Maintain for period and hand back Share in profits Agreement was signed on June 2003

Lessons learned Project Management –Responsibility for the project cannot be abdicated – Dedicated Project champion –Dedicated Functional team with team leaders –Must project manage the TAs and assist/facilitate data collection –Project Officer must have project management skills and advanced influencing/negotiation skills

Lessons (Cont.) Project Management (Cont.) –Project mix must be methodical and painstakingly precise –Ensure that everyone in the room has the same understanding – repetition and reinforcement –Functional teams must have detailed brief and progress must be followed up – must meet regularly –Project definition must be clear

Lessons learned (Cont.) Buy-in –Must ensure political and top management buy-in –Must mainstream PPP to ensure adequate funding to deal with pressures –Must ensure that labor is brought on board at an appropriate time

Lessons (Cont.) Communication –Regular communication on progress –PPPs driven from the Head Office SCM Units – set-up a PPP unit with strong financial and contract management competencies –Local Project Manager / Hospital Manager –JMC –EMC –Good relationships during negotiations and beyond

Lessons (Cont.) Policy –Non-core services vs clinical services –Policy imperatives – District hospitals L1 services –Procurement phase – feasibility processes Land –Heritage –Ownership

PPPs in Health Sector THANK YOU !!! Iain Menzies The World Bank