Following the recent financial close of the Bilkent Integrated Healthcare Campus in Ankara – Turkey’s third and largest-ever healthcare public-private partnership (PPP) – it seems a good moment to take stock of the role PPPs are playing in today’s healthcare systems. As such, I would like to share some thoughts on this topic, based on Siemens Financial Services’ experience as a long-term partner and investor in global healthcare projects.
Controlling costs and ensuring quality
Following the recent financial close of the Bilkent Integrated Healthcare Campus in Ankara – Turkey’s third and largest-ever healthcare public-private partnership (PPP) – it seems a good moment to take stock of the role PPPs are playing in today’s healthcare systems. As such, I would like to share some thoughts on this topic, based on Siemens Financial Services’ experience as a long-term partner and investor in global healthcare projects.
Controlling costs and ensuring quality
Shifting demographic factors, such as population growth and ageing, urbanization, and high levels of chronic disease, are putting the world’s healthcare systems under severe strain. As such, ensuring the development of adequate resources and access to healthcare services has become an increasingly costly priority for those responsible. With public hospitals accounting for the largest share of global healthcare spending, governments across the world are increasingly turning to PPPs as the primary mechanism for delivering healthcare services to meet this growing demand.
PPPs are a tried-and-tested solution enabling costs to be controlled and services to be delivered efficiently by aligning project-stakeholder interests through delivery-based performance payments. Importantly, PPPs provide a flexible risk-sharing model that can be applied to a wide range of healthcare situations: from hospital construction to clinical care and support and management services. As such, PPPs provide a customizable solution that can meet individual project and different country or municipal healthcare-system requirements. Governments, project partners and financiers now have a large toolkit of best-practice models at their disposal to use as benchmarks for new projects, fine-tuning risk-sharing models to tailor individual solutions to specific projects.
Rolling out public-private partnerships globally
The potential to increase healthcare capacity and quality efficiently means that some countries have developed long-term healthcare PPP investment programs, building the necessary procurement expertise and providing private-sector partners with a transparent pipeline of investable opportunities. Australia, for example, has had notable success in this regard, with a number of major hospital projects being financed through PPPs, such as Sunshine Coast University in Queensland and, more recently, Bendigo in Victoria – both projects in which we act as a supporting consortium partner and equity investor.
This success has led other countries, including those in emerging markets, to follow suit. In Turkey, for instance, two major hospital projects – the Adana Integrated Healthcare Campus and the Bilkent Integrated Healthcare Campus in Ankara – have recently been procured using the PPP model as part of the government’s progressive Health Transformation Program. We helped finance both projects through debt contributions respectively. Using the PPP model, we have also helped finance a new cancer treatment centre in Poland. Certainly, successful projects like these indicate the growing confidence in PPPs as a mechanism for delivering projects in today’s global healthcare markets.