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

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 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

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 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 & 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 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.)

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)

• 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;

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 TA’s 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

– 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

[email protected]