Georgian clinics are about (in a relative term) to get a lot closer to European standards. Three major hospitals are to get a complete overhaul as part of an ambitious reformative project, which, among other things, promises to reduce the healthcare costs by 30 %. The hospitals in question are the Central Republican Hospital, the Tbilisi Oncology Center and the Khliani Children\u2019s Infectious Disease Hospital.<\/p>\n
In this ambitious undertaking, Georgia\u2019s state-owned shareholding company, the Partnership Fund (PF) is teaming up with AlphaMedic Consortium and Georgia\u2019s Ministry of Labor Health and Social Affairs. The Georgian and Austrian sides met several times in Tbilisi to discuss the \u2018Tbilisi Cluster Healthcare PPP Transformation Project.\u2019 The project, tailored by AlphaMedic Consortium to the government tender to improve Georgia\u2019s primary healthcare services, is set to be put into motion as early as the end of the month.<\/p>\n
The representatives of AlphaMedic Consortium said the company was ready to invest 250 million GEL to rehabilitate the three hospitals. According Minister\u2019s statement the total cost of the project was expected to reach about 0.5 billion GEL, which the agreement stated would be jointly covered by the tender-winning company and the PF.<\/p>\n
Behind all this mundane trivia though is a rather intriguing factor – the way the Austrians intend going to go about it. The Vienna-based sector focus is healthcare Public Private Partnerships (PPP). In more accessible words, it\u2019s a value for money, performance based contract that sees the winning company obliged to attract investments and create a development plan for the three hospitals. Furthermore, AlphaMedic Consortium must design, construct and reconstruct the State\u2019s medical clinics so they meet European standards, including equipping them with high-quality medical technology.<\/p>\n
To give you more insight on how AlphaMedic Consortium is going to reinvigorate Georgia\u2019s primary care system and why the PPP approach is a win for every party involved, GEORGIA TODAY was privileged to have an EXCLUSIVE interview with the mind behind Alphamedic\u2019s tender bid \u2013 Mr. Leo McKenna. A man with vast experience and knowledge in all things related to PPP, McKenna boasts an impeccable work record spanning more than two decades, with highlights including Ireland\u2019s first and only PPP hospital; the largest project ever successfully delivered in the region\u2019s history. Mr. McKenna was kind enough to offer his insights on the \u201cmassive Georgian project\u201d he and his team are about to tackle.<\/p>\n
\u201cIt\u2019s an innovative solution for Georgia,\u201d he says, \u201ca compelling project both intellectually and commercially- from healthcare planning to conceptual design.\u201d<\/p>\n
Compelling is an understatement as the parties have to devise a funding solution to ensure the project\u2019s financial viability. After that, the actual construction will begin, which McKenna believes is to last around three years. The Austrian company is going to \u201clook after things\u201d for 25 years, the duration of the agreed operational term.<\/p>\n
It\u2019s a lot of responsibility. And the lion\u2019s share of this responsibility, McKenna insists, lies with Alpamedic.<\/p>\n
\u201cWithin the PPP model, the risk is transferred from the public sector to the private one,\u201d McKenna told us. \u201cSo all risks \u2013 be it design or construction-related, or financial and operational risks- rest with the private sector partner. The fundamental principle of PPP is that each party should manage the risks it is best able to manage. For example, the demand risk, like how many beds the hospital should have, lies with the public sector and is a planning function of the Ministry of Health. The delivery capability, the reality sits with the private sector.\u201d<\/p>\n
It sounds like a big commitment. But apparently commitment is what both McKenna and Alphamedic clearly have in mind with regards their Georgian future. The Alphamedic man plainly states that he and his company want to build \u201ca lasting legacy.\u201d<\/p>\n
\u201cWe would love to make it long-term. Alphamedic is looking to build a strategic relationship with the Ministry of Health and the Partnership Fund \u2013 to be the partner of choice when it comes to developing medical infrastructure projects,\u201d he says.<\/p>\n
However, AlphaMedic Consortium is also a commercial organization, so it will obviously also be looking for return in investment. As things stand, the cluster project is a joint venture project together with the Partnership Fund- 40 percent of the project funding is covered equally by the Partnership Fund and Alphamedic, and the remaining 60 percent would be taken from the bank. McKenna is convinced that there would be no shortage of potential lenders. He backs it with the extensive financial and market analysis his company carried out, regarding the risks, ahead of the project.<\/p>\n
\u201cOur solution is financially viable. That\u2019s all cold hard numbers, no emotion. We\u2019ve done a lot of modeling, from both financial and operational perspectives. It\u2019s a forecast with very prudent predictions and assumptions. And it tells us that the demand is there,\u201d he says.<\/p>\n
His optimism is hard to argue with as he rips through the potential challenges and setbacks with the self-belief of a man who\u2019s been there, done that. And he clearly has faith in his Georgian colleagues, too.<\/p>\n
\u201cTwo fundamental pillars that the project needs to be built on \u2013 the logistics know-how and the funding, which are already there,\u201d he says. \u201cWe are confident in our Georgian partners, in their integrity and transparency and in their commitment to positive development. With all projects of this sort, normally, bureaucracy is your worst enemy, and the only antidote to that is decision-making, and we believe it\u2019s here in this case.\u201d<\/p>\n
Bureaucracy really might not be a problem, and both the previous and incumbent governments have strived to ensure that much. Not so rosy in other areas though \u2013 a ruthless oligopoly is just about the kindest description of Georgia\u2019s pharmacy market you might hear these days and some of those are already voicing discontent in fear of what government might come up with next. McKenna says they will listen \u2013 and theoretically, cooperate with \u2013 only those who offer value for money. \u201cIt\u2019s not just a business,\u201d he declares. \u201cWe aren\u2019t just looking to make money, as many other providers do, we are beyond that. We want to be strategic partners for the government and people of Georgia.\u201d He says they will be trying to employ local companies and people at every opportunity and every stage of the project.<\/p>\n
\u201cIt works for us as well \u2013 local people understand the situation on the ground better than we do. So, for example, when we start with the construction competition, we will be looking at the companies here in Georgia.\u201d<\/p>\n
Expect high standards and prerequisites. And a thorough examination of a job done, too. McKenna and Alphamedic clearly aren\u2019t the kind that turn a blind eye to sloppy work. Very much on the contrary, Alphamedic will be employing international assessment teams to ensure that everything is \u201cas it was stated in the contract\u201d. This is, for example, a routine procedure with the hospitals.<\/p>\n
\u201cBefore the hospital is accepted by the PPP Company, we will have independent verification that it has been built according to the specifications stated in the contract- a professional third party assessment carried out. We\u2019ll announce a competition on that as well, to get the best possible price.\u201d states McKenna, stressing that the ultimate focus of the project is to improve the overall healthcare situation and the primary care in particular. Hard to argue with that \u2013 no less than 247 primary care facilities are attached to this project, which would significantly improve the health situation of communities, especially in the regions.<\/p>\n
To summarize, what are the benefits of PPP and why is it good for Georgia?<\/strong><\/p>\n \u201cThe biggest benefit of PPPs is that they are performance-based and generally result in better value for money. Because you have competitive tension at all stages of the supply chain. It guarantees the cost-effective solution and accelerates the delivery. 96 percent of the PPP\u2019s finish ahead of or on time as, in case of a delay, they will have to start repaying the bank, while the government doesn\u2019t have to,\u201d McKenna said. \u201cAnd on the other hand, if they finish ahead of time, they get the money with a nice interest rate and don\u2019t have to pay the bank before it\u2019s due, so it\u2019s a significant saving. With respect to the operational period, which is 25 years in our case \u2013 we build it in 3 years and we operate it for 25 years \u2013 during this period, if the hospital doesn\u2019t meet the standards envisioned in the contract, the PPP Company has to fix it with its own resources, otherwise it will not get paid. So all of these risks, which currently sit with the public sector, are transferred to the PPP.\u201d<\/p>\n Vazha Tavberidze<\/p>\n","protected":false},"excerpt":{"rendered":" Georgian clinics are about (in a relative term) to get [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":3164,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"acf":[],"yoast_head":"\n