Speech by Brian Lenihan T.D., Minister of State with Responsibility for Children at the Information Seminar on PPP Pilot Projects for Community Nursing Units and Central Services Units in the Eastern Regional Health Authority and Southern Health Board
I am very pleased to join you here this afternoon at this information seminar on the PPP Pilot Projects for Community Nursing Units and Central Services Units in the Eastern Regional Health Authority and Southern Health Board. It is great to see such a wide interest in this new development in the Health Sector. I especially welcome the attendance at this seminar of delegates from Congress, the health boards, local partnership committees, IBEC, the Health Services Employment Agency, members of the National Joint Council and the Health Services Partnership Forum.
This information seminar is part of the ongoing consultation, communications and awareness-raising programme being carried out by the Department of Health and Children. Its aim is to explain the PPP concept and outline the pilot projects currently being implemented in the health sector to all stakeholders and interested parties. The need for effective communication in relation to PPPs is clear. Recent market research concluded that “the majority of Irish people do not understand the term Public Private Partnership”. It is hoped that this seminar will shed some light on the PPP process and describe the two pilot projects that are currently being progressed in the health sector. It will provide us with a welcome opportunity to reflect on the benefits and potential of PPP in the health sector.
Two weeks ago my colleague Mr Charlie McCreevy, Minister for Finance, launched the PPP Communications Strategy. This National Communications Strategy, agreed with the social partners, outlines the way in which communications with key stakeholders will be undertaken to further develop Ireland’s PPP process. A number of information seminars have been held around the country by the Central PPP Unit in the Department of Finance and more events are planned for the coming months. The Department of Health and Children will be contributing to these seminars.
Public Private Partnerships
Given the amount of misunderstanding on the subject we must be clear about what is a Public Private Partnership. A Public Private Partnership is a partnership between the public and private sector for the purpose of delivering a project or service traditionally provided by the public sector. Better value for money for the Exchequer may be achieved through the exploitation of private sector competencies and the allocation of risk to the party best able to manage it.
It is also important to note that PPPs are not “privatisation by the back door”. There is no irrevocable transfer of assets. Public authorities will remain responsible for policy and levels of service. PPP represents significant change in the funding and ongoing facilities management of healthcare facilities.
There has always been a strong history of partnership in the delivery of our health service. This is recognised through our partnership with voluntary, private and community based organisations. The delivery of projects through PPPs gives us all an opportunity to maximise the interaction and co-operation between the public and private sectors.
PPP in Health
As you are probably aware, the Department is now facing a very significant challenge in building up the health infrastructure generally over the next five to ten years. The necessary pace to deliver on this strategy will be difficult to achieve without PPPs to accelerate the provision of the necessary infrastructure and services over the coming years. As a matter of priority, the Department will commence using PPPs for the provision of community nursing units.
The Health Strategy proposes a number of developments with regard to services for older people. It acknowledges that the proportion of older people in Ireland is increasing at a rapid rate and estimates would suggest that by the year 2011 the population aged over 65 years will have increased by 23%. In order to cope with the anticipated demand it will be necessary to significantly expand services for older people.
In the Health Strategy a commitment was given to provide an additional 3000 beds in acute hospitals over the next 10 years. This represents the largest ever concentrated expansion of acute hospital capacity in Ireland. In 2002 the first phase of these additional beds was announced with the commissioning of an extra 709 beds, an increase of 6% in the acute hospital capacity. I am pleased to say that 520 of these beds are now in operation and the remaining beds will be brought into use shortly. However, the inappropriate blockage of acute beds by older patients is a major cause of difficulties in acute hospital services. The provision of bed capacity in community nursing units should help to alleviate the problem in the acute sector.
With this in mind, the Department was pleased to announce in July last year two Pilot PPP Projects which will create a total of 850 additional beds for older people in the east and south of the country, where the shortage of long-stay beds is most acute. Under the proposed PPP, the EHRA will provide 9 new Community Nursing Units (3 in each of the area health boards), giving a total of 450 new beds. The SHB will provide 8 new Community Nursing Units giving a total of 400 new beds. A Central Services Unit to provide accommodation for Health Board staff will also be provided in each of the 2 pilot areas.
The services offered by the community nursing units will include assessment, respite, rehabilitation and convalescence. Day centres for the elderly will be combined with the Units which will help promote the dignity and independence of older people and to support them living at home. The 850 additional beds to be provided under the PPP arrangement will free up acute hospital beds and provide a higher quality of care to older people.
The pilot projects in the health sector will involve the design, build, finance and partial operation of the Community Nursing Units and Central Services Units by the private sector. All clinical services will be provided by the ERHA and Southern Health Board. It is anticipated that the two health authorities will enter into 25 year contracts with the private sector for the provision of these facilities, and at the end of this term the ownership will revert to the state. The details of these projects and the process involved will be explained in more detail by the other speakers today.
The Irish health sector is new to the PPP arena and is not near as advanced as our colleagues in other government departments such as Education, Environment and Local Government and the National Roads Authority who have projects at various stages of procurement. This Department is keeping a close eye on these projects. We hope to learn from any lessons learnt by them and elsewhere and incorporate best international practice into PPP in the Irish Health Sector.
Benefits and Challenges of PPP
While the acknowledged benefits of PPPs are many, it is also true that PPPs can present difficult and complex issues for both public and private sector partners. For the public sector we have to satisfy ourselves that the business case for proceeding with a project on a PPP basis is sound and represents value for money when compared with the conventional approach of direct build and finance. Output business cases will be produced this summer which will assess the feasibility of these projects as PPPs.
For the private sector, the costs associated with bidding for PPP projects can be substantial and for trade unions significant issues can arise where public staff are transferred to the private sector under PPPs. This will not be an issue with the two pilot projects. As these will all be new beds there will be no transfer of staff and all clinical services will remain provided by the public sector. This will be the first PPP in the Health Sector in Ireland and as such it is important to do it right. The two pilot projects will be watched very closely by different interests both at home and abroad. It is vital that we all work together to ensure that it is a success.
The Importance of Partnership
The key element of PPPs is partnership. Not just with the private sector but with all of the social partners. Partnership, as defined by the Programme for Prosperity and Fairness, is an active relationship based on recognition of a common interest to secure competitiveness, viability and prosperity of the enterprise. Securing competitiveness, viability and prosperity in the health sector requires broad consensus in relation to the scope of PPPs, the process through which PPP projects will be developed and the benefits we expect to realise by adopting the PPP approach across all interests in both the public and private sectors.
The development of PPPs in Ireland is firmly grounded in the Partnership process. The Programme for Prosperity and Fairness reaffirmed the commitment of the social partners to PPPs. It called for the development of a clear framework to assess the appropriateness of PPPs for infrastructure projects and to guide their implementation, taking into account the wider economic, social and environmental objectives that should guide infrastructural development, irrespective of the procurement method followed. A comprehensive framework for PPPs was negotiated between the Government and the social partners. It promotes the development of joint objectives, co-operation and trust between all parties concerned.
The Health Strategy: Quality and Fairness states that “The partnership arrangements in place nationally and in each of the health boards will be used as a vehicle for the involvement of staff and staff groups in the implementation of the Strategy at national and local levels”. This will be the case with the PPP Pilot Projects. National and local partnership arrangements will be used to involve all stakeholders in the implementation of the PPP pilot projects. The Health Strategy commits to working with everybody in the system and recognises that the partnership approach can play a key role in driving the changes proposed in the health strategy.
This commitment to Social Partnership continues under the latest agreement Sustaining Progress which requires the guidance to be delivered on a range of key areas by 2004. It recognises that the use of the partnership approach to develop and implement projects using PPPs has been an essential element in their success. The continuing application of such an approach is seen as a key element in the delivery of
Like the partnership structures developed in Ireland over the past decade PPP will be an active, ongoing dialogue contributing to the mutual benefit of all parties. There will be a partnership culture from the outset. Consultation at both national and local level has already taken place and will continue on a regular basis. I would like to take the opportunity today to restate the Department’s commitment to a culture of partnership.
If PPP is to have a future in Irish Healthcare it is essential that positive partnership practice be employed from the outset. The partnership approach will be maintained throughout the lifetime of the projects. Participation and involvement will be the hallmark of PPP in the health sector. Managers, staff, trade unions and the Department must all work together in unison to strengthen the quality of Ireland’s healthcare capital. Partnership must be implemented in an integrated, measured and strategic manner.
The development of PPPs in Ireland is based on the principles of Social Partnership and must be consistent with the agreed Framework. The commitment to Partnership represented by the PPP process is an expression of shared values and principles which transcends national, sectoral and economic differences and aims to improve the lot of citizens through better delivery of quality public services.
Addressing the complex issues involved with PPPs requires commitment, dialogue and agreement. I am happy to say that the Department is firmly committed to resolving the issues that will inevitably arise as we implement these pilot projects. We want to ensure that issues are resolved before they become problems; that problems are solved before they become impediments to PPP projects and that impediments are removed by dialogue and agreement before they obstruct the successful implementation of important PPP projects.
In conclusion, I would like to take this opportunity to wish the ERHA and the Southern Health Board every success in their pilot projects. While the benefits of this information seminar will be immediately apparent to its delegates, I have no doubt that the prime beneficiaries of this exchange of knowledge and ideas will be the wider health service and in particularly, its patients and service users.