THE EASTERN CAPE DOHNETCARE PPP PARTNERSHIP

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THE EASTERN CAPE DOH/NETCARE PPP PARTNERSHIP

• DDG FOR HEALTH, ECDOH
• DR NANDI DILIZA

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Overview

• Introduction
• Traditional Procurement vs PPPs
• Reasons for PPPs in general
• Reasons for Health Specific PPPs
• Benefits for Public Health from PPPs
• Challenges for Health PPPs
• The ECDOH/Netcare PPP
• Lessons learnt
• Conclusion

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Introduction

• A PPP is defined in South African law as
• A contract between a government institution and
  private party, where
• the private party performs an institutional
  function and/or uses state property in terms of
  output specifications
• substantial project risk (financial, technical,
  operational) is transferred to the private party
• The private party benefits through
• unitary payments from government budgets and/or
  user fees.

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Benefits of PPP procurement

• Leveraging of private sector
• Capital
• Skills
• Transfer of
• Financial risk to the private sector
• Specialist skills to the public sector
• Public sector
• Pays only once the goods or service have been
  delivered
• Focuses on outputs and benefits from the start of
  the project

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Challenges i.r.o. PPP procurement

• Slow Turn Around Times
• Political will and general Buy In
• Dwindling Competition due to size of market
• Risk Averse Private sector

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Challenges i.r.o. PPP procurement

• Pooling of Funds from different programmes for
  PPPs
• Very Litigious Environment
• Limited Pool of experience both in public
  private sector
• Innovation and thinking outside the box
• Understanding basic principles of PPPs, win-win
  situation
• Contract Management

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Reasons for PPPs in Public Health

• Discrepancy in the standard and quality of
  healthcare
• Access to health care
• The exodus or dearth of skills
• Degraded and dilapidated public facilities
• Equity and transformation

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Public Health Sector Benefits

• Providing scope for medical professionals to grow
  their private practices
• Improving hospital management through skills
  transfer and
• Access to quality healthcare for communities
  served by the PPP hospital

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Key success factors for PPPs

• Legal certainty and enforcement of rules
• Political will and commitment
• Transparent, fair, open and competitive process
• Competent consultancy market
• Dedicated state resources and internal skills

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Key success factors for PPPs

• Private sector interest and capacity
• Balance between profit and commitment to improved
  service delivery
• Availability of funds to honor commitment
• Common vision and purpose

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THE ECDOH PPP

• THE CASE STUDY

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Background

• The Department determined the need to upgrade the
  hospital facilities in the Cacadu Region, namely
  
• Port Alfred and Settlers District Hospitals
• Also recognized the need to maintain the improved
  facilities at a high level and
• To provide associated non-core support services
  to an acceptable standard.

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Planning Phase

• Purpose of TA
• The Transaction Advisors assistet the Department
  with Feasibility Study that would
• Determine whether the proposed PPP was in the
  best interest of the Department and that
• The PPP met the need to offer strategic and
  operational benefits to the Department wrt
  government strategic objectives and policy

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Concession Agreement

• The concession agreement was signed on the 7th of
  May 2007, in terms of which
• The Private Party upgraded and refurbished the
  two Hospitals
• The financing, design, upgrade and refurbishment
  of the facilities and provision of operational
  and associated services including hard and soft
  facilities management

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Concession Agreement

• Terms of the agreement
• To build property, plant and acquire equipment
• Life-cycle maintenance, replacement and
  refreshment of selected equipment, including
  medical equipment, IT and furniture
• Together with the co-located private beds to be
  operated by the Private Party

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Concession Agreement

• Private beds
• Private pharmacy
• Private administration
• Two private consulting rooms
• Public beds
• Public outpatients facility
• Public pharmacy
• Public administration
• Shared facilities of Labour ward, Maternity ward,
  Casualty, Theatres, CSSD, Kitchen, mortuary,
  stores, linen areas and plant and workshop areas

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Contract Management

• Critical success factor for a PPP
• Project Officer is the Contract Manager
• Leading a team of various experts
• Finance
• Legal
• Clinical HR
• Facilities management

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Contract Management

• Quarterly meetings held
• Looks at strategic matters
• Direct access to the accounting officer
• Private sector has own team
• Meets with departmental Contract management team
  quarterly

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Contract Management

• Operational Team below Contract Management Team
• CEO of each hospital together with his/her
  management team
• Meet monthly to consider operational matters and
  take decisions
• Makes inputs to the Contract Management team

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Contract Management

• Day to day management overseen by local managers
  CMOs, Nursing Managers, Nursing Unit managers,
  Admin Mangers from both sides
• Regular and frequent interactions key
• Problems WILL arise but MUST be addressed on
  site, elevated if necessary
• Stick to the terms of the contract

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Contract Management

• This PPP has taken off well
• Good bed occupancy rate on both sides
• Shared resources ensure Economies of Scale
• Doctors share after hour calls
• Private sector better able to attract doctors due
  to flexibility in remuneration models
• OSD for doctors will also assist in attracting
  doctors to the Public sector

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Exit Plan

• The Private Party shall upon expiry or early
  termination of this Agreement, handover the
  facilities (including the Private Facilities) to
  the institution free of any Encumbrance or any
  liabilities or debt, and
• In good order as at commencement of PPP
• No payment of any amounts by the state

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PPP Benefits

• The benefit of the project is the extent of
  investment involved, the socio-economic benefits
  and spin-offs, the BEE participation requirements
  and the contributions to health service delivery

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Lessons Learnt

• Full and detailed understanding of all facets of
  project essential
• A clear affordability statement up front with
  appropriate funding and payment mechanisms
• Product design MUST provide value-for-money and
  the sources of drivers of such value must be
  exposed understood

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Lessons Learnt

• A formal cooperative procurement plan
• A carefully appointed project team LEADERSHIP!!
  
• POLITICAL MANAGEMENT BUY-IN
• Well-defined output specifications
• Transparent risk transfer

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Conclusion

• True PPPs bring value-for-money healthcare
  within reach of public patients provided there is
  clear understanding between parties involved, and
  a commitment to meeting critical success
  criteria
• Accessibility
• Affordability
• Transfer of appropriate technical, operational
  and financial risk between the sectors
• Profit is an essential component in providing
  sustainable, quality healthcare delivery

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Conclusion (cont.)

• True PPPs also contribute substantially to the
  evolution of BBBEE in the healthcare sector a
  CRITICAL aspect of healthcare transformation

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THE END

• THANK YOU