hemodialysis center ppps: project structures and terms · (cvrh) to cagayan valley medical center...

Hemodialysis Center PPPs:Project Structures and Terms

25 October 2019Collaboration of the Department of

Health and the Public-Private Partnership Center

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Accelerated

Infrastructure

Development

infrastructure spending of 7% of GDP by 2022

Developing PPPs in the Health Sector

Invest in human capital development, including health and education systems

“The UHC provides opportunity for private providers to expand their market reach and challenge the creativity in making value enhancing solutions. Through forum like this, we benefit from PPP experts, we learn to quantify the gaps and map where private sector can bring most value,”

- Health Secretary Francisco Duque III

Collaboration between the public and private sectors is paramount in the delivery of quality health service

The Public-Private Partnership (PPP) Center and the Department

of Health (DOH) are developing Hemodialysis Facility PPP Projects

in various hospitals across the regions, through business case

development. Pilot projects include:

➢ Baguio General Hospital and Medical Center

➢ Cagayan Valley Medical Center

➢ Quezon City General Hospital

Hemodialysis Center PPP Project

Market Sounding Activity

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The government intends to sound off the initial project scope and potential

private sector role for the proposed hemodialysis facility projects.

The government intends to foster a broadly competitive procurement

Gather private sector insights on the proposed scope and potential

participation/role in the project.

✓ Interest as a contract, supplier, operator, financing institution

✓ Experience on similar projects

✓ Possible points for improvement in the structuring of these projects (i.e., technical and

financial aspects)

✓ Other points/components that should be considered in the study

✓ Identify potential challenges and risks

What we would like to know…

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Project viability

Private sector capability

CapacityMaturity of the concept

Key Reminders

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• This is an information/feedback-gathering activity only. Participation

in this activity does not translate to a company’s formal expression of

interest to participate in the project.

• Attendees of this activity are not given due advantage on the

projects. Information disclosed here are also open to all interested

parties to ensure a level-playing field come the bidding process.

• Insights gathered will be solely used for the development of the

studies for these hemodialysis projects.

Ground Rules / Reminders

Please put your phones in silent mode. Should you need to take a call, kindly take the call outside the room.

There will be audio recording of the whole session. The recording will be solely used for documentation purposes.

Photos of the session will be taken and will be used for the documentation report.

Ground Rules / Reminders

All participants are enjoined to speak out their thoughts and opinions. Participants have the right to abstain from answering topics they are not comfortable of.

All responses are valid. There are no right or wrong answers.

The activity will start at 10:45AM end by 11:15AM. Should you have forgotten to raise any comment during the activity, forms will be given afterwards where you can write these down.

Let’s try to stay on topic to maximize allotted time.

Market Sounding Activity Outline

Background and Objectives

Overview of Public-Private Partnerships

Proposed Scope and Structure of the Hemodialysis PPP Projects

Market Sounding Activity Feedback-Gathering Session

Accelerated

Infrastructure

Development Financing and Implementation

Delivery Mechanisms

Government Financing General appropriations,

corporate funds

Government Borrowings Domestic & foreign debt,

official development assistance (ODA)

Private Sector FinancingPublic-Private Partnership

(PPP)

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infrastructure spending of 7% of GDP by 2022

PPP Program for Infrastructure Development

✓A contractual arrangement between the government (Implementing Agency or Local Government Unit) and private sector to accelerate provision and/or implementation of infrastructure and/or development projects or services.

✓The contractual agreement provides clearly-defined roles and responsibilities of the parties/partners.

✓There is allocation of rewards/revenues and costs/risksbetween public and private partners.

GOVERNMENT PRIVATE SECTOR

PPP Concept

PPP Legal Framework by Implementing Agency

ImplementingAgency

RA 7718(Amended BOT Law)

NEDA Joint Venture (JV) Guidelines

PPP/ JV/ P4 Code

NGA ✓

LGU ✓At the option

of the LGU ✓

GOCC, GCE, GICP, GFI, SUC

(including WDs)✓ ✓

Modes of Procurement:▪ Solicited ▪ Unsolicited

Visit the PPP Center website for the Guidelines on Managing Unsolicited Proposals including checklist of documentary requirements. Access link: https://bit.ly/2VTqN2j

Integrated approach

• Proper alignment of incentives (among contractor, operator and maintenance provider) in a whole-of-life approach

• Single procurement process

Optimized risk allocation

• Allocation of risks to party who can best manage that risk (e.g. risk of cost and time overruns allocated to private partner)

Output specifications

• Specifications are defined via desired project outputs

• Government can tap private partner’s innovation and expertise in coming up with most efficient design that adheres to specifications

Revenue potential

• Revenue sharing with private partner

• Revenues from commercial activities

Private sector capacity

• Can address implementing agencies’ limited absorptive capacity and government’s limited fiscal space

Harnessing Advantages under PPP Approach

Traditional Public Works Contract

PPP Contract

Bidding

Design

Bidding

Build (Construction) O & M

Outsource

Company A

Outsource

Company B

Bidding Outsource

Company C

Bidding BiddingOutsource

Company D

Outsource

Company E

Bidding

Design Build (Construction) O & M

Outsource

PPP contract

Company X (Special Purpose Vehicle in many cases)

Output-based Specifications

PPP: Integrated Approach in Procurement

1. Concession-based PPPs – private partner is allowed to collect charges, tolls and fees from users

2. Availability-based PPPs – implementing agency (IA) will allocate budget or funds as payment to private partner

3. Non-monetary payments – private partner may be repaid through non-monetary payments (e.g. grant of commercial development rights, grant of a portion of reclaimed land, subject to constitutional requirements, etc.)

4. Others – private partner may be repaid through a combination of different schemes or any other schemes approved by ICC/NEDA Board or appropriate approving body

PPP Payment Mechanisms



Overview of Public-Private Partnerships



Hemodialysis (HD) Treatment and the HD Industry

End-Stage Renal Disease (ESRD)

End-stage renal failure, also known as end-stage renal disease (ESRD), is the final, permanent stage of chronic kidney disease, where the kidney function has declined to the point that the kidneys can no longer function on their own.

2.3 MillionFilipinos have chronic

kidney disease(2% of Total Population)

The Philippine Context

Source: DOH-PhilHealth Health Policy Note entitled, “Should PhilHealth cover more hemodialysis sessions?” by Health Technology Assessment (HTA) Study Group

15% IncreaseIn the number of

patients in one year(2015 – 2016)

P8.8 BillionTotal PhilHealth Payout

(7% of Total Payout)


Renal Replacement Therapy (RRT) in the Philippines

As a form of management for patients with end-stage renal failure, the two most common modern modalities as renal replacement therapy (RRT) include kidney transplantation with drug suppression therapy and dialysis.

Kidney Transplant HemodialysisPeritoneal Dialysis

Overview

Considered to be the best of the options for people with ESRD

Replacement of failed kidneys can improve patient’s quality of life and survival

Appears to be simpler and easier compared to

HD as no expensive machines are needed

More common treatment option

Shorter treatment time and less infection risks as it is administered by professionals in a health facility

ConcernsFinding a right match for a kidney donor is a challenge

Dialysis demands longer timeInfection Risk

PhilHealth coverage for HD is only 90 sessions/year

Source: Preliminary Stakeholder (Patients and Practitioners) Consultations, Health Study Team


Renal Replacement Therapy (RRT) in the Philippines

As a form of management for patients with end-stage renal failure, the two most common modern modalities as renal replacement therapy (RRT) include kidney transplantation with drug suppression therapy and dialysis.

Kidney Transplant HemodialysisPeritoneal Dialysis

Proportion of Patients in Modality 2% 4% 94%

Current PhilHealth Coverage

Transplant surgery and immunosuppression up

to Php 600,000

3 PD solutions per day, for a year 90 sessions per year*

Number of visits required per year

16 (for the first year after surgery) 24 156 (adequate

treatment)

Estimated total annual medical cost Php 1.2 million Php 235,000 Php 562,000

Source: DOH-PhilHealth Health Policy Note entitled, “Should PhilHealth cover more hemodialysis sessions?” by Health Technology Assessment (HTA) Study Group

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Issues & Challenges Faced by Public Hemodialysis Centers

The inadequate facilities and insufficient HD machines in public hospitals like BGHMC, CVMC, and QCGH pose the following recurring issues in their respective HD units:

Schedule Disruptions Inability to Accommodate the Subsequent Regular Hemodialysis Treatments of the Inpatients

Source: BGHMC and CVMC Project Study Committee Inception Report Findings

About Baguio General Hospital and Medical Center

➢ On September 23, 2018, President Duterte signed Republic Act No. 11084 increasing the bedcapacity of BGHMC from 500 to 800 beds and upgrading its existing service facilities andprofessional health care services

➢ BGHMC’s existing 30-machine Dialysis Center has become the Dialysis Center of NorthernLuzon serving patients from the Cordillera, Regions I, II, III and IV, with increasing numberof clients served in recent years.

➢ With a vision “BGHMC is the premier referral center of Northern Luzon offering leadingedge specialty services,” the hospital is keen to undertake more health infrastructureprojects in the future. People from Kalinga and Apayao, and even neighboring lowlandprovinces like Pangasinan have their medical consultations and procedures done in thehospital because it enjoys high trust ratings for affordable healthcare.

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BGHMC is the largest government-funded tertiary hospital in the Cordillera

Autonomous Region and was selected as an expansion area for the construction of

the state-of-the-art health facilities

About Baguio General Hospital and Medical Center

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✓ In 1958, BGHMC was one of the identified 11training hospitals all over the Philippines.

✓ Through the years, it gained recognition as ateaching institution in 13 Accredited MedicalServices, as well as a training establishment forallied medical affiliated schools. To date, theseaccredited medical services are Internal Medicine,Anesthesiology, Family Medicine, Dental, OB,Ophthalmology, ENT, Orthopedics, Pediatrics,Psychiatry, Surgery, Radiology and Pathology.

✓ In response to the growing client base, it expandedits services to include Out-Patient Department(OPD), Emergency Room (ER), Operating Room(OR), Pay Ward, Cancer, Out-patient DrugTreatment Rehabilitation Unit (ODTRU) and Womenand Child’s Protection Unit (WCPU)

✓ In January 2017, BGHMC is one ofthe first agencies to be awardedthe ISO 9001:2015 certification inBaguio.

✓ Having only received the ISO9001:2008 certification last 2014,the hospital went further by havingthe latest certification

✓ BGHMC commits to attaininternational standards of qualityand be globally competitive

BGHMC AS A MULTI-SPECIALTY

CENTER

Local PPP ProjectsLocation - BGHMC

The proposed project is located within the16.7-ha property of the BGHMC in BarangayBGH Compound, Baguio City. The BGHMCComplex is connected to national roadnetworks including Kennon Road andMarcos Highway

About Cagayan Valley Medical Center

Location: Dalan na Pagayaya, Regional Government Center, Carig Sur, Tuguegarao City, Cagayan, Philippines

Cagayan Valley Medical Center (CVMC)

CVMC is the largest medical facility in CagayanValley region and the only government-ownedtertiary hospital in Cagayan province. It is a center ofexcellence on patient care, training & research.

ISO 9001:2015

About Cagayan Valley Medical Center Cagayan Valley Medical Center (CVMC)

CVMC is a regional 3rd level Hospital, is acenter of excellence on patient care,training & research.

On April 22, 1980, CVMC was classified as Tertiary Regional Hospital by virtue of Ministry Order No. 83, series 1980.

On March 20, 1998, R.A. No. 8599 converted from Cagayan Valley Regional Hospital (CVRH) to Cagayan Valley Medical Center (CVMC) with an authorized Bed Capacity of 500.

Mission

Cagayan Valley Medical Centeris a government tertiary,teaching, training and researchhospital of Region II providingquality patient care.

Vision

Cagayan Valley MedicalCenter is a Center ofExcellence of patientcare, training &research.

About Cagayan Valley Medical Center Cagayan Valley Medical Center (CVMC)

Newly-constructed centers (2019):• Cancer Center• Department of Behavioral Medicine• Human Immunodeficiency Virus/Acquired

Immunodeficiency Syndrome (HIV/AIDS) Center

• Malasakit Center

“The Cagayan Valley Medical Center(CVMC) is envisioned to become a‘mega’ hospital in Luzon by 2022.Among the features of a mega hospitalinclude the establishment of specialcenters for the lung, heart, kidney,burn, acute stroke, cancer, traumaand other special services.”

The newly built Department of Behavioral Medicine at the Cagayan Valley Medical Center.

Source: PIA (2018) https://pia.gov.ph/news/articles/1009301

Local PPP ProjectsLocation - CVMC

▪ QCGH is under the direct supervision and control of the Mayor, as stated in Quezon City’s Charter, RA 6548.

▪ Hospital Category: Tertiary (250 bed capacity)

▪ Hospital Director – Dr. Josephine B. Sabando

▪ Services offered:✓ Clinical Services

✓ Physical Medicine and Rehabilitation

✓ Internal Medicine

✓ Otorhinolaryngology

✓ Surgery

✓ Ophthalmology

✓ Pediatrics

✓ OB-GYN

✓ Dental

✓ Radiology

Project ScopeAbout QC General Hospital

QCGH

SM North

2018 PROFILE AND PERFORMANCE

Personnel 937

Appropriation Php 765 million

Bed Occupancy Rate 82.19%

PHIC Accredited Yes

Local PPP ProjectsLocation - QCGH

Local PPP ProjectsGeneral Scope of Work

✓Procurement, Delivery, and Installation of Renal Facilities✓Undertaking of other required services✓ Engineering, Procurement, and Construction of

Hemodialysis Center Building

Baseline No. of HD Units 50 - 60

Increase in capacity Yearly depending on volume

General Function, Operational Features, Safety Features, etc.

✓

Machine Life @ 3 shifts 5 – 8 years

Back up requirements ✓

Other Medical Equipment ✓

Procurement, Delivery, and Installation of Renal Facilities


Undertaking of other required services

▪ Water and Chemical analysis▪ Back up Facilities for Power Supply▪ Integration of Energy Conservation

and Efficiency Measures▪ Hazardous Waste Management

▪ Supplies, Consumables and Materials

▪ Housekeeping and Maintenance Works

▪ Security

Medical StaffRequired per

DOH AO 2012-0001

Required Medical Staff based on

100 HD machinesResponsibility

Physician on

Duty

1 per 15 HD

stations7 Mainly Government

Nurse 1 per 4 HD stations 25 Private

Dialysis

TechnicianNot specified At least 1 per shift* Private

Required Manpower

* Preliminary allotment, figure under study


Engineering, Procurement, and Construction of Hemodialysis Center Building

✓ HD Center Building shall refer to the building to be designed, financed, developed, constructed, and maintained by the Private Partner at the Project Site and in which the principal functions of the Required Services shall be performed

✓ If the building is already existing, this component may involve retrofitting, refurbishing and finishing works

Proposed 2-storey building and floor plan


Indicative Floor Plan for BGHMC


Functional Areas

General Scope of WorkMinimum Performance Standards and Specifications (MPSS)

A. MPSS During Engineering Procurement and Construction (EPC) Phase of the HD Center

1. Spatial Planning Parameters2. HD Center Materials and Quality of Works3. Plumbing and Sanitary Works4. Electrical Works & Installations5. Fire Protection System6. Mechanical Works7. Mechanical, electrical and internal plumbing & drainage systems8. Doors, windows, and ventilators9. Interiors10. Fit Out Works11. Lighting / Illumination12. Gender13. Design Standards

B. MPSS Related to the Procurement and Service of the Renal FacilitiesI. Major Medical Component / Equipment

1. Dialysis Service Complex / Treatment Area2. HD Machines3. Water Treatment System (WTS), etc.

II. Other Medical Equipment

General Scope of Work

Key Performance Indicators (KPIs)A. General Building, Facilities and Service Availability KPIs

1. Service Availability2. Availability of Back-up Supply of Utilities3. Availability of Service Capacity4. Maintenance Incidents Resolution Time5. Availability of Supplies & Consumables6. Water Quality7. Availability of Personnel8. Waste Management

B. Medical-related KPIs1. Dialysis Adequacy and Quality2. Vascular Access3. Measurement of Mineral Concentration4. Mortality Rate5. Hospitalization Rate6. Anemia Management7. Patient Safety8. Infection Control

Local PPP ProjectsFinancial Considerations

Projected Demand for HD Care in Select Area*

Increasing demand for HD care within the planning horizon

*Based on current prevalence rates

Expectation is for need of HD machine to increase by 10 - 12 every year to reach at least 100 within 5 years


Projected Demand for HD Care in Select Area*

HD Machines Demand Projection2020 2021 2022 2023 2024 2025

Number of

Patients 480 537 598 665 736 813

Number of

HD units60 67 75 83 92 102

2018 2019 2020(Year 1)

2021(Year 2)

2022(Year 3)

2023(Year 4)

2024(Year 5)

Total Number of CVMC’s Hemodialysis Patients

218 265 317 369 428 493 562

Number of HD Machines Required 36 44 53 62 71 82 94

For the Baguio area:

For the Tuguegarao area:


Cost Recovery Mechanisms

Revenue Sources Preliminary Estimation

Hemodialysis Treatment Est. Php 150 - 270 million* annually

OOP Charges On the account of proponent

Commercial Revenues Leasing of available spaces

Rental Payments from Hospital Depending on project structure

Positive financial indicators based on projections

*Based on Php 2,600 per HD session

Local PPP ProjectsProcurement Strategy

Legal Framework ▪ BOT Law (RA 7718, as amended)▪ Local PPP Code

Mode Solicited

Type 2-stage (Qualification and Bid Proper)1-stage

Eligibility Financial – Equity equal to % of Project Cost + bank testimonial letterLegal EligibilityTechnical - Experience in construction + Experience in HD operation + key personnel

Procuring Entity ▪ DOH▪ Regional Hospital▪ LGU

Target Publication 2nd Quarter of 2020

Local PPP ProjectsUnique Proposition

Why partner with the Government for the delivery of HD Care facilities?

GOVERNMENT PRIVATE SECTOR

✓ Longer contract period than the average lease of equipment contract (e.g. 10 , 15, 20 years)

✓ Situated within the hospital premises catering to all types of patients (in patient, out patient, emergency)

✓ Volume-triggered increases in capacity

✓ Optimal sharing of risks and responsibilities

Local PPP ProjectsUnique Proposition

Partnering with renowned public hospitals for the provision of hemodialysis care:✓ Quality of service ✓ Less waiting time✓ Higher life expectancy and

quality of life, longer work productive life

✓ Reasonable charges

Who are we looking for…

Construction Firm / Contractor

Private HD Operator

Asset Ownership after PPP Contract Period

• HD Center Building Public Sector(immovable assets)• Ancillary Facilities

• Parking Facility (if applicable)

• Furniture, Fixtures and Non-Medical Equipment

Public Sector OR Private Proponent(movable assets)

Asset to be Delivered / Responsibility

• Delivery of Medical Equipment Private Proponent

• Operate and Maintain the entire Renal Facility -



Overview on Public-Private Partnerships



Imari Kate S. [email protected]

Janella B. [email protected]

Thank You!For further information, please contact:

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hemodialysis center ppps: project structures and terms · (cvrh) to cagayan valley medical center...

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