Living our values - comesaria-ppp.org Netcare PPP/PPI experience • Bronkhorstspruit Hospital • Bloemfontein co-location PPP • Port Alfred and Settlers PPP • UCT Private Hospital

CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION

Living our values

COMESA RIA Conference -Public-Private PartnershipsSwaziland

Divyash Keshav | Netcare6 May 2009

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Living our values

Format of presentation

About Netcare

Lesotho PPP

What went well

What could have been done better

What to look for in another COMESA country


Living our values

About Netcare

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Living our values

Company profile – a tale of two cities

• Netcare Limited is a holding company listed on the JSE in 1996

• Treats over 4 million patients per annum

• Largest private health provider in SA• 52 private hospitals with 8,500 beds • Largest primary healthcare network• Largest emergency service provider • Leader in dialysis therapy – 61 centres• Leader in PPPs since 1998• Leader in private health training

In South Africa

• Largest private hospital group in the UK• Owns 51% of GHG• 56 private hospitals with 2,840 beds• Provider of clinical services to NHS via

the ISTC program

In the United Kingdom

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Living our values

Netcare PPP/PPI experience

• Bronkhorstspruit Hospital• Bloemfontein co-location PPP• Port Alfred and Settlers PPP• UCT Private Hospital• Lesotho PPP

Netcare Southern Africa

• Mobile cataract services• Elective surgical hospitals• Primary care Commuter Walk-In

Centre (CWICs) (e.g. Leeds Station)

• Free Patient Choice

Netcare United Kingdom

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Living our values

SA hospital division is cutting edge

• 52 multi-disciplinary hospitals, many with international accreditation

• 15% of all beds are ICU and High Care

• 41 Trauma Units of which 5 Emergency Departments qualify for USALevel 1 Trauma accreditation

• 9 Radio Oncology Units

• Full spectrum of medical and surgical procedures including heart and lung transplants

• Only private burns unit in SA

• 48 pharmacies

• Average of 70% - 80% of profits after tax reinvested in equipment and capital expenditure over the last 12 years

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Living our values

Primary Care

1. Source: Healthman 2008/09 NHRPL Submission

Primary Care

Medicross and Prime Cure Prime Cure

• 101 medical and dental centres• 42 retail pharmacies• 3.5 million patients treated

• 264,000 lives• Administers 49 medical options• Focused on low income market• Very low admin fees

Provider services Managed Care Organisation

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Living our values

Emergency Services (Netcare 911)

• Over 240 emergency, rapid response vehicles and ambulances

• Fixed wing jets and national helicopter service for medical evacuation

• 7,5 million insured members

• 213,236 dispatched calls from new 100 seat call centre

• Electronic Patient Report Form (EPRF) now provides automated ‘on-site’system for roads and air service for accurate patient information and records

• Training centre for paramedics is the first private institution to be fully accredited by the Health Professionals Council (HPCSA)

• 463 emergency personnel trained

Voted South Africa’s no 1 Healthcare BrandSunday Times/Markinor survey 2008

TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION

Living our values

Lesotho (PPP) Project

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Living our values

Lesotho PPP

• Milestones:

- RFP 6 June 2007

- Closing date 8 October 2007

- Preferred bidder December 2007

- Commercial close 27 October 2008

- Financial close 20 March 2009

- Construction start date 23 March 2009

- Construction completion March 2011

- Hospital opening September 2011

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Living our values

Lesotho PPP

• 10 further agreements

Financing agreements

• 166 pages• 25 schedules• Conditions precedent

PPP agreements

Subcontracting agreements

• Clinical and management services • Facilities management• Design and construction• Shared facilities –

Radiology/trauma/theatres/ICU

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Living our values

Project brief

• 390 bed public hospital and 3 off-site filter clinics

• 35 bed private facility

• Gateway clinic

• Contract period: 18 years, including 2½ years construction/commissioning

• Provision of clinical and non-clinical services

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Living our values

2 main components

• Lesotho Referral Hospital• 3 filter clinics (District Healthcare)

Clinical services

• Design, build and construction• Equipment and FM

Construction

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Living our values

Special Purpose Vehicle (SPV)

Netcare led consortium

Tsepong (Pty) Limited

Lesotho registered company, no 2006/855

Registration with revenue services

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Living our values

Tsepong shareholding

Netcare Limited

Excel Health

Afri’nnai

Women Investment Company

D10 Investments

40%

20%

20%

10%

10%

South African healthcare company

Grouping of Lesotho based doctors

Grouping of Bloemfontein based doctors

Basotho women empowerment company

Local Chamber of Commerce Investment arm

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Living our values

Role of partners

• Provision of visiting specialists

Afri’nnai Health

• Provision of medical services

Excel Health

• Subcontracting

Women Investment Company

• Subcontracting

D10 Investments

• Subcontracting and operator

Netcare

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Living our values

RPP Developers

Netcare Management (Pty) LtdTsepong (Pty) Ltd

Netcare Hospitals (Pty) Ltd

Grinaker LTA

Medical equipment

IT

HR

Private Ward

Government of Lesotho

Facility Maintenance -TBC

Cleaning

Garden

Security

Lab

National Renal Care

Laundry and linen

Pest control

Waste management

Clinical services

PPP agreement

Sub contractors Services providedPPP Agreement Partners

Contractual organogram

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Living our values

Capital structure

Project funding*

Equity(15%)

Pure equity(10%)

Netcare(40%)

Loans(90%)

LEE¹(60%)

DBSA(100%)

Debt(85%)

* Excluding Government of Lesotho grant1. Tsepong Partners excluding Netcare

Netcareshareholder loan

(40%)

DBSAmezzanine loan/bridging finance

(60%)

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Living our values

Project Team Structure – Govt. & Private Party

Integrated Hospital Commissioning (IHC)

Clinical Services Team

Design & ConstructionTeam

Medical Equipment

Facilities Management

LegalTeam Financial Team

Human Resources

Team

Project Co-ordination: Govt. led

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Living our values

Legal and Institutional framework

• In SA we have standardised PPP guidelines issued by SA National Treasury ito PFMA

• Lesotho have no standard PPP guidelines but followed the IFC guidelines, also relied on current procurement processes

• PPP’s can be implemented with little or no guidelines

• Important to have advisers who have thorough knowledge and experience with PPP’s

• Government should establish a PPP unit, which should be part of their Treasury department to ensure the smooth running of the entire PPP project lifecyle

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Living our values

What went well

• Communication between all parties – understanding of requirements, clarification, etc.

• Government participation – incl. Ministries of Health & Finance

• Tender Process

• Negotiation – managing expectations

• Obtaining of Grant funding (Govt. & GPOBA)

• Meeting Local Economic Empowerment objectives

• Proper Project Management

• Cost neutrality squared

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Living our values

What could have been done better

• Government perspective:

- Site issues (i.e. GPS co-ordinates, ownership, EIA, bulk services, etc.)

- Shorter negotiation period

- Achieving Financial Closure earlier (discussions in parallel)

• Private Party perspective:

- Improved communication - between the different teams, staff, etc.

- Managing expectations of all stakeholders – e.g. exit of Hard FM provider

- Proper understanding and agreement on all funding issues

» Eliminate the need for clarification after financial close

» More flexibility with project finances

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Living our values

In summary – What to look for in another COMESA country…

• Political & economic stability

• Political will

• Trust

• Understanding of roles & objectives

• Innovation

• Flexibility

• Experienced operator

• Local partners who add value

• Good transaction advisors

• Willing lenders

• Most importantly a common goal to improve access to

quality and affordable health care


Living our values

Thank you.

Documents

Living our values - comesaria-ppp.org Netcare PPP/PPI experience • Bronkhorstspruit Hospital • Bloemfontein co-location PPP • Port Alfred and Settlers PPP • UCT Private Hospital