Health & Education

Looking Rosy

PPP Hospitals

The health campus program in Turkey—a $10 billion investment—is the largest pipeline of PPP hospitals in the world.

As Turkey looks to become a leader in healthcare development, it has turned to public-private partnerships in order to achieve its goal. The government, through partnerships with companies like Siemens, is bridging the gap between the limitations that are inherent with relying solely on either public funds or private investment. It has pumped around $10 billion into its healthcare system through PPP, making it the largest investment of its kind in the world.

Regulated by the Department of Public Private Partnership under the Ministry of Health, Turkey first used the public-private partnership model as a means to develop its infrastructure and, upon seeing its success, has returned to the model in order to bolster its education and healthcare system.

PPPs are currently enjoying great fanfare in Turkey; the country launched its ambitious plan to expand and improve its healthcare system by utilizing PPPs to build 35 campuses. A 2012 Deloitte survey ranked Turkey as second in terms of the most attractive PPP markets, and predicted that it would rank among the top 10 countries with the most PPP projects and investments in the medium and long terms. According to a government report, legislation adopted in 2013 mandates that at least 20% of medical equipment used in hospitals and healthcare facilities are to be funded by PPPs.

The Ministry of Health’s 2014 report also indicated just how rapidly Turkey has ramped up its PPP program; the sum value of all PPP contracts in the country was just at $2 billion, but by the end of 2013 it had skyrocketed to $46 billion. At the beginning of 2013, Turkey became third-largest PPP market in Europe, outperforming countries with even more developed and sophisticated PPP markets.

The partnerships operate under the build-lease-transfer model, with the report indicating that the Ministry of Health predicts that it will lease each campus for 25 years and that total lease payments will amount to $38 to 47 billion. As of early 2014, there were already 20 projects in the works.

Turkey’s economic development and geographic location are two reasons why large multinational corporations find it so appealing. Siemens recently announced that it had completed a campus in the southern part of Turkey. The campus was the first of its kind to be completed financially, with Siemens and its eight partner companies investing a total of $610 million.

Such projects come at a crucial point for Turkey’s healthcare system. The country’s system has seen massive investment and reform since 2003, expanding coverage with a universal mechanism. The OECD, however, notes that it still has significant hurdles to overcome operationally and otherwise before it becomes a system to be emulated. In its assessment of practice and quality, the OECD notes that Turkey needs to “shift its emphasis from encouraging high volume of care to delivering high-quality health services.”

With Turkey’s geopolitical aspirations on the rise, modernizing its key sectors will continue to make the country an attractive market for foreign investment—especially with its European neighbors. Provided the maintenance of these projects is meticulous, these PPPs will do more for the country than simply increasing the number of hospital beds.

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