PPP projects in healthcare are still subject of public debates between skeptics of the effects of “privatizing” the healthcare sector, especially after the failure of some projects in countries like Australia, Japan and Italy (1), from one side and the defenders of this model to face the constraints of public resources and to use the experience of the private sector in this field from the other.
Actually, there is no country in the world where healthcare is financed entirely by the government. While the provision of health is widely recognized as the responsibility of government, private capital and expertise are increasingly viewed as welcome sources to induce efficiency and innovation. (1)
The aim of this article is to present a successful case of PPP hospital project, Iknosi Albert Luthuli Central Hospital (IALCH) in South Africa. It will analyze the contract and the role of the private partner and will discuss the keys of success.
This successful case shows that PPP model, if correctly managed and controlled by the public authorities, can be a good solution to be used to finance new health facilities or at wider scale to develop the existing healthcare system. Please check for example the opportunities in the healthcare in Kurdistan. Or even, in some cases, to reconstruct the national healthcare system after a war. Please check the article about the reconstruction of the healthcare sector in Syria after the war.
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| Durban, South Africa |
General information about IALCH
Inkosi Albert Luthuli Central Hospital is situated in Durban, KwaZulu Natal open in 2002
This hospital provides highly specialized services to the entire population of the province of KwaZulu-Natal and half of the province of Eastern Cape. (2)
It has 846 beds (3) and includes the following services (4):
Management domain
Office of the Chief Executive Officer, Medical Management, Nursing and Quality Management, Human Resource Management, Systems Management, Finance Management
Medical domain
Oncology, Cardiology, Renal, Dermatology, Endocrine, Metabolic Respiratory, Rheumatology, Neurology, Haemodialysis, Plasmophoresis
Surgical domain
Neurology Medical, Plastic Surgery, Cardiac Surgery, Vascular, Cardiothoracic, Ear, Nose and Throat, Urology, General Surgery, Orthopaedics, Maxillo Facial.
Mother & child domain
Antenatal and postnatal, Paediatric Haematology and Oncology, Nursery and Neonatal Intensive Care Unit, Crano-facial, Paediatric Neurosurgery, Gynaecology ward, Laparoscopy, Labour ward, Paediatric Medical, Orthopaedic and Cardiology, Cardiothoracic, Urology and Plastic
Peri-operative domain
Opetating Theatres, Intensive Care Units, High Care Units, Cathlab, Pre-Anaesthetic Assesment Clinic and Pain Clinic, Trauma, Burns Unit.
Professions Allied to Medical Support (PAMS) domain
Radiology, Speech and Audiology, Physiotherapym, Occupational Therapy, Radiation Oncology, Clinical, Psychology, Nuclear Medicine, Dietetics, Social Work
It is fully computerized and all files are managed electronically. (2)
Once opened in 2002 it was one of the most modern facilities in the entire continent (2)
The contract
This contract is the first PPP contract in healthcare in South Africa in which a private partner is responsible of providing non-clinical services (2). It means that the private partner is responsible for providing hospital equipment and related services for 15 years from the signature of the contract. After this period the equipment will be transferred to the Ministry of Health if the contract is not renewed. (2)
The initial duration of the contract is 15 years starting from 2002, then it was extended for additional 3 year. (3)
The private partner is Impilo Consortium composed, at the moment of the contract award, by Siemens Medical Solutions (31%), Vulindlela Holdings (26%), AME Austria (20%), Drake & Scull (9%), Mbekani (7%) and Omame (7%). (2)
The annual fee at the contract signature was 304,9 milion ZAR (2001) paid on monthly basis indexed according to the consumption prices index. (2)
Execution phase of Inkosi Albert Luthui Central Hospital
The construction of the facility was subject to a separate contract and was ultimate before establishing this PPP contract.
Siemens Medical solutions was responsible of the procurement and installation of all medical equipment in the hospitals. (2) Particular attention was give to the information technology system to let this hospital fully digital. Therefore Siemens developed film-less imaging integrated network combining IT with the medical imaging as well as laboratory, ECG and all other equipment generating data .
All imaging data are instantly available by logging on at any of the 1200 PCs or the 125 radio-connected trolley-mounted notebooks located around the hospital. (5)
AME Austria was responsible of the information technology system and provided the following services during the execution phase: (6)
- Planning & System Design
- Procurement
- System Integration
- Testing & Commissioning of all medical departments in stages
- Training & Change Management
Operation phase of Inkosi Albert Luthuli Central Hospital
During the operation phase the consortium is responsible for: (3)
All of the Information Management and Technology (IM&T) for the Inkosi Albert Luthuli Central Hospital.
The central medical technical department. Its services include procurement, maintenance and refreshment of medical equipment across the full spectrum of requirements
Facilities Management Services (FMS) These include: building maintenance, specialist engineering services, procurement, central and satellite stores management, a 24-hour/365 days central helpdesk, all soft facilities management services including security, management of CSSD and TSSU services, catering, cleaning, patient portering, landscaping, parking, waste management, management of creche, a 465 bed residential village and retail units. The Dake & Skull facilities management team is the responibile of this part of the facility management. (7)
The public partner which is the department of health in the provincial government is responsible of providing the clinical services and the operation of the hospital.
Keys of success
The project shows the importance of the political will. As the first PPP project in healthcare in South Africa, Inkosi Albert Luthuli Central Hospital benefited of big support from the public authorities. This allowed an acceleration in all procedures, completed in less than 2 years, starting from the initial qualification request on March 2000, to the financial agreement on February 2002. This is a very short time for this kind of PPP projects.
This period of 2 years includes also the prequalification, feasibility study preparation, technical specifications preparation, request for quotation only for the pre-qualified participants, approval of the treasury and the contract signature in December 2001. (2; 8)
The public authorities relied on international firms with high experience covering all fields and phases of the project. The team included advisers PricewaterhouseCoopers, a law firm (White & Case), chartered accountants (Gobodo), a British consultancy firm on hospital projects (Hiltron) and engineering firm (Saicog). (2) the feasibility study of the project was done by PricewaterhouseCoopers (8)
The project is also a good example about how to use the skills and resources of the private sector to achieve target in terms of timing. After the contract signature in December 2001, the implementation started on March 2002 for 12 month. In the meantime the first patients were accepted on June 2002. (2; 8)
Using high technology equipment lets the hospital be one of the most modern and important facilities in the African continent. For its ICU capacity and the high level of equipment the hospital was identified to receive positive cases during COVID-19 pandemic. (9)
The hospital is the first completely paperless hospital in South-Africa. Paper documents have been replaced with an electronic patient record, enabling medical staff to have instant access to the patient's test results and entire history, including X-ray films, laboratory results, medication information, ECG traces, as well as all the respective specialist reports that go with such examinations. (5)
The contract asks for the replacement of medical equipment each five years and the replacement of the information and administration technologies each 3 years (2). This will allow the public partner to receive new and up-to-date equipment, once the equipment will be transferred at the end of the contract.
Bibliography
1. PWC. Build and Beyond: The (r)evolution of healthcare PPPs. s.l. : PWC, 2010.
2. Edward Farquharson, Clemencia Torres de Mästle et E.R. Yescombe with avec Javier Encinas. Comment susciter l’engagement du secteur privé dans des partenariats public-privé sur les marchés émergents. Washington DC : World Bank, 2011. ISBN: 978-0-8213-9467-0.
3. Iknosi Albert Luthuli Central Hospital. About Us. Iknosi Albert Luthuli Central Hospital. [Online] [Cited: May 21, 2020.] http://www.ialch.co.za/about-us/.
4. Iknosi Albert Luthuli cental hospital. services. Iknosi Albert Luthuli cental hospital. [Online] [Cited: May 23, 2020.] http://www.ialch.co.za/services/.
5. Siemens, Rodney Weidemann for. Healthcare goes hi-tech. IT Web Business Technology medical Company. [Online] March 10, 2003. [Cited: May 31, 2020.] https://www.itweb.co.za/content/VgZey7JAQ8ZvdjX9.
6. AME International GMBH. 840 Bed Inkosi Albert Luthuli Central Hospital, Outsourcing, Durban in South Africa. AME International. [Online] [Cited: May 31, 2020.] http://www.ame-international.com/800-beds-inkosi-albert-luthuli-central-hospital-ialch-durban-republic-of-south-africa/.
7. Drake & Scull. Tfs wiredprojects. [Online] [Cited: May 31, 2020.] http://tfs.wiredprojects.co.za/wp-content/uploads/2014/10/PMR-Feature-IALCH.pdf.
8. Haarhoff, Kosie Jacobus. Public Private Partnerships as an alternative delivery option: A multiple case study of healthcare sector in South-Africa. Stellenbosch : University of Stellenbosch, 2008.
9. Ngema, Thobeka. KZN hospitals prepare for Covid-19 admissions. IOL. [Online] March 24, 2020. [Cited: May 31, 2020.] https://www.iol.co.za/dailynews/news/kwazulu-natal/kzn-hospitals-prepare-for-covid-19-admissions-45453306.
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