Feature Story

Better builds for better health

Óscar Gaspar, Portuguese State Secretary for Health, details how a staggered approach to PPP is delivering hospitals throughout the country.

The structural reform and rehabilitation of the hospital sector is one of the pillars of public health policy in Portugal. In the past decade this area has undergone some major developments that encompass several dimensions, amongst which; naturally, the Public Private Partnership (PPP) approach has brought its innovative value to the sector since 2002.

The aim is getting best 'value for money'; PPP should be the instrument to optimise allocation of risks to those entities best qualified to manage them, be they government or private sector. The ultimate aim is to allow the health sector (particularly, the hospital sector) to benefit from the managing capacities of the private sector. In deciding whether or not to have a PPP, the proposals of the private sector in a competitive tender should be examined. Are they below public sector comparable costs for an equivalent project? Another crucial element in deciding in favor of having a PPP is the overall budget sustainability of the project.

The Portuguese PPP programme for the hospital sector was set up originally in 2002 and includes the opening of a number of units under contracts with different characteristics. It has been organised around two waves of projects; the first comprises the design, building, financing and operating, including the managing, of the healthcare unit. The second wave only encompasses the infrastructural component and some soft services, ie. healthcare provision that was included in the first model but is now excluded from the contract, remaining within the public sector.

The first wave included four hospitals, three located in the region of Greater Lisbon (the hospitals of Cascais, Loures and Vila Franca de Xira) and a hospital in Braga, in the north of Portugal. The new hospitals of Cascais, Braga and Vila Franca de Xira will be replacing the current existing units that are operating in outdated facilities; in all these cases the concessionaire is also responsible for the management of the old units until the new hospitals become fully operational.

The procedures and tenders of the second wave of PPP contracts are currently under way or are in preparation. They include another four hospitals: one in Lisbon, another in the Algarve (Faro/Loulé) and two hospitals in the north of the country (Vila Nova de Gaia and Póvoa de Varzim/Vila do Conde).

The total Net Present Cost (NPC) of this programme (four hospitals in the first wave and four in the second) is estimated at around €3.3bn. From this value, around €1.7bn of NPC concerns healthcare services (first wave) and €1.6bn for design, build, finance and operate of new facilities (both waves). The total initial investment is estimated at around €1bn.

In addition to the hospitals, there are two smaller PPP projects already operating: the National Health Service Call Centre and the Physiotherapy Centre of the South (in the Algarve). Both opened at the same time, in April 2007, and the contracts include the installation, financing and running of those specialised units.

The first wave
The model established in the first wave is based on a management agreement that is performed by two managing authorities with different and clear-cut responsibilities within a framework of cooperation and complementarity:
• Infra.Co, the managing authority of the building with a 30-year contract, is responsible for the design, construction and maintenance of the building;
• Clinic.Co, the managing authority of the establishment, has a 10 year contract and is responsible for the provision of healthcare and for the acquisition and replacement of medical equipment.

Cascais Hospital is a 270-bed facility, inaugurated in February 2010 and on time against a very ambitious deadline of two years to build and become operational. The new hospital is expected to carry out close to 1,500 hospitalisation episodes, 6,000 surgical operations, 115,000 outpatient consultations and about 112,000 emergencies, on a yearly basis.

The contract for the 700-bed Braga Hospital was signed in February 2009 and the new unit should become operational in May 2011. The managing authority became responsible for the management of the current hospital in September 2009. The contract for the new Loures Hospital was signed in December 2009 and is expected to become operational in February 2012. The 420-bed hospital will also have 45 outpatient physician offices and eight operating theatres capable of performing 11,000 surgical operations a year.

The process concerning the new Vila Franca de Xira Hospital, a unit due to have close to 280 beds and 10 operating theatres, is under final negotiation with the selected successful bidder and the contract is expected to be signed during 2010.

The second wave
The distinguishable feature of the PPP projects included in the second wave is that healthcare will be provided by the public sector, the private sector being only responsible for the design, building, financing and operating of the facility as well as some complementary support services (eg. cleaning, security, laundry, catering) varying according to the cases. Similarly to the previous situation, the managing authority of the building has a contract for a period of 30 years, during which it is responsible for the running of the hospital facility.

The first tender for a PPP of the second wave was launched in April 2008, involving East Lisbon Hospital, and it is currently under negotiation with two selected successful bidders. This unit, which is expected to have a built-up area of 165,000m?, will have a capacity of close to 790 beds, 85 outpatient physician offices and 20 operating theatres. The procedure for the Algarve Central Hospital PPP was launched in May 2008 and bids are currently being assessed for the 575-bed facility.

There are currently two tenders for hospitals in the north of the country that are expected to be launched before the end of the year. They include the new Vila Nova de Gaia Hospital (580 beds, 10 operating theatres, 75 outpatient physician offices) and Póvoa de Varzim/Vila Conde Hospital (150 beds, six operating theatres, 26 outpatient physician offices).

Other PPPs in the health sector
The National Health Service Call Centre has been fully operational since April 2007. Up to the end of 2009, 'Health Line 24/24' had already received over two million telephone calls, mainly due to an upsurge of the A-type influenza (virus H1N1). The call centre was one of the most important pillars of the Portuguese anti A-Type influenza emergency plan, because it was the first point of contact dealing with public demand for information and personal advice. The PPP contract currently in force will end in May 2011.

The Physiotherapy Centre of the South in the Algarve has been operational since April 2007. During 2009 this unit carried out over 2,100 outpatient consultations, 10,000 day hospital treatment sessions and 350 hospitalisation episodes. The contract for this partnership will end in 2013.

Conclusion
We tend to view PPP as another instrument at the disposal of public health policy and the National Health System, and as a new form of managing hospitals and healthcare facilities. However, entrusting these responsibilities to the private sector should not be considered as a goal in itself: it is a means. The final aim is always better government and better health for all. People expect the government to have the adequate competences to tender and decide the best PPP contracts and then to monitor them efficiently throughout their duration, always having in mind that the foremost objective is the protection and satisfaction of the public interest. That is why our PPP contracts include sophisticated permanent and thorough evaluation requirements.

We firmly believe that the PPP approach – combining the best informed government decisions with the best managing skills of the private sector – is particularly suited to foster the quality of healthcare facilities and pursue necessary reform in the hospital sector in Portugal, especially considering the difficult times and budgetary constraints we are experiencing right now.


Óscar Gaspar
State Secretary for Health
Ministry of Health, Portugal


www.min-saude.pt

plase could you tell what you
think what dose ppp/pfi mene
i do not understand

thunk you
james
james - london