INSIGHTS

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PRIVATE PUBLIC PARTNERSHIPS (PPP) - A Leading Healthcare NHS Trust (UK)

 

A leading London NHS Hospital (UK) partnered with a MNC creating the 1st PPP innovative business model to maximise on quality, expenditure and innovation.

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Learn about this PPP.

 

To address the NHS annual budget, the Clinical Technical Services (CTS) at a Leading Healthcare NHS Trust (UK) wanted to create a new medical equipment maintenance platform that would allow it to continue to protect and sustain its pioneering position for the next few years. The goal of the Trust was to reduce the maintenance costs of the 17,000 medical equipment through a quality and cost optimisation model over the next 5 years, to meet the NHS forecasted budget. This led to a brainstorming of multiple solutions, concluding with a partnership model.

 

As part of the two year private-public partnership (PPP) effort, THC assembled and led the radical PPP business model restructure.  Since the Clinical Technical Services (CTS) already provided an excellent service, the partnership model had to surpass the current service on cost optimisation, whilst maintaining high quality. The PPP process was conducted through a competitive dialogue, which is differentiated from the traditional tender.  The ‘dialogue’ encouraged innovative thinking and focused on maximizing quality, expenditure and key deliverables.  

 

The PPP was split into three phases (i) competitive dialogue, (ii) operational due diligence and (iii) contractual KPIs. The 1st phase – competitive dialogue invited the MNCs to a ‘dialogue’. A dialogue is different to a tender as it allows for creative solutions. The 2nd phase – operational due diligence examined all aspects of the current operations and proposed model, against the outcomes laid out by CTS through a scoring system. The operational due diligence included scope analysis, financially analysis, scenarios, and risk analysis. The 3rd phase – contractual KPIs was critical to the success of the contract as it proposed clear outcome and success measures and mapped out expectations.

 

The PPP process was expected to be completed within 9 months, however it ran for 2 years.  The delay was due to both the Competitive dialogue process and Operational plan. The MNCs were not anticipating out of the box thinking to drive solutions, and had not expected to agree the new Operational plan which included contractual KPIs, prior to signing the partnership. Whilst the NHS Trust had not anticipated the resources and capabilities required for the PPP process. The PPP process is a long and comprehensive process and should not be rushed. The true value of PPPs are only demonstrated when both parties are aligned on the operational plan and measurable outcomes, prior to signing.

 

PPP Success Enablers - PRIOR to signing the contract:

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• PPP Value proposition – both parties to align and agree on the partnership value; this acts as a value compass guiding pre and post contract behaviours

• PPP Innovative model – PPP requires a new thinking that will enable both parties to move away from their current solutions to a new workable business model

• Operational plan – both parties agree the new operating model incl: roles; responsibilities; processes

• Contractual KPIs (monthly report) – must include and measure the new terms to determine progress and the success of the partnership

• Due diligence on cost efficiencies and operational risks including any 3rd party partners