Innovation Roll Out - PwC
Innovation roll outValencia’s experience with publicprivate integrated partnershipsHealthcare public-private partnerships series, No. 3
The Global Health GroupGlobal Health SciencesUniversity of California, San Francisco550 16th Street, 3rd FloorSan Francisco, CA 94158 USAWebsite: tiny.ucsf.edu/globalhealthgroupPwC300 Madison AvenueNew York, NY 10017 USAWebsite: www.pwc.com/global-healthPwC MexicoMariano Escobedo 573. Col. Rincón del BosqueMéxico, D.F. 11580 MéxicoWebsite: www.pwc.com/mx/sector-saludOrdering informationThis publication is available for electronic download from the Global HealthGroup and PwC websites.Recommended citationSosa Delgado-Pastor, V., Brashers, E., Foong, S., Montagu, D., Feachem, R.(2016). Innovation roll out: Valencia’s experience with public-privateintegrated partnerships. Healthcare public-private partnerships series, No. 3.San Francisco: The Global Health Group, Global Health Sciences, Universityof California, San Francisco and PwC. Produced in the United States ofAmerica. First Edition, December 2016.This is an open-access document distributed under the terms of the CreativeCommons Attribution-Noncommercial License, which permits anynoncommercial use, distribution, and reproduction in any medium, providedthe original authors and source are credited.ImagesCover photos provided courtesy of Ribera Salud, Marina Salud,Hospital de Manises.
Table of contentsAcknowledgements . 4List of figures and tables . 5UCSF/PwC report series on public-private partnerships . 6About the report series . 6About public-private partnerships . 6Methodology .7Audience .7Executive summary . 8Spain – political organization and health system design . 9The La Ribera Hospital – innovative public-private collaboration in Valencia . 9Innovation roll out . 11Highlights of the subsequent PPIP projects . 13Improvements in efficiency . 14Strengths and opportunities . 16Conclusion . 17Introduction . 18Country profile – Spanish health & economic context . 19Spanish National Health System fundamentals . 22Types of public-private collaboration in healthcare . 24Valencia’s PPIP model . 25The Valencia Community . 25Innovation in Valencia . 26Key features of the new model . 32Innovation roll out – replicating the model . 48PPIPs in Madrid . 60Lessons learned . 63Recommendations . 67Conclusion . 70References .71About the authors . 73About the UCSF Global Health Group. 73About PwC . 73
AcknowledgementsThe authors are grateful for the expertise and experience so generously sharedduring the development of this report. While this report was prepared by theUCSF Global Health Group and PwC, information and insights contained in thereport were provided by the following individuals and organizations:4 Dr. Carlos Alberto Arenas Dr. Alfonso Bataller Vicent Dr. Antonio Burgueño Carbonell Dr. Luis Fidel Campoy Domene Dr. Sergio García Vicente Sr. Eloy Jiménez Cantos Dénia Health Department Elche-Crevillent (Vinalopó) Health Department International Financial Corporation/The World Bank Group La Ribera Health Department Madrid Health Service Manises Health Department PwC Spain Ribera Salud Spanish Society for Health Directors Torrevieja Health Department Valencia Health AgencyInnovation roll out: Valencia’s experience with public-private integrated partnerships
List of figures and tablesFiguresFigure 1: Map of Valencia Community health departments, including the five managed as PPIPs . 8Figure 2: La Ribera PPIP design and configuration, following the 2002-03 re-tender process . 10Figure 3: Timeline of the Valencia PPIP rollout . 12Figure 4: Comparison of health expenditures per person in PPIP vs. publicly-managed health departments . 15Figure 5: Demographic distribution in Spain, 2010-2050 . 19Figure 6: Changes in GDP and health spending in Spain since 2003 . 21Figure 7: Organizational design of Spain’s National Health System . 23Figure 8: Map of the 17 autonomous communities of Spain . 25Figure 9: (reprised): Map of Valencia Community health departments, including the five managed as PPIPs . 26Figure 10: La Ribera PPIP design and configuration, 1997 vs. 2003 . 29Figure 11: Collaboration mechanism within the new model . 32Figure 12: Valencia Community population and expenditure on healthcare – PPIP vs. publicly-managedhealth departments .37Figure 13: Comparison of average per capita fees – PPIP vs. publicly-managed health departments, 2006-2011 . 38Figure 14: La Ribera Health Department – overview of healthcare activity. 43Figure 15: PPIP health departments – capitated payment analysis . 44Figure 16: Outpatient pharmacy spending in Valencia . 45Figure 17: La Ribera Health Department human resources. 46Figure 18: (reprised): Valencia PPIP model roll out. 48Figure 19: PPIP Health Department 22, Torrevieja – location, design and configuration . 49Figure 20: PPIP Health Department 13, Dénia – location, design and configuration . 51Figure 21: PPIP Health Department 23, L’Horta Manises – location, design and configuration . 54Figure 22: PPIP Health Department 24, Elche-Crevillent – location, design and configuration . 56Figure 23: Vinalopó Hospital – performance appraisal model . 58Figure 24: Madrid PPIP model timeline . 61TablesTable 1: Key features of the Valencia PPIPs . 14Table 2: Valencia PPIP strengths and opportunities . 16Table 3: Spain summary statistics, 2015 (most recent available unless otherwise noted) . 20Table 4: Most common forms of healthcare public-private collaboration in Spain . 24Table 5: La Ribera Hospital and La Ribera Health Department PPIP concessions – comparison of RFP terms . 31Table 6: Summary of contracted risk and responsibility. 33Table 7: Key players and roles under the PPIP model . 35Table 8: Committed and actual investments by PPIP health department . 40Table 9: Sample Valencia Community healthcare performance indicators . 42Table 10: Valencia Community PPIP hospital performance . 42Table 11: Snapshot of the PPIP health department roll out . 48Healthcare public-private partnerships series, No. 35
UCSF/PwC report series on public-privatepartnershipsAbout the report seriesThis report on public-privateintegrated partnerships (PPIPs) inValencia, Spain is the third in aseries of publications on publicprivate partnerships (PPPs) jointlyauthored by the UCSF GlobalHealth Group and PwC.This series aims to document andraise awareness of innovative PPPmodels in health globally, and todisseminate lessons learned toinform current and futurehealthcare partnerships.“Innovation roll out” explores theexperience of the ValenciaCommunity of Spain, as itdeveloped and expanded the PPIPmodel to address the health needsof its population in five healthdepartments between 1997 and2013. The report discusses thesuccesses and challengesencountered, and examines therange of innovations in patientcare, management practices,performance management and useof technology put in place toachieve financial efficiencies andimproved access to integratedhealth care for target populations.Finally, the report explores severalopportunities for both the publicand private sectors, to optimize thesuccess and sustainability of themodel in the future.6About public-privatepartnershipsPPPs are a form of long-termcontract between a government anda private entity through which thegovernment and private partyjointly invest in the provision ofpublic services. PPPs aredistinguished from othergovernment private contracts by:the long-term nature of the contract(typically 15 years); the sharednature of the investment or assetcontribution; and the transfer ofrisk from the public to theprivate sector.Under a PPP arrangement, theprivate sector takes on significantfinancial, technical and operationalrisks and is held accountable fordefined outcomes. PPPs providegovernments with alternativemethods of financing,infrastructure development andservice delivery. By making capitalinvestment more attractive to theprivate sector, PPPs can reduce therisk for private investment in newmarkets and ease barriers to entry.In the past three decades,governments from low-to highincome countries have increasinglysought long-term partnerships withthe private sector to deliver servicesin sectors such as transportation,infrastructure and energy.Healthcare partnerships haveemerged more cautiously, but haverapidly expanded since the early2000s. The emerging partnershipshave tackled a range of healthcaresystem needs—from construction offacilities, to provision of medicalequipment or supplies, to deliveryof healthcare services.Most PPPs operate under a “DBOT”model (design, build, operate,transfer), under which the privatepartner is responsible formaintaining the infrastructurethroughout the life of the contract.The private partner then transfersthis responsibility back to thegovernment upon expiration of thecontract. The private partner isresponsible for operating thehospital, including services such aslaundry and cafeteria. Thegovernment retains responsibilityfor the delivery of healthcareservice throughout. The mostcommon form of PPPs in health hasbeen the private finance initiative(PFI) model used to build manyhospitals in the United Kingdom.1Innovation roll out: Valencia’s experience with public-private integrated partnerships
Since the early 200s, an increasingnumber of governments have beenexploring more ambitious modelssuch as public-private integratedpartnerships (PPIPs), under whichthe private partner is additionallyresponsible for delivering allclinical services at one or morehealth facilities, often including anacute care hospital, as well as oneor more primary care facilities. Theprivate partner designs, builds andoperates the facilities, and deliversclinical care, including recruitmentand staffing of healthcareprofessionals.1, 2 This model iscommonly called the “DBOD”(design, build, operate, deliver)model.MethodologyAudienceStudy researchers conductedqualitative interviews in Spain—mostly in the Valencia region—during September and October2013. Interviewees included: theGovernment of Valencia (primarilythe Valencia Health Agency); keyactors in the five PPIP healthdepartments; employees fromRibera Salud; the Madrid HealthAgency and several insurancecompanies involved in PPPs;members of the Society of SpanishHealth Directors; representatives ofThe World Bank Group/International Finance Corporation;external advisors to the projectsand other key individuals withrelevant history and experiencewith the Valencia PPIP projects.The authors also reviewed grey andpeer-reviewed literature on PPPsand PPIPs to inform the study.The primary audiences for thisreport are the governments of lowand middle-income countries(LMICs), including policymakers inministries of health and finance,who wish to consider PPPs andPPIPs as models for health systemstrengthening, as well as the widerange of private sector actors whoseek to engage with government.Lessons and findings may also behelpful to others studying how bestto leverage the private sector tostrengthen health systems,including donor agencies, nongovernmental organizations,academic institutions and privatehealth entities.Healthcare public-private partnerships series, No. 37
Executive summaryIn the late 1990s, the ValenciaCommunity (an administrativeregion) in Spain embarked on anew model for managing itshospitals, engaging with the privatesector to expand capacity andimprove quality and costeffectiveness. Since then, the regionhas continued to lead and innovatein the public-private partnership(PPP) arena—renegotiating itsoriginal project tender to addresslessons learned and adapting theoriginal business model to addressevolving population, healthcareaccess and management needs inother facilities.The rich history of the La RiberaHospital has been well documentedover the last 15 years; the history ofthe subsequent PPIP projects inValencia are less well known. Theauthors hope that the informationincluded in this report will providea useful reference for governments,private actors and other policymakers who are considering PPPsas a potential mechanism forimproving or expanding healthcareservices in their local, regional ornational contexts.Figure 1: Map of Valencia Community health departments, including the five managed as PPIPsSource: Generalitat Valenciana, Consellaria de Sanidad: Data Warehouse SIP, Sistema de Information Poblacional, November 2015: SIPInforme Mensual. blacion-atendida-e-informes-anuales, viewed on April 19, 20168Innovation roll out: Valencia’s experience with public-private integrated partnerships
Spain – politicalorganization and healthsystem designSpain is a constitutional monarchy,with a hereditary monarch and aparliament of two houses—theCortes. Its 50 provinces areorganized administratively into 17autonomous (self-managed)communities and two autonomouscities, each with its own electedauthorities. Following majorreforms in the 1980s, the SpanishNational Health System wasdecentralized, with eachcommunity’s Ministry of Healthtaking on responsibility forhealthcare delivery for itspopulation. Each Ministry of Healthis responsible for selecting andemploying its preferred deliverymodel(s); the central governmentsets overarching policy and providesinter-regional coordination.In the Valencia Community, locatedon the east coast of Spain, healthservices are organized under 24distinct “health departments,”which were established in 1982(see Figure 1). Each healthdepartment is responsible forproviding comprehensive healthcareservices, including inpatient,primary and specialty care, for up to250,000 residents. The healthdepartment also provides healthpromotion, disease prevention andsocial-health support.3 In 2003, theValencia Health Agencyimplemented a further reform,known as the “one-head” model,under which managementof primary and specialty care forboth outpatient and inpatient care—traditionally structured underdifferent functional divisions withinthe health department—wasconsolidated under the manager ofeach health department.The La Ribera Hospital –innovative public-privatecollaboration in ValenciaIn 1986, following severe flooding ofthe Jucar River that left a largeportion of the local populationwithout access to healthcare, theValencia Community Ministry ofHealth decided to build a newregional hospital in the city of Alzira.Under the innovative leadership ofthe Health Minister and the leaderof Adeslas, a leading Spanish healthinsurer, the Community embarkedon a new vision, of opening the newhospital through a public-privatepartnership. This new vision wentbeyond the typical model ofengaging the private sector to simplyfinance and construct a newhospital, and instead contracted theprivate partner to also manage anddeliver clinical services in the newhospital.1,2 Today this model is oftenreferred to as a public-privateintegrated partnership, or PPIP. Thegoal of this new approach was toleverage private sector expertise inhospital management and systems,and use carefully designed paymentincentives and performancemanagement clauses in thecontract to achieve improvementsin efficiency, quality and accessto care.1Construction of the new La RiberaHospital (also referred to as theAlzira Hospital) was tendered in1997. A private consortium led byAdeslas and financing partnerRibera Salud was contracted todesign, finance, build, operate andmaintain the hospital, and to deliverspecialized clinical care to an initialpopulation of 230,000 residents.4The La Ribera Hospital opened in1999, with an original contract termof 10 years and financing based on aper capita payment of 204 euros.Although a much more conservativearrangement than the privateconsortium had expected, it was themaximum that the governmentwould approve at the time.After three years of operation, theparties agreed to adjust the contractto address several criticalsustainability issues. Key designchanges included incorporatingprimary care services from otherparts of the health department intothe PPIP to help manage patientdemand and referrals, and makingimprovements in infrastructuremanagement. The changes alsoresulted in an increase in the percapita fee to better finance theexpanded operations, and anextension of the contract period to15 years (with an option to extendto 20 years).The project was re-tendered in 2002with these updates; the AdeslasRibera Salud consortium was againawarded the contract.Healthcare public-private partnerships series, No. 39
Figure 2: La Ribera PPIP design and configuration, following the 2002-03 re-tender processSource: La Ribera Department of Health. Activity Report (2012)† In 2014 Centene Corporation acquired Bancaja’s 50% share in Ribera SaludIn 2015 Ribera Salud acquired Adeslas’ 51% stake in UTE-Ribera II. The new shareholders of UTE-Ribera II are Ribera Salud (96%),Dragados (2%) and Lubasa (2%).10Innovation roll out: Valencia’s experience with public-private integrated partnerships
Money follows the patientThe Valencia PPIP model approach is based on the principle that “money follows the patient.” The privateprovider is paid an annual fee based on the size and anticipated health conditions of the population to beserved; patients are then allowed to choose where they seek medical care.The goal of the PPIP model is to achieve the same or better healthcare for 80% of the cost. Thus, if a patientlives in a health department that is run as a PPIP, but chooses to seek care at another public hospital or facility,the PPIP health department must pay the government facility 100% of the cost of the patient’s treatment.However, if a patient lives in a publicly-managed health department and seeks care at a PPIP facility, thegovernment reimburses the PPIP facility for the patient’s care, but only at 80% of the cost. This approach wasdeveloped to incentivize PPIP facilities to provide high quality services to attract and retain patients.To foster patient engagement, each of the Valencia PPIPs implemented significant community outreachcampaigns to encourage the use of PPIP hospitals, and educate patients about the services offered.Innovation roll outBuilding on the initial success ofthe La Ribera project, the ValenciaMinistry of Health decided toreplicate and innovate on themodel, to address facility andservice delivery needs in otherhealth departments.Between 2002 and 2006 theMinistry issued four additionalPPIP tenders, each geared toward aparticular regional challenge orcircumstance (see Figure 3 andTable 1). Three of the tenders werefor new hospitals; one involved thereplacement of an aging districthospital. In each case, the 2003 LaRibera Hospital contract wasadopted as a blueprint, withadjustments made for the differentpatient care needs of each healthdepartment’s population.This period was marked bywidespread European economicstability, which allowed theValencia government to issue newtenders with confidence, anddouble the population covered byPPIP healthcare services to 18% ofthe Valencia Community.5By laying out an expansive andlonger-term vision forimplementing PPIPs across a seriesof projects, the Ministry was able topromote greater private sectorengagement and increasecompetition for the subsequenttenders.Broader implementation of thePPIP model also required thegovernment to develop additionalmanagement skills and capacityto supervise and implementthe contracts.Despite its initial popularity,however, many public entitieswithin Valencia did not supportfurther expansion of the PPIPmanagement model. Frequentchanges in government leadership,followed by the economic crisis in2008, ultimately halted newfunding for PPIPs after 2006.6In the 2015 Regional Elections,Spain’s Popular Party (PartidoPopular) lost its absolutemajority in Valencia after 20years. As this report went toprint, the new regional coalitiongovernment announced that itwill not extend the La RiberaHealth Department PPIPcontract when it ends in 2018.It remains to be seen whetherthe government will choose tobring the Health Departmentback under public management,or whether it will pursue a newcontract with Ribera Salud orother private parties.Healthcare public-private partnerships series, No. 311
Figure 3: Timeline of the Valencia PPIP rolloutSource: UCSF/PwC Fellowship analysis12Innovation roll out: Valencia’s experience with public-private integrated partnerships
Highlights of thesubsequent PPIP projects Torrevieja is Valencia’sprimary tourist destination,with a population that almosttriples during the summer. Tomeet this peak demand, theValencia Ministry of Healthissued the Torrevieja Hospitaltender in 2002. Althoughinitially successful, the projectsuffered from changes to itscovered population: in 2007,the Valencia governmentdecided that only residents ofthe Torrevieja HealthDepartment could be countedtoward capitated payments;services rendered for nonresidents had to be reimbursedunder the “money follows thepatient” model where the homemunicipality of the visitorwould reimburse the cost ofservices to the TorreviejaHealth Department.Dénia. Flanked by Valenciaand Alicante, the two largestcities in the ValenciaCommunity, the Dénia HealthDepartment was supported by asmall district hospital,insufficient for its growingpopulation and fluctuatingtourist population. Residentswith specialized treatmentneeds were regularly referredto hospitals in the largernearby cities.To address this gap, theValencia Ministry of Healthinitiated a tender in 2004 toexpand and convert the existinggovernment district hospitalinto a PPIP hospital. Achallenge in Dénia was thetransition of existing hospitalstaff to the new PPIP.Following extendednegotiations, a solution wasagreed to allow existing staff toretain their government status,while all new staff were hiredby the private consortium.Through close negotiations andperseverance, this approachlargely succeeded. The PPIPalso included a significantinvestment in informationtechnology (IT) infrastructureand systems to helpcoordinate care. Manises is a suburb ofValencia that experienced highpopulation growth in the early2000’s, with further projectionsof future growth. The region’ssuburban population alsosuffered a high rate of complexchronic conditions and hadbecome accustomed to seekingtreatment at the well-known LaFe Hospital 10 miles away.The Manises PPIP Hospital wastendered in 2006 to addressthese challenges.personnel recruitment strategy.New talent managementapproaches were employed,including the sharing of staffand schedules across thethree facilities. Vinalopó. Although theElche-Crevillent HealthDepartment already had ageneral hospital, populationgrowth demanded additionalservices. The Vinalopó PPIPHospital opened in 2010, a fewblocks from the existing publichospital. The close proximity ofthe two facilities opened upcare choices for patients andmotivated healthcareimprovements throughcompetition.By the time of the ElcheCrevillent/Vinalopó Hospitaltender, private sectorengagement had beensufficiently stimulated that theproject received multiplebidders. Key features of eachPPIP are listed in Table 1.In addition to building a newhospital, the scope of theManises PPIP contract wasexpanded over time, to includebuilding of a second generalhospital, a chronic diseasehospital and a hospitalspecialty center with 21 medicalspecialties. This expansionrequired an aggressiveHealthcare public-private partnerships series, No. 313
Table 1: Key features of the Valencia PPIPsPPIP healthdepartmentLa ent(Vinalopó)Private partners*Adeslas/(operating/financing) Ribera SaludAsisa/DKV/Sanitas/Ribera Salud/Ribera SaludRibera SaludRibera SaludAsisaYear tendered1997/20022002200420062006Year opened1999/20032006200920092010DriverFloods cutting offSummer populationpopulations from care influxNeed to expa
been the private finance initiative (PFI) model used to build many hospitals in 1the United Kingdom. Healthcare public-private partnerships series, . Valencia's experience with public-private integrated partnerships. Healthcare public-private partnerships series, No. 3 Innovation roll out . Healthcare public-private partnerships series, .
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