Private Public Partnerships (PPPs) for Sustainability

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Presented by Dr. Nelson Gitonga, Insight Health Advisor, Kenya during Regional AIDS Training Network (RATN) 12th General Council Meeting held in Mombasa, Kenya from 24th - 29th June 2013

Presented by Dr. Nelson Gitonga, Insight Health Advisor, Kenya during Regional AIDS Training Network (RATN) 12th General Council Meeting held in Mombasa, Kenya from 24th - 29th June 2013

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  • The Private Health Sector includes: Private commercial or for-profit entities active in the health sector Non-profit entities active in the health sector, such as FBOs, NGOs, CSOs and community organizations Examples of private health sector actors: Private health facilities Private insurance providers Private pharmacies Private sector professional associations Private medical colleges Producers of e-health technologies
  • Let’s turn our attention to the different components of a health system and the range of private sector actors. This is diagram – which is on the wall as a reference as well as a handout in your packet – is based on the WHO six building blocks. The six building blocks are in the middle green circle. They include governance; information; financing; human resources and medicine and technology. The outer blue ring illustrates the breadth and scope of private sector providers. Private sector is a cross–cutting theme in each of health system building blocks LIST A FEW BY BUILDING BLOCK As you can note, there are a diverse range of private sector actors beyond private healthcare providers. As mentioned before, the diversity presents a challenge for public sector because the private health sector is often fragmented and not “organized”. The breadth of private sector actors also presents an opportunity, offering a greater range of PPP possibilities that can strengthen the health system. Another important observation is that many of the same private health sector actors are present in multiple building blocks. This signifies that when the public sector can effectively work with the private sector partners it not only helps strengthen one building block but in most cases, several health systems.
  • Clear Sector Strategy and Road Map The diagnostic assessment of the sector yields information to develop and inform targeted, specific, and realistic sector strategy and road map to achieve improvements, through PPPs and other interventions. The strategy and road map provide clarity and certainty about the operating environment to private sector operators—a prerequisite for sizable investments. Clear political commitment and champions The private sector will expect government to be a competent partner in discharging its obligations in terms of policy and reform planning, project development, and contract oversight. It will also expect that the government has established the appropriate legal and other frameworks to set targets, monitor progress, evaluate progress, report progress, enforce the contract provisions, and handle disputes. A detailed road map helps manage expectations in that regard, and allows the actual performance of the government to be monitored and measured. The government’s commitment to the strategy is demonstrated in several ways: through a public statement of the reform strategy and expectations of PPP; through stakeholder consultation and transparency of process; through the provision of adequate funding and support for the process; and through the appointment of a powerful champion, or driver, for the process. The champion is an individual or unit that is accountable for progress, is a focal point for public communication and information, ensures that appropriate attention is given to the main issues, works with various parties to achieve cooperation/ consensus, and leads the government toward decisions. The standing, credibility, and strength of mandate of the PPP champion are strong indications of the true commitment of the government to the PPP project. Political changes and powerful vested interests can all constrain the PPP process

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  • 1. SHOPS is funded by the U.S. Agency for International Development. Abt Associates leads the project in collaboration with Banyan Global Jhpiego Marie Stopes International Monitor Group O’Hanlon Health Consulting Public Private Partnership as a Sustainability Strategy Dr. Nelson Gitonga Private Sector Advisor, SHOPS Project June 2013 Mombasa
  • 2. Presentation Outline • Sustainability approaches • Overview of private sector • Why engage the private sector? • What is PPP? –Levels, Types, Mechanisms & Objectives • Examples of PPP’s • Opportunities for RATN/ACA in PPP’s
  • 3. 1. Sustainability Approaches in Health Development • Emphasize country-led and country-owned programs • Alignment between country and development partner strategies • Investment in leadership, capacity building & systems • Maximizing a client-centred approach through integration of services and systems. • Increased engagement and involvement of the private sector - Commercial/NGO/FBO/CSO in improving health systems and delivery • Ensure strategic collaboration and coordination of all key stakeholders • Focus on results and mutual accountability (USAID Kenya Guiding Principles in health programming).
  • 4. Sustainability Approaches in Health Development contd. • Key determinants of sustainability. • Local ownership and leadership • Relevance and alignment first to national then regional and global health context and priorities • Mobilization of local resources and capacities • Demonstration of results • Funds and resources both local and international will follow sustainable and innovative approaches. • The new era of Sustainable Development Goals – SDG’s (Ref: SAT presentation) • Relative roles and links between trade and aid will change (?More trade and less aid?)
  • 5. 2. Who is the private sector? • Non-state actors within the health sector. • Private for profit entities • Private not-for profit entities – NGO, FBO. CSO’s • Non-state actors outside the health sector • Businesses – ICT, telecommunication, financial services, mining, agriculture etc • Employer groups • Education institutions and foundations
  • 6. Who is the Private Sector in Health? Providers and facilities exist in both FBO/NGO and for-profit sectors – more commonly a solo practitioners (small scale providers)
  • 7. Understanding of the Many Roles of the Private Sector in Health
  • 8. Myths about the Private Commercial Sector in Africa ! • Myth #1: Health in Africa is financed primarily by the public sector • Myth#2: The private health sector only or mostly benefits the wealthy • Myth #3: The private health sector is insignificant in Africa • Information about the private sector is available in: • Various research publications such as the Private Sector Assessments (West, East and Southern Africa) (USAID, IFC/WB) (SHOPS website –www.shopsproject.org) • Health System Assessments (USAID HS 20/20) • National Health Accounts series • DHS series
  • 9. 3. Why engage the private sector?  Broad Rationale::  A ‘whole sector approach’ is more effective and efficient  Promote local ownership and leadership  Enhance relevance and alignment in programs  Mobilize local resources and capacities to fill in funding and capacity gaps  Public health case  Business case
  • 10. Business Case for Health PPPs  Attracts private capital investment and managerial expertise (often to either supplement public resources or release them for other public needs)  Realizes long-term value-for-money through appropriate risk transfer to the private sector over the life of the PPP  Rationalizes the use of existing health resources and infrastructure – public and private alike –effectiveness and efficiency  Reforms sectors through a reallocation of roles, incentives, and accountability
  • 11. Public Health Case for Health PPPs  Improves access to key health services and products  Leverages private sector resources – expertise and infrastructure – to health  Introduces innovations and new technologies into the health sector  Increase efficiencies in service delivery  Promotes greater equity and helps ensure universal coverage of health
  • 12. Risks of Health PPPs  Requires new and different capacity to ensure “value for money”  If not structured well, can pass the cost of H/PPP to consumers  Requires political and financial stability and support to implement PPP/H  Government still has responsibility for ensuring access and quality of services and products  Difficult to plan for all contingencies that may arise over the life of a PPP/H
  • 13. 4. What is PPP? Different Levels of Engagement with the Private Sector Engagement & dialogue between the public and the private sectors to share ideas and concerns, to build trust, common vision Public and private sector working together to reform policies and collaborate on health priorities Public and private sectors partnering to deliver health services and products and/or address health system gaps P1 Public private dialogue P2 Public private interaction P3 Public private partnership
  • 14. Different Concepts for Health PPPs by “Tribe” Gov’t establishes an on-going relationship to work with private sector on health sector issues of common interest Gov’t establishes long-term contract for services (may include use of public assets) Gov’t incentivizes private actors to invest capital in delivery of health services and products
  • 15. Defining Public Private Partnership (P3 ) • PPP is a contractual arrangement between a public sector entity (government agencies, regulatory bodies and government-owned health facilities) and a private sector entity (entity with majority non-governmental ownership). • Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. • In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility.
  • 16. Fundamental Features of a PPP/H Clear definition, allocation of and agreement on  Desired outcomes  Roles and responsibilities of the parties  Sensible risk-sharing among the public and the private sector partners  Available resources  Financial rewards to the private party commensurate with the achievement of pre-specified outputs
  • 17.  Rather than buying buildings, equipment and/or supplies, PPPs are long-term contracts for gov’t to buy a bundled services (facility, staff, supplies, equipment)  PPP 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 capital financing Health PPPs How they differ from traditional public procurements
  • 18. Resource Sharing Contracts / MOUs Design Build Operate Leases and Concessions Level of Private Sector Involvement DegreeofComplexityforMOH • Staff • Medicines • Supplies • Help in equipment maintenance • Resource sharing • Services • Management • Facilities • Medical equipment • Maintenance • • Infrastructure Most Common P3-level Arrangements / Structures in Health Sector
  • 19. PPPs Arrangements in Health Clinical Services Non-Clinical Support Services Clinical Support Services Medicines and Equipment HRH Education and Training Facility/ Hospital Management Infrastructure • ICT • Maintenance • Food • Laundry • Cleaning • Billing Primary Care • MCH • RH/FP • HIV/AIDs • TB/Malaria Specialized • Dialysis • Radio-therapy • Other • Lab analysis • Diagnostics tests • Ambulance • Medical equipment maintenance • Open donor sponsored training • Joint labor & education planning • Other? Management of • Specific area (e.g. maternity ward) • Entire hospital • Network of clinics and/or hospital • Medical equipment • Medical supplies • Specific medicines • Local manufacturing • Detailed design • Building construction • Medical equipment • Capital financing Increase Access Improve Equity Decrease Costs Improve Efficiency • Contract for services • Contract for services • Service Level Agreements • Vouchers • MOUs • Subsidized inputs • Staff sharing • Contract for services • MOUs • Subsidized inputs • Staff sharing • Equipment sharing • MOU • Contract for services • Capital financing • Management Contracts • Co-location • Leasing • Contract for services • Lease contracts • Capital financing • Build-Operate- Transfer ArrangementGoalActivityArea
  • 20. Health PPP Process MOH Mgmt PPP Unit MOH Mgmt PPP Unit PPP Unit MOH/Dept Finance MOF PPP Unit MOH/Dept Finance MOF Structure a Health PPP Market it to the private sector Prepare PPP arrangement Conduct offer process Structure a Health PPP Market it to the private sector Prepare PPP arrangement Conduct offer process Phase 1: Analysis and Prioritization Conduct feasibility/ sustainability study Review legal/policy framework Assess MOH institutional capacity Identify MOH PPP Team Diagnose health sector needs Agree on health priorities and system gaps Develop a PPP Strategy for Health Diagnose health sector needs Agree on health priorities and system gaps Develop a PPP Strategy for Health Phase 2: Preparation Phase 3: Design and Award Phase 4: Implementation and Evaluation Put financing in place Initiate PPP activities Regularly monitor progress Close PPP and Evaluate Share lessons learned from PPP/H PPP Unit Outside Expertise PPP Unit Outside Expertise PPP Unit MOH/Dept Finance MOF Outside Expertise PPP Unit MOH/Dept Finance MOF Outside Expertise StakeholderConsultation PrivateSectorConsumers StakeholderConsultation PrivateSectorConsumers
  • 21. Set PPP priorities Establish selection criteria Approve PPPs Create regulatory/ legal framework and structure Set PPP priorities Establish selection criteria Approve PPPs Create regulatory/ legal framework and structure Stakeholder Roles in the Health PPP Process Roles and Responsibilities Government Agree on common goal for PPPs Express interest to participate Provide company data to assist in due diligence Implement PPPs Agree on common goal for PPPs Express interest to participate Provide company data to assist in due diligence Implement PPPs Private Sector Participate in design of PPP’s Communicate health needs and priorities Adopt positive Health seeking behavior Provide feedback on quality of services Participate in design of PPP’s Communicate health needs and priorities Adopt positive Health seeking behavior Provide feedback on quality of services Consumers Assist Gvt to establish PPP reforms and enabling environment Provide unbiased evaluations on PPP options Facilitate cooperation Assist Gvt to establish PPP reforms and enabling environment Provide unbiased evaluations on PPP options Facilitate cooperation Outside Expert
  • 22. Factors Contributing to Successful Health PPPs  Clear definition of desired outcomes and each partners’ roles and responsibilities  Structured, regular and open stakeholder consultation  Clear sector strategy and roadmap creating certainty in the health sector  Clear government commitment and designated champions demonstrating credibility
  • 23. Designing Pro-Poor Health PPPs PPP Arrangements Incentives Resource Sharing •Link inputs to services delivered to low income groups MOUs Service Contracts (SLAs) Management Contracts •Link MOU/contract activities to agreed upon goals (e.g. increase access, remove financial barriers to poor) •Link payments to performance indicators (quality, access, saving to subsidize poor) •Create additional incentives for services targeting poor in remote areas Lease Concessions Co-location •Offer incentives to provide services to low income groups within catchment area – difficult to extend leasing to remote locations •Offer concession in exchange for assured quality, convenience and affordable pricing for low income consumers •Create additional incentives to operate in remote areas B-O-T •Build facilities in underserved areas and for target population groups
  • 24. 5. PPP Examples: P1 Policy Dialogue: Kenya Example PPP Health Kenya  Signed a Letter of Intent outlining rules of engagement  Functions as Board of Directors advocating for H/PPPs  Established a road map of key areas to be addressed through policy reform  Participates actively in policy forums, strategic planning etc.
  • 25. P1 Policy Dialogue: Other African examples Ghana Private Health Sector Alliance in Ghana (PHSAG) set up with wide membership of private sector organizations Recently formed to organize private sector voice Meets regularly Starting to form direct relationship with public sector With MOH help, starting to attend policy and planning meetings Tanzania PPP-Technical Work Group set up as part of a larger donor coordination board. Focuses primarily on coordinating health programs between the sectors and donors. Have conducted a Private Sector Assessment similar to Kenya Have requested TA to establish a policy forum like PPP-Health Kenya to elevate the PPP-TWG to a sector-wide forum
  • 26. P2 Interaction and Coordination: Kenya Example Public sector, private sector and donors in Kenya are partnering to achieve the following:  Develop laws, policies and plans that recognize private sector contribution and define private sector roles: • Position paper on the implication of the constitution on the health sector • Kenya Health Policy Framework • General Health Law and Acts • A healthcare financing strategy • NHSSP III  MOU with private universities on training health workers  MOU with FBO hospitals for provision of staff and commodities
  • 27. P2 Interaction and Coordination: Other African Examples Uganda Kakira Sugar Works and MoH are collaborating to expand HIV/AIDS prevention services including male circumcision and workplace prevention program at Kakira Sugar clinic. MOH provides training, equipment and IEC Namibia Government and the Namibia Business Coalition on AIDS (NABCOA) collaborated in Global Fund Round, with MoHSS and MoE secunding staff to private sector implementers Tanzania MoHSW and the private sector association APHFTA worked together to revise the Health Sector Policy in 2007 recognizing the private health sector as well as the PPP act in 2010 setting the foundations for PPPs in health
  • 28. P3 PPP: Kenya Examples Existing Partnerships East Africa Latex Manufacturing: the company and GoK signed an MoU whereby the company will produce condoms and other rubber products and the government will be a major buyer Gold Star Network Social Franchise: MoH/NASCOP donates HIV/STI commodities, facilitates training, and oversees guidelines and standards; Gold Star Network/FHI360 certifies and accredits franchise providers Reproductive Health Social Franchise Networks: Tunza and AMUA (PSI Kenya and Marie Stopes Kenya respectively) franchise providers and offer RH commodities and services at subsidized rates, while DRH/MOH donates commodities, facilitates training, oversees guidelines and standards OBA Project: PWC distributes vouchers funded by GoK and KfW to the poorest families to access safe motherhood and family planning services from certified public, private for-profit, and private not-for-profit service providers
  • 29. P3 PPPs: Other African Examples Namibia Rosh Pinah PPP: Mining company and MoHSS entered an agreement giving public patients access to mine-operated medical facilities and diagnostics equipment that is not available at the nurse-staffed public clinic Tanzania Service Agreements: MOH contracts with private and FBO/NGO providers to deliver primary health care services Zambia HIV Program: To lower cost of private sector HIV/AIDS treatment, Trust Hospital entered into agreement with NGO to get subsidized ARVs. Trust Hospital convinced private insurance to include HIV/AIDS treatment and care as benefit package
  • 30. 6. PPP Opportunities for RATN (ACA) In view of RATN/ACA’s new strategic direction, where do you see opportunities for the network in the PPP model? •Capacity building of national and regional health authorities •Capacity building of private sector to engage and implement PPP’s •Participation in selected PPP’s as an implementer/service provider •Adopt PPP as a cross cutting issue in all strategies
  • 31. SHOPS is funded by the U.S. Agency for International Development. Abt Associates leads the project in collaboration with Banyan Global Jhpiego Marie Stopes International Monitor Group O’Hanlon Health Consulting Dr. Nelson Gitonga Private Sector Policy Advisor, SHOPS Project www.shopsproject.org