NKTI's Presentation To ADB On Hemodialysis Project (Public-Private Partnership)

National Kidney and Transplant Institute
A Model for Health of the Public-Private Partnership

January 2013
Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank( ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use. Terminology used may not necessarily be consistent with ADB official terms.
NKTI Overview Rationale for the Public-Private Partnership of the Hemodialysis Center Project Operational Concerns Financial concerns Dialysis Center financial performance Effect on the overall financial performance of NKTI Renewal of the project after 5 years
Tertiary medical specialty center for renal diseases Government owned and controlled corporation Three-fold mission: Service, Training and Research 1st Government Hospital to be ISO 9001:2000 certified The lead government agency in renal care
NKTI HEMODIALYSIS SERVICES

NUMBER OF HD MACHINES NUMBER OF DIALYSIS SHIFTS PER DAY (each machines is used for 4 hours)
MODE OF PROCUREMENT
1983 1998 2000
5 16 20
1 2-3 3
Negotiated purchase Bid/purchase Bid/purchase
OPERATIONAL CONCERNS Hemodialysis slots were immediately filled
1-2 patients per day were turned down for treatment
Emergency cases were not accommodated immediately due to a lack of available HD machines
OPERATIONAL CONCERNS
Increasing patients dissatisfaction because they are displaced from their regular HD schedules by patients requiring emergency dialysis/treatment delay due to water treatment breakdown and morbidity due to water treatment contamination Delayed technology upgrades on equipment and services because of insufficient fund availability
OPERATIONAL CONCERNS
Long machine down time due to

Frequency of repairs for old HD machines HD machine replacements delayed due to either lack of funds for capital expenditures or lack of available spare parts Bureaucracy in processing repair work
Frequent breakdown of an old water treatment facility Occassional contamination of water treatment facility
Led To A Decline In Patient Services
Problems with storing a large (3-month) inventory of HD supplies:

storage facility, ordering time and forecasting
FINANCIAL CONCERNS
Major concern: Rising cost of repairs and maintenance of HD equipments/water treatment facility
Frequency of downtime in machine operations including corresponding lost of revenue resulted in high cost of repairs
Reduced revenue: High repair costs and reduced number of HD sessions due to down time
FINANCIAL CONCERNS
Expected
increase in capital expenditures
Limitations in funds to accommodate technology upgrades
Insufficient storage space for old, poorly functional HD machines
Difficult disposal proceedings for junked machines
FINANCIAL CONCERNS
Inventory Management problems

1. 2. 3. 4.
Cost of money Inventory losses Poor inventory monitoring & control system Insufficient storage area (3-month inventory)
OTHERS Very poor customer satisfaction survey results
What is the appropriate style Click to edit title procurement process that is affordable by a government controlled corporation
to upgrade the NKTIs HD facilities into a World-class HD Center
SOLUTION: Text in
here
Public Private Partnership (PPP) application to the healthcare industry
Mandate: Secure permission from Department of Health / Board of Trustees Legal: Seek the advice and clearance from government corporate counsel Request for assistance and guidance of the BOT office of the Dept of Trade & Industry
2 3
CONCEPT
A COOPERATIVE COLLABORATION BETWEEN
a governmentowned corporation AND
Private corporation
NKTI
Provide the space, staff and utilities requirements
PROVIDER
Supply all HD equipment including state of the art water treatment and dialyzer reprocessing machines Provide maintenance / service technicians at all times Ensure availability of HD supplies at all times
Maintain quality performance in accordance with international standards

Ensure compliance with government regulatory policies Prompt payment to provider
Provide regular training of staff Maintain and upgrade technology
CHALLENGE
Formulate TERMS OF REFERENCE (TOR) to include all the excellent features of HD machines without excluding any of the major players
BIDDING INITIATED AND COMPLETED

1. Technical Working Group (TWG) was created with members from NKTI, BOT Center, OGCC and a representative from Commission on Audit was invited to observe. 2. TWG formulated the TERMS OF REFERENCE that included detailed features of the HD machines, water treatment, dialyzers as well as other furniture, fixtures needed to start the operations of the HD center. Two separate HD Centers were required for In-patient and Out-patient HD services.
3.
Hospital Bids & Awards Committee conducted the bidding with 3 Principal Bidders: Fresenius Medical Care B. Braun Phils Gambro TWG performed the post-bidding evaluation Contract awarded to the bidder that submitted the most responsive bid proposal: FRESENIUS MEDICAL CARE
4. 5.
PATIENT MARKETING NURSING SERVICES DIALYSIS UNIT DIRECTOR/ NEPHROLOGISTS/ DIETICIANS ADMINISTRATIVE SERVICES (ACCOUNTING, HR) UTILITIES (WATER AND ELECTRICITY) INTERIOR DESIGN, AIRCONDITIONING, CABLE TV BUILDING MAINTENACE / JANITORIAL / SECURITY SERVICES CENTER INFRASTRUCTURE
EMERGENCY CART AND OTHERS EDUCATIONAL UPDATES
DIALYSIS CHAIR AND CENTER FURNITURE
TECHNICAL SERVICES DIALYZER, TUBINGS, FISTULA NEEDLES, DRESSING KITS REPROCESSING MACHINES AND MAINTENACE WATER TREATMENT SYSTEM AND INSTALLATION HEMODIALYSIS MACHINES AND MAINTENACE
PROJECT TIMELINE
Conceptualization to Award of Contract
TOR Preparation 4 months
Bidding Activities 1 month
Post Evaluation 1 month
Awarding of Contract 1 month
Cooperation Period 5 years
Diagram
IMPLEMENTATION OF THE HEMODIALYSIS CENTER PPP-PROJECT
THE FIRST IN HEALTH
OUTCOME : The NKTI offers a state of the art HD Center with the highest standards at a reasonable cost
Patient satisfaction guaranteed Continuous training of government personnel Minimal funding released by NKTI Competitive HD rates
1983
1998
2000
2003
# OF HD MACHINES # OF DIALYSIS SHIFTS PER DAY * MODE OF PROCUREMENT
16
20
40
1
BID/ PURCHASE
2-3
BID/ PURCHASE
3
BID/ PURCHASE
4
BID / LEASE FEE PER TREATMENT
* EACH SHIFT LASTS 4 HOURS
CHALLENGES First three ( 3 ) months

Filling up the slots
STRATEGIES IMPLEMENTED
Maintained competitive HD rates
Liberalized the acceptance of service (subsidized) patients Intensified nurses training program Improved the rotation of nursing staff
First two ( 2 ) years

High nurse turn over Training of personnel to keep pace with the demand
FINANCIAL IMPACT OF THE HEMODIALYSIS CENTER PPP-PROJECT
Increased revenue contribution directly from the operations of the HD Centers. Increased revenue from the other ancillary services units: laboratory, radiology, nuclear medicine, physical rehab, etc.
50000
40000 2005: Start of 4th shift 2003: Start of partnership with Fresenius 2007: Resistance to the 4th shift 2010: PCSO issues
30000
20000
10000
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Hemodialysis Center: Revenue against Lease Charges

160000 140000 120000 100000 80000 60000 40000 20000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011
2010: New contract, lower rate
Lease fee/ treatment to Provider: 2003: $41 2010: $38
Hospital Rate/treatment: 2003: $58 2010: $63
CONTRIBUTION OF THE HD CENTER REVENUE TO THE OVER-ALL FINANCIAL PERFORMANCE OF NKTI
2,000 1,500 1,000 500 0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Revenue
Subsidy
QFS
2002
NUMBER OF HD TREATMENTS GROSS INCOME NET INCOME 15,185 USD $ 997,202 USD $ 293,738
2009
41,701 USD $ 3,101,402 USD $ 358,038
22% increase in net income

PHP 43: USD 1.00
2010
GROSS INCOME USD $ 2.96 Million
2011
USD $ 3.34 Million
NET INCOME
USD $ 374,976.00
USD $ 516,095.00
38% increase in net income

PHP 43: USD 1.00
DUE TO THE SUCCESS OF THE 1ST PPP PROJECT, AT THE END OF THE CONTRACT ANOTHER BIDDING WAS UNDERTAKEN FOR A 2ND CONTRACT
Click to edit title style
Most advanced HD machine
Capable of HEMODIAFILTRATION with on-line fluid substitution
TECHNICAL ISSUES
More advanced type of dialysis Uses BOTH convection and diffusion to remove large molecular weight poisons from the blood

Enhanced computerized database system of HD treatments. Provision of a single-needle HD machine, and HD machine that does continuous dialysis (24 hrs).
TECHNICAL ISSUES
Portable water treatment (reverse osmosis) machines to provide additional HD treatments, anywhere in the hospital, during calamities when there are epidemics requiring emergency HD.
Transfer of expenses related to laundry and garbage disposal (sharps, tubings, dialyzers) to the winning proponent. The lease-fee-per-treatment that is the basis of payment to the winning proponent, is ADJUSTABLE, in case of fluctuations in the US dollar to peso exchange rate, reflecting an improved peso value.
OPERATIONS
2003
2010
2003 CONTRACT
TOR PREPARATION BIDDING ACTIVITIES
2010 CONTRACT
2 months
1 month 1 month 1 month
4 months
1 month 1 month 1 month
POSTEVALUATION
AWARDING OF CONTRACT
Cooperation Period 5 years
3 proponents participated in the bidding
3 proponents participated in the bidding
The bid of Fresenius Medical Care emerged as the most responsive bid
2nd contract became effective in March 2010
SUMMARY
After 2.5 years of the 2nd contract, the HD Centers continue to increase its revenue
The highest quality and most advanced typed of HD therapy is provided for all Filipinos, especially the underprivileged, at one third the cost of delivery of the same treatment in other hospitals
SUMMARY
The success of the HD Project has paved the way for PPP for another NKTI project
Radiology-Oncology Center

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National Kidney and Transplant Institute

A Model for Health of the Public-Private Partnership

NKTI HEMODIALYSIS SERVICES

1983 1998 2000

Negotiated purchase Bid/purchase Bid/purchase

OPERATIONAL CONCERNS Hemodialysis slots were immediately filled

1-2 patients per day were turned down for treatment

Long machine down time due to

Led To A Decline In Patient Services

Problems with storing a large (3-month) inventory of HD supplies:

increase in capital expenditures

Limitations in funds to accommodate technology upgrades

Insufficient storage space for old, poorly functional HD machines

Difficult disposal proceedings for junked machines

Inventory Management problems

OTHERS Very poor customer satisfaction survey results

to upgrade the NKTIs HD facilities into a World-class HD Center

Public Private Partnership (PPP) application to the healthcare industry

Maintain quality performance in accordance with international standards

Provide regular training of staff Maintain and upgrade technology

BIDDING INITIATED AND COMPLETED

EMERGENCY CART AND OTHERS EDUCATIONAL UPDATES

DIALYSIS CHAIR AND CENTER FURNITURE

TOR Preparation 4 months

Bidding Activities 1 month

Post Evaluation 1 month

Awarding of Contract 1 month

Cooperation Period 5 years

THE FIRST IN HEALTH

# OF HD MACHINES # OF DIALYSIS SHIFTS PER DAY * MODE OF PROCUREMENT

* EACH SHIFT LASTS 4 HOURS

CHALLENGES First three ( 3 ) months

First two ( 2 ) years

FINANCIAL IMPACT OF THE HEMODIALYSIS CENTER PPP-PROJECT

Hemodialysis Center: Revenue against Lease Charges

Lease fee/ treatment to Provider: 2003: $41 2010: $38

Hospital Rate/treatment: 2003: $58 2010: $63

CONTRIBUTION OF THE HD CENTER REVENUE TO THE OVER-ALL FINANCIAL PERFORMANCE OF NKTI

2,000 1,500 1,000 500 0

22% increase in net income

38% increase in net income

Click to edit title style

Most advanced HD machine

Capable of HEMODIAFILTRATION with on-line fluid substitution

Click to edit title style

Click to edit title style

Cooperation Period 5 years

3 proponents participated in the bidding

3 proponents participated in the bidding

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