Oct. 31, 2019

KHIDI Department of Global Healthcare (Outbound)

Introduction to Korean Hospital PPP Projects

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I. Introduction to Korean Public Hospital PPP Projects

1. Current State2. Definition of BTL (Build-Transfer-Lease) Project3. Structure of BTL4. Structure of Private Investment Return, Investment Recovery5. Implementation Procedure

II. Introduction to Public Hospital PPP Projects

1. Project Overview 2. Main Contents3. Project Promotion Process 4. Outline of Negotiations

III. Conclusion

Contents

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I. Introduction to Korean Public Hospital PPP Projects

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1. Current State Korean PPP projects are promoted in BTO or BTL Depending on their Types and Scales.

New construction or extension of hospitals is all done by BTL.

16 projects have been completed so far from the Local Hospital BTL Project in 2005 - 12 hospitals are in operation, and 4 hospital is being built. (Construction Stage 1,

Bid preparation 3)

Classification Project Stage Year

Geriatric Hospitals

(5)

Hwasoon Geriatric Hospital Construction BTL Project Open 2005

Busan City Geriatric Hospital (4th Hospital) Construction BTL Project Open 2008

Euiryung Geriatric Hospital Construction BTL Project Open 2008

Euisung County Geriatric Hospital BTL Project Open 2009

Hampyung Public Geriatric Hospital BTL Project Open 2009

Local Hospitals

(6)

Kangjin Hospital Relocation and Construction BTL Project Open 2005

Choongjoo Hospital Relocation and Construction BTL Project Open 2007

Seoguipo Hospital Construction BTL Project Open 2009

Gongjoo Hospital Relocation and Construction BTL Project Open 2010

Gyunggido Ansung Hospital Relocation BTL Project Open 2012

Gyunggido Icheon Hospital Construction BTL Project Under Construction 2013

National Hospitals

(2)

National Masan Hospital Modernization BTL Project Open 2011

Yeongjoo Red Cross Hospital Construction BTL Project Open 2011

In Progress

(3)

Samcheok Hospital Relocation and Construction BTL Project RFP Establishment 2019

Daejeon Hospital Construction BTL Project Preliminary Feasibility Study 2019

West Busan Hospital Construction BTL Project Preliminary Feasibility Study 2019

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2. Definition of BTL

A method of private investment in infrastructure, building of a public facility (e.g., public hospital), and leasing to the government to get back its invested capital.

Private company

builds a public facility

with its own investment

B

Concessionaire is granted

the right to operate the

facility and receive

government payment

(lease)

L Ownership of the facility is

transferred to the government

upon completion of construction

while the managing and operating

authority is retained by the private

company

T

B T L(Build-Transfer-Lease)

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Operation Investor(O&M)

ConstructionInvestor

(Design+Construction)

FinancialInvestor

S P V(CI+OI+FI)

Operation

ConstructionInvestment

Equity

Land Donation + Operation Service Lease + Operational Cost

3. Structure of BTL

SPV (Special-Purpose Vehicle) established by Private Investment, PlanningDesign-Finance-Construction-Operation (O&M)

Government

Construction

DividendPrincipal and

Interest

Equity/Debt

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Private Investment

Construction/Facility Investment

Operating Cost

Government Payment

Lease

Operating Cost

Affiliated Profit

Government pays the unitary charge covering the construction costs inclusive ofoperating costs

• Government Payment = Lease (Initial Cost) + Operating Cost – Affiliated Profit

• Facility (Construction) Cost: Annual Lease Payment by the Government

• Operating Cost: Annual Payment by government based on an agreement between the public and private sectors (based on its operational performance for a specific period of time)

• Affiliated Profit from Operating Other Supplementary Facilities. (Non-operating Revenue - Non-operating Expense)

4. Structure of Private Investment Return, Investment Recovery

Redemption

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BTL Feasibility Study & VFM Test & Application of Investment Ceiling

5. Implementation Procedure (General BTL)

Request for Proposal

• Condition of Project Implementation• Method and Schedule of Implementation• Determination of Aggregate Investment- Government Payment / Operating Cost• RFP• Inspection of Performance / Evaluation /

Application

Announcement of RFPs

Evaluation and Selection of Preferred Bidder• 1st PQ Evaluation• 2nd Business Plan Evaluation• Selection of Preferred Bidder

Negotiation and Contract Award

• Negotiation• Designation of Concessionaire

Selection of Implementer

Application for Approval of Detailed Implementation Plan

Construction

Construction Implementation

• Quality Assurance/Quality Control• Equipment Ordering/Installation Management• Compliance of Applicable Technology

Completion of Construction

Operation

• Completion Inspection Confirmation• Concessionaire in Operation

Submission of Project Proposal

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II. Introduction to Public Hospital PPP Projects

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1-1. Project Overview – Gongjoo Hospital Relocation and Construction BTL Project

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Construction Overview

Classification Finally Negotiated Results

Site Location Choongnam Gongjoo-Shi Ungjin-Dong 253-2

Site Area 33,000㎡ (9,982.5 pyeong)

Special-Purpose ZoneDesignated as Green Zone, Urban Zone, and Comprehensive

Medical Facility Zone

Legal Building-to-Land Ratio / Floor Area-to-Site Ratio

Less than 20% / Less than 80%

Total Building Area 31,539㎡ (9,540 pyeong)

Parking Space 314 Vehicles in all

Number of Beds 361 Beds (including contingency beds)

1-2. Outline of the Project

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Major Services Basic Medical Care: In-Patient, Out-Patient, and Emergency Care (District Emergency Center

in Operation), Health Checkup Special Care: Hemodialysis, Specialization Center, Palliative Care, Oriental Medicine Care, etc. Public Services: Infectious and Chronic Conditions Management, Traveling Free Care, Free

Care, Foreigners and Homeless Care, Domestic/Sexual Violence Care, Youth in Need Care, etc. Funeral Hall

Medical Departments : 16 in all

(14 Regular Departments, 2 Optional or Irregular Departments)

Project Purpose: Local Hospital (District Public Hospital Modernization Project)

ClassificationInternal Med.

SurgeryCardiothoracic

SurgeryOb/Gyn

Pediatrics

Psychiatry

Orthopedics

Neurology

Neurosurgery

Urology

Rehabilitation

Anesthesiolog

y

Radiology

PathologyLab

Dentistry

Ophthalmolog

yENT

Relocated and Newly Built

Hospital○ ○ ○ ○ ○ - ○ ○ ○ ○ ○ ○ ○ ○ ○ ▲ ▲

Note) ▲ : Optional Opening or Irregular Departments

2-1. Main Contents

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Bed TypeTarget Bed Number

Bed Planning

2nd In-Hospital Care for Acute Cases

General Acute Conditions

230 60 General Beds (Per Unit) × 3 Units = 180 Beds

60 Mixed Beds (50 Beds + Isolated 10 Beds) × 1 Unit

= 60 Beds

60 Rehabilitation and Nursing Beds (Per Unit) × 1 Unit

= 60 Beds

20 Intensive Care Beds × 1 Unit = 20 Beds

Contagious and Isolated Cases

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Nursing and Rehabilitation

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Total 3005 Wards, 1 ICU

6 Wards in all (320 Beds, 300 Beds without IC Beds)

2-2. Main Contents

Bed Distribution

Target Bed Number: 300 Beds

Acute Conditions 2nd Care Bed Number: 240 Beds(Including 10 Isolated Beds for Contagious Cases)

Nursing and Rehabilitation Bed Number: 60 Beds

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ClassificationFunctional Classification and Spaces

Function Functional Spaces

In-Patient Wards

General Ward Standard Ward

Mixed Ward General Ward + Isolated Ward

ICU Comprehensive ICU (Internal Medicine, Surgery), Cardiovascular Treatment Room, Isolated Room

Out-Patient Care

General Outpatient Services Internal Medicine Dept., Surgery, Specialization Center, Others, Oriental Medicine, etc.

District Emergency Care Center ER

Others Patient Day Care Center, Health Checkup Center

Central Care

Surgery and Delivery OR, Delivery Room, and Neonatal Room

Imaging/Testing/TreatingRadiology, Pathology Lab, Anatomic Pathology Lab,

Physiological Function Test Room, Rehabilitation Treatment Room, Hemodialysis Room

Secondary Services

Pharmaceuticals and Supplies Pharmacy, Central Supply Room, Central Storage

Food Supply and Laundry Patient Meal Kitchen, Employee Cafeteria, Laundry Room

Funeral Services Funeral Hall

Others Mechanical and Electricity Room, Facility & Equipment Management Room

General Management and

Others

General ManagementHospital Management, Administration, Medical Record Room, Nursing Department, Management Team,

Administration Team, etc.

Education Facility Auditorium, Doctors’ Research Room, Hospital Staff Room, Staff Dormitory, Library, etc.

AmenitiesEmployee Amenities, Hair Salon, Barber Shop, Lockers, Flower Shop, Bakery Shop, Convenience Store,

Prayer Room, etc.

2-3. Main Contents

Hospital’s Functional Units

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- Dec. 2010, Private Investment Limit Approved

(KRW 54.1 Billion, 300 Beds)

- Sep. 2011, RFP (Request for Proposal) Established

- Nov. 2012, Project Announced

- Mar. 2013, Project Planning Report Evaluation and Selection of First

Negotiation Targets

- Mar. 2014, Conclusion of Agreement and Project Implementer

Designation

- Sep. 2014 Final Design Completed

- Aug. 2016, Construction Work Completed

- Sep. 2016, Move to New Hospital

- Oct. 2016, Opening (Nov. 10)

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Stage 6

3. Project Promotion Process

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Negotiation Period: Mar. 16, 2013 ~ Mar. 25, 2014 (approx. 12 months)

Composition of Negotiation Team

Managing Authorities

- KHIDI

- Technical/Operational/Financial/Legal Consulting Committee

- Choongnam Provincial Government and Gongjoo Hospital Persons in Charge

First Negotiation Targets (Project Implementers)

- Gongjoo Medical Center Corporation: A Consortium of 7 Companies including Construction Company, Financial Investors, Operators, etc.

Setting of Management and Operation Rights

The project implementers obtain management and operation rights after paying their donations to the managing authority at the time of completion of building construction

Period: 20 Years (2016∼2036)

4. Outline of Negotiations

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1. Gongjoo Hospital Relocation and Construction BLT Project

181. Gongjoo Hospital Relocation and Construction BLT Project

191. Gongjoo Hospital Relocation and Construction BLT Project

201. Gongjoo Hospital Relocation and Construction BLT Project

211. Gongjoo Hospital Relocation and Construction BLT Project

222. Gyunggido Icheon Hospital Construction BLT Project

232. Gyunggido Icheon Hospital Construction BLT Project

243. National Masan Hospital Modernization BLT Project

253. National Masan Hospital Modernization BLT Project

264. Yeongjoo Red Cross Hospital Construction BLT Project

274. Yeongjoo Red Cross Hospital Construction BLT Project

284. Yeongjoo Red Cross Hospital Construction BLT Project

294. Yeongjoo Red Cross Hospital Construction BLT Project

Thank you.

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