Myths _ Realities

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					Upgrading hospital through
PPPs in Eastern Cape
province in South Africa: A
case study

Iain Menzies
The World Bank

St. Petersburg- May 23, 2008

• Introduction
• An Eastern Cape Health
• 5 Myths / Realities
• Health PPP’s 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 CSC’s

• Strategic Plan
   – PPP
   – Staff recruitment and retention


• 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 PPP’s
         The model :
                       Structure of Co-location PPP

• Private Party upgrades & maintains facility and provides
  non-core services;

• Public sector serves public patients (doctors, nursing &

• 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

• Improved medical equipment;

• On-going maintenance to keep to above at high standard;

• Provision of certain non-core services;

• Transfer of skills

                      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

• 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

• 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 syst’s

• 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.)


• 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
                                      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)

• TA’s appointed with Equity funding

• Pre- regulation 16

• ECDOH project officer appointed in October 2002.

• Concession agreement signed in June 2003.

• 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;

• 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

    –    maintenance & repairs,
    –   security,
    –   gardening,
    –   cleaning & domestic and
    –   waste removal;

• Central block

   –   Building of a second theatre.
   –   New CSSD
   –   Laboratory.
   –   New radiology department.
   –   New casualty/OPD section
   –   New Private Pharmacy and Dispensary
              CONSTRUCTION (Cont.)

• West wing (surgical and maternity wards).

   – Upgrading and renovations.
   – Expanding maternity section with 8 beds.
   – Upgraded reception area.
                   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.
                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 TA’s and assist/facilitate data

  – Project Officer must have project management skills
    and advanced influencing/negotiation skills
                                        Lessons (Cont.)

• Project Management (Cont.)

   – Project mix must be methodical and painstakingly

   – 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

  – PPP’s 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

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