The Ministry of Health of Turkey PUBLIC PRIVATE

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					The Ministry of Health of Turkey




       HEALTH CAMPUS PROJECTS
       Erkan Topal, Ph.D.
       May 3, 2012 Istanbul
The background


§ The Ministry of Health of the Republic of Turkey (MoH) has developed and
  been implementing a plan to expand and improve its medical education,
  training and service delivery by creating a new, modern and efficient public
  health infrastructure
§ To achieve this vision, it is calculated that a large number of important
  projects are required totalling an investment of more than € 10 billion which
  the MoH plans to implement within a 5 year period
§ The main challenge for the MoH, will be to procure such projects in the most
  efficient, cost effective and rapid manner, without overburdening the public
  finances and straining the limited public resources
§ Lead by the successful examples of similar programs that were implemented
  in some European countries, and in particular in the UK, the MoH has
  decided that a carefully designed Public Private Partnership program would
  be the best way to effectively realize the project of creating a modern and
  efficient health infrastructure in Turkey
Legal Framework




§   Fundamental Law on Health Services, No. 3359 of 1987
§   Supplementary Article 7 to the above law as introduced by Law No.
    5396 of 2005, authorizing the MoH to contract with the private
    sector for long durations for building health units and providing non
    -clinical support services in return for yearly rentals
§   Regulation on “the construction of health facilities and
    management of non clinical services” Law No. 26236 of 22 July
    2006 (Regulation)
Legal Framework – The Regulation

The Regulation provides for:


§   new healthcare facilities to be built and existing healthcare facilities
    to be refurbished and renovated as indicated by the Higher
    Planning Board of the MoH
§   the transfer by the Treasury of the land where the above facilities
    are located to the MoH
§   the possibility for the Project Company to obtain a building lease
    right for a duration not exceeding 49 years (ownership of the
    assets), to be used as a security to banks (the building lease right
    can be subject to a mortgage)
§   a typical DBLOT kind of structure associated with an availability
    type of payment mechanism
Legal Framework – The Regulation



§ the right for the private sector to carry out non-clinical services within
  the hospital facilities and other functional areas


§ the right for the private sector to establish joint ventures in the form of
  either business partnerships or consortiums to bid for the contract


§ the ratio of equity capital to be provided by the Project Company of
  not less than 20%


§ the duration of the contract: not exceeding 49 years
The Project - Structure
Contract          Ministry of Health – Project Company
Parties:
Subcontractors:   Design and Build Contractor and Service Providers
Services:         Non-Clinical Services as per the Regulation, including:
                  § Building and plants services and maintenance
                  § Ground Maintenance
                  § Security
                  § Pest control service
                  § Cleaning Services
                  § Help Desk
                  § Kitchen/Catering Services
                  § Laundry/Linen Services
                  § Sterilization Services
                  § Waste Management and Disposal Service
                  § Communication and IT (MIS and HIS)
                  § Medical and non-medical equipment, including educational/training
                    equipment
                  § Diagnostic and Treatment, and Laboratory Services
The Project - Structure

Non-Medical   - As per the Regulation activities which the Project Company can
Functional      carry out within Non-Medical Functional Areas may include the
Area:           following:
                 -car park
                 -hotel
                 -bank branch
                 -restaurant
                 -conference and culture centre
                 -internet and communication centre
                 -pharmacy
                 -day nursery
                 -fitness and diet centre
                 -taxi and transportation services
 Contracted


                                     Investment
Location and type       # of Beds   Amount (m €)



Kayseri Campus           1,584          290
Ankara Etlik Campus      3,566          815
Ankara Bilkent Campus    3,662          860
Tenders Finalized




      Location and type          # of Beds


      Elazig Campus               1,038
      Manisa General Hospital       400
      Yozgat General Hospital       400
      Konya General                 800
      Istanbul Ikitelli Campus    2,480
Tenders in progress

       Location and type                    # of Beds

       Bursa Campus                           1,350

       Mersin Campus                          1,233

       Adana Campus                           1,320

       Kocaeli Campus                         1,130

       Gaziantep Campus                       1,550

       Izmir Bayrakli Campus                  1,640

       Isparta General ,Women and Chidren      600

       Rehabilation & Physiatric              2,530
Tender (to be announced)

       Location and type                   # of Beds
       (18 Packages)
       Refik Saydam Health Institution        NA
       Eskisehir Campus                      1,000
       Istanbul Uskudar General Hospital      300
       Istanbul Bakırkoy Campus               800
       Samsun Campus                          700
       Antalya Campus                        1,000
       Diyarbakir Kayapinar Campus            750
       Diyarbakir Yenisehir Campus            600
       Izmir South Campus                    1,200
       Urfa Campus                           1,700
       Tekirdag General Hospital              400
       Istanbul Anadolu Physiatric            700
       Denizli Campus                        1,000
       Maras General Hospital                 350
       Maras Elbistan General Hospital        250
       Ankara Sincan General Hospital         400
       Izmir Behcet Uz General Hospital       350
       Trabzon Fatih General Hospital         400
SUMMARY




§ 34 Packages prepared, estimated €10 billion
§ 16 packages have been tendered              (68%)
  § Constitutes for 25,283 beds
    § 8 tenders finalized,        13,930 beds (38%)
    § 8 tenders in progress,      11,353 beds (30%)


§ By the end of 2013, all will be finalized
Particapants of PFI
Risk Allocations

          ITEM           Description/Comments                                    Risk Allocation

                                                          Administration        Project Company    Shared

PLANNING

Project Approval        Statutory Consent for                    
                        Project
Land                    Title                                    
Superficies Right       Responsibility for creating              
                        Superficies Right

                        Responsibility for Site                                       
                        Conditions
                                                       for Unforeseen Ground
                                                             Conditions
                        Third Party Rights and                   
                        Compensation, i.e. claims
                        for compensation from
                        private individuals in
                        relation to the Title to the
                        Site
CONSENTS

Construction Consents   Responsibility for                                            
                        obtaining all consents so
                                                       Administration to use
                        that the commencement
                                                        best endeavours to
                        of the construction Works
                                                       facilitate the Project
                        can occur within 90 days
                                                        Company to obtain
                        from the Site Delivery
                                                              consents
                        Date
           ITEM                Description/Comments                                            Risk Allocation

                                                                  Administration              Project Company         Shared

Construction Consents        Responsibility for obtaining                                           
                             all consents so that the
                                                             Administration to use best
                             commencement of the
                                                              endeavours to facilitate
                             construction Works can
                                                              the Project Company to
                             occur within 90 days from
                                                                  obtain consents
                             the Site Delivery Date
Clinical Services Consents   Responsibility for obtaining                                           
                             all necessary consents to
                                                                                           Project Company to use
                             provide the Clinical Services
                                                                                          best endeavours to assist
                                                                                            the Administration to
                                                                                               obtain consents
Clinical Support Services    Responsibility for obtaining                                            
Consents                     all necessary consents to
                                                             Administration to use best
                             provide the Clinical Support
                                                              endeavours to facilitate
                             Services
                                                              the Project Company to
                                                                  obtain consents
Commercial Activities        Responsibility for obtaining                                           
Consents                     all necessary consents to
                                                             Administration to use best
                             provide the Commercial
                                                              endeavours to facilitate
                             Activities
                                                              the Project Company to
                                                                  obtain consents
Operating Licence            Responsibility from                         
                             obtaining the operating
                             licence from the General
                             Directorate of Curative
                             Services of the Ministry of
                             Health
  Design

           ITEM           Description/Comments                          Risk Allocation


                                                      Administration   Project Company    Shared


Specification           Responsibility for setting          
                        design standards
                        (Administration's
                        Construction
                        Requirements)

Design Responsibility   Responsibility in case the                            
                        Administration's
                        Construction Requirements
                        are not sufficient/correct



Design Compliance       Responsibility for accuracy                           
                        of design data with the
                        Project Company's Proposal,
                        Tender Documentation and
                        Preliminary Design



Design                  Responsibility for design                             
  Contruction
            ITEM     Description/Comments                                 Risk Allocation

                                                   Administration        Project Company           Shared

Construction       Responsibility for                                            
                   construction
Cost               Cost over-run risk for design                                 
                   and Construction (increase
                   in cost of row materials,
                   increase in cost for
                   workforce)
Programme          Programme risk and                                            
                   responsibility for delivering
                                                                    unless the Project Company
                   on time or delay
                                                                     is entitled to an extension
                                                                          of time under the
                                                                              Agreement
Weather            Bad or good weather that                                        
                   does not amount to force
                   majeure
Defects            Responsibility for defects in                                 
                   design and construction
Defects            Latent Defects                                                

Changes            Changes to design and                 
                   construction requirements
                   due to new laws (Change in
                   law)
Additional works   Additional works                      
                   (Variations)
Resources          Labour, Equipment and                                         
                   Materials required for
                   design and construction
       Operations and Maintenance
            ITEM      Description/Comments                             Risk Allocation

                                                     Administration   Project Company    Shared

Maintenance        Responsibility for                                        
                   maintenance works
Cost               Cost of carrying out required                             
                   maintenance
Programme          Programming of                                            
                   maintenance works (Periodic
                   or Major)
Weather            Effects of weather on                                     
                   maintenance programmes
                   (to the extent does not
                   constitute an FM event)
Defects            Unplanned Remedial works                                  

Changes            Changes to operation and                
                   maintenance standards and
                   specifications (Variation to
                   Services)
Additional Works   Additional Works (Variations)           

Resources          Labour, Equipment and                                     
                   Materials to carry out works
Staffing           Project Company (for non-                                               
                   teaching and non-clinical
                   staff) Administration (for
                   teaching and clinical staff and
                   management). Project
                   Company responsible for
                   hiring and paying own staff.
      Legal

            ITEM         Description/Comments                          Risk Allocation


                                                     Administration   Project Company               Shared


Changes in Law      General Changes in Law                                   

                    Discriminatory Change in Law           




Health and Safety   Compliance with health and                               
                    safety standards and law


Indemnity           Indemnity for Direct Losses                                          
                    sustained as a consequence
                                                                                         each party provides an
                    of:
                                                                                         indemnity to the other party
                    1.     death or personal                                             for Direct Losses
                           injury of respective
                           employee
                    2.      death or personal
                           injury of third party,
                    3.     physical damage to the
                           Facilities
                    4.     loss of or damage to
                           third party property or
                           assets
Financial Matters

            ITEM            Description/Comments                               Risk Allocation

                                                         Administration       Project Company    Shared

Operating Profitability    No guarantee of                                
                           profitability or return on
                           investment

Inflation                  The Lease Payment will
                           be indexed in accordance
                           with the arithmetic
                           average of the Consumer
                           Price Index (CPI) and the           
                           Producer Price Index (PPI)
                           published by Turkish
                           Statistical Institution
Financing (interest rate   Responsibility for                             
and tenor)                 obtaining capital
                           financing and refinance (if
                           necessary) for duration of
                           the Project.
Currency                   Payments will be made as            
                           TRL
Thanks…

				
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