Integrated public-private health care

Transcription

1 Integrated public-private health care Kempton Cowan Chief Executive Officer Joondalup Health Campus

2 Public Private Partnerships The aim of a PPP is to deliver improved services and better value for money primarily through appropriate risk transfer, encouraging innovation, greater asset utilisation and an integrated whole-of-life management, underpinned by private financing. National PPP Guidelines 2008 Source:

3 UK Experience 229m Norwich University Hospital 1,000 beds 1.1bn Barts and The Royal London 1,036 beds UK Government initiative 2001 First PPP hospital opens 130 Health PPPs delivered since bn Capital investment since 2001 Privately-financed construction Public buy-back of facility over 30 years Clinicians remain NHS employees Facility maintained by private partner

4 UK Lessons Asset utilisation Best decision ever made in this part of the NHS Sir Robert Naylor CEO UCLH UCLH merged four hospitals onto one site Improved services The long-term benefits for patients of PFI are clear Norfolk and Norwich Trust has estimated that it is treating 23,000 more patients each year as a result of moving to new PFI premises. Former UK Labour Minister Mike O Brien Innovation We ve learnt that when risk is shared equitably between all parties involved in construction, you get more innovation. In PFI, the NHS wanted the private consortiums to take all the risks. So new ideas weren t being tried. James Barlow Imperial College London Value for money The debts attached to PFI schemes and the lack of flexibility in repaying them hugely increase the financial pressures on NHS trusts. Dr Mark Porter British Medical Association

5 UK Export Much like football, PPP started out in the UK but is now done better overseas. The Guardian, April 2012 Source:

6 Australian Private Hospitals Asset utilisation Higher labor productivity Improved services Shorter waits for elective surgery Fewer adverse incidents (3.7% v 5.5%) Innovation Reduced length of stay Flexible workforce Value for money Lower cost per separation ($1953 v $2,552 casemix adjusted) Lower capital costs ($230 v $426) Source: Public and Private Hospitals Productivity Commission 2009

7 Ramsay PPP Hospitals Joondalup Health Campus Noosa Hospital Peel Health Campus Mildura Base Hospital

8 1984

9 History 1980 Wanneroo Public Hospital opens 1993 Liberal Government announces PPP 1996 Health Care of Australia contracted Leases assets; funded for activity 2001 Affinity Health Care 2005 Ramsay Health Care year contract extension agreed 2013 $375m redevelopment completed 1984

10 2014

11 Joondalup Health Campus Major hospital for Perth s north Treating public and private patients 519 public/mix beds and bays 145-bed private hospital Managing 1 in 10 WA public patients Key regional employer (2,700 staff) $325m public funding in

12 North Metropolitan Health Service Determines public services Sets annual activity levels Allocates annual operating budget Benchmarks cost per separation Monitors activity, waiting, incidents Audits coding, invoicing, acuity

13 Clinical Services Emergency (adult and paediatric) Intensive care Obstetrics & neonates Paediatric medicine & surgery General medicine General surgery & orthopedics Adult psychiatry Aged care & rehabilitation State bariatric & peritonectomy surgery

14 93,278 emergencies Clinical Services Emergency (adult and paediatric) Intensive care Obstetrics & neonates Paediatric medicine & surgery General medicine General surgery & orthopedics Adult psychiatry Aged care & rehabilitation State bariatric & peritonectomy surgery 66,044 admissions 25,852 procedures 3,191 births

15 PPP Test Joondalup Health Campus Asset utilisation Operating theatres used more effectively Mixed areas/shared costs in ICU, theatres Improved services Fewer return to theatres Fewer readmissions (within 28 days) Fewer falls & pressure injuries <1% emergency patients transferred Shorter elective surgery waits Innovation Privately-funded cath lab Statewide peretonectomy service Flexible workforce = flexible services Responsive to changing needs Value for money Provide sub-tertiary services (NSW 5) Cost no more than general hospital (NSW 4) Private patients not permitted in public beds Financial risk transferred to operator

16 PPP Test Joondalup Redevelopment Asset utilisation Private sector design (works elsewhere) Improved services 12 months ahead of schedule Innovation 90% of construction waste recycled 5,000m2 of additional facilities Value for money Significant savings $6m returned to State Government

17 Political Challenges NSW Qld WA Community protests PPP plans scrapped Trade union campaign

18 Reputation & Relationships

19 Experience Matters State Government Inquiry Ramsay Health Care transfer Best in class - ACHS

20 Community Engagement

21 Threats Weaknesses PPP SWOT Test Delivered on budget and on time Risk shared with private provider Capital and recurrent cost certainty Provider manages workforce and assets Private sector flexibility Higher private sector borrowing rates Significant risk remains with State Ideological opposition to model Perceived lack of accountability No one-size-fits-all model Opportunities Strengths Private capital to fund new projects Competitive tender to reduce costs Long term value for money Incentive to innovate Activity-based funding can lower costs Onerous contracts increase costs Inexperienced operators Poor risk & reputation management Personal relationships built on trust Lack of contract flexibility

22 What lies ahead? Year Separations Bed days 85% Bed Need % Increase ,620,000 15,870,000 51, % ,980,000 17,760,000 57,200 6,000 12% ,350,000 19,600,000 63,200 12,000 23% ,750,000 21,510,000 69,300 18,100 35% Source: Hardes & Associates 2014

23 What lies ahead? $36.2bn Investment within 11 years Year Separations Bed days 85% Bed Need % Increase ,620,000 15,870,000 51, % ,980,000 17,760,000 57,200 6,000 12% ,350,000 19,600,000 63,200 12,000 23% ,750,000 21,510,000 69,300 18,100 35% Source: Hardes & Associates 2014

24 What lies ahead? There is no shortage of private sector capital that could potentially be deployed to finance public infrastructure in Australia...Private capital markets will finance most projects at the right price. Productivity Commission Infrastructure Report 2014

25 What is the big picture? Let the market decide? Green-field hospital PPPs only What are the key drivers? State v Federal responsibilities A more coordinated approach Privatise existing hospitals Genuine choice for patients?

26 Kempton Cowan Chief Executive Officer Joondalup Health Campus Questions?