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Hospital PPPs State of Mexico IFC Transaction Experience

Hospital PPPs State of Mexico IFC Transaction Experience. The Location: Estado de México. One of 32 states in Mexico Population 14.4 million. The Client: ISSEMyM. IFC Mandate.

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Hospital PPPs State of Mexico IFC Transaction Experience

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  1. Hospital PPPsState of Mexico IFC Transaction Experience

  2. The Location: Estado de México • One of 32 states in Mexico • Population 14.4 million

  3. The Client: ISSEMyM IFC Mandate Initially IFC was hired to implement PPPs for a newly-opened oncology center and for construction/operation of a new tertiary hospital IFC analysis showed Oncology center could be optimized by contracting w/ other insurers for utilization, without need for a PPP No need for proposed tertiary hospital Need for two new 120-bed secondary hospitals – via PPPs • State social security agency for state employees • Health insurance and services for approx 900,000 people (employees + families) • Network of 82 primary care centers, 10 secondary hospitals, 4 tertiary hospitals

  4. PPP Transactions Project • New 120 bed regional secondary hospitals in Toluca and Tlalnepantla • Estimated investment of $48 million (Toluca) and $57 million (Tlalne) Structure • Operator is responsible for design, construction, financing, equipping, facility management, non-clinical services, and selected clinical services (dialysis, labs, imaging) under a 25 year contract • The public sector will be responsible for hospital management & other clinical services • The private sector operator will receive a fixed payment and a variable payment related to performance • PPP operator assumes risk for: • Cost of consumables • Replacement of medical equipment

  5. Bidding • Sequential bids for Toluca (Sept/10) and Tlalnepantla (Oct/10) • Three-step bidding evaluation Must exceed thresholds Pass/fail vis-à-vis Lowest wins functional specs • Toluca bid: • 3 bidders (all passed) • Prodelmex won • Tlalnepantla • 4 bidders (3 passed) • Marhnos won Concept Design Financial Bid (PPP payment) Technical & Financial Criteria

  6. Hospital Concept Designs

  7. Implementation Issues State’s PPP law requires EACH project to be approved by State Legislature. 12-month delay in submitting to Legislature Tlalnepantla location hampered by limited space and existence of clinic & communications tower Design changes & obligation to include new clinic Bidders reluctant to take consumables & equipment replacement risk Risk transferred but mitigated with caps

  8. Project Selection & Justification Investor Confidence IFC’s Value Added IFC’s presence • enhanced bidding competition • gave confidence to operators re: bankability/ sustainability • Recommended different projects • Sizing to meet client needs & fiscal limits • Reports to State Legislature Bidding Procedures • Simplified bid criteria & evaluation • Recommended max price to client

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