BNDES and IFC Signed the Agreement to Develop Healthcare PPP in Pernambuco

Brazilian Jaboatão dos Guararapes is the first municipality in the country to sign technical cooperation with the National Bank for Economic and Social Development (BNDES) and the International Finance Corporation (IFC),  to develop public-private partnership projects on the healthcare. The signing of the partnership took place in Brasília with the presence of mayor Anderson Ferreira, the superintendent of the BNDES’ government and institutional relations area, Pedro Bruno Barros de Souza and IFC principal investment officer in Brazil, Bernardo Tavares. The project will involve an investment of R$250 million ($45m) and is expected to come into effect from next year.

The technical assistance will involve investments planned for the expansion and modernization of medical care for the population of Jaboatão. According to the Ministry of Health, the proposed project will include the construction and installation of equipment in basic healthcare centers ((Unidades Básicas de Saúde). In addition to these investments, the model called “grey coat” will include the maintenance costs of the units.

 “This project enables important investments in infrastructure, essential for serving the population, better efficiency and gains in management. And it will allow municipal governments to fulfill the mission of providing citizens with well-being”.

Bernardo Tavares, IFC Principal Investment Officer in Brazil

The scope of work of the BNDES and IFC involves the carrying out of technical, legal, environmental and economic-financial analysis studies, as well as support in the preparation of bidding documents, project promotion and the adoption of technological and contractual innovations based on the best national practices and international in the sector.

Source and image credits: official website of City Hall of Jaboatão dos Guararapes

Tender Announcement for the National Cancer Institute in Chile

General Directorate of Concessions in Chile invites interested parties to submit the bids for the National Cancer Institute PPP project to replace a highly complex hospital in the commune of Independencia featuring specialized cancer care and teaching facilities.

The project considers the investment of around USD 161,5 million (UF 4,704,824) with the concession term of 19 years, which includes design, construction and maintenance of the new facilities as well as provision, replacement, assembly and maintenance of medical equipment and furniture.

With the total area of 86.000 m2  it is expected that it will be able to serve the entire Santiago Metropolitan Region and also considered to be a national reference center, to benefit the population of 11.6 million people in the age of 15 and older.

The technical and economic bids for the concession will be accepted until January 4, 2022. The project will be awarded in the second quarter of 2022 and the beginning of construction planned for 2024.

The new facility will have 249 beds with 13 oncological surgery pavilions, 8 linear accelerators for external radiotherapy, 2 brachytherapy equipment, diagnostic services to support the detection and treatment of oncological pathologies.

To learn more about the project here.

Source and image: General Directorate of Concessions in Chile.

Tender Announced for O’Higgins PPP Hospital Network

General Directorate of Concessions in Chile announced the call for international tender for the O’Higgins Hospital Network to replace two health facilities  in Rengo and Pichilemu with overall 262 beds and benefit for 276 thousand inhabitants.

The project  includes design, construction and maintenance of the new units of the buildings as well as the provision, replacement, assembly and maintenance of medical equipment and furniture.

Estimated around USD 159 million (UF 3,782,141), the PPP contract with a term of 15 years of operation planned to be awarded during the first quarter of 2022 and the beginning of construction in 2023. 

Interested parties are invited to submit their applications until January 11, 2022.

About the project

The Rengo Hospital will be a medium-high complexity facility, which will serve about 206 thousand inhabitants of the districts of Rengo, Malloa, Quinta de Tilcoco, San Vicente de Tagua Tagua, Peumo, Pichidegua and Las Cabras.

With a total projected area of 66 thousand mthe establishment will have 235 beds, 47 rooms for medical and non-medical consultations, emergency units, seven pavilions, six rooms for comprehensive delivery care, ten chairs for care of chemotherapy and 18 for dialysis.

The Pichilemu Hospital will be a low-complexity facility, which will benefit about 70 thousand inhabitants  of Pichilemu, Navidad, Litueche, La Estrella, Marchigue, Pichidegua and Paredones districts.

The new building will have a total area of 12 thousand m2 and will have 27 beds, 33 boxes for medical and non-medical consultations and five boxes for emergency units.

Source: website of the Ministry of  Public Works in Chile.

Acciona Presented the Best Offer for La Serena PPP Hospital in Chile

Image: General Directorate of Concessions in Chile

According to official session of the General Directorate of Concessions held on November 5, 2021,  the best economic offers received for the La Serena PPP Hospital from Acciona Concesiones Hospitalarias consortium, made up of Acciona Concesions SL and Concesions Chile Holdings I SpA. The offer considered USD 14.7 million (UF 384,560) for the fixed subsidy for construction and about USD 6,7 million (UF 174,400) for the fixed subsidy for operation. 

The other offer received from Obrascón Huarte Lain SA was USD 17.8 (UF 465,779) for the fixed subsidy for construction and about USD 6,7 million (UF 174,400) for the fixed subsidy for operation.

The project, which includes an investment of USD 258 million (UF 6,146,350) and a concession term of 15 years of operation, will allow the construction of a new highly complex hospital, which will benefit the inhabitants of the communes of La Serena, La Higuera, Vicuña and Paihuano, as well as a regional reference. More about the project here.

Source: official website of General Directorate of Concessions in Chile

RFP released for New South Niagara Hospital

Image: Niagara Health

Infrastructure Ontario and Niagara Health have invited three prequalified teams to respond to a request for proposals to design, build, finance and maintain the new South Niagara Hospital.

The prequalified teams and their team members:

EllisDon Infrastructure Healthcare (EDIH)

  • Applicant Lead: EllisDon Corporation
  • Design Team: Parkin Architects Limited
  • Construction Team: EllisDon Corporation
  • Facilities Management: EllisDon Facilities Services
  • Financial Advisor: EllisDon Capital Inc.

Niagara Care Partners

  • Applicant Leads: Amico Concessions Inc, Sacyr Concesiones, S.l., and SNC-Lavalin Capital Inc.
  • Design Team: IBI Group Architects (Canada) Inc.
  • Construction Team: Sacyr Construccion, S.A and Amico Design Build Inc.
  • Facilities Management:  Sacyr Concesiones, S.L, SNC-Lavalin O&M Inc, and Amico Concessions Inc.
  • Financial Advisor: MUFG Bank Ltd

Plenary PCL Niagara Health

  • Applicant Leads: Plenary Americas LP and PCL Investments Inc.
  • Design Team: Cannon Design Ltd.
  • Construction Team: PCL Constructors Canada Inc.
  • Facilities Management: Johnson Controls Canada L.P
  • Financial Advisor: Plenary Americas LP

The new hospital is expected to have 469 beds and will bring together acute care services, improving access to high-quality health care.

 “The request for proposals brings us one step closer to a new hospital that will ensure patients and families in the Niagara region have access to the high-quality care they need and deserve, when and where they need it.”

 Christine Elliott, Deputy Premier and Minister of Health

Since 2018, Ontario has invested over $19.5 million towards planning the new hospital in Niagara Falls. The new South Niagara Hospital will be designed and built to meet the Canada Green Building Council’s Leadership in Energy and Environmental Design (LEED) Silver standards and the first WELL®– certified healthcare facility in Canada, focused on the health and well-being of their staff, physicians, volunteers, patients, families and caregivers and the Niagara community.

Source: Infrastructure Ontario official website

New PPP Hospital in Tulsa Scheduled to Open in 2024

The Eastern Oklahoma Veterans Affairs Health Care System will expand healthcare for Veterans by opening a new 58-bed VA hospital in Tulsa, US which will be part of the Oklahoma State University Medical Center Campus.

It is the first VA hospital in the nation built as part of a public-private partnership and the first VA hospital built under the Communities Helping Invest through Property and Improvements Needed for Veterans Act of 2016 (CHIP-IN Act). The act authorizes VA to form a public-private partnership and accept up to five donations from non-federal entities.

The project is a combination of federal and private funds from the Anne & Henry Zarrow Foundation. The State of Oklahoma is also assisting by donating the Kerr-Edmondson buildings, which will be converted into the hospital. The City of Tulsa has committed to building a parking garage on site.

The new hospital is part of VA’s efforts to expand services in the Tulsa metro area and northeast Oklahoma. While Eastern Oklahoma VA serves Veterans in 25 counties in eastern Oklahoma, approximately 72% of Veterans live in the Tulsa metro area.

“The new VA hospital in Tulsa is a historic victory. It will offer long lasting and far-reaching benefits for our Veterans, VA and our community,” said Mark E. Morgan, director of the Eastern Oklahoma VA Health Care Center.

Source and image: VAntrage Point, an official website of the U.S. Department of Veterans Affairs.

Tender Announced for 2 Specialized PPP Hospitals in Peru

Image: ProInversión
The Private Investment Promotion Agency in Peru (ProInversión) with the assistance of the Health Insurance Board (EsSalud) issued the tender for two high complexity PPP hospitals in Piura and Chimbote
 
The projects aim to increase coverage and improve the quality of healthcare services of the population from Piura, Tumbes and Ancash regions such as expanding access to specialized hospital services, providing health services with high quality standards and reducing healthcare expenses of families.
 

Both projects will be executed under the co-financed public-private partnership model to build, design, finance, equip, operate and maintain both hospital centers, which require investment of approximately USD280 million. The estimated concession period is 20 years including 3 years of development, construction and implementation and 17 years of operation and maintenance.

More about the pipeline of healthcare PPPs in Peru read here.
 

EoI issued fo 16 New PPP Medical Colleges in Uttar Pradesh

Aiming to improve the healthcare situation, the Uttar Pradesh medical education department has decided to provide incentives for setting up medical colleges on a public-private partnership model in 16 districts in the state. The land for opening medical colleges in the districts has already been identified.

The interested bidders are invited to submit the expression of interest by the 5th of November.

There is no government or private medical college in 16 districts, including Baghpat, Ballia, Bhadohi, Chitrakoot, Hamirpur, Hathras, Kasganj, Maharajganj, Mahoba, Mainpuri, Mau, Rampur, Sambhal, Sant Kabirnagar, Shamli and Shravasti. 

“Many big institutions of the country have expressed their willingness to open medical colleges,” said Alok Kumar, principal secretary, medical education department, in a press statement on Wednesday.

The medical education department had recently issued the policy regarding setting up of medical colleges in 16 districts on PPP model after getting the approval of the cabinet and had provided three options.

Read also about another Indian state  Maharashtra that decided to set up new medical colleges and super-specialty hospitals across the state under PPP.

The idea of using PPP model is to link new or existing private medical colleges with the government district hospitals under a PPP agreement.

The public policy think tank of Indian government, NITI Aayog, is also developing draft guidelines for a “viability gap funding” to attach these medical colleges to existing district hospitals in public-private-partnership mode. 

“The policy aims to provide fiscal and/or non-fiscal incentives and other support to incentivize private sector entities to set up medical colleges and hospital facilities,” the official notice said.

There were only 17 medical colleges and hospitals prior to 2016 and the state today has 16 unserved districts left in terms of planning and development of medical colleges.

The Uttar Pradesh government is inviting applications in three modes:

  • private sector shall bring in own operational hospital and adequate land for setting up of medical college.
  • authority shall provide land on lease to the private sector entity for setting up of the medical college.
  • authority shall provide an existing district hospital on lease to the applicant. The Applicant shall have the obligation to bring adequate land parcel in accordance with the extant regulations for the development of medical college infrastructure notified by National Medical Commission (NMC).

According to the Hindustan Times report, the medical colleges to be set up in 16 districts will have 1600 new doctors and about 10,000 vacancies.

Source: news by career 360, The Hindustan Time.

The Best Offer Announced for the Los Rios-Los Lagos PPP Hospitals Network in Chile

On October 4, 2021 the Ministry of Public Works in Chile announced two financial offers submitted on September 13 for the Los Ríos-Los Lagos PPP hospitals network, which includes the construction of three hospitals in the Los Rios region  and one in Los Lagos region.

According to the announcement the Mexican Constructora y Edificadora GIA + A SA de CV submitted the best offer with nearly USD 21.5 million (UF 634,900) of fixed subsidy for construction and about USD 5,5 million (UF 161,400) of fixed subsidy for the operation.

“This hospitals network will provide 500 beds within 153 thousand m2 of health infrastructure, which in its construction stage will generate around 2,700 jobs per month, contributing to our economic reactivation. ”

Alfredo Moreno, Minister of Public Works in Chile

The Minister also stressed the importance to continue advancing in the bidding portfolio established for this year, which considers 17 projects worth of USD 6,111 million.

The other proposal was presented by the Ibero-Asian Consortium, consisting of China Road and Bridge Corporation and Puentes y Calzadas Grupo De Empresas SA.

The award of the contract is scheduled for the first quarter of 2022 and its construction is estimated to begin during the first quarter of 2023.  

The project considers the design, construction and maintenance of the new units of the buildings as well as the provision, replacement, assembly and maintenance of medical equipment and furniture. The four hospitals together will provide 495 beds with a 290 thousand benefited people. it is estimated that the hospitals will start operate in the first quarter of 2026.

Source and photo credits website of the Ministry of  Public Works in Chile.

PPPs in Australia: Lessons to Learn

Image: Victorian Comprehensive Cancer Centre Pty Ltd

As governments around the world try to implement Public-Private Partnerships (PPPs) and to gain all the value that could be brought to their long-term projects, some governments have had more success than others. And one such country is Australia.

In order to measure, compare and keep track of such successes and opportunities for improvement, The World Bank has created a benchmarking system, where they appraise each country’s regulatory framework regarding PPPs according to “internationally recognized good practices” (The World Bank, 2020).  And according to their benchmarking system, Australia’s framework scores higher than the world average on all the four dimensions that are measured (figure 1).

Figure 1. Australia’s score on the four dimensions of PPP regulatory frameworks (The World Bank, 2020)

Furthermore, the praises that Australia’s PPP framework has received is not just the opinion of The World Bank, Oktavianus, et al. (2018), in their global review of PPP trends, also recognised Australia as being one of the most advanced with regards to Social Infrastructure based on a PPP modality. They also reiterate JETRO’s (2010) report on the country’s PPP modality:

“The Australian market now has a reputation for a clear and transparent procurement process which is being used to deliver infrastructure projects across a plethora of sectors. The scope of services that the private sector provides is quite broad and as a result, there is greater risk transfer through a whole of life approach to project delivery which has resulted in greater opportunities for the PPP model to deliver a VfM (Value for Money) outcome when compared to the conventional form of procurement ,” (JETRO, 2010).

Similarly, Ernst & Young (2008) conducted a survey to determine the performance of PPP projects in Australia and whether they were producing desired outcomes. Their survey concluded that the country’s PPP projects were being delivered on time, as the government had intended and within their budget. The PPPs had ensured high quality and good maintenance of the facilities and allowed the public sector to focus on core services (Ernst & Young, 2008).

With such success, this article aims to put forward the case of PPPs in Australia with special emphasis on the healthcare sector. After a brief overview of how Social Infrastructure PPPs have changed over the years, the article presents one successful case study and then finally summarises some of the lessons that could be learnt from Australia’s regulatory framework.

Social Infrastructure PPPs in Australia

When the PPP industry was first introduced in Australia, it mainly consisted of BOO (Build, Own and Operate) and BOOT (Build, Own, Operate and Transfer) contracts, with the first of their kind being the Sydney Harbour Tunnel that commenced in 1988. Progressively, more and more economic infrastructure projects were added to the industry’s agenda and their success made for a good case in favour of implementing PPPs for social infrastructure projects as well (such as hospitals, schools and mhousing) (Duffield, 2004; Jefferies, et al., 2014).

Social Infrastructure, however, is known to be more complex in nature than economic infrastructure due to its ongoing engagement with the community. Hence, the Australian government have had limited initial success when it came to the health sector. The University of Newcastle (2014) published a theoretical case analysis on hospitals that were made under the PPP modality, namely; Port Macquarie Base Hospital in NSW (built-in 1994) and Latrobe Regional Hospital in Victoria (built-in 1991). The report summarized how the governments could work to improve their contract outcomes for the benefit of all stakeholders involved, identifying areas of improvement, like a lack of due diligence by both sectors and improper evaluation of risk transfer to name a few (Jefferies, et al., 2014).

The suggestions made by experts in the field luckily did not fall on deaf ears. As the state governments increasingly made PPPs the preferred route to deliver public-sector services, while The Partnerships Victoria (DTF, 2001a) policy ushered in the second generation of PPPs in Australia, contract outcomes improved significantly, creating more Value for Money (VfM) for taxpayers.

For example, in a much more recent study conducted by Infrastructure Partnerships Australia (2021), the value and service outcome of Social Infrastructure PPPs were measured. The results were ​overwhelmingly positive; 95% of service providers felt that PPP projects had delivered on services promised by the government and media releases; 95% of them also preferred working within a PPP framework over that of traditional procurement contracts; the level of satisfaction remained high over the years of operation; and the study also showed how the originally calculated VfM was maintained throughout the operating phase (Infrastructure Partnerships Australia, 2021) . In fact, due to its cost- effective nature, when the COVID-19 pandemic hit Australia and threatened to burden their healthcare resources, their chosen response had also been to shore up resources using a PPP project (Department of Health, 2020).

Figure 2. Perceived satisfaction level of Social Infrastructure PPP Projects (Infrastructure Partnerships Australia, 2021)
Figure 3. Satisfaction levels as expressed by service providers over years of project operations (Infrastructure Partnerships Australia, 2021)

Victorian Comprehensive Cancer Centre (VCCC)

Apart from Infrastructure Partnerships Australia’s study, there are also examples of successful healthcare projects that the government has recently completed that provide further proof of their robust PPP framework.
 
Winner of the Best International Healthcare Project Award, Government Partnership Excellence Award, the PPP Award over Best Operational Project and many more, the VCCC was completed in June of 2016 (Plenary, 2016). The purpose-built centre specializes in cancer, handling research, treatment, education and care (figure 4).
 
It is a 130,000-square-meter facility valued at $ 1 billion with over 200 beds, 8 operating theatres and 8 radiation therapy bunkers. The contract terms are Design, Build, Finance and Maintain for 25 years and has already reached financial closure in 2011 (Plenary, 2016).
Figure 4. The Victorian Comprehensive Cancer Centre has also received many awards for its architectural design (Plenary, 2016)

Lessons to Learn

The Australian Government has undeniably had much success in terms of planning and implementing PPPs. Their policies and approach have demonstrated clear VfM for taxpayers while maintaining high satisfaction amongst other stakeholders. Hence, it is of value to consider what advice they might have to give.
 
The University of Melbourne Professor, C.F. Duffield in 2004 published a report on PPPs in Australia, where he described some of the lessons that the Australian government had learnt regarding PPPs that had a big impact on their projects. The lessons included:
1)Skills: where the participants, both public and private, had to go through a steep learning curve with regards to PPPs, which were quite different from traditional design and construction contracts and where risk needed to be managed specifically for each project.
2)Ownership: there had been instances where the public and private sectors had mismatched objectives, with financers focusing on the achievement of the contract rather than the long-term delivery of the service.
3)Bidding Costs: approaches like standardization of commercial terms, improved communication and shorter negotiation periods were applied as ways to lower bidding costs.
4)Risk and Risk Management: clear risk allocation principles were developed in order to balance them better.
 
Other than the lessons learnt, C.F. Duffield (2004) also made a table of what he considered to be a “Mix Required for Successful PPPs” (figure 4), especially emphasizing the need to gain public acceptance through robust accountability and political leadership.
Figure 6. The Mix Required for Successful PPPs (Duffield, 2004)

Conclusion

Since their commencement in the late 1980s, the Australian Government has increasingly used PPPs to procure and manage long-term projects. And through trial and error, they have created a framework renowned for creating VfM and maintaining satisfaction amongst stakeholders. This article has briefly mentioned how the government’s Social Infrastructure projects have become more and more successful over the years and what lessons can be learnt from this shift.
 
References
 
Duffield, C., 2004. PPPs in Australia, Melbourne: The University of Melbourne.
 
Ernst & Young, 2008. The Journey Continues PPPs in Social Infrastructure, s.l.: Ernst & Young.
 
Infrastructure Partnerships Australia, 2021.
Measuring the value and service outcomes of social infrastructure PPPs in Australia and New Zealand, Melbourne: Infrastructure Partnerships Australia.
 
Jefferies, M., Gajendran, T. & Brewer, G., 2014. Public private partnerships: The provision of healthcare infrastructure in Australia.
University of Newcastle. 
 
JETRO, 2010. Public Private Partnerships in Australia and Japan Facilitating Private Sector Participation, s.l.: Japan External Trade Organization (JETRO).
 
Oktavianus, A., Mahani, I. & Meifrinaldi, 2018.
A Global Review of Public Private Partnerships Trends and Challenges for Social Infrastructure, s.l.: EDP Sciences.