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
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Three administrations
Lack of infrastructural maintenance
Provincial inequity
Access to health services
Inadequate budget
An Eastern Cape Health Perspective (Cont.)
• Service Delivery Model
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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:
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maintenance & repairs,
security,
gardening,
cleaning & domestic and
waste removal;
REHABILITATION, UPGRADING &
CONSTRUCTION
• Central block
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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
Imenzies@worldbank.org