Ministry of Healthcare and Social Development of the Republic of Kazakhstan Department of Investment Policy and Development of Public-Private Partnership Astana, 2015 Planning, investment management and development of public-private partnership

Restructuring regional networks of healthcare organisations in accordance with international standards Developing an algorithm of phase- in implementation of restructuring regional networks of healthcare organisations Developing a rational and efficient investment policy in the context of developing the network of healthcare organisations in accordance with international standards 1. Improving the standards for healthcare infrastructure planning in accordance with international standards 2. Developing master-plans of restructuring regional medical organisations 3. Increasing the potential for investment planning in respective organisations at the various healthcare levels 4. Producing recommendations on the application of PPP mechanisms in the healthcare sector The strategy of development of the network of healthcare organisations in accordance with international standards Aim: To establish a rational network of healthcare organisations for the provision of affordable high- quality medical care to people in accordance with international standards Aim: To establish a rational network of healthcare organisations for the provision of affordable high- quality medical care to people in accordance with international standards «Sanigest International» TasksTasks ActionsActions Long-term plans of development of the network of healthcare organisations for by regions of the RK Total numbers of healthcare facilities

“KAZAKHSTAN -2050” STRATEGY New policy of an established state Priority tasks 80. Implementatio n of mandatory social health insurance. Priority financing of the primary health care 81. Development of private health care, implementation of corporate management in medical facilities. THE NATION’S PLAN – 100 concrete steps to implement the 5 institutional reforms Healthcare challenges and development priorities Challenges 1. Minimal social standards 2.Prioritized development of PHC 3.Optimizing and refocusing of hospital organisations 4.The increase of public costs of implementing new medical technologies 5. Developing private medicine 6. Developing new forms of PPP 7. Adopting the mandatory medical insurance system Increasing life expectancy to 73 years by 2020 Increasing the accessibility and quality of medical services Improving the financing and management system in healthcare Strategic healthcare targets (The strategic plan for development of the Republic of Kazakhstan until the year 2020) Draft project of The National program of healthcare development in the Republic of Kazakhstan “Densaulyk” for Implementing a new healthcare policy based on an integrated approach to disease prevention and control Ensuring the efficiency of management and financing of healthcare Rational use of resources and optimization of the system’s infrastructure “…Our primary goal is to become one of the 30 most developed countries of the world by 2050 …The creation of an efficient private sector of the economy and the development of public-private partnership.. …Establish the environment for the growth of private medicine.. …improve and unify the supply of equipment and materials to medical institutions…”

Kazakhstan’s healthcare system in comparison with OECD countries Distinctive featuresOECD countries (of total GDP) Kazakhstan (of total GDP) Notes Healthcare expenditure 8%3,8%At least 5% is required in developing countries (WHO) Priority development of PHC 34% – inpatient care 61% – PHC 62% – inpatient care and 34% – PHC At least 40% of all healthcare expenditure is recommended to be allocated towards PHC (international evidence) Maximum access to essential medicines at the PHC level 80% in outpatient care, no more than 20% in inpatient care 55% in outpatient care, around 50% in inpatient care Low level of private healthcare expenditure 19,6%35,4%Above 20% is considered a sign of a healthcare system’s financial instability (WHO) Healthcare priority Increased attention to and concern with non- communicable diseases (NCD) Preventative work on NCD is in the early stages Only 10% of a person’s health depends on the healthcare system, while 50% depends on the lifestyle (WHO) Medical science priority The proportion of domestic expenditure on research and development – 3% 0,26% The proportion of private sector in healthcare 44%26,8

The history of public and private sector cooperation in Kazakhstan Early 90s The start of implementing the mechanisms of public and private sector cooperation that are new for the country Participation of the state as the shareholder of corporate bodies along with the private sector, trust management of public property objects, public purchases, privatization. PPP was viewed mainly as an element of public assets management. December 23, 1991 The first «On concessions» ActThe terms of loaning public property, land, natural resources to foreign investors are defined. Regulating the organizational, economic and legal terms of granting facilities under the concession agreements only to foreign investors within the territory of the Republic of Kazakhstan July 7, 2006 The new «On concessions» ActLegal terms of concession, types of government support provided to the concessioner and the regulation of social relations during the process of entering into, implementing and terminating the concession contracts are defined. Transferring the right of constructing public property objects to domestic investors became possible The creation of “The public-private partnership center of Kazakhstan” joint-stock company Role: conducting the economic evaluation of projects, working towards improving the legislative environment and strategic development of the PPP system in Kazakhstan 2011 The adoption of the Program for PPP development in Kazakhstan for Aim: To ensure the implementation of policies on raising the profile of PPP mechanisms The creation of regional PPP centers Role: supporting regional PPP projects 2014 The creation of the Support Center for PPP projects Involved at the stages of preparing and structuring the projects, conducting negotiations among the projects’ actors, as well as developing proposals on the financing structure of potential PPP projects 2015 The adoption of the «On public- private partnership» Act Stipulates the lifting of restrictions on the areas of PPP application, increases the number of PPP actors, enhances the role of the private sector in initializing and preparing PPP projects

Development of master plans for restructuring medical organisations Development and approval of long-term plans based on the master plans* 2014 Monitoring the implementation of long- term plans* Implementing the master-plans developed by «Sanigest International» Improving the long-term plans* Developing the Action plan for PPP in Healthcare of the Republic of Kazakhstan 2015 * Long-term plans of development of the network of healthcare organisations for by regions of the RK Investment projects planning The National program of healthcare development in the Republic of Kazakhstan “Densaulyk” for In the provision of medical services within the framework of the guaranteed volume of free medical care (GVFMC) through the provision of various government support measures EXPANDING THE INVOLVEMENT OF PRIVATE MEDICAL ORGANISATIONS To private companies, including foreign ones (on the basis of standard bidding documentation) TRANSFERRING THE MANAGEMENT OF NATIONAL AND LOCAL HEALTHCARE ORGANISATIONS For the construction and management of healthcare facilities (PPP, concession), including the creation of a favourable environment for placing PHC organisations on the ground floors of apartment buildings PRIVATE CAPITAL RAISING Surgical complexes, dialysis centers, oncological centers UPDATING THE SERVICE CONTRACT EQUIPMENT

The forms of public-private partnership in healthcare Potential types of PPP contracts in the healthcare sphere Within the “On concessions” Act Within the “On public-private partnership” Act Construction/reconstruction of healthcare facilities with utilization Trust management of healthcare facilities Renting healthcare facilities from private partners Shared management of healthcare facilities Construction/reconstruction, maintenance, renting and trust management of healthcare facilities. Shared management of healthcare facilities Life cycle contracts. Service contracts for the maintenance of medical and non-medical equipment. Outsourcing selected types of medical and non- medical services. Purchasing, renting/leasing equipment. Small-batch production of medical products and medicines. Implementing innovations. Private initiative projects. The possibility of implementing “small” PPP projects, which are executed on the regional level.

The action plan for PPP in the healthcare of the Republic of Kazakhstan Developing the Action plan for PPP in healthcare Shaping the vision of the Local Executive Authorities (LEA) Formation and approval of the catalogue of prospective PPP projects with preplanning of the scheme Improving the industry-specific legislation due to the following necessities: Flexible tariffs for medical services (the possibility of withholding the utilization component) Changes in equipment and medical appliances purchasing for PPP A warranty system of the volume of services for LEA and the compensation of the loss of profit to ensure the return of investments Domestic financing of small and large PPP projects without hard collaterals Attracting private operators and investors The foundation: Critical need for updating the healthcare infrastructure The draft of the «On public-private partnership» Act and the “On concessions” Act The development of private medicine (step number 81 of the institutional reform) A draft policy standard of PPP in healthcare of the European Economic Commission of UN Recommendations on PPP in healthcare provided by the European Bank for Reconstruction and Development Based on the recommendations of the Standard of National policy on PPP in healthcare of the European Economic Commission of UN The outcome of developing the Action plan: Marketable projects (for which funds may be raised) with payment mechanisms and a basis for assessing the cost of each service. Changes to the industry-specific legislation in order to provide an opportunity to structure the principal schemes of PPP contracts Cost cutting at the development stage and ensuring the consistency of approach within the regions Improving the quality of development, decreasing the possibility of failed tenders Developing interest in the projects pool from the private sector and a PPP scheme that may be accepted by the investors Regarding the service contract and transfer to trust management contract drafts - a basic template stipulating the terms by which efficiency is achieved on the public part The stability of the implementation of PPP projects and its conformity to the plan The end result Fulfilling the needs of the population and the healthcare sector

Thank you for your attention!