What is the meaning of hospital ppp model
How to implement the public hospital PPP project is currently plagued by investors and local governments. Do you understand the hospital PPP model? If you don't know, please follow me to read below!
For the local government, most of the public hospitals have a bad medical environment, medical equipment is obsolete, hospitals with drugs to support the serious problem of medical care, medical income is not enough to make ends meet, etc., there is an urgent need to relocate, equipment upgrades, improve the management of the local health care service level, so there is a very strong desire to participate in the social capital of the public hospital services.
For social capital, hospitals and medical services are monopoly resources. With the aggravation of the aging society, health issues will become more and more a matter of social concern, while the increase in income and quality of life, more people are willing and able to spend more money on their health. Due to the public nature of public hospitals, tax incentives, and good branding, social capital is optimistic about the development prospects of hospitals, especially public hospitals, and is also very keen to participate in the investment and operation of public hospitals.
The PPP model, as a public-private partnership model encouraged and strongly advocated by the government, seems to have opened the door for the government and social capital to cooperate in running a hospital. Public hospitals, as a social welfare, belong to the public **** affairs that the government side of the PPP project can be taken out to cooperate, the core of the PPP model is not to change the public **** affairs of the public welfare, but through the participation of social capital to enhance the efficiency of the public **** affairs. Therefore, in terms of the principle of PPP, it is perfectly suitable for the real needs of government and social capital cooperation in hospital projects as described above.
Representative Model
Social capital participation in the operation of public hospitals is not new, there is a demand, there are interests, there will be people involved. Over the past decade, social capital investment in public hospitals around the world has given birth to a variety of forms, broadly speaking, there is a shareholding system transformation, hosting (public-private) and so on.
Shareholding
Typical cases of shareholding transformation are the Tongzhou District People's Hospital in Nantong, Jiangsu Province, which was implemented in 2004. At that time, the Tongzhou Municipal Party Committee and the municipal government of the people's hospital to implement shareholding reform, through public auction, the introduction of Jiangsu Dafuhao Brewery Company Limited as the hospital's major shareholders, as well as shares held by state-owned capital and employees, respectively, accounted for 30% and 25%. 10 years, the hospital's floor area from 40,000 square meters to more than 100,000 square meters, beds from less than 400 increased to more than 1,600. The value-added of the state-owned assets of the holding amounted to 132%.
Nonetheless, questions about this restructuring have never ceased. Some people believe that ? People's Hospital? top? The people? The signboard but belongs to the private sector, can not guarantee the fairness. The conflict between the shareholding system and the public hospital's identity as a public good seems to be an irreconcilable contradiction between social capital investment in public hospitals.
As the shareholding system changes the nature of public hospitals, it seems that the hospitals after the shareholding system can not be accommodated in the new public hospital development plan. 2009 the new health care reform program was promulgated, which requires the government in each county (city) to establish a public hospital in each county (city), and to establish a public hospital in each county (city). Government in each county (city) focus on 1-2 county hospitals (including hospitals)?
The case of Tongzhou People's Hospital in Jiangsu Province represents an attempt a decade ago. Since then, the market-oriented restructuring has been questioned or even denied, and the new healthcare reform emphasizes government investment, so social capital has been silent for a while.
Since 2013, the restructuring of public hospitals has ushered in a new capital boom after national policies explicitly encouraged the participation of social capital in the healthcare industry. One of the latest samples to be finalized is the shareholding reform of public hospitals in Shanwei, Guangdong Province, in cooperation with CITIC Healthcare. The way of cooperation, by Shanwei City Government and CITIC Medical **** with the formation of a joint venture company, the company's capital to the three hospitals of the net assets assessment for the price, and then by the CITIC Medical in accordance with the 60% shareholding ratio of the cash investment, the position of the controlling party. The three hospitals' non-profit and institutional attributes remain unchanged.
Hosting
Hosting of public hospitals is also a common mode of social capital participation in hospital management. There are various forms of hosting, including hosting assets, hosting management, and hosting operations. The more thorough is the whole hospital hosting, the more popular is the establishment of a hospital management group hosting a number of hospitals, both public and private hospitals can be hosted.
October 24, 2013, the China Hospital Association, private hospital management branch, long policy think tank, Social Science Literature Publishing House jointly launched in Beijing, "Private Hospital Blue Book: China's private hospital development report (2013)" (hereinafter referred to as the "Blue Book") that public hospitals hosted by the social capital (state-owned private) is the reform of China's public hospitals, an effective way, which has an important role for the reform of state-owned small and medium-sized hospitals, the public hospitals are not only to promote the development of the hospitals, but also to improve the hospitals. State-owned small and medium-sized hospital reform is of great practical significance.
The biggest feature of the public hospital trusteeship model is that it does not involve the transfer of ownership of public hospitals, i.e., the investor does not acquire the property rights of the hospital, and only acquires the hospital management fees and supply chain management profits by entrusting the operation.
The social capital representative of the hosting mode is Phoenix Medical Group, whose IOT (Invest-Operate-Transfer) hospital hosting mode has been implemented in many public hospitals. The so-called IOT model, simply put, is an investment in exchange for the right to operate, and the IOT model does not change the ownership and non-profit nature of the hospital. Phoenix Healthcare invests in the hospital to improve its medical facilities and services in exchange for the right to manage and operate the hospital for a period of 19-48 years, collect hospital management fees, and supply the hospital with medicines, equipment and consumables.
Policy Guidance
Since the promulgation of the 2009 healthcare reform program, the government has invested a great deal of support and financial resources in this area of basic healthcare services, clarified the responsibility of the government to run the healthcare system, and emphasized that basic healthcare services are a public ****product to ensure that its public welfare and the basic health needs of the people are met.
The Recent Key Implementation Plan for Reform of the Medical and Health Care System, released in 2009, made it clear that the purpose of the reform is to fundamentally change the situation where some urban and rural residents do not have medical protection and where public **** medical and health care services have been weak for a long time, and to reverse the profit-oriented behavior of the public health care institutions, so as to make them return to the real public welfare.
The State Council's Opinions on Promoting the Development of the Health Service Industry, released in 2013, stipulates that the government should effectively implement its responsibility for running medical services, rationally formulate regional health planning and medical institution setup planning, clearly define the number, scale and layout of public medical institutions, and adhere to the dominant position of public medical institutions in providing basic medical services for urban and rural residents.
In April 2015, the newly released "General Office of the State Council on the implementation of comprehensive reform of county-level public hospitals" further clarified the direction of the comprehensive reform of county-level public hospitals.
In terms of the trend represented by the above policies, the government tends to keep the nature of public hospitals unchanged in the direction of public hospital reform to ensure that the basic medical needs of the people are safeguarded. As a result, the comprehensive reform of public hospitals is based on the premise that ownership remains unchanged, and that the efficiency and service level of medical services can be improved through the separation of the medical office, performance evaluation, personnel system, remuneration system and other changes in the specific operation level. Only when the number of public hospitals is relatively abundant, and the people's basic medical needs can be met from public hospitals, can some surplus public hospitals implement shareholding restructuring and transform into non-public hospitals.
Related Issues
1, shareholding restructuring can not be used as the mainstream mode of this round of public hospital PPP.
It can be seen from the above policies for public hospitals that the government will not allow a change in the dominant position of public hospitals due to the need to safeguard the provision of basic medical services for the public good.
In terms of the operation of PPP itself, equity cooperation is usually considered a form of PPP. However, the legal basis for equity cooperation is corporatization of operations, and the company must be profit-oriented, so indeed there is an incompatibility between shareholding restructuring and the public hospital itself, which is a public good and a cause.
CITIC Healthcare's project in Shanwei, Guangdong Province, seems to take a variation of the government and CITIC to set up a joint venture company, the government injected the hospital assets into the joint venture company, CITIC cash contribution, the joint venture company to invest in the management of the hospital, the hospital's career and public welfare remain unchanged. However, as the owner of the hospital becomes the joint venture company, i.e. the social capital, after adopting this model, strictly speaking, the hospital is no longer of a public hospital nature, but a non-profit hospital established by social capital. Due to the government's requirement on the number of public hospitals, this model is difficult to be carried out in places where the number of public hospitals is not surplus to requirements.
2. If IOT is used, is T paid?
The Phoenix Medical Group's IOT model, mentioned earlier, deserves further exploration. This model is based on trusteeship, but the investor needs to provide a certain amount of initial investment in exchange for trusteeship. That initial investment is eventually converted into hospital buildings, facilities and medical equipment, so who owns these assets formed by the investor's investment? At the end of the trusteeship period, when the relevant facilities are handed over to the government for full ownership and operation, does the government need to pay the investor a certain amount of consideration? These questions are difficult to answer for both the government and the investor. For the government, if the government needs to buy back the facilities invested by the investor at the end of the trusteeship period, which is equivalent to an elongated BT, does the government have sufficient financial resources to buy back the facilities at that time? Should the buyback amount be treated as government debt? For the investor, if the facility is transferred to the government at no cost, will the investor be able to recover its investment within the trustee period? Will the investor, due to the pressure of investment, try to break the boundary of public welfare to generate income during the trustee period? If the government buys back the hospital, will the investor still be concerned about the government's ability to pay?
3. How will the trust fee be collected? How will the hospital's operating profit and loss be distributed during the hosting period?
For social capital, the use of trusteeship to intervene in the management of public hospitals, its purpose is still to obtain income from the management behavior. The management behavior provided is still business behavior. Similarly, in the hospital restructuring project in Shanwei, Guangdong Province, China Resources also participated in the bidding for the project, but the model proposed by China Resources is a hosting approach, requiring the local government to pay a certain amount of annual management fees to China Resources. This model was rejected by the local government on the grounds that the purpose of hospital restructuring is to reduce the burden on the government, and if the government still has to pay a fixed annual management fee after restructuring, it is equivalent to increasing the burden on the government.
Therefore, how to collect the management fee under the hosting mode is an important issue for social capital to consider. According to the current situation, the social capital hopes to charge a fixed management fee in order to drought and flood seems to be unworkable. The way that can be accepted by the local government is that under the condition that the hospital does not lose money, the social capital will take a fixed percentage of the hospital's income as management fee. This condition is actually equivalent to the social capital needs to ensure that the hospital has enough revenue, otherwise it can not maintain its management costs, and thus there is a certain conflict with the public welfare of the hospital.
It is worth mentioning that, in the terms of the trustee fee, can it be agreed that the hospital's 'all proceeds to the trustee to enjoy? I think this is not appropriate. If the proceeds of the trustee to enjoy, it is inevitable that the losses must also be borne by the trustee, then it is equivalent to the trustee completely contracted to operate the hospital. As a result of the private nature of the trustees, this model is clearly contrary to the public interest of the hospital.
4. How can we ensure that the public interest is met on the premise of reasonable income generation?
Although the hosting model is compatible with the identity of public hospitals and the nature of the public good, but how to make the social capital to take the hosting mode of operation of the public welfare of the hospital is still profitable, the hosting model is the key to promote. Especially in the case where social capital needs to provide a large amount of investment money upfront in exchange for trusteeship, the problem becomes more prominent.
Based on the scarcity of hospital resources and the branding of public hospitals themselves, the reality is that many social capital investors are not so worried about this, but rather believe that as long as they can get the exclusive right to manage the hospital, they will naturally be able to find a way to make money.
It is important to note that in order to ensure that public hospitals do not distort their public interest nature, the government has drawn many red lines for public hospitals to operate, thus limiting the revenue generation channels that social capital hopes to achieve when hosting a public hospital.
For example, in the Implementing Opinions on the Classification and Management of Urban Medical Institutions issued in 2000, it was clearly stated that ? Non-profit medical institutions organized by the government shall not invest in joint ventures with other organizations to set up non-independent legal personality for-profit ? departments? The government-organized non-profit medical institutions shall not invest in joint ventures with other organizations to establish non-independent legal entities for profit. Ward? and other organizations to establish non-profit-making departments, wards, or hospitals. projects. Have invested in joint ventures with other organizations to hold for-profit? Department? The program has been developed in collaboration with other organizations and is being implemented by the Ministry of Health and Welfare. Ward? The project Project? s should be discontinued or transformed into independent legal entities with the approval of health administration and finance departments.?
The Health Planning Commission also issued the "Strengthening of Medical and Health Care Practices in 2013? The nine disallowances? regulations to stop hospitals from being driven by profit to undermine medical ethics.
And, in the future, the government may also issue new regulations to ensure the public welfare nature of hospitals, which may make it impossible for social capital to create a contract that does not prohibit business practices that are contrary to the new regulations. Even if the trusteeship contract may include provisions for changes in the law to avoid the risk of such new regulations, the government can explain that these are not changes in the law, but rather explanations and clarifications of the public welfare nature of the hospital. Since the social capitalist is committed to the public good of the hospital remaining unchanged, it should not have engaged in these business practices in the first place.
5, centralized purchasing, services, how to synergize with the government tender?
Another source of revenue when social capital is involved in hosting public hospitals is the procurement spread. For example, the Phoenix Medical Group, which purchases drugs, equipment and supplies at prices agreed upon by suppliers and then resells them to its hospitals at bidding prices set by the government, earns the difference. Due to the network of 12 hospitals and 28 clinics under the Phoenix Medical Group, it has a high bargaining power. 2013, the management service business revenue of the Phoenix Medical Group's hospitals amounted to 480 million yuan, accounting for 48.41% of the revenue, and the gross profit amounted to 100 million yuan, accounting for 47.23% of the gross profit, with a gross profit margin of 20.94%.
This business looks profitable, but because public hospitals need to go through centralized purchasing for drug procurement, the profit margin may be continuously compressed, on the other hand, to have high bargaining power, social capital itself is also very important to control the resources.
The General Office of the State Council issued in 2015, "on improving the centralized procurement of drugs in public hospitals, the guiding opinions" clearly stipulates that ? All medicines used in hospitals (excluding traditional Chinese medicine tablets) should be procured through the provincial centralized drug procurement platform.? With the effective implementation of the government procurement platform, the bidding price of drugs may be getting closer and closer to the bargaining price of social capital, resulting in social capital not being able to get the difference in income from this piece.
In summary, there are still many problems with PPP in public hospitals, but as mentioned earlier, from the principle of PPP, it should be fully applicable to public hospitals. My suggestion is not to stick to the nature of ownership, but to establish detailed public interest indicators for public hospitals, and to use the indicators as a means of assessing whether they meet the demand for basic healthcare services and whether they are in the interest of the general public. In the newly released Notice of the General Office of the State Council on the Issuance of the Summary of the Work of Deepening the Reform of the Medical and Health System in 2014 and the Key Tasks in 2015, it has been mentioned that it should be accompanied by the Implementation Plan for the Comprehensive Reform of Public Hospitals at the County Level to Evaluate the Effectiveness of Comprehensive Reform. If there is a detailed performance evaluation standard, as long as it meets that performance evaluation standard, it can be recognized as a public good, and the government can give subsidies or incentives on a case-by-case basis without caring about the nature of its ownership. In this way, the government and social capital in the public hospital PPP project, there are more choices and space.
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