LESOTHO REFERRAL
HOSPITAL PPP
PROJECT INFRASTRUCTURE
By
LENESA LEAOOA
Ministry of Health
Outline
• Background
• Replacement of the QE II
• Project overview
• infrastructure design
• PPP structure
• Performance monitoring
• Successes
• Challenges
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Background
• Lesotho is a mountainous country of 11,720 square miles (30,335 sq
km) entirely surrounded by South Africa
• The population is estimated to be 2 million people
• The Lesotho government is custodian of the health services in the
country. It is in partnership with Christians Health Association of
Lesotho (CHAL), where by the government owns 51% and CHAL 49%
of the Health Facilities
• Beside CHAL there is also Lesotho Red Cross society which runs
only Health centres
• The Lesotho health system is predominately publicly funded (61% of
the health expenditure and the health spending represents the 11.1%
of the GDP.
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Background cont….
• Government of Lesotho is the main funder of the Lesotho Health
system. It provides an annual line budget for government of
Lesotho health facilities and subvention for CHAL and LRCS
facilities though a MOU.
• Development partners support different programmes of the
Ministry of Health inline with the national policy guideline and
strategic plan of the Ministry.
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Replacement of Queen Elizabeth II Hospital
In 2000 the Lesotho MOH undertook a compressive strategic
assessment of the only tertiary hospital in the country QE II. The
assessment identified that QE II hospital is over 100 years old and
needed either replacement or extensive refurbishment. It was also
identified that:
• The infrastructure was too old and Dilapidated
• Inadequate human resources for Health
• Poor management of services
• Old and outdated equipment
• Poor maintenance systems
All of which contributed to decline in quality health services provision
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Replacement of Queen Elizabeth II Hospital
cont..
• In 2001 The MOH through Lesotho Boston Health Alliance
commissioned a feasibility study to review the status of the QEII
• The study confirmed the old infrastructure status and
recommended the need for replacement of QEII
• Against this background, a decision was taken for establishment of
PPP project by the Prime Minister and cabinet
• International Financing Corporation (IFC) Engaged as transaction
advisor for the PPP project
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QE II hospital
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PPP Project Overview
• The proposed PPP project was assigned with the responsibility to Design,
build, finance, fully maintain and operate the Hospital and its 3 filter
clinics in Maseru for a period of 18 years. 2.5 years for construction and
15.5 years for operating the facilities
• The PPP project has a mix of public/private financing with Government of
Lesotho contributing 37.7% and the Private sector contributing 62.3%
• The tendering bid was won by Private Operator Tsepong (Pty) Ltd which
is the private operator
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PPP Project Overview (Cont)
• Infrastructure Design & Construction:
The facility is a:
– 425 beds Hospital with 390 public beds and 35 private beds and a gateway clinic.
– Equipping and commissioning of the hospital
– Refurbishment and re-equipping of three filter clinics (Mabote, Qoaling, Likotsi).
• Infrastructure/Project Capital Costs (design, construction,
equipment):
• M 1,2bn (±US$120m).
• Funding: Government Capital Contribution (37.7%); Private Finance (62.3%).
• Annual Unitary Payment is fixed in PPP Agreement and is escalated by annual inflation
index .
• Patients’ user fees remain unchanged and are guided by Government policy.
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PPP Project Overview (Cont)
• Infrastructure design for Clinical Services include:
– Casualty
– Tertiary Hospital specialties
– Outpatient (general and specialist services),
– Inpatient services : General and specialist surgeries, neonatal ICU, ICU,
etc.
– And a gateway clinic
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PPP Project Overview (cont)
• Infrastructure for Clinical Support Services
e.g. biomedical engineering, laboratory, pharmacy, etc
• Infrastructure for Non-clinical services:
•
e.g. administration, facilities management, maintenance and repair, etc.
• Exclusions:
Clinical Services or Procedures
Exclusions
Transplants
All transplants are excluded except corneal transplants
Major Orthopaedic
Joint replacements are excluded except hip replacements
Dialysis
Cardiac
Chronic (end stage) renal disease is excluded
All elective cardiac and great vessels surgery is excluded, except compelling emergency
procedures
All chemotherapy and Radiotherapy is excluded, except for data capturing
Oncology services such as
Chemotherapy and
Radiotherapy
Obstetrics and Gynaecology
Plastic Surgery
Dentistry
InVitro Fertilisation (IVF) and advanced fertility treatments are excluded
Plastic surgery other than basic, essential reconstructive and with medical need, is
excluded
Cosmetic dentistry excluded
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PPP Project Overview (cont)
• Infrastructure for Private Patients
• There are 35-bed private ward.
• Revenue shared with Government.
• Managing Referrals to South Africa
• Tsepong (Pty) Ltd together with Government will be responsible for
monitoring the cost of referrals to SA;
• If the data shows sufficient patients’ need for specific additional services,
they can be added at a later stage as a project variation.
• Patient Volumes:
• Unitary Payment guarantees service for 20,000 inpatients and 310,000
outpatients p.a.
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Infrastructural design
• The hospital was strategically located to allow easy access
• Road network was developed before the commencement of
construction to connect the hospital with the three filter clinics
• Hi-tech Telecommunication infrastructure was also developed to
enhance easy communication with other Health facilities within the
country
• There is adequate provision of packing space for patients, visitor
and taxi rank for easy of transportation
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PPP Structure
10%
D10 Investments
20%
Excel Health Services
40%
Netcare Hospital Group
Government
Lenders Direct
Agreement
PPP Agreement
annual
Tsepong
Financing
Agreements
DBSA
Subcontractor Agreements
20%
Afri’nnai Health
Women Investment
Company
Construction
Contract
Clinical, Soft FM &
Equipment Contract
Hard FM
Contract
RPP Lesotho
Netcare
Hospitals
Netcare
Hospitals
10%
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Performance Monitoring
Service Payments
Operator
Government
Construction/
Services
COHSASA
Construction/
Service Standards
PPP Agreement
Performance
Indicators
Independent
certifier/Monitor
Compliance
Failure
No Penalty
Deductions
Excusing Cause?
Yes
Penalty Deductions
from Service
Payments
No
Penalty Deductions
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WHY THE PARTNERSHIP WAS A SUCCESS
• Setting affordable limits for the Government to ensure that the outcome
of the bid would not be way beyond what the government could
accommodate in its budget allocations.
• Contribution of the Government to the capital cost, which has resulted in
the unitary payment and which will be a long-term recurrent cost , was
made to be affordable.
• The design of the PPP model gives a comprehensive solution –
Infrastructure and services.
• The Local economic empowerment which is a mandatory requirement
from the operator did build local private sector capacity.
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WHY THE PARTNERSHIP WAS A SUCCESS: CONT….
• The monitoring regime engaged an Independent Monitor for independent
audit of services provided by Tsepong (Pty) Ltd , to ensure that they meet
the set quality standards. This is commonly done for infrastructure work
only with an Independent Engineer/Certifier.
• Payment mechanism is output based, where by there will be penalties tied
to failure to meet construction/service standards.
• Access to the Global Partnership on Output-Based Grant (GPOBA) from
the World Bank has resulted in reduced financial burden on the
Government during the first two years of the operations of the project.
This financed service provision at the 3 filter clinics until the hospital
opened, therefore, disbursement of the unitary payment from the
Government commenced upon completion and take off of the hospital.
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WHY THE PARTNERSHIP WAS A SUCCESS: CONT….
• The project is not fully financed by the User fees, which ensures continued
access to health care services to all the inhabitants of the country.
• Tsepong (Pty) Ltd has been requested to utilize the country’s National
Drug supply System for procurement of its own drugs. This has
strengthen our supply chain management capacity of the country.
• An MOU has been signed between Tsepong (Pty) Ltd and the National
Health Training College (NHTC) for collaboration in upgrading capacities
of health workers, exchange of Tutors and use of Hospital infrastructure.
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Challenges
• No Legal and Regulatory framework to guide the way forward for all other
PPP projects. However the New Referral Hospital succeeded without it.
PPP Policy has developed though SADC support and ready for approval.
• Internal capacity – The MOF and MODP are at the inception phase of
setting up a PPP Unit, which will need to be capacitated to enable it guide
all sectors in PPP projects. SADC is supporting the process
• The New referral Hospital was the first big PPP for Lesotho and there is a
need to learn from it before moving to many other PPPs. The Ministry has
to ensure that the contract management system is fully functional, as this
is core to the continued success of the project.
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Thank You
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Thank you
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