Public-Private Partnership Stories Romania: Outpatient Dialysis Services Photo © IFC More than a quarter of Romania’s dialysis patients have received better health care as a result of a public-private partnership to provide dialysis on an outpatient basis. This was IFC’s third public-private partnership transaction with the government of Romania in the health care sector since 2002. Four international operators won four-year contracts (extendible to seven years if the operators opt to build new facilities) to refurbish, operate, and manage dialysis centers at eight hospitals around the country. The companies have invested more than €28.6 million to modernize the facilities and expand services. Between 2005 and 2008, the government of Romania saved €2.9 million as a result of this outsourcing of public dialysis services to private providers. The transaction closed in November 2004. This series provides an overview of public-private partnership stories in various infrastructure sectors, The introduction of a fixed fee for treatment, which is now also where IFC was the lead advisor. IFC Advisory Services in being applied to publicly managed clinics, has resulted in a more Public-Private Partnerships 2121 Pennsylvania Ave. NW transparent pricing system for dialysis services. Washington D.C. 20433 ifc.org/ppp BACKGROUND TRANSACTION STRUCTURE Prior to the transaction, the government of Romania was In line with the government’s decision to maximize the amount spending an average of 6 percent of the country’s gross domestic invested in clinics, IFC structured the transaction so that contracts product (GDP) on health care, which was comparable to other were awarded on the basis of investment levels rather than price. countries with similar GDPs, but the quality of and access Operators are paid a flat fee per hemodialysis treatment and an to services remained problematic. In 2003, Romania had 36 annual fee per peritoneal dialysis patient. The operators assumed hemodialysis machines per million population, compared with full responsibility for renovating and/or equipping facilities; 93 in Hungary and 102 in the Czech Republic. Hospitals were maintaining and operating equipment; procuring all medical severely undercapacity in terms of their ability to diagnose and supplies; recruiting, training, and managing all staff; and treating treat existing patients or to accommodate new ones. Therefore, the patients. government wanted to address three key issues. First, in 2005, the number of patients in Romania who received dialysis services was BIDDING 70 percent below the average treatment rate in Western Europe. Bidders were restricted to winning no more than two dialysis Second, the quality of services was poor because of outdated centers to limit concentration. Four international companies equipment, poor follow-up, and lack of specialized staff training. and their local partners passed the prequalification criteria and Third, multiple funding streams and fragmented procurement submitted winning bids: B. Braun (Germany), Baxter (United systems resulted in a lack of transparency and accountability in the States), Fresenius (Germany), and Gambro (Sweden). management of operating budgets for dialysis services. IFC’S ROLE In 2002, the government hired IFC as its adviser to launch a series EXPECTED POST-TENDER RESULTS of public-private partnerships in health care, including private • The operators have invested more than €28.6 management of radiology and laboratory services, and public million to upgrade and expand dialysis facilities. hospitals. For dialysis services specifically, the government hoped to: • The operators have replaced dialysis equipment in all the pilot centers. Increase public access to dialysis. • • The operators have opened two new public Improve the quality of all dialysis services. • dialysis clinics and as of mid-2008, 17 more Streamline payments from the National Health Insurance • were under construction or planned. House to dialysis providers. • The introduction of a fixed fee for treatment, Enhance the system’s overall accountability. • which is now also being applied to publicly managed clinics, has resulted in a more trans- IFC recommended that the government outsource the provision parent pricing system for dialysis services. of dialysis services, which would then allow it to focus on its role • The government has adopted strict national quality as strategic purchaser. Under the mandate, IFC: standards applicable to both privately and publicly • Designed the pilot program taking into account the managed clinics. government’s priorities,. Defined the responsibilities of the private providers and • the government. 12/2008 Established technical and financial prequalification criteria. • Set the fixed price for dialysis treatments. • Revised national dialysis standards to reflect international • best practice. Prepared contracts and tender documents. • Helped the government conduct the tender process. •