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

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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

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DOH Objective

Why a New Hospital is Needed?

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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

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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

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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

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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

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• 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