The MarkeTech Group www.themarketechgroup.com USA The MarkeTech Group, LLC 502 Mace Blvd, Suite 15 Davis, CA 95618 Tele: (+1) 530-792-8400 Fax: (+1) 530-792-8447 France The MarkeTech Group, SARL 3, Rue Emile Péhant 44 000 Nantes Tele: +33 (0)2 72 01 00 80 Fax: +33 (0)2 40 48 29 40

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minuteISSUE 1 VOLUME 13 SUMMER 2014
The MarkeTech Group
INTERVIEW OF THE SEMESTER
Hospital PPP from the inside
Mr. Bernard Bensadoun (BB)
Managing Director of Nantes Polyclinique de l’Atlantique
Mr. Yann Bubien (YB)
Managing Director of Angers CHU
Mr. Jean Michel Budet (JMB)
Deputy Managing Director of Assistance Publique
Hopitaux de Marseilles (AP-HM)
Mr. Michel Meignier (MM)
Managing Director of Nantes Bretéché Clinic Nantes
INTERVIEW
Interviewer: Olivier Cotten, TMTG Partner
OC: Before discussing further on how these PPPs affect purchasing and investment,
I would like you to give us your own definition of a PPP.
BB: In the hospital world, PPPs deal, on the one hand, with the hospital building for renovation, extension or rehabilitation projects and
on the other hand with cooperation between public and private establishments. The latter projects date principally from the Hospital,
Patient, Health, Territory law (HPST law) that has ensured promotion as a source of performance even if they already existed before
this law.
YB: We can define a PPP as being a market entrusted to a private player to build or even manage a public hospital. Funding is
provided by the private group and the public establishment then pays this investment back in the form of rent. At the end of the day, this
is a kind of leasing arrangement over several years (10 to 40 years). The approach is attractive to the extent that it means that a
significant amount of money does not have to be paid out in one go as the expense can be spread out over time. It is also useful to
make the most of private sector advantages, benefitting from more advantageous legal arrangements in market terms: less formal calls
for tender and more significant expertise, for example, to shorten construction times, optimise maintenance contracts or benefit from
wide ranging legal services. However, these examples remain quite theoretical and do not always actually come to light. The rent
approach is seductive but recent attempts have often ended in failure or have been time bombs, particularly for very large operations.
JMB: PPPs effectively deal with cooperation but there are practices prior to texts from 2004 and 2005 with, for example, public services
concessions that really correspond to PPPs in other forms. The 2004 law intended to contractualize these partnerships to allow
construction or logistics operations to be performed in the hospital world. These experiences are now expanding to other expertise: in
Marseille, the AP-HM thereby welcomes private establishments into the public domain that complement the care offer, particularly in the
field of follow-up care. Other considerations involve assessing hospital property patrimony or the field of purchasing equipment (medical
imagery, for example).
There are partnerships to pool
resources or to acquire
technologies they cannot access
alone. One example might be
PET Scans or robotics in
nuclear medicine.
“
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INTERVIEW
MM: One of the private sector's lines of reasoning also considers setting up consistent territorial ensembles from a medical and
institutional point of view including as many participants as possible. In the past, some partnerships have turned out to be
catastrophic. These failures can be explained away by lack of experience and distance from these partnerships and by culture
divergence that should be toned down in the future.
OC: We have understood, I think, what PPPs are and are not. Now I would like to understand whether this approach can
be applied to all fields or if it is limited to just some:
BB: If we only look at the matter from a legal point of view, the possibilities are endless. We can share human resources,
equipment, administrative tasks or logistics. The legislator has got it all planned to manage implementing partnerships such as the
GHSs (Healthcare Cooperation Consortiums).
JMB: One priority is to make a reasonable choice of PPP. The main failures have concerned wide reaching projects that affect the
hospital's overall core business. This ambition is in all likelihood too vast. We can quote examples from Sud Francilien or the Caen
CHU where projects lacked maturity. As an example, at AP-HM, a PPP was set up for a logistics platform. This is not the hospital's
core business. Logistics processes are more classic and common. This refers to stable, controlled fields where performance
targets are quite easy to identify.
YB: The chances of success are much higher for targeted, well-calibrated operations such as in Angers involving a crèche or
biomass project. These are reasonably simple operations that are easy to control. In wide-reaching projects, we see that private
companies are far better armed than a hospital or even a CHU. There is a difference in level, particularly legally. We have to stick
to small operations (linen store, for example) to guarantee a PPP's success.
BB: Apart from PPPs where the hospital delegates building construction to a private player, there are partnerships to pool
resources or to acquire technologies they cannot access alone. One example might be PET Scans or robotics in nuclear medicine.
As far as IT is concerned, the approach is more complicated for reasons of confidentiality and independent patient data
management.
YB: The ARSs (Regional Health Agencies) clearly encourage public, private establishments and PSPHs (private establishments
participating in public hospitals) or ESPICs (collective interest private health establishments) to pool equipment with a view to
optimising use. As an example, a partnership between the Angers CHU and the Paul Papin Cancer Centre is underway to pool
use of the technical support centre (operating and imagery centre). How it will be used remains to be defined, particularly
concerning staff. Nevertheless overall, we can see an increasingly strong demand for these groups from public authorities.
BB: To go into further detail on this trend, here are a few figures: In 2006, there were 65 GCS (Healthcare Cooperation
Consortiums) set up, 128 in 2007 and 491 today. Initial failures also spring from the fact that the contracts did not evolve over
time. Local context and evolving needs have not generally been integrated in these rather constraining contracts where the tiniest
request for change causes significant contractual difficulties that were not initially envisaged.
YB: It is essential to understand that before 2011, a PPP's financial commitments were not considered to be a debt on the balance
sheet which distinctly worsens the establishment's results. Since January 2011, we have had to enter these commitments on the
balance sheet which modifies the data remarkably, particularly for PPPs involved in construction operations.
OC: Is the PPP principle uniform across Europe?
YB: Great Britain was one of the first European countries to launch PPPs. These PPPs particularly focussed on prisons and then
hospitals. Following Great Britain's lead, France began to implement PPPs even before they saw specific results on their efficacy.
Today, results are extremely lukewarm or even negative as far as Great Britain is concerned. The British have therefore put a stop
to PPPs for major operations. British and subsequent French experience tends to show that we have to recalibrate these
operations on more technical and modestly sized approaches. It should be noted that in England, staff pooling does not happen as
health is very largely public. The private sector is very narrow, very independent and not reimbursed by the public sector.
OC: To what extent do PPPs provide new funding opportunities for health establishments?
JMB: It is important to note that one of the reasons for creating PPPs is linked to the economic context as hospitals have
significant debts on the whole and it is difficult to borrow any further. In terms of funding, PPPs represent an indispensable
alternative. As an example, in the field of imagery, during periods where we have little cash flow, it is interesting to work with
suppliers such as GE or SIEMENS who have a banking organisation to support investment operations. Furthermore, it should also
be noted that these PPP contracts are included as public debt from now on and not as a charge entered in the results account.
OC: How does belonging to a PPP affect purchasing strategies?
BB: On the one hand, there is the purchasing performance and, on the other, the rise in purchasing power. As an example, it is
hard for an establishment to pay for a PET Scan or an operating robot due to lack of funding capacity and particularly due to
under-exploitation in terms of usage volume.
MM: PPPs come into play on heavy machinery. Regarding other aspects such as purchasing drugs, this becomes much more
difficult to envisage due to very different ways of working.

3. 3
502 Mace Blvd, Suite 15 3, rue Emile Péhant
Davis, CA 95618 44 000 Nantes - France
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MEASURING the VOICE-OF-CUSTOMER in HEALTHCARE
INTERVIEW JMB: Regarding purchasing anything other than heavy equipment, encouragement has been seen lately to modernise public
spending with public establishment consortiums and buyer training. This group strategy concerning public establishments may be
at the expense of local cooperation.
BB: Today, purchasing performance involves consortiums such what as UniHa (Health Cooperative Group) has managed to do in
the public domain. Public/private groupings could be set up. Nevertheless, it is important to understand that this is not where the
industry's interest lies. Today, the industry no longer tugs on the heart strings of the competition between establishments and will
not be a facilitator for the participants' capacity to work together.
MM: In terms of purchasing strategy, as far as pooling the purchase of small scale equipment is concerned, it is plausible that this
will make something that is already not simple even more complicated.
YB: As far as drugs are concerned, a pharmaceutical GCS could be envisaged as the approach is legally possible. However, this
approach is extremely complex, particularly because of the pharmacist's liability on either side. Nobody really wants to launch
themselves into this idea or only by taking vast precautions.
OC: Conclusion
JMB: The idea of rental, within the framework of building for example, can potentially be applied to other fields. As far as MRIs are
concerned, we might envisage asking constructors, not for an MRI, but the MRI availability time whilst paying for use. This is an
area to be explored in line with current rates and performance targets.
YB: In the construction field, the opinion is rather unfavourable (except for small operations) as public hospitals would be at a
distinct disadvantage against the particularly well-armed (certainly legally) major private groups. In terms of heavy equipment, this
is a good approach if ratios are relatively balanced in terms of activity. It has to be a win-win situation.
MM: The PPP tool is interesting for targeted operations that take into account the local environment.
BB: There are really two major lines: the first line concerns construction PPPs with a rather more pejorative reputation although
they are quite interesting as they are thought up to allow funding for modernity and innovation. The other line corresponds to PPPs
between establishments such as cooperation projects. In this case, the economic context encourages us to explore this approach
to optimise resources and equipment. This also refers to a means of structuring a care offer to the scale of a territory and thereby
becoming more consistent.
JMB: The success of the logistics platform contract in Marseille gives some maturity to the targets as well as solid legal and
financial support to work on a level playing field with our private partnerships. These targeted approaches are interesting.