PPP tender process at CH Henri Laborit This energy performance contract is the first of its kind for

PPP tender process at CH Henri Laborit This energy performance contract is the first of its kind for hospitals in France. Therefore in respect to procedures the process was complex for all interested parties (CH Henri Laborit, the private partner and public authorities). However this PPP-contract on energy performance was considered as the only tool to seen as reliable for linking contractual commitments and investment performance. It required up to two years complete all necessary arrangements. Initial assessment was supervised by experts from MAPPP before launching the tender process. The contract was concluded with prior consultations involving the Regional Health Agency (ARS). At the beginning of the process (2008) the hospital presented the project to the ADEME to ensure that opting for a private operator would not penalize the hospital in regards to obtaining grants attached to any biomass and heating network projects. In 2009 a project management expertise (AMO8 ) was outsourced for technical, legal and financial issues. A feasibility study done by the AMO confirmed the technical interests of the operation, especially considering the insulation of buildings classified as inefficient in energy audits carried out by the help. The assessment of legal and financial feasibility took into consideration the operation complexity and after weighing benefits and constraints in concluded in favor of a PPP contract against other possible solutions. During that time energy efficiency contracts were not well known. Thus it was very difficult for the hospital to explain to regulatory authorities and convince them on the reasons why the hospital should use a partnership agreement for such an investment. Besides, a changing hospital legal framework introduced new key roles/players in public health PPP (MPPP, MAINH, ARS). The last difficulty was the uncertainty over ADEME subsidies, their sustainability and grant awarding rules. The tender process (January-March 2010) resulted in 3 candidates (Dalkia, COFELY and Idex) being invited to submit their offers in July 2010 but only Dalkia and COFELY carried on the process. The next steps were marked by competitive dialogue between the hospital and bidders and on the basis of the documents (forward-looking proposals and interim summaries) between September 2010 and January 2011, before candidates are invited to submit their final tenders for the March 21, 2011 on the basis of the originally intended project. In the end COFELY retained as the best offer based on the selection criteria (technical proposal 25%, overall cost of services 30%, performance targets 30%, commitment to outsource parts of the contract to SMEs 5% and level of risk-taking 10%). 3. Funding mechanisms The funding is exclusively private: COFELY financed a total of € 2,609,023 (tax excluded) against € 674,040 financed by the Hospital for insulation work and solar thermal systems. Nonetheless, as a biomass project was concerned, the private partner received substantial financial assistance under the ‘Fonds chaleur’. In the end 48.8% of financing is covered by government. The contract is signed for 20 years. 8 AMO=Assistants en Maîtrise d’Ouvrage. Health and Economics Analysis for an Evaluation of the Public Private Partnerships in Health Care Delivery across EU 119 4. Commitments and risk sharing During the inception phase hospital needs were refined and both parties conclude deals on keeping or replacing existing boilers, incorporating the boiler residual value, extra buildings, etc. into the contract. As the hospital not only remains the client but also financially contributes for solar thermal and insulation work it directly benefits from associated grants (Fonds chaleur) and power saving certificates (EEC). The contract takes into consideration necessary progress and leaves room for the Hospital to continue its own energy improvement policy. As a performance based contract almost all risks are borne on the private partner. Indeed during the construction phase, the risk is borne entirely by the private partner, which must ensure parallel conduct and operation of existing facilities, contractual terms and market heating existing contract. In fact COFELY has to meet up to 4060 MWh by wood energy and produced up 6674 m3 hot water in regards to the hospital target performance (88% energy wood) which corresponds to 91% in seasons requiring heating, a production of at least 30% of energy through solar and a 24% reduction in energy requirements heating for buildings that received insulation work, and reducing emissions of greenhouse gas emissions by about 1000 tonnes of CO2 (including 720 due to renovations and 280 biomass and solar thermal). The energy mix allows the hospital to control its costs in the medium term. In case of increase or decrease in consumption, the contract provides for a sharing of asymmetric incremental/savings. If one or more of these commitments is not met, COFELY will be penalized on the remuneration. The contract also provides some fixed penalties in addition to the financial penalties. On its part CH Henri Laborit pays a financial rent for the investment, a compensation of infrastructure maintenance and upgrade expenses, a compensation of energy mix and compensation contract management expense. 5. Linking PPP to payment mechanism, cost per patient. At CH Henri Laborit and generally in Franche different pricing and payment modalities apply to patients covered by community health insurance (mutuelles) and CPAM Caisse Primaire d’Assurance Maladie. Pricing is determined by the ARS and covers all the expenses incurred by the hospital during the patient’s stay and vary according to different factors: hospital admission vs. day care, adulthood vs childhood…. This is the same all public health facilities. As far as fees are concerned it should be mention that at CH Henri Laborit consultation is provided free of charge. Table 1: Fees rates at CH Henri Laborit Category Rate (€) Hospitalisation_ Adult 296.00 Hospitalisation_ Child 592.00 Family Therapy_Adult 79.00 Family Therapy_Child 86.00 Day care_Adult 291.00 Day care_Child 448.00 Half day_Adult 218.00 Night care_Child 165.00 Daily rate 2011 (forfeit) 13.50

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