HANSHEP HEALTH PPP FACILITY
1. Strategic Case
A. Context and need for DFID intervention
The proposed HANSHEP HEALTH PPP FACILITY will assist governments in low income settings to
introduce and improve strategic purchasing of healthcare services from non-state providers, under a range
of Public-Private-Partnership options that would be tailored to the specific country and healthcare context.
Improving the purchasing practices of governments will enhance access of public patients to quality
services while limiting catastrophic out-of-pocket expenditure for poor patients, and serve to mobilize
private investments into the healthcare sector, ranging from public health programs, primary care, to
advanced treatment of non communicable diseases, and social health insurance programs. It will also, by
fostering increased transparency, competition and good practice in structuring PPPs, contribute to more
efficient spending in the sector - WHO estimates indicate that between “20% to 40% of all health
spending in emerging markets and developing economies is wasted through inefficiency”1. Recent IFC
research indicates that about 50% of governments in Africa already contract for some type of services,
albeit mostly for simple and non-clinical services and on a fairly small scale. The report finds that “more
effective engagement between the public and private health care sectors in terms of better policies,
regulations, information sharing, and financing mechanisms, including for the poor, would improve the
performance of African health systems. It would save lives.”
The proposed intervention is in high demand, given the well publicized gaps in healthcare systems, the
growing presence of non-state providers and increasing recognition of senior policy makers of
opportunities to leverage private sector for public services but also increase regulation in the private
sector. An increasing number of governments are keen to explore contracting approaches with non- state
actors to complement healthcare delivered by public facilities. Following initial discussions with DFID
and other development partners about the proposed initiative in February 2011, IFC has ramped up efforts
to market-test demand for the proposed initiative and to generate an indicative pipeline. IFC has received
direct requests for support, in some cases for multiple transactions, from governments in Benin, Nigeria,
Ghana, Uganda, Mozambique, Malawi, Southern Sudan, Lesotho and from low income states in India,
including Madya Pradesh, Rajasthan, Bihar, and Meghalaya. IFC expects to sign advisory agreements
within the next few months with virtually all of these governments.
The proposed HANSHEP HEALTH PPP FACILITY will facilitate advisory support towards PPP
projects for private (for-profit or not-for profit) provision of high priority health care services and/or
health insurance for the poorest and women and girls. It will address a critical market failure - limited
capacity of governments and limited hands-on support to scale up contracting approaches and expand
contracting to more complex health services; as well as knowledge barriers hindering adoption of good
international practice in structuring sustainable partnerships with non-state actors, including performancebased provider payment mechanisms.
1
WHO, World Health Report, Health systems financing: the path to universal coverage, 2011
Projects selected for support by the HANSHEP HEALTH PPP FACILITY will primarily benefit target
groups identified by government policies, but support will be made available in priority to projects
targeting the poor (defined as below the poverty line of the host country), children and women. Similarly,
selected projects will reflect a country’s specific health priorities. Illustrative examples might include,
inter alia








Primary care for the urban and rural poor
Advanced diagnostic services for low income groups
Maternal and child health services, such as primary health care , preventative health care
programs, vaccinations, ob-gyn services (outpatient and inpatient), children’s inpatient treatment
(e.g. children’s hospitals)
Women’s cancer screening and treatment
Acute care hospitals accessible to low income groups
Specialist outpatient centers providing treatment to a catchment area of predominantly poor
people, or where poor people represent an important part of the patient mix
Health services for local communities in the proximity of resource extractive industries (e.g.
mining, oil/gas) and large agricultural plantations
Coverage of low income patients through social health insurance
Target Regions/Countries
Governments eligible for assistance by the proposed facility would include national and sub-national
government entities, such as health ministries, government sponsored health societies, and social/
statutory health insurance systems. Support will be made (at least 80% of projects) in priority to
governments of



the “Least Developed” and “Other Low Income Countries” as set out in the DAC List of ODA
Recipients. These countries have a per capita GNI < $935 in 2007. The two categories include 61
countries and coincide almost identically with the World Bank’s list of IDA-eligible countries (per
capita GNI<$1,165 in 2009)
Low-income states of India, which include 8 states with a total population of 450 million people
Fragile states (as defined and updated by the World Bank2), which currently includes 26 Least
Developed and Other Low Income Countries, and 5 Lower Middle Income Countries
Evidence underpinning intervention
There is a growing body of literature available that demonstrates the value and positive development
impact of contracting by governments for health services, if done in accordance with good international
2
For detailed definitions and updated country listings, see
http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/STRATEGIES/EXTLICUS/0,,contentMDK:22230573~pagePK:6
4171531~menuPK:4448982~piPK:64171507~theSitePK:511778,00.html
practice 3,4, including in low resource settings and for primary care 5 At the same time, the depth of
current research remains limited, given the paucity of PPP models implemented in emerging economies to
date and rather recently, compared to OECD economies, and the wide variety of possible models and
applications that make it difficult to arrive at conclusive findings across all types of PPPs.
IFC, as the sole multilateral donor offering hands-on transaction support for health PPPs, has been able to
successfully close and to document lessons learnt from 17 health PPP transactions to date, in terms of
private investment mobilized, patients having obtained access to new and improved services, and fiscal
benefits to governments, and in terms of lower costs of services provided than would have been feasible
otherwise6. These pilot transactions have clearly demonstrated and validated the demand for this type of
assistance to governments in emerging markets, and the challenge to establish more clearly the viability
of PPP approaches in low income settings. The following Table 1 illustrates some of the outputs and
impacts associated with recent and ongoing IFC transactions. Based on our active portfolio of mandates,
we expect comparable development results associated with mandates in Africa and India, with slightly
higher patient figures but possibly, slightly lower investment commitments.
Table 1: Sample portfolio of recent and ongoing IFC health PPP transactions - anticipated development impact
People with access
Status
Project ID
Country
Project
to improved
Priv. Inv (US$m)
services per annum
Closed
24237
Lesotho
National Referral Hospital
330,000
77
Closed
27857
Brazil
Bahia - Hospital do Suburbio
400,000
50
Closed
28431
India
Andhra Pradesh - Radiology Services
Closed
26388
Mexico
Toluca and Tlalnepantla Hospitals
98,800
6
201,000
120
The HANSHEP HEALTH PPP FACILITY will enable IFC to scale up and expand advisory support to
governments in low income countries that could not mobilize funds to support the cost of PPP
transactions otherwise and that do not have ready access to knowledge and hands-on support to structure
innovative partnership with non state actors.
In reflection of the need to document on a more systematic basis the evidence concerning health PPPs,
one core component of the proposed HANSHEP HEALTH PPP FACILITY IFC will be to monitor,
document and disseminate development impact and lessons learnt around PPP transactions in the
healthcare sector, through publications, IFC’s dedicated healthcare PPP website and other cross
3 WHO, Use of contracting in public health; http://www.who.int/bulletin/volumes/84/11/06-037416.pdf;
Gonzalez R, Pantoja T, Vera C. The impact of contracting out on health outcomes and use of health services in low- and middleincome countries: http://apps.who.int/rhl/effective_practice_and_organizing_care/CD008133_gonzalezr_com/en/;
4 Loevinsohn, Benjamin, Performance-based contracting for health services in developing countries : a toolkit;
http://siteresources.worldbank.org/INTHSD/Resources/topics/415176-1216235459918/ContractingEbook.pdf
5
M. Kremer, Brookings Institution: Contracting for Health: Evidence from Cambodia,
http://www.brookings.edu/papers/2006/07healthcare_kremer.aspx
6
For more detailed information on IFC support to health services, see:
http://www.ifc.org/ifcext/psa.nsf/AttachmentsByTitle/SectorBrief_Health/$FILE/SectorSheets_Health.pdf;
http://www.ifc.org/ifcext/psa.nsf/AttachmentsByTitle/IFCSupport2HealthPPPs/$FILE/IFC_Support2Health_WEB.pdf
references to other relevant web sites, other online fora/ social media, launch events, and seminars for
senior policy makers, in order to broaden the existing global evidence base available to policy makers.
B. Impact and Outcome
During the first years of IFC’s engagement in the healthcare PPP space, IFC has successfully closed 17
PPP transactions, and has generated outcomes and development impact exceeding initial expectations.
However, the lack of predictability in donor support is hampering a more programmatic engagement with
government entities to mainstream contracting approaches and is limiting the ability to deepen
engagement with low income countries that may not have the resources to fund project preparation and
transaction advice, and where projects are unlikely to yield success fees from services providers to
recover project development costs. A multi-year Health PPP Advisory Facility would enable IFC to
significantly expand its health PPP business, with a far greater development impact and sharpened focus
on the poor and disadvantaged groups.
Based on the track record established over recent years, IFC anticipates the following development
impact for the proposed HANSHEP HEALTH PPP FACILITY, assuming US$5 million in additional
funding, on a portfolio basis:
(i)
Output 1: IFC will undertake at least twelve PPP advisory mandates over three years, and for
each mandate, deliver a detailed PPP strategic options (or transaction structuring) report
– providing important policy guidance and hands-on capacity building even where it may be
decided that a specific transaction may not be viable or value-for-money for a PPP solution.
During this phase, IFC will also assess client capacity to procure and manage PPPs and take
suitable actions to mitigate any gaps.
(ii)
Output 2: Ten successful tenders and contractual closures, through a competitive and
transparent process, for a long-term PPP arrangement. IFC will also provide assistance to
client governments on PPP contract management for up to twelve months after tender
award/contract signing, where appropriate and requested by clients. Two mandates of the
twelve (under Output 1) are assumed to not move to the tendering or contractual closing
stage.
(iii)
Output 3: Dissemination - ten publications detailing lessons learnt about the PPP approach
and structuring of specific transactions, to be published as part of IFC’s “Success Stories”
series or equivalent healthcare publications, and widely disseminated among health care
policy makers. Additionally, presentations at relevant industry and policy events.
(iv)
Outcome 1: US$250 million would be generated in private investment (on portfolio basis,
investments per project would fluctuate depending on the type of project). These
assumptions reflect IFC’s track record in closing PPP transactions in the healthcare sector to
date.
(v)
Outcome 2: 100 senior health policy makers/ government officials having attended a seminar
focusing on PPPs in healthcare and co-sponsored by IFC/ HANSHEP HEALTH PPP
FACILITY, with at least 65% rating the event “highly satisfactory/ satisfactory” in postworkshop attendee evaluation.
(vi)
Impact 1: over 1.500,000 additional patients will be afforded access to new or materially
improved healthcare services per annum.
2. Appraisal Case
A. Determining Critical Success Criteria (CSC)
Success criteria that are critical to achieving the Impact and Outcome recorded in the Strategic Case are
listed below, and a 1-5 weighting is applied, where 1 is least important and 5 is most important based on
the relative importance of each criterion to the success of the intervention. CSC’s are selected based on
IFC’s experience in the PPP advisory space, including but not limited to the healthcare sector.
CSC
Description
Weighting
(1-5)
1
Political commitment by client authorities to pursue PPP options, based on
transparent process, for delivering healthcare services, subject to
appropriate review of alternatives
5
2
Market response – interest by not-for-profit and for-profit providers to
engage with government to provide services to lower income groups under
a PPP arrangement
4
3
Stakeholder support – endorsement by relevant sector donors and other
stakeholder groups, not limited to medical profession, local NGO
community/ patient representatives
3
4
Strengthened capacity at administrative level to monitor and effectively
manage PPP arrangements to sustain meaningful PPP arrangements
4
5
PPP design effectively reduces cost barriers to health care among lower
income groups – political commitment to address needs of the poor and
administrative capacity/ tools to implement credible targeting
3
6
PPP design to ensure sustainability, including retention of key medical staff,
financial viability and reliable supply of essential medicines and medical
supplies
4
B. Feasible options
Below table lists four feasible options for delivering targeted outcomes.
Option
Evidence
rating
Climate
change and
environment
category (A, B,
C, D)
“HANSHEP option A”: Supporting the proposed HANSHEP HEALTH PPP
FACILITY will provide (i) continuity for clients and opportunity to build on an
existing and robust program managed by IFC; (ii) will allow DFID to
leverage the support of other HANSHEP donor partners, and to concentrate
support in this critical area, in contrast to the proliferation of fragmented and
isolated interventions; (iii) utilisation of the IFC network of offices and
contacts to further the programmes aims and (iv) good value for money
given IFC’s contribution of own funds.
Strong
C
“HANSHEP option B”: Supporting a separate (set of) activities under the
HANSHEP umbrella, with the goal of fostering PPPs, other than the
proposed HEALTH PPP FACILITY; no such proposal has currently been
put forward by HANSHEP members, but other HANSHEP members could
collaborate to develop such a proposal
Not yet tried
C
“DFID internal option” - setting up of an internal team to offer similar advice.
Given the level of specialization it would seem unlikely that existing staff
have the requisite skills thus additional external recruitment would be
required, of either individuals or private firms on a transaction-bytransaction basis. In addition, DFID country offices have currently little
engagement with government clients around PPPs in health specifically, so
risks associated with the ramp up and actual delivery of successful
initiatives would seem significant. Donor coordination would most likely be
negatively affected.
New to DFID
C
‘Do nothing more than is already being done’
C
C. Appraisal of options
Offering advice on PPP arrangements in the healthcare sector in emerging markets is a highly specialised
area that is still in a nascent stage and where IFC has done pioneering work. There are little other
plausible implementation alternatives available at present, and an in-house DFID delivery option would
have to be developed from scratch. It is therefore not likely to provide comparable value for money for
DFID as the new activity is developed and rolled out without leveraging the knowledge base and network
available to IFC.
Against this have to be weighed some potential advantages of a more loosely defined separate facility including the ability of DFID country teams to mobilize support for clients more quickly and with lesser
need for consultation among HANSHEP partners, including IFC; a greater focus on DFID countries of
interest and more discretion in managing the Facility - without the inertia of working with a wider group
of donors as consequence of working through the HANSHEP umbrella, albeit at the loss of donor
coordination and the expertise developed by IFC in that space to date.
A ‘do nothing more than is already being done’ – e.g. for DFID to not provide funding to scale up PPP
advisory work beyond the level already undertaken by IFC and other donor partners has been considered
as an alternative option.
Cost benefit framework
The proposed Facility would extend advisory support to government entities to facilitate Public-PrivatePartnership arrangements that will foster access to high quality medical care to low income patients
without access to those services today. Therefore, the proposed Facility seeks to defray one-time
transaction costs rather than the costs of medical services itself which will continue to be borne by host
governments, for low income patients not otherwise able to afford such services. The benefits from
governments shifting towards healthcare provision contracted out to non-state actors will vary depending
upon the type of healthcare service and PPP, but would be expected to include increased access by the
poor to healthcare services, improved quality of care for public patients, improved governance of services
and strengthened accountability by the service providers.
On average, and based on the conservative assumptions outlined in this document, the cost of such
assistance would be in the order of two US Dollars (US$2) per patient afforded access to new or
significantly improved services, in the first year alone, of the typically long-term PPP agreements. Taking
into account the long term nature of PPP agreements, transaction costs therefore represent much less than
one US Dollar per patient ultimately benefiting from this intervention. Specific transaction costs can be
further reduced with selectivity towards mandates that feature increased patient figures (more
common/frequent diagnoses) and reduced transaction costs (repeat mandates with clients/ type of health
sector intervention).
Costs incurred by DFID directly will be even further reduced by leveraging funding contributions from
other donors.
D. Comparison of options
Compare feasible options to critical success criteria
Analysis of options against Critical Success Criteria (CSC)
Option 1
Option 2
CSC
Weight
Score
Weighted
Score
Weighted
(1-5)
(1-5)
Score
Score
1
5
4
20
3
15
2
4
5
20
1
4
3
3
4
12
3
9
4
4
4
16
2
8
5
3
4
12
2
6
6
4
4
16
2
8
Totals
96
50
Option 3
Score
Weighted
Score
3
15
3
12
4
12
3
12
3
9
3
12
72
Option 4
Score
1
1
1
1
1
1
Weighted
Score
5
4
3
4
3
4
23
The proposed Facility (Option 1) provides a unique combination of IFC’s specific experience and
expertise in the health PPP advisory space, with the broader coordination of other development partners
and their respective strengths in the healthcare sector. IFC’s knowledge of local healthcare markets and
position as part of the World Bank Group positions the proposed Facility very strongly in understanding
and fostering client commitment as well as the interest of non-state actors in possible PPP solutions.
Within the umbrella of the HANSHEP Group, the preferred option therefore ranks higher than other
strategic options in terms of securing client commitment, ensuring good international practice in the way
PPPs are designed and implemented, as well as the depth of stakeholder engagement and focus on
creating effective social security features protecting the poor from catastrophic healthcare expenditure.
E. Measures to be used or developed to assess value for money
The indicators below have been developed by IFC to assess value for money during the last several years
in piloting PPP transaction advisory services in the healthcare sector and build on monitoring/evaluation
work done across other sectors. IFC will apply these indicators to measure the value for money of PPPs
supported as part of this intervention.
Indicator 1: The number of advisory mandates signed under the proposed Facility to validate
government demand and thus, from a client perspective, demonstrate value in hiring IFC as well as
contracting with non-state actors for healthcare solutions. This intervention would anticipate 12 new
mandates.
Indicator 2: The number of PPP contracts which are awarded and reach financial closure. This indicator
would demonstrate the viability and value proposition of PPPs to deliver both on public healthcare goals,
at costs acceptable to client governments, while at the same time providing viable and bankable
investment opportunities for non-state healthcare provider. IFC anticipates this intervention will result in
10 PPP contracts reaching tender award and financial close.
Indicator 3: The number of patients who will benefit from improved healthcare as a result of the PPP
agreement, i.e. patients to be diagnosed/ treated under the various PPP contract agreements. This indicator
will allow HANSHEP donors to comparatively assess the efficiency of this intervention, against other
interventions, in achieving improved services for the poor. This intervention is expected to result in more
than 1.5 million patients per annum receiving access to previously unavailable or significantly improved
quality healthcare services.
Improved quality of patient care is also essential, though it is difficult to aggregate quality-of-care
indicators across health PPP projects given that different types of projects/treatments measure quality in
different ways; e.g. lower hospital infection rates, readmission rates and casemix adjusted mortality rates
for a hospital PPP, improved test accuracy for imaging and lab PPPs, lower infant and maternal mortality
rates for a maternal health PPP. Rather, specific quality performance indicators will be developed/
incorporated within each PPP contract and monitored/reported through the life of the PPP contracts.
Indicator 4: The level of investment to be mobilized by non-state actors towards improvements in
healthcare infrastructure accessible to public patients. This indicator would demonstrate the level of
financial leverage achieved by DFID as opposed to providing grants directly towards the purchasing of
services or healthcare services related hardware. This intervention is expected to result in private
investment of US$ 250 million.
Indicator 5: The actual costs of transaction advisory support per mandate, and respectively, the amount
of subsidies extended per mandate by DFID; this would serve to calculate and monitor value for money
ratios, including (i) transaction cost/ patient and (ii) transaction cost/ private investment mobilized. This
intervention would anticipate average value for money ratios of, indicatively, US$2 per patient afforded
improved services (recognizing the range of values, depending on the specific nature of transactions
requested by government clients) and mobilization levels of, indicatively, US$80 in private investment
per US$ of DFID support. The ratio analysis would serve to inform strategic discussions with DFID and
other HANSHEP partners at the annual review meetings.
3. Commercial Case
DFID’s contributions to the proposed HANSHEP HEALTH PPP FACILITY will be untied and the funds
will be transferred to IFC under a standard HANSHEP grant agreement, subject to detailed reporting
requirements as agreed by DFID and other HANSHEP donor partners. HANSHEP has established its
own funding mechanism managed by Crown Agents Bank (CA Bank). DFID will sign an individual
project MoU with the HANSHEP Secretariat (managed by CA Legal) stating the agreed financial support
to the HANSHEP HEALTH PPP Facility. DFID funds will then be made available to the IFC via the
HANSHEP funding mechanism. CA Bank will establish a separate bank account for this purpose. IFC
will be responsible for reporting to the HANSHEP Secretariat which, in turn, will disseminate this to all
the HANSHEP donors including DFID.
The Facility will be managed by IFC. The Facility would be used to fund a share of technical consultants
and transaction lawyers retained by IFC towards individual health PPP mandates, as well as services
related to monitoring and evaluation activities, or dissemination of lessons learnt and results of the
program. Procurement of all external consultants and related services funded by the HANSHEP HEALTH
PPP FACILITY would be done by IFC, leveraging IFC’s technical expertise in this area. All procurement
would follow World Bank procurement guidelines, to ensure high technical quality of services being
provided and competitive pricing.
IFC staff and travel costs would be covered from IFC’s administrative budget and client contributions
(fee income). In principle, IFC is open to reinvesting fees earned from advisory transactions - in excess of
costs - back into the Facility. However, current IFC pricing does not provide for recovery of externally
funded consultants. While raising client contributions is an option, it does not seem feasible nor desirable
for this program, given: (i) the fiscal constraints of clients in the target markets, which hinder higher
client contributions; and (ii) the type/size of transactions (targeted to the poor), which typically do not
enable high success fees, whether paid by the client government or the winning bidders.
IFC suggests reviewing the pricing/reinvestment policy for mandates supported by the proposed
FACILITY during the Annual Reviews.
Major cost drivers for services being secured through the Facility will include the level of technical
complexity/ replication of specific transaction types, location of mandate, and mix between local and
international technical/legal expertise as appropriately required for individual mandates.
4. Financial Case
A. How much it will cost?
DFID will provide funding of US$5 million to the proposed HEALTH PPP FACILITY for a three-year
period. IFC may request additional amounts during the three-year period for DFID consideration, if
warranted by demand and results.
DFID's contribution will be capped at 50% of the total external funding for the proposed facility, with
matching funds expected from (i) other donors, including funds being made available outside the
HANSHEP umbrella for projects eligible for support by the Facility, and (ii) client fee contributions, as
per mandate agreements7 for individual transactions. DFID's contribution will be requested semiannually, only at levels for which matching donor funding has been confirmed, and client contributions
have been committed as per signed mandates.
Such DFID and other external funding will complement IFC’s own internal trust fund (“FMTAAS” - net
income allocated to advisory services). A three-year FMTAAS contribution of US$2.25 million
(US$750,000 p.a.) for the proposed HEALTH PPP FACILITY (commencing July 1st) has been approved
by senior management and the initial annual contribution (covering FY12) of $750,000 is confirmed. The
subsequent years’ contribution has been approved subject to IFC generating sufficient profits for
FMTAAS in those years. IFC will make additional contributions through its administrative budget in
support of IFC staff and travel costs associated with mandates undertaken by the proposed Facility.
7
Advisory service agreements signed by IFC and the client government
Annex 1 provides a diagram of the PPP advisory process, with indicative estimates for timeframe and
costs associated with advisory mandates.
B. How it will be funded: capital/programme/admin
Funds will come from programme resources.
C. How funds will be paid out?
The initial three year allocation will be transferred to the IFC under a standard grant agreement prepared
by CA Legal/ HANSHEP Secretariat. IFC anticipates a semi-annual request for drawdown of funds,
subject to a cap with regard to matching funds being confirmed, in accordance with Section 4.A above.
D. How expenditure will be monitored, reported, and accounted for
Financial reporting will be in accordance with procedures agreed under the standard trust fund/ grant
arrangement. Given the nature of the proposed Facility, no assets will be created, nor is there an
expectation at this stage that any residual funds need be returned to DFID. Administration, monitoring
and evaluation costs would be borne by the proposed Facility.
5. Management Case
The appropriate arrangements to ensure the successful delivery of the project/ programme are in place, as
described below.
A. Oversight
Working with IFC’s Health PPP advisory group, the Non State Basic Services (NSBS) Adviser in DFID's
Private Sector Department (PSD) will oversee implementation and M&E of the Facility. The NSBS
Adviser will regularly monitor progress against agreed outcomes, outputs and indicators and take active
steps to resolve outstanding issues. The NSBS Adviser will manage the Annual Reviews and the final
Project Completion Report (PCR) as well as liaise with IFC, the other HANSHEP donors and the
HANSHEP Secretariat. Through the NSBS Advisor, IFC will liaise closely with relevant DFID country
programs in the health and private sectors to ensure close coordination of activities on the ground.
IFC will administer the HANSHEP/ DFID contribution as a single donor trust fund. DFID has expressed
its strong preference to pool its resources with other HANSHEP members through the HANSHEP
Secretariat (CA Legal/ CA Bank). Under the proposed arrangement, IFC will submit annual progress
reports to the HANSHEP Secretariat, on the status of fund disbursements, fund uses, and other relevant
indicators (see E) as well as the strategic direction of the programme. Annually, and at the discretion of
DFID, DFID may wish to hold direct consultations regarding the progress and orientation of the
programme, including other HANSHEP members and other donors as appropriate, to ensure broad
ownership of the Facility.
Under the standard donor trust fund agreement, DFID/ HANSHEP Secretariat will have full access to
financial information and audit rights as per standard IFC procedures.
B. Management
IFC will manage the proposed HANSHEP HEALTH PPP FACILITY, as an integral part of its current
operations, out of its PPP Transaction Advisory department which serves as the anchor for IFC’s global
PPP Transaction Advisory Business Line. This arrangement reflects the successful management
arrangement for donor partnerships for infrastructure PPPs, including with DFID and the Private
Infrastructure Development Group (PIDG)8, and serves to ensure full alignment with current management
processes, i.e. efficient internal work flow and approval processes, and to avoid significant additional cost
of a separate program management unit.
Under the proposed arrangement, the IFC PPP health sector lead would be responsible for ensuring use
and disbursement of funds in line with the priorities agreed with HANSHEP/ DFID for the proposed
HEALTH PPP FACILITY. This would include (i) reviewing proposals for assistance in accordance with
the criteria and process approved by DFID; and (ii) defining and assisting overall delivery of the
programme’s activities, and (3) maintaining effective relationships with DFID, other HANSHEP
stakeholders and future HANSHEP facilities.
C. Conditionality
The contribution to IFC for the proposed HEALTH PPP FACILITY will be untied. There is potential for
collaboration with DFID’s regional staff in the target regions in prioritising support to reforming
countries in the region and IFC will make best efforts to maximize this collaboration.
At least 80% of projects to be funded by the HEALTH PPP FACILITY shall be for



8
The “Least Developed” and “Other Low Income Countries” as set out in the DAC List of ODA
Recipients defined by the OECD.
Low-income states (LIS) of India, which include 8 states with a total population of 450 million people
(Bihar, Chhattisgarh, Jharkand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh); active
collaboration with DFID country programmes will be explored in those and other states.
Fragile states (as defined and updated by the World Bank), which currently includes 26 Least
Developed and Other Low Income Countries, 5 Lower Middle Income Countries (Congo Rep,
Kosovo, Iraq, Bosnia and Herzegovina, and Georgia) and two territories West Bank & Gaza,
Western Sahara).
http://www.pidg.org/organisationProfile.asp?NavID=40&step=4&contentID=42
D. Monitoring & Evaluation and communications strategy
IFC has a well-established monitoring strategy in place, including for all healthcare PPP advisory
assignments. Project specific outcomes will be developed for each advisory mandate and IFC will
monitor outputs and outcomes as indicated in the logframe. The monitoring strategy builds essentially on
the approach adopted under the existing partnership between DFID and IFC for infrastructure PPPs
(DevCo9) which has been very successful in documenting the link between inputs and support provided
by DFID and development outcomes. IFC remains committed to disaggregate results by gender and
poverty levels of beneficiaries, based on appropriate proxies and within the practical limitations of
healthcare facilities accessible indiscriminately to publicly funded patients.
IFC’s M&E framework encompasses the following elements and activities:
(i)
(ii)
(iii)
(iv)
9
Initial baseline estimate: Indicative baseline information with regard to patient access will
be obtained prior to engaging on any particular mandate and be utilized to set an indicative
target for the number of patients expected to obtain treatment under the PPP. Estimates will
also be made of the amount of private investment which is expected to be mobilized for each
PPP (though not included as PPP contractual obligations, given that PPP contracts are based
on outputs not inputs). IFC plans to capture and monitor initial baseline estimates for every
mandate supported by the proposed FACILITY.
Baseline validation: Typically, indicative baseline estimates are made on the basis of
insufficient and often incomplete sector data provided by government entities and require
validation during the due diligence phase for any individual mandate. Given that the scope of
mandates may also shift during the due diligence and structuring phase (e.g. to include a
wider catchment area than previously thought, or additional services), baseline validation is
an integral part of detailed due diligence and transaction structuring as the first phase of PPP
advisory mandates. It is anticipated to capture and monitor validated baseline estimates for
every mandate supported by the proposed FACILITY.
Estimating project impacts: One critical outcome of the due diligence and transaction
structuring phase is a robust estimate of investment needs, required quality improvements,
and prospective patient figures over the life of the envisaged PPP contract. These estimates
will assist IFC in assessing the financial viability of the proposed PPP and potential fiscal
liability for government, as well as to define plausible project outcomes and impact. IFC
anticipates capturing and monitoring estimated project impacts for every mandate supported
by the proposed FACILITY.
Defining contractual commitments: PPP contracts typically include specific commitments
and obligations for the incoming private service provider/ investor. These will typically
include quality targets, and may sometimes include specific volume targets, e.g. of patients
treated, procedures undertaken etc. Several of the intended project impacts thus will become
contractually binding targets for the private service provider. IFC anticipates capturing and
http://www.pidg.org/organisationProfile.asp?NavID=40&step=4&contentID=42
monitoring contractual commitments for every mandate supported by the proposed
FACILITY.
Monitoring of project outcomes: Project outcomes are monitored in the post-tender
implementation phase compared to the contractual commitments in the PPP contracts. These
contractual obligations are captured by IFC as proxy information for project impact. IFC
plans to monitor project outcomes against contractual commitments for every mandate
supported by the proposed FACILITY.
Project evaluations: IFC routinely conducts evaluations of advisory mandates after the
initial (3-4) years of operation of PPPs to account for the impact of these projects. These
evaluations allow taking into account various changes that may have occurred over the life of
the contract and were not foreseeable at the time of contract award, e.g. changes in patient
volumes, broader economic changes, regulatory frameworks etc. IFC intends to undertake a
full impact evaluation for at least five closed mandates, typically around three years after
award of the PPP contract (later if there is a lengthy construction period after tender award
but before start-up).
(v)
(vi)
IFC’s M&E activities are carried out by teams of M&E specialists from within the IFC Advisory Services
Vice Presidency, supplemented by effectiveness ratings and sample in-depth independent evaluations
carried out by IFC’s Independent Evaluations Group.
IFC acknowledges that DFID will conduct an annual review of the Facility after each of the first two
years and a full PCR at the end of the third year and prior to additional funding being provided by DFID
to further scale up the Facility should such replenishment be required as a result of more robust than
currently projected demand for PPP transaction advisory services.
M&E reports will be made available to HANSHEP and HANSHEP donors as part of the Annual Progress
Report and will feed into IFC’s communications strategy for the proposed Facility.
Dissemination of results and strategic communications: IFC's communication efforts aim to create
awareness of public-private partnerships, promote successful PPP transactions and establish IFC's
leadership in this space. We create materials that build on lessons learnt around innovative PPP model
transactions or processes in healthcare PPPs to educate stakeholders on best practices in the marketplace
and to promote the value of PPP's. We use social media, digital media such as videos and our website to
disseminate our content to external and internal audiences. We also work closely with traditional media to
find opportunities to share our expertise with governments, donors, advisors, practitioners and academics.
Selected communication materials include:
·
·
·
Handshake: IFC’s quarterly journal on public-private partnerships. To read visit:
www.ifc.org/ppp
Success stories: There are 42 case studies of our work available in English, Spanish, French,
Portuguese and Russian
Sector factsheets, for health sector please see
http://www.ifc.org/ifcext/psa.nsf/AttachmentsByTitle/SectorBrief_Health/$FILE/SectorSheets_Health.pdf;
·
Sector booklets, currently available in Infrastructure, Transport & Health
·
·
Social media and digital media we use to disseminate upcoming publications and news
includes Facebook, Scribd, Flickr, Twitter, and YouTube
Events: We regularly organize and present at policy and industry conferences, workshops and
sector specific PPP conferences, seminars within the World Bank Group and externally at
major policy events such as the G20.
E. Risk Assessment
Key risks associated with the proposed Facility include:
Government commitment: One key risk associated with the proposed facility is client commitment, ie
willingness by government counterparts to pursue partnerships with non-state actors to improve
healthcare services, on the basis of a transparent and competitive process and tender as promoted by IFC,
through its Health PPP Advisory work. IFC routinely screens client commitment and client integrity as
one of the priority risks associated with any PPP mandate before proceeding.
Affordability and sustainability for services provided by non-state actors: A second key risk relates
to the countries and regions targeted for the proposed intervention, and the fiscal realities in those low
income settings. Most PPPs require significant fiscal resources by government to compensate for services
provided to low income, public patients by non-state actors. Securing such fiscal flexibility is increasingly
more difficult in low income settings, and forces government counterparts to prioritise among services,
not all of which may most suitably be provided under a PPP framework or provide a viable entry point for
advisory services under the proposed Facility. Options to mitigate these concerns include: (i) due
diligence prior to taking on mandates and ensuring fiscal affordability and buy-in by the respective
Ministries of Finance in addition to line ministries; and (ii) in selective cases, mobilization of donor
resources, including through the Global Partnership for Output based Aid (GPOBA) and other donor
partners.
Market response: PPPs are a relatively new concept for many non-state actors in the healthcare sectors
in the target countries. The ability to attract multiple bidders for PPP opportunities brought to market by
the Facility constitutes a key risk, but IFC has been able to mitigate this risk well, by selectivity in terms
of mandates, extensive marketing, and consistently ensuring bankability of deals brought to market.
Based on experience by IFC in healthcare PPPs to date, and based on lessons learnt from other sectors,
the risks associated with the proposed Facility are well recognized and can be managed through the
existing IFC risk management framework, despite the push into higher risk markets, which we anticipate
will increase risks over and above transactions in more mature economies
F. Results and Benefits Management
A logframe is attached.
Intervention Summary
Title:
IFC Health PPP Advisory Facility
What support will the UK provide?
DFID will provide US$5 million by 30 Oct. 2011, indicatively for a three year-period, and subject to
adequate matching funds by other donors and /or client contributions. If client demand exceeds current
projections and/or if other donors or clients commit additional co-funding, DFID may in its sole
discretion provide additional funds.
Why is UK support required?
The proposed HANSHEP HEALTH PPP FACILITY will assist governments in low income settings to
introduce and improve strategic purchasing of healthcare services through a variety of PPP
arrangements from non-state providers. Improving the purchasing practices of governments will enhance
access of public patients to quality services while limiting catastrophic out-of-pocket expenditures for
poor patients, and serve to mobilize private investment into the healthcare sector. The frailty of public
health systems and the opportunity to improve services through well designed and transparent partnership
mechanisms are well recognized.
The proposed facility will address critical market failures: insufficient practical knowledge, limited
capacity of governments and generally, absence of hands-on support to scale up contracting approaches
and expand contracting to complex, integrated health services; as well as knowledge barriers hindering
adoption of good international practice in structuring sustainable partnerships with non-state actors,
including performance-based provider payment mechanisms. There are significant public good elements
embedded in this type of advisory support, including capacity building of government officials, fostering
support by stakeholders, motivating providers to move into more challenging markets, all of which justify
subsidies.
UK support would be critical in allowing IFC to provide this type of assistance, to scale up advisory
support in low income and fragile states where full cost recovery from government clients or
through success fees from winning bidders remains difficult. By working through the HANSHEP
umbrella with IFC, DFID can ensure coordination of development assistance with other relevant donors,
co-financing of other sources and thus, substantial leverage of the resources provided by DFID.
What are the expected results?
The expected results from the initiative are (i) improved health outcomes by affording poor patients better
access to high quality health care – between 1.500,000 and 2.200,000 patients per annum will be afforded
access to new or materially improved healthcare services; (ii) private investments mobilized to
strengthen public healthcare systems where public funds alone are insufficient - up to US$250 million
generated in private investment; and (iii) deepening and wider dissemination of the global body of
knowledge about the benefits and critical design elements for PPPs with non-state actors in health in
emerging markets. The achieved benefits would be directly attributable to DFID support and be directly
measurable in terms of PPPs closed and number of patients having gained access to previously
unavailable or significantly improved medical care.
Annex I: Indicative estimates for timeframe and costs associated with advisory mandates
The following chart outlines the key phases at the core of IFC supported PPP transaction advisory
mandates.
1. Initial analysis and due diligence (Phase I) typically requires around 6-9 months. Indicative allin costs for this phase would be in the range of US$ 450 k to 550k, including the cost of external
technical advisory support, and legal counsel. As an output of this phase, IFC would present
government clients with a Strategic Options Report or Transaction Structure Report (outlining the
proposed main parameters of the PPP transaction), and facilitate subsequent consultations within
government to foster consensus among administrative and political stakeholders around a
preferred PPP option and transaction structure.
2. Transaction implementation (Phase II) typically requires 6-12 months. This phase includes
marketing the proposed PPP structure to investors, preparing draft contractual documentation,
stakeholder consultation, conduct of the tender process, and closing of the PPP contract. The
outcome of this phase is the contract award by government. Indicatively, the costs for this phase
are in the order of US$600-700k, depending on the structural and legal complexity of the
proposed PPP.
3. Contract management support: Following the closing of individual PPP mandates, IFC
typically continues to provide hands-on implementation support to client governments in PPP
contract management. This support can extend up to twelve months into the effectiveness of a
new PPP contract, at costs of up to US$100k per mandate, and is part of the strategic assistance
provided by IFC.