Experience Sharing Seminar on Co-located Public-Private Hospitals in Australia

1. Experience Sharing Seminar on Co-located Public-Private Hospitals in Australia PPP and Co-location Issues in Australian Hospitals and their applicability to Hong Kong 11 April 2007

2. Outline of Presentation • Different PPP Models in Australian Hospitals • Key Issues of PPPs and Co-location • Lessons Learnt from Australian Experience • Applicability to HK

3. Different PPP Models in Australian Hospitals • Build-Own-Operate (BOO) / Build-Own-Operate-Transfer (BOOT) e.g. Joondalup Health Campus, Latrobe Regional Hospital

4. Different PPP Models in Australian Hospitals Joondalup Health Campus – Entrance Directory Children’s Wards

5. Different PPP Models in Australian Hospitals • Design-Build-Finance (DBF) and Facility Management (FM) –e.g. Casey Hospital

6. Different PPP Models in Australian Hospitals Casey Hospital Entrance and Reception Area

7. Different PPP Models in Australian Hospitals • Design-Build-Finance (DBF) and Facility Management (FM) –e.g. Royal Women’s Hospital

8. Different PPP Models in Australian Hospitals Royal Women’s Hospital

9. Different PPP Models in Australian Hospitals • Co-location Establishment and operation of a private hospital that is co-located with a public hospital to form a joint medical precinct - for sharing of facilities and services to certain extent.

10. Different PPP Models in Australian Hospitals • Co-location • e.g. Prince of Wales Hospitals

11. Different PPP Models in Australian Hospitals Prince of Wales Hospitals

12. Different PPP Models in Australian Hospitals • Co-location e.g. Mater Hospitals

13. Different PPP Models in Australian Hospitals Mater Hospitals – An overview of the co-located public and private hospitals

14. PPP Issues in Hospital Projects • Key Considerations for involving private sector in hospital projects • Respective roles and responsibilities of the public and private sectors involved, and the services to be provided • Risk allocation and management • Financial arrangements and charging scheme • Consultation with stakeholders • Public acceptance of PPP in hospital services • Details of the project specifications for EoI and RFP

15. PPP Issues in Hospital Projects • Key Considerations for involving private sector in hospital projects (Cont’d) • Market interest and capability • Procurement process and competition in bidding • Public Sector Comparator (risk-adjusted) and cost-effectiveness • Output specifications and Key Performance Indicators • Governance and monitoring system

16. Co-location in Hospital Projects • Particular Issues on Co-location • Generally less risky than BOOT • Different roles of the co-located hospitals • Interface issues between the co-located public and private hospitals • More complex in design to facilitate better sharing of facilities • Often co-located with research and teaching facilities • Variation in service charges

17. Co-location in Hospital Projects Why co-location?

18. Benefits of Co-location • To Government / Public Hospitals: • Share costs and facilities • Increase utilisation of surplus facilities/capacities • Retain medical specialists • Provide backup capacities • Create additional revenue • Share information with a group of specialists • To Private Hospital Operators: • Provide source of patients • Provide backup facilities and expertise • Enjoy economies of scale

19. Benefits of Co-location • To Medical Practitioners: • Provide convenient access to both public and private patients, research and teaching facilities • To Public / Patients: • Increase the range and choice of hospital services to meet their needs

20. Co-location in Australian Hospitals • Challenges in Application of Co-location • Conflict of interests - competition vs. cooperation • Difficulties in sharing facilities • Independence vs. inter-dependence • Contractual arrangements for co-located hospitals

21. Co-location in Australian Hospitals Public vs. Private • Meet government agenda • Cost containment / control • Risk averse • Doctors / Patients – consumers of resources, conflict of needs • Focus on meeting community needs • Public relations • Meet owners (shareholders) agenda • Revenue generation • Risk taking • Doctors / Patients – source of income, mutual satisfaction of needs • Customer focus – doctors and patients • Marketing

22. Lessons Learnt from Australian Experience (1) • Formal PPP policy / guidelines • Strong government support to application of PPPs • Different PPP models to meet different objectives • Stakeholder management • Detailed project specifications

23. Lessons Learnt from Australian Experience (2) • Use of PSC for comparing the costs of the PPP approach with conventional approach • Allocation of risks to the most suitable parties • Maximising competition in the procurement process • Output-based service specifications • Manageable no. of KPI

24. Applicability of Australian Experience to HK • Socio-economic Environment of Australia • Well-developed private health insurance system • Abundant land supply for building hospitals • Well-developed PPP policy and practice in different service sectors, including hospitals • A number of successful precedent cases of PPP hospitals, including co-location, in different states • Public acceptance of PPPs

25. Applicability of Australian Experience to HK • In general, the key issues and lessons learnt in Australia are applicable to HK in developing its PPP hospitals • However, HK may encounter some challenges - • Lack of local precedent cases • Participation of public in private health insurance • Public awareness and acceptance of PPPs • High lease price of land/buildings • Sufficient demand for private hospital services ?

26. ~ Thank You ~