Pilot PPP projects in healthcare in Kazakhstan · Pilot PPP projects in healthcare in Kazakhstan. ... Organisational and legal structure ... •Laundry services
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Центр сопровождения проектов
государственно-частного партнерства
Pilot PPP projects in healthcare in Kazakhstan
Construction and operationof general hospital with capacity of 300 beds
at “Kazakh National Medical University after S. D. Asfendiyarov” in Almaty
Project Team
PPP AC
MH&SD RK
KPMG AJZ Engineering
Mandated as a legal entity for advisory support of
national and regional concession projects by the
decree of the Government of the Republic of
Kazakhstan on 30 April 2014 №248.
The mission
to support the development of infrastructure in the
Republic of Kazakhstan by providing advisory
services on preparation and implementation of
infrastructure projects including PPP projects.
PPP Advisory Center
Concept of the project
Name of the concession
project
Construction and operation of a multi-disciplinary hospital at Kazakh National Medical
University named after SD Asfendiyarov RSE in Almaty
Project Grantor Ministry of Healthcare and Social Development of the Republic of Kazakhstan
Concession Type Design – Finance – Build– Maintenance – Operate (DFBMO)
Срок концессии 20 years
CAPEX in constant
prices (est.)
USD 100,7 mln. (30 882,8 bln. tenge in prices of 1 кв .2015 г.)
Objectives of the
project
• Applying new technologies to improve quality of medical services to the population
of the Republic of Kazakhstan
• Providing base for clinical training of students and retraining of doctors of KazNMU
involving on the latest achievements of medical science
• Creating a base for scientific and clinical research in cooperation with foreign
scientific communities
Uralsk
Atyrau
Aktobinsk
Kostanay
Pavlodar
Karaganda
Aktau
Astana
Almaty
Ust-Kamenogorsk
Semipalatinsk
TarazKyzylorda
Shymkent
Taldykorgan
• The object is to be located in the Nauryzbayskiy district of Almaty
• The object consists of a 300-bed hospital and clinics that can handle 300 visits per day
Concession object
N
S
Almaty
Distance from city
centre: 12 km
Location of object of concession
Strengths of the project
• The project is in line with the Strategic Plan of development of healthcare ofKazakhstan up to 2020 and Perspective plan of the network of health careorganizations of Almaty city for 2015-2025.
Strategic importance for Government
• In 2010 - 2014, the population of the city increased by 16.19%, while the realincome of the population grew by 26%*
Economic advantages of Almaty
• Kazakh National Medical University benefits from 1454 lecturers, including4 academicians, 172 doctors of science, 475 candidates of science.
• More than 1,600 medical professionals are graduated from KazNMU annually
• Ministry envisages high level of medical equipment of the university hospital
Strong resource base
Trends in the development of Almaty
• The role of the private health sector is increasing inAlmaty
In 2009 to 2013 number of private outpatientorganizations and doctors' offices in Almaty almostdoubled from 168 to 293.
• competition among private and public organizationsis expected to increase due to introduction of theinsurance system
This demonstrates the need for quality services and theconfidence of patients in the planned hospital.
ACCORDING TO THE MARKETING STUDY OF
MEDICAL SERVICES IN ALMATY OPTIMAL
CAPACITY OF THE UNIVERSITY HOSPITAL IS
300 BEDS
1 413,501 449,80 1 475,40
1 507,50
1 642,30
2010 2011 2012 2013 2014
Population, thous. people
10,009,70
10,80 11,10
11,70
2010 2011 2012 2013 2014
Rate of natural increase,%
71,0071,70
72,8073,70
74,10
2010 2011 2012 2013 2014
Life expectancy at birth, years
Structure of profiles and beds
Profile Quantity
Therapeutic 40
Cardiological 30
Neurologic 30
Endocrinological 30
Rheumatological 25
Ophthalmological 20
Traumatologic 30
Surgery 30
Interventional cardiology 15
Gynaecological 20
Rehabilitation of adults 30
TOTAL 300
Out-Patient Daily Department’s Services
Ophthalmologic Treatment
Otolaryngological Treatment
Proctologic Treatment
Gynecological Treatment
Therapy
Surgery
Consultations of doctors - 300 visits per day
Therapist
Gasteroenterolog
Pulmonologist
Nephrologist
Rheumatologist
Ophthalmologist
Otolaryngologist
Traumatologist
Surgeon
Cardiologist
Neurologist
Endocrinologis
t
Gynecologist
Urologist
Proctologist
Types of Support Services
Types of Support Services
Operating rooms, beds in intensive carebeds, in the recovery room
Diagnostics Center
• Functional diagnostics and ultrasound: EKG, EEG, Doppler blood vessels
• Radiological diagnosis: CT, MRI, X-ray diagnostics, mammography
• Endoscopy
Center for Laboratory Medicine
The spectrum of research:
1. Immunological
2. Biochemical
3. Hemostasis
4. Hematology
5. Cytological
6. General hospital
7. Immunology
8. PCR analysis
9. Immunoassay
Schedule of pre-investment stage
Development of the concession proposal
Development of tender documentation and draft concession agreement
Competition for the selection of the concessionaire
2015 2016
Kickoff Commercial
close
Announcement of
Tender
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Pre-qualification
BAFO*
* BAFO – Best and Final Offer
Due Diligence
2017
Financial Studies
Technical Studies
Marketing Studies
Legal Studies
Social Studies
Risks Studies
KPMG
10
Schedule of pre-investment stage
Pre-qualification
Initial discussion
Receipt of applications
to confirm compliance
with the qualification
requirements
Participants who have
passed the qualification
are invited to
competition
Submission of
applicationsAnnouncement of BAFO
2 months 2,5 months3 week 6 months 2 months
Estimation of conformity
of criteria
Competitive dialogue
The development of
competitive application,
including a feasibility
study
Choosing of BAFO
Negotiations with the
participant whose bid as
the best
Announcement of the
winner and the signing
of the contract
Preliminary project concept
Construction of flagship hospital and clinics on a
concession basis
• An investor is invited to build the object, supply
equipment, and provide technical maintenance
• The preliminary contract duration is 20 years
• Medical services in the hospital are to be provided by a
state operator (on basis of KazNMU)
Legal aspects
• The project is carried out in accordance with the
Kazakhstan Law “On Concessions”
• The concessionaire is to design, build and operate a 300-
bed hospital and clinics with a capacity for 300 visits per
day (concession object)
• The Kazakhstan Ministry of Health and Social
Development (MHSD) acts as a grantor
• 2-stage tender procedure: prequalification and bidding
process
• Upon the start of operation the object is transferred to the
state. The concessionaire obtains rights of use and
ownership until the end of concession period
• At the end of concession period the concessionaire shall
return the object to the grantor in an appropriate condition
• The grantor shall provide a land plot for construction and
shall pay an availability payment
Typical pack of other project agreements
• Financing agreement with shareholders
• Agreement with shareholders for the provision
of subordinated debt
• Senior loan agreement
• Direct agreement
• EPC-contract
• Operation services contract
Organisational and legal structure
Concessionaire
Kazakhstan Ministry of Health
and Social Development
(grantor)
Insurance companies
Department of the committee
for the payment of medical
services
Medical operator
transfer to operational
control
Partner university clinics
Patients
Rights of use and
ownership
Hospital and clinics
(concession object)
Interaction
agreement №1
Concession
agreement
Interaction
agreement №2
The hospital is transferred to operational control
Medical services
agreement
Voluntary health
insurance agreement
GVFMS*
Agreement
Notes: * GVFMS – Guaranteed Volume of Free Medical Services
Payment mechanism (1/2)
Compensation for investment costs Concession management fee
Compensation for senior debt service costs
• Repayment of the principal
• Interest payments during construction
• Bank fees during construction
• Security bonds bank guarantees
Compensation of concession object management costs to
shareholders
• Repayment of the subordinated debt principal
• Interest payments on subordinated debt
• Shareholder’s return on investment in the form of dividends
• Interest payments during operation
• Bank fees during during operation stage
Availability payment
• Supply and maintenance of medical equipment:
• The maintenance of medical equipment (till the 1st
upgrade)
• Utility services:
• The maintenance of electricity, water, heat, lighting, air
conditioning, IT systems
• General cleaning services, sanitation
• The cleaning of nearby areas
• Waste disposal, medical waste disposal
Compensation of operational costs
• Maintenance services:
• Maintenance of the building, technical equipment, elevators
• Maintenance of the medical gas supply system
• Other services:
• Communication services (including the internet)
• Security services
• Disinfection
• Catering services for patients
• Laundry services
• Free car parking
Payment mechanism (2/2)
Revenue from additional services
• Additional paid catering services
• Pharmacy sales
• Waste disposal services for other clinics
(B- and C-class waste)
Additional revenue of the concessionaire (not covered by the availability payment)
Preliminary cash flows. Construction stage
Concessionaire
General contractorKazakhstan state
budget
Payment for
construction
works
Taxes
Taxes
Insurance companies
Insurance costs
Financing
institution (Bank 1)
Senior long-term debtShareholders
(Sponsors)
Shareholder’s capital
Subordinated debt
Financing institution
(Bank 2)
Security bond fees
Interest payments / fees
under senior long-term debt
Subordinated lender
Preliminary cash flows. Operational stage
Patients
Department of the
committee for the
payment of medical
services
Payment of GVFMS* tariff
Payments from Voluntary
Medical Insurance
Revenue from paid medical services
Taxes
Access fees
Shareholders
(Sponsors)
Subordinated lender
Financing institution
(Bank 1)Principal and interest
repayments on
subordinated debt
Dividends, repayment of share capital
Fees, principal and interest repayments on
senior long term debt
Taxes
Financing institution
(Bank 2)
Security bond fees
Insurance
costs
GrantorKazakhstan
state budget
Insurance companies
Medical operator
Concessionaire
Partner university
clinics Payment under partner
agreement
Notes: * GVFMS – Guaranteed
Volume of Free Medical Services
General PPP project structure. Key project agreements
Private
partnerLenders
Shareholders
Construction
contractorOperation contractor
Public
partner
Loan
agreement
Direct
agreement
Concession
agreement
Agreement with
shareholders
Service
contract
EPC-
contract
Loan agreement
• The main document between the lenders and the private
partner contains the project funding terms: the list and
terms of all loan facilities under the project, requirements
for drawdown and repayment, security, debt covenants, and
early repayment terms, including early termination of the
concession agreement
Direct agreement
• Three-way agreement between the public partner, private
partner and the lenders under which the public partner
agrees to give the lenders a period of advance notice of the
impending termination of the project arrangement
• This agreement also gives the lenders the opportunity to
step in, either directly or through a nominee or
representative, to remedy the termination event or to
find another party who will be acceptable from the point
of view of taking over the rights and obligations of the
private partner under the concession agreement
Construction and operation of outpatient hospital for 500 visits per shift in Kyzylorda city
Moscow, November 3rd, 2015
ATTRACTIVENESS OF THE PROJECT
Stable partner from government side represented by Akimat of Kyzylorda region
Reimbursement of investment expenses
Management fee
Stable demand for medical services in the new, developing residential area
RESULT OF THE PROJECT
Outpatient hospital for 500 visits per shift in “beyond the line parT” of the city Kyzylorda,
residential area “Al-Farabi”.
Access to medical services of primary medical care for the population of “beyond the line part”
of the city.
PROJECT OBJECTIVE
Providing quality and available medical services of primary medical care of the population
Kyzylorda and Kyzylorda region.
Construction and operation of outpatient hospital
for 500 visits per shift in Kyzylorda city
2
Grantor Akimat of Kyzylorda region
Operating statements 500 visits per shift, 2 shifts per day
Location Kyzylorda city, residential area Al-Phatabi, Alshynbayeva-Ashirbayeva str.
Concession period Up to 18 years
Investment volume (estimate) ~3 billion tenge (10,8 mln.USD)
Sources of reimbursement expenses and
income provision of the concessionaire
Reimbursement of investment expenses of the concessionaire
Management fee
Income from medical and non-medical services
Type of concession BTO («Design - Finance - Build - Transfer - Operate»)
Estimated type of Tender Tender at the selection of the concessionaire without using the two-stage procedures
Tender announcement July, 2016
Construction of object will be carried out according to design estimate documentation of outpatient hospital for
500 visits per shift in Kyzylorda city, developed by the order of Akimat of Kyzylorda region
Construction and operation of outpatient hospital for 500
visits per shift in Kyzylorda city
3
Selected land parcel for construction
City outpatient hospital
№5 - 32 813 people
attached
City outpatient hospital
№2 - 35 134 people
attached
COH - City outpatient hospital
Concession object location
Residential are Al-Pharabi
(population 6 865 people)
“beyond the line part” of the
city часть города (population
31 853 people)
The private sector dominates.
4
Concession object
COH №5COH №2
Public outpatient organizations in the city
6 outpatient hospitals, with two of them (outpatient hospitals №2 and №5) located in “beyond the railway part” of the city
8 medical ambulances, 9 medical centers, 1 rural health post
Diagnostic center of Kyzylorda region
Public hospital organizations, rendering similar ambulance services
State hospital, children hospital, branch outpatient hospital «Railway hospital of medicine of accidents» JSC, Kyzylorda railway
hospital, Regional medical center
Private organizations
18 private medical organizations:
‐ ambulance services (physiotherapeutic procedures, treatment sessions on east and Chinese medicine and etc.), consulting services,
laboratory services
‐ some of them have stationary beds, a day patient facilities
‐ none of those located in the region of planned outpatient hospital
Overview of medical organizations
in Kyzylorda city
5
6
The new outpatient hospital is planned as replacement of the existing city outpatient hospital №2
Planned number of attached people - 35 000 people
Creation of the new state medical organizations in "beyond the railway part " of the city is not expected in the next 10 years
The forecast number of the attached population:
1st year: 35 000 people, 2nd year: 35 700 people, 3rd year: 36 414 people, 4th year: 37 142 people, 5th year: 37 885 people
The predicted growth rate of the attached population to outpatient hospital is 2%*
Estimation based on Healthcare department’s data taking into account growth rate of the population "beyond the railway" part of the city and dynamics of number of the
attached population of the operating outpatient hospitals.
Demand factors for medical services in “beyond the railway part” of the city
CONCLUSION
THE DEMAND ON NEW OUTPATIENT HOSPITAL FOR 500 VISITS PER SHIFT IN NORTH-WEST SIDE OF THE CITY
Public outpatient hospital №5 and public outpatient hospital №2 are located in “beyond the railway” part of the city.
City outpatient hospital №2,
500 visits per shift35 134 people are attached
Located in the building, which is not standard and
run-down (made from clay-straw material in 1957)
City outpatient hospital №5,
650 visits per shift32 813 people are attached Served population who are not living in the majority in " beyond the line part " of the city
Institutional scheme
The scheme of interaction of the parties during the post-investment period
INCOME OF THE CONCESSIONAIRE
financing and creating the object of concession
rendering medical services and non- medical services
maintenance of concession object, including routine
maintenance and overhaul repairs of concession object
ensuring security and safety of concession object, observance
of standards of fire safety, management of medical waste and
chemical means (including utilization)
FUNCTIONS OF THE CONCESSIONAIRE
reimbursement of investment expenses of the
concessionaire
Management fee
Income from medical and non-medical services
FUNCTIONS OF THE GRANTOR
post-investment period
transfer rights to possess and use concession object for
the term of concession to the concessionaire
payments of reimbursement of investment expenses and
management fee
project monitoring and control the quality of services
provided under the concession agreement.
Вuild – Тransfer - Operate
RIE – Reimbursement of investment expenses
GVFMC – volume of medical care, guaranteed to citizens of Kazakhstan by State.
GRANTOR (AKIMAT)
Concession agreement
Founder Creditor
Patients
Committee of
medical services
payment
Insurance
companies
Paym
ent fo
r
GV
FM
C
Paid
serv
ices
Concessionaire
Insura
nce
paym
ents
RIE,
Management fee
Financing
7
Primary health care services
Therapist, pediatrician, general practitioner, obstetrician-gynaecologist, psychologist, case worker, midwife
Consulting at specialist doctors
surgeon, ENT specialist, cardologist, rheumatologist, neuropathologist, infection disease doctor, endocrinologist,
ophthalmologist, traumatologist, otolaryngologist, traumatologist-orthopedist
Laboratory diagnosis
‐ All-clinical trials;
‐ Hematologic researches;
‐ Biochemical researches;
‐ Immunological researches;
‐ Serological researches;
‐ Histopathology and cytology
Instrumental diagnosis
‐ Functional diagnostics: Electrocardiography (electrocardiogram), Elektroentsephalografphy (EEG), Ultrasonic
diagnostics (ultrasonography);
‐ Radio diagnosis: X-ray diagnostics, mammography
Procedures and manipulations
Physioprocedures
Day patient facility (10 beds)
Outpatient hospital services
8
Development of Concession proposal
Development of Tender documentation and draft of Concession agreement
Tender procedures
2015 2016
Kick off
Commercial Close
Tender
announcement
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Introduction of
CO
DBAFO
Due diligence and
coordination
2017
Financial studies
Technical studies
Marketing studies
Legal studies
Social studies
Risks studies
Selection of
the private partnerNegotiations
Project planning timeline
9
Clarification of Tender
conditions
Introduction of Tender
offers
Potential concessionaires
receive the admission to
participation in Tender
Announcement of the
winner and signing the
contract
2 month2 month10 days
Estimation of pre-
qualification
requirements
Negotiations with
participants , whose
offer defined the Best
Beginning of
construction
Choosing Best Concession Offer
2 month
Announcement of the
best Concession offer
As part of the tender documentation participants will be given a concession proposal and design and
estimate documentation.
The Potential concessionaires can also participate in competition with their own land plot.
Financing close and
organizational works
of concessionaires
6 month
Tender procedures timeline
10
Construction and operationof general hospital with capacity of 300 beds
at Karaganda State Medical University in Karaganda city
Object locationKaraganda city, Republic of
Kazakhstan
Concession schemeBuild -Operate – Transfer (BOT) or
Build -Transfer – Operate (BTO)
Estimated activities of the
Concessionaire within the concession
project
financing,
construction and equipment,
medical activities,
renovation of the equipment
Multidisciplinary Hospital with 300 beds at Karaganda State Medical
University in Karaganda city
Ministry of
healthcare and
social
development
of RK
(Grantor)
Committee of
the state
property and
privatization of
RK
(Committee)
Concessionaire
Financing
institution
(Bank)
Shareholders
(Sponsors)
Concession agreement
Repayment of a
body and percent
on the senior debt
Reimbursement of own
capital
Transfer of rights of
possession and use of
Concession object KarSMU
Cooperation agreement
Students
Teaching staff
GVFMS Private VMI
Reimbursement of investment expenses
Payment for medical services
Payment for clinical site
Road-map of PPP in healthcare in Republic of Kazakhstan
Program of development of PPP in RK for 2011-2015 provides for creation of social infrastructure by PPP. In sectoral
strategic documents, such as Healthcare development program in RK for 2016-2020, Strategic plan of MHSD RK for
2015-2018.
Standard of a state policy on PPP in healthcare of the United Nations Economic Commission for Europe (UNECE)
recommends development and adoption of the detailed program document - the Road map on introduction of PPP in
health care (PPP Delivery Plan).
Detailed and realistic plan of action and pool of selected projects at the national level can become a major factor of
attraction of private and domestic investments into healthcare.
Formation of an effective Road map includes a number of extensive analytical works which are at the moment not
carried out and aren't begun.
The action plan of public-private partnership in healthcare in the Republic of Kazakhstan
Road map of PPP in healthcare in the Republic of Kazakhstan will be developed
Basic templates in part to monitoring of concession projects, the interface of the agreement between the concessionaire and medical operator, systems of penalties and deduction within contracts PPP, systems of indicators to which there have to correspond services of the concessionaire
Base template of service contracts and contracts of transfer to trust management, providing conditions under which efficiency for the state party is reached
Pool of bankable projects
On all chosen projects – the payment mechanism
Economy of funds for stages of development of the PPP projects
Improvement of quality of development, increased chance of successful tender
Promotion of the pool of PPP projects to the market, market sounding events
The action plan of public-private partnership in healthcare in the Republic of Kazakhstan
Thank you for your attention!
PPP Advisory Center, LLC
010000 Republic of Kazakhstan, Astana, st.
Dostyk, 18, a business center “Moscow”, 16 Floor
Telephone: +7 (7172) 79-04-50
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