Public–Private Partnerships in Health Carmen Carpio Senior Operations Officer

Table of Contents Title of Presentation2  PPPs: What & Why?  Examples  Lessons learned  Final thoughts

The World Bank Twin Goals

Rise in non- communicable diseases Shift in provision of care Increasing costs and expectations Health Trends – Challenges and Constraints Lack of infrastructure Shortage of trained staff Limited resources

“A long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears a significant risk and management responsibility, and remuneration is linked to performance.” What is a PPP? Public-Private Partnerships Reference Guide WBG, IDB, ADB, PPIAF.

PPP Types 6 Adapted from Public-Private Partnerships Reference Guide 2014 and from “Pure Public” “Pure Private” Contract Types Public sector owns and operates assets Public-Private Partnerships Private sector owns and operates assets All private finance Public finance Mix of public and private finance Extent of Private Sector ParticipationLow High Sources of Financing

Strategic Purchasing Spectrum 7

1 2 Improve Services Mobilize capital 3 Increase efficiency Better identification, better analysis and innovation. Additional sources of funding and financing, Ensure predicable budget commitments. Long-term investment perspective (inadequate maintenance). Better construction – due to whole life cycle focus. Better construction management – payment starts only when facility is available. Provide access to industry best practices, private- sector expertise and incentives. Why a PPP?

The evolution of the PPP model in health… Infrastructure Construction and facilities management In hospitals, primary care or community care facilities Asset-heavy Services Clinical and non-clinical services At primary, secondary or tertiary level Asset-light Could include medical training/health insurance or vouchers Integrated Construction and facilities management and full range of clinical and non-clinical services At primary, secondary or tertiary level

PPP Stories

Two new 120-bed hospitals. 25-year PPP to design, finance, construct, equip, maintain, and provide dialysis, imaging, and lab services. Awarded to Prodemex (Toluca) and Marhnos (Tlalnepantla). 20,000 people with improved access to services $120 million in investment 33% decrease in operational costs. Mexico: Toluca & Tlanepantla Hospitals (2010)

400,000 people with improved access to services $50 million in investment New 298-bed emergency hospital in Periperi district of Salvador, Bahia. 10-year concession to equip, maintain, and operate both clinical and non-clinical services. Awarded to Promedica and Dalkia. Brazil: Hospital do Subúrbio (2010)

Moldova: Radiology and Diagnostic Imaging (2011) 12-year concession to construct, equip and operate a new diagnostic imaging and radiology center. First PPP in Moldova. Awarded to Magnific a Moldovan health care services provider. Over 100,000 people with improved access to service $7 million in private investment 5% of annual revenues returned by operator to Republican Hospital

Lessons Learned

Political will and legislative frameworks are needed

Carefully screen projects

Teamwork- Multi disciplinary teams with government

Risk transfer

Specialized agencies

Fair and transparent procurement process

Economic analysis to ensure benefits for population

Ingredients for a Successful PPP Public sector capacity Fiscal Space Legislative and regulatory environment Fit with wider health strategy Appropriate risk sharing Private sector capacity Strong political will All projects claim to have these… ….but they need to be present not just on day one!

Final thoughts 1.PPP is merely a financing and procurement tool…it won’t turn a bad project into a good one! 2.Project therefore has to be assessed on its merits separately from how it’s procured – a business case will help determine need, technical feasibility, etc. 3.The public sector needs access to skills and experience that may not be easily available – internal expertise as well as strong advisory input. 4.Detailed cost analysis of the project will help with understanding long term fiscal implications/affordability. 5.Need buy-in of stakeholders – can cause problems later in process 6.Political support should be broad – Ministers can move on!

Global PPP Network World Bank PPP Infrastructure Resource Center Public-Private Infrastructure Advisory PPP Knowledge Lab IFC PPPs in Health ealth_WEB.pdf?MOD=AJPERES University of California, San Francisco initiative-pshi/research/public-private-partnerships Center for Health Market Innovations More information

Thank you The World Bank Group 1818 H Street, NW Washington, DC Phone: (202) Fax: (202)