1. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India.

2. 2 Introduction to IFC PPPs in Healthcare PPP Case Study

3. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 3 * IFC is the private sector arm of the World Bank Group which comprises five agencies

4. 4 Technical assistance and advice to governments and businesses World’s largest multilateral provider of financing for private enterprises $30+ billion in outstanding investment commitments

5. 5 Introduction to IFC PPPs in Healthcare PPP Case Study

6. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. * Inadequate Infrastructure * Inadequate utilization of existing infrastructure * Availability of specialists, technicians, staff * Governments are facing increasing demand for health care services, but also rising costs (medical technology, changing disease patterns) * Mixed experience with NGOs and CSR initiatives * Governments are looking for new, sustainable models to respond to these challenges PPPs can mobilize private finance, increase access, introduce efficiencies in the delivery of public health services, and improve health outcomes. Need for new models for health service delivery

7. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. “A cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.” The Canadian Council for Public-Private Partnerships 7

8. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 8 * Rather than buying buildings, equipment or supplies, PPPs are long-term contracts for governments to buy a bundled service (facility, staff, supplies, equipment) * PPPs involve annual payments over long-term after facility commissioning * Payment is tied to performance not inputs/milestones * Private party is typically responsible for all or part of the capital financing

9. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. Management of hospitals or networks of hospitals and/or clinics Country examples: Brazil Clinical Services Management Contracts Infrastructure PPP (PFI) Contracting out services such as dialysis, radiotherapy, day surgery etc. Country examples: Romania, Peru, UK Contracting a private provider to design, build and manage facilities Country examples: UK, Spain, Italy, Mexico, South Africa, France, Australia Non-clinical Services Contracting out works and services such as IT equipment and service, cleaning, catering, maintenance, etc. Country examples: global Contracting a private provider to design, build, and manage facilities as well as deliver clinical services Country examples: Portugal, Lesotho, Spain, Turks and Caicos Infrastructure and Services PPP

10. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 10 PPP Service Provider Department of Health/ Medical Education Government Hospital ACCREDITATION BODIES (NABH, JCI etc) Public Insurance Scheme Higher Income Patients Concession Agreement Referrals for uninsured emergency Contract Management Performance Monitoring Invoicing Payments Out of Pocket/ Private Insurance Payments Publicly Insured Patients Service Accreditation Service

11. 11 Introduction to IFC PPPs in Healthcare PPP Case Study

12. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 12 Andhra Medical College, Vishakhapatnam Rangaraya Medical College, Kakinada Kakatiya Medical College, Warangal Kurnool Medical College, Kurnool

13. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. * The teaching hospitals are located at the heart of the towns with very good access and approach * The radiology departments were short of either equipment or doctors or technicians. * Medical Council of India had de-recognized PG courses in radiology due to lack of equipment 13 * Working hours were 3-4 hours in a day and machine down time was in months at a stretch * Patients had to wait for weeks to get an CT Scan wherever the machine existed

14. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. * Private diagnostic centers providing services * Obsolete/ low quality equipment used e.g. 0.35 T MRI, Single slice CT machine * Exorbitant prices for scans * Payments from Government backed insurance for BPL patients(Aarogyasri scheme) were made to these private centers * It was suspected that the price of these scans were high due to the informal referral system (kickbacks) 14

15. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 15 GOVERNMENT OBJECTIVES Make healthcare services accessible to every strata of society → Need of availability of equipment and manpower Provide free & quality services to the under - privileged population of society at low cost to Govt. → Need of efficiency and excellence in operations Regulate Market Price of services in the private sector → Need of competition to existing private service providers PRIVATE PLAYER OBJECTIVES Expansion of operations in tier II and tier III cities and towns → Need of local partners in these places Sustainable cash flows from the project → Need of volumes i.e. large number of patients Low initial investment to make the project viable at low tariffs in small towns → Need of funds to make the project viable

16. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. * 7 year concession contract between the Government and the Private investor/operator (Concessionaire) * Government to provide land/building and funds for fixtures & civil works * Private investor construct, install equipment, arrange for staff, operate and maintain facilities * Equipment based on the technical requirements provided by the Government * Private investor to be paid service fees on per scan basis from the Government for patients referred by the hospital doctors. Extra revenues can be taken by private patients. 16

17. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 17 ANDHRA RADIOLOGY PPP PILLARS FOR THE PPP VIABILITY The Government to provide ‘Viability Gap Funding’ in form of land, building and civil work costs SUSTAINABILITY Exclusivity to the PPP: All patients of the hospital referred only to the PPP facility for radiology services Payments made by Govt. on a monthly basis Covenants for penalties in case of non performance of service by private player or non payment of fees by the Government

18. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. * Around 15 private firms expressed interest in bidding for this project * This included global equipment manufacturers, national diagnostic services providers and corporate hospital chains * A transparent and competitive bidding process was conducted * The bidding criteria was Average rate per scan for a simple menu of scans * Outcome of the bidding process: Bid won by a global major in equipment manufacturing together with a strong domestic service provider. 18

19. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 19 Private player gets returns on its investments BPL patients served within hours BPL patients served within hours High-end equipment installed High-end equipment installed Aarogyasri payments routed to Govt Hospitals Aarogyasri payments routed to Govt Hospitals Meet MCI regulation Price per scan for private patients 30 – 50% lower than existing private service providers: Market price goes down

20. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. 20 END USERS INSURANCE COMPANY GOVERNMENT PRIVATE SERVICE PROVIDER

21. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. Modernizing facilities: Andhra Pradesh

22. 28 – 29 September 2011 Vedic Village Spa Resort Kolkata, India. Modernizing facilities: Andhra Pradesh

23. Project Ministry of Health, Meghalaya, retained IFC as lead transaction advisor for a project to address lack of any medical college in the state of Meghalaya and to address healthcare needs of low- income & uninsured populace Structure The scope of the project was: o Greenfield teaching hospital of 650 beds (550 public, 100 private) o Greenfield Medical college to admit 100 MBBS students each year o Design, construction, partial finance, full operation for 30 years with significant risk transfer to the Private Operator. Results Project Transaction Structure has been approved by GoM. Bidding procedure to commence in September/ October 2011. Capex ~ USD 55 million. Government capital contribution of 40% of capex. Patients will get services at no additional cost as present. First batch of MBBS students will be admitted in August 2013 Meghalaya Medical College PPP (India)

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