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INVESTORS FORUM
Modernization of Philippine Orthopedic
Centre through Public Private
Partnership
Department of Health Republic of Philippines
Agenda
• Development Objective
• Project Description
• Proposed Structure for PPP
• Investment Opportunity
• Way Forward
• Open House: Q&A Session
2
3
Development ObjectiveNeed for Modernized Philippine
Orthopedic Center
• Drive the establishment of the New Hospital Facility as the country’s ‘Leading Tertiary Care Center for Muscoskeletal and Neurological Diseases, Trauma, and Rehabilitation Medicine’, capable of providing international quality orthopedic and trauma care.
• Facilitate affordable, competitive and quality focused medical care for all through cross subsidization framework, thus achieving Universal Health Care agenda
4
DOH Objective
Why a New Hospital is Needed?
5
Constraints & Issues Solutions facilitated by New Facility
Low Capacity Utilization at only 70%-75% of Sanctioned capacity
Private sector operational efficiencies to improve capacity utilization to 90-95% beds
Lower than ideal Staff-to-Bed ratio & Discharge periods
Improved Staff-to-Bed ratio and reduced discharge period
Only primary and secondary medical services being provided at present
Super specialty tertiary care with modern equipment and select qualified medical staff
Limitations in catering to non-citizen patients or medical travelers
Medical tourism patients identified as part of envisaged overall patient population served
Archaic infrastructure & facilities requiring essential upgradation
State of the art infrastructure & modern equipment & facilities to be installed & operated
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Project DescriptionProposed Location, Envisaged Scope for
Infrastructure & Facilities, Patient Mix & Fee
Sources for Private Project Proponent
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Identified Site
Located within National Kidney and Transplant Institute (NKTI) Complex on East Avenue, Quezon City in an approx. area of 8,000 sq. meters
• Design, Build, Finance, Operate, Manage and
Transfer the Super-specialty Tertiary Care
Orthopedic Hospital providing Orthopedic
Clinical Services and Allied Services, having
700-bed capacity, state of the art
infrastructure, medical and diagnostics
equipment; within 25 years period; under PPP
scheme (BOT model) including inter alia:
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Project Proponent’s Scope
• Construction, Installation, Operation & Maintenance of the
entire facility including its modern diagnostic center, clinical
equipment; IT/ITeS systems, the clinical services within various
departments, & other hard and soft facilities services;
• Operation and maintenance includes clinical services (core) as
well as facility maintenance (non-core)
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• Delivering specialty orthopedic care related to Joint
Replacement, Degenerative Disorders, Orthopedics Oncology,
Orthopedic Trauma Care, Pediatric Orthopedics, Spine Care,
Arthroscopy and Sports Medicine & Injury rehabilitation; and
• Provision of teaching and training facilities for advanced clinical
care and management for specialized & sub-specialized
treatments & surgical procedures;
Project Proponent’s Scope (cont.)
Infrastructure at New Facility:• Over 51,000 sq. mtrs constructible area across • 2 blocks of 13 plus floors interconnected at all levels• In house Diagnostic facility• Specific functional areas: general rooms, private suites & specialized areas
(OT, ICU, SICU, etc.) • Non core - Support amenities & Services (Cafeteria, Pharmacy,
Kitchen/Dietary services, Laundry, CSSD, IT, Security)
Plan for New Hospital Facility
Clinical Services Configuration• Joint Replacements - Hip/Knee• Degenerative Disorders• Orthopedics Oncology• Orthopedic Trauma Care• Pediatric Orthopedics• Spine Care• Arthroscopy • Sports Medicine & injury mgmt.
Area Segregation• Day Care & Nursing units • Ambulatory Patient block• Administrative block• Sports Medicine block• Rehabilitation block• Teaching, Training & Research block• Seminar Hall, Auditorium,
Gymnasium, Cafeteria, etc.
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700 Beds60%
Sponsored Patients� Cost of treatment is
entirely covered by
PhilHealth/Insurance
� No direct payment by
the patient to the
hospital
� PhilHealth/Insurer
reimburses hospital
operator for service
Beds Reserved - 420
30%
Pay Patients� Partly sponsored
patients with co-payment ( i.e. balance exceeding
insurance coverage paid by patient)
� Private patients who pay entire cost of treatment,
directly to the hospital operator
Beds Available - 210
10%
Service PatientsPaid for by operator
Beds Reserved - 70
Fee Sources & Patients Mix Served
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Additional revenue sources to include fees generated from use of support amenities, affiliations, teaching & training, research, homecare, advertising, leasing, byproduct sales, and use of allied infrastructure such as seminar hall, auditorium, gymnasium, etc.
Proposed PPP StructurePPP structure, role allocation between DOH &
Private Project Proponent & Likely Bid Parameter
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• Deliver the site & Right of Way
• Assist Government approvals
• Select & appoint Independent
Consultant
• Enforce the Project Proponent’s
right to develop, operate & collect
fees from the services as authorized
under the BOT Agreement;
• Provide funding support in form of
O&M Cash Support (if required)
• Ensure adherence to DOH
stipulated policies, standards,
norms as well as the MPSS
requirements monitored by IC
13
Roles/Obligations under BOT Agreement
Special Purpose Company (Concessionaire/Project Proponent)
Department of Health (Awarding Agency)
• Undertake the project scope & conditions precedent – i.e. design, build, finance, operate maintain the new hospital in adherence with the MPSS for construction & operations and patient mix to be prescribed in BOT agreement
• Collect the fees for services as authorized under the BOT Agreement,
• Set up the SPC, Escrow account, appoint IC & achieve financial close
• Bear commercial risks from Project as a going business concern; and
• Turn-over/ and transfer the new hospital in good working condition to DOH at the end of the Cooperation period
14
Structure during Construction Phase
Project Proponent/SPC(Concessionaire)
Independent
Consultant for
Construction
• constructs new hospital facility
in conformity with MPSS
• ensures compliance
with MPSS & other
construction related
standards
DOH (Concessioning Authority)
• appoints SPC under concession
based contract
• monitors compliance based on
Independent Consultant’s
recommendations
15
Structure during Operations Phase
Hospital Operator/
Project Proponent
Project Management
& Monitoring Team
• undertakes O&M in
accordance with
MPSS and O&M
Manual
• DOH representatives
• Monitor compliance
with MPSS and O&M
Manual
Project Proponent SPC DOH
• provides policy directions
• resolve disputes
Governance Committee
Independent
Consultant for
O&M
• Provides
independent
third party
monitoring on
all operational
aspects
• Collectively constituted with
representation from members of
Project Proponent & DOH
Likely Bid Award Parameter
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LOWEST LUMP SUM AMOUNT
PAYABLE BY DOH TO THE
BIDDER FOR FIRST 5
CONSECUTIVE YEARS OF
OPERATIONS
(“O&M Subsidy”)
Investment OpportunityForecasted Patient Population, Market Feedback
& Prospects for Private Project Proponent
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• Nearly 237,000 patients projected at the facility at the time of
operations commencement, over 268,000 by the end of
cooperation period, after accounting for competing medical
facilities
• On average, more than 230,000 patients served each year,
incremental patients may be expected from medical tourism &
availing of allied services at the facility
Projected No. of Patients Served
Projected Case 2016 2020 2024 2028 2032 2036 2038
Total Patients 237,500 246,750 253,500 260,250 265,500 267,000 268,000
In Patient 33,000 34,750 36,500 38,250 40,000 40,500 40,500
Out Patient 204,500 211,750 217,000 222,000 225,500 226,750 227,500
Start of
Commercial
Operations
End of
Cooperation
Period
19
• Positive interest indicated through interactions with
domestic and international hospital operators
• Suo moto inquiries and investment proposals
received by DOH
• Financing support from Project Lending Agencies &
Institutional investors & support implementation
agencies also seen forthcoming
• Keen interest exhibited by Private Sector Investors
Market Sounding Feedback
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• ‘First of its kind’ PPP project by DOH - DOH to adopt PPPs for developing
‘other’ upcoming medical facilities as well in the Philippines
Why Invest?
• Strong project fundamentals – government backed hospital facility for
specialized orthopedic care & allied treatments at a centralized/country level
• NEDA* approved - project with sanctioned cost of PhP 5.6 Billion
• Optimal PPP structuring – balanced risk sharing & competitive returns to
private sector proponents
• PPP Agreement for 25 years – scope for long term investment & returns
• Award through competitive bidding – transparency & equality for all
prospective private sector bidders/investors
• Possibility for financing support (if required) - tax benefits & ancillary
support from domestic implementation support agencies
• Funds Allocation in Cabinet Budget 2013 underway– allocation of funds for
project to be made part of forthcoming Cabinet Budget in 2012
*NEDA - National Economic & Development Authority
Way ForwardEnvisaged Timelines for Bidding & Award of
Project on PPP mode
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Activity Timeline
Invitation for Request for Bid Proposal (RFP) November, 2012
Bid preparation March 2013
Pre-bid conference January, 2013
Bid Submission Due Date March 2013
Bid Evaluation Period April 2013
Notice of Award May 2013
Signing of BOT Agreement June 2013
Independent Consultant Selection December 2013
Start of Commercial Operation May 2016
End of Cooperation Period & Turnover to DOH November 2038
Way Forward - Important Timelines
A soft copy of this presentation shall be hosted at the websites of the DOH & PPP Center for your reference.
Note that these timelines are tentative and may be subject to change. The final timelines shall be communicated at the appropriate time, as necessary. The bidding process, once commenced, shall follow the timelines as prescribed under the BOT Law of Philippines.
Q&A Session
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THANK YOU
Department of Health Republic of Philippines