1

Modernization of the

Philippine Orthopedic Center

Source: Department of Health (DOH)

Outline of Presentation

Development Objective

Project Description

Proposed Structure for PPP

Investment Opportunity

Way Forward

2

3

Project Objectives

To drive the establishment of the New Hospital Facility as the country’s ‘Leading Tertiary Care Center for Bone and Joint

Diseases, Trauma, and Rehabilitation Medicine’, capable of providing international quality orthopedic and trauma care

To facilitate affordable, competitive and quality focused medical care for all through cross subsidization framework, thus achieving Universal Health Care agenda

4

Why the need for a new hospital?

Constraints & Issues Solutions facilitated by New Facility

LOW CAPACITY UTILIZATION(only 70%-75% of Sanctioned capacity)

Private sector operational efficiencies to improve capacity utilization to 90-95% beds

STAFF-TO-BED RATIO & DISCHARGE PERIODS(lower than ideal)

Improved Staff-to-Bed ratio and reduced discharge period

LIMITED MEDICAL SERVICES(only primary and secondary services)

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 and modern equipment & facilities to be installed and operated

Identified Site of the Project

5

Located within the National Kidney and Transplant Institute (NKTI) Compound along East Avenue, Quezon City, Philippines in an approximate area of 8,000 sq. meters

Private proponent shall design, build, finance, operate, manage and transfer the super-specialty tertiary care Orthopedic Hospital providing orthopedic clinical services and allied services

The project is a 700-bed capacity hospital with state of the art infrastructure, modern medical diagnostics and clinical equipment, and IT facilities, which shall be operated and maintained within a period of 25 years, including: clinical services (core) as well as facility maintenance (non-core);

specialty orthopedic care related to joint replacement, degenerative disorders, orthopedics oncology, orthopedic trauma care, pediatric orthopedics, spine care, arthroscopy and sports medicine and injury rehabilitation; and

provision of teaching and training facilities for basic and advanced clinical care and management of specialized and sub-specialized treatments & surgical procedures.

Project Scope

6

7

Features of the New Facility In-house Diagnostic facility Administrative and ancillary services of advanced level that is commensurate with the

specific clinical specialties practiced in tertiary care 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)

Clinical Services Joint Replacements-Hip/Knee Degenerative Disorders Orthopedics Oncology Orthopedic Trauma Care Pediatric Orthopedics Spine Care Arthroscopy Sports Medicine & Injury Mgt.

Hospital 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.

Plan for the New Hospital Facility

700 Beds

60%

Sponsored PatientsCost 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

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.

Fee Sources & Patient Mix

8

Deliver the site & right of way (ROW)

Assist in securing government approvals

Select & appoint Independent Consultant (IC)

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

Special Purpose Company (Concessionaire/Project Proponent)

Department of Health (Awarding Agency)

Undertake the project scope & conditions – 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, 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

Roles/Obligations under BOT Agreement

9

Project Proponent/SPC(Concessionaire)

IndependentConsultant 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

Structure during Construction Phase

1010

11

• undertakes O&M in accordance with MPSS and O&M Manual

• DOH representatives• monitors compliance with

MPSS and O&M Manual

• provides independent third party monitoring on all operational aspectsHospital Operator/

Project ProponentProject Management &

Monitoring Team

Governance Committee• Project Proponent SPC• DOH

IndependentConsultant for

O&M

• constituted with representation from members of Project Proponent & DOH

• resolves disputes

Structure during Operation Phase

11

12

Likely Bid Parameter

12

HIGHEST UPFRONT LUMP SUM AMOUNT PAYABLE BY THE BIDDER TO THE DOH

(“Premium”)

LOWEST LUMP SUM AMOUNT PAYABLE BY DOH TO THE BIDDER

FOR FIRST 5 CONSECUTIVE YEARS OF OPERATIONS(“O&M Subsidy”)

OR

13

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 Case 2016 2020 2024 2028 2032 2036 2038Total 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

Projected No. of Patients Served

13

„First of its kind‟ PPP project DOH to adopt PPPs for developing ‘other’ upcoming medical facilities as well in the Philippines

NEDA* Board-approved project with a project cost of PhP 5.7 Billion

Optimal PPP structuringbalanced risk sharing and competitive returns to private sector proponents

PPP Agreement for 25 yearsscope for long term investment & returns

Award through competitive biddingtransparency and 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 the Cabinet Budget allocation of funds for project to be made part of forthcoming Cabinet Budget in 2013

*NEDA - National Economic & Development Authority

Why Invest?

14

Strong project fundamentals Government backed hospital facility for specialized orthopedic care & allied treatments at a centralized level

READY FOR BUSINESS.

15

Activity TimelineInvitation for Request for Bid proposal 18 November 2012Release of Bid Documents 26 November 2012Bid preparation 26 November 2012 to

25 March 2013Pre-bid conference 25 January 2013Bid Submission Due Date 26 March 2013Bid Evaluation Period April 2013Notice of Award May 2013Signing of BOT Agreement May 2013Independent Consultant Selection December 2013Start of Commercial Operation April 2016End of Cooperation Period & Turnover to DOH October 2038

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 and its 2012 Revised Implementing Rules and Regulations.

Way Forward: Estimated Project Timelines

15

16

MPOC Bid Documents

16

Bid documents shall be available at:

Center of Excellence for Public Private Partnerships in Health (CEP3H)3rd Floor of the Diagnostic Center of the National Kidney and Transplantation InstituteEast Avenue, Quezon City, Philippines

Will be available from 26 November 2012 to 25 February 2013

Payment of non-refundable fee of Two hundred Fifty Thousand Pesos (PhP250,000) shall be made in cash or managers check payable to the Department of Health, or by wire transfer to the following account:

Department of Health COBAC Account # 1432104610Landbank of the Philippines,Tayuman Branch, Sta. Cruz, Manila

* Only entities that have been issued the Bidding Documents shall be allowed to participate in the Bidding Process

17

Bidding Activities

17

Pre-bid Conference:

25 January 2013, 10:00 a.m. Auditorium, 3rd Floor, Diagnostics Center, National Kidney and Transplant Institute Compound, East Avenue, Quezon City, Philippines

Bid submission deadline:

26 March 2013, 2:00 p.m.COBAC, Ground Floor, Building V, Department of Health, San Lazaro Compound, Rizal Avenue, Manila City, Philippines

* Only entities that have been issued the Bidding Documents shall be allowed to participate in the Bidding Process

18

Modernization of the

Philippine Orthopedic Center

THANK YOU!