Build-Operate-Transfer (BOT). In the Philippines, the amended BOT Law (Republic Act 7718, July 1990) and its revised Implementing Rules and Regulations (IRR, 2012) provide the legal framework for public-private partnerships. The original BOT Law specified a set of processes to ensure that the government and the private proponent meet their obligations. However, the risk was with the private sector, while the government entity had assured returns (fixed fee, percentage, or both). The amended BOT Law provided a reasonable security package, clarified government support and incentives, liberalized the regulatory framework, provided and allowed private sector proponents to directly submit solicited and unsolicited proposals for infrastructure projects, provided a clear framework for structuring BOT contracts, and clarified the approval process.
There are several variations in the BOT scheme:
(ii) Build and transfer,
(iii) Build-own-and-operate or build-operate-and-own,
(iv) Build-lease-and-transfer,
(v) Build-transfer-and-operate,
(vi) Contract-add-and-operate,
(vii) Develop-operate-and-transfer,
(viii) Rehabilitate-own-and-transfer,
(ix) Rehabilitate-own-and-operate, and
(x) Other variations as may be approved by the President of the Philippines.
Franchising involves a franchisor-franchisee relationship built on standardized contractual arrangements. It requires (i) standardization of products and services; (ii) standardized procurement, packaging, and distribution; (iii) standardized accounting, billing, and payment system; and (iv) common branding.
Joint ventures involve sharing of profits, losses, and risks and are either corporatized (i.e., a joint-venture stock corporation is formed) or covered by an executive joint-venture agreement and public-private partnership (PPP) institutional arrangements. In a joint venture, the government agency contributes physical assets (e.g., building, land, hospital, facilities) and is a minority shareholder, but retains significant control over the use of the property. The government's share generates income or dividends, and the agency may benefit from better market conditions in the future. Performance standards are established and monitored.
Modalities. PPP in hospital management may adopt different modalities (e.g., a joint venture), although the assumptions in this guidebook are based on a straightforward contracting scheme/arrangement where a government organization forges a partnership with a private sector entity through a hospital management contract. However, in any type or modality of a PPP in hospital management, due diligence must be exercised to ensure that both the clinical and administrative aspects of hospital management are clearly understood by all parties concerned. The PPP arrangement may cover both the clinical and administrative aspects or only one of these areas. In both cases, the government entity must ensure that if it enters into a PPP arrangement, it is doing so with a clear understanding of what its roles are, the risks involved, the requirements of the arrangement, the extent of control that it is willing to share with its private sector partner, and similar considerations. The best financial arrangement should also be clearly identified (e.g., determining whether it is better to issue a straightforward management fee, opt for profit sharing, or adopt a mixture of both schemes).
Municipal Development Fund (MDF). The MDF is a special revolving fund that aims to establish an effective mechanism that would enable local government units (LGUs) to avail themselves of funds and local and international assistance for the implementation of various social and economic development projects. The MDF Office, under the Department of Finance, was created through Executive Order No. 41 to assume the administration of the MDF. The MDF Office, through its various programs, projects, and activities, provides assistance to LGUs in financing development projects, helps establish LGUs' creditworthiness, and promotes fiscal discipline.
Priority Development Assistance Fund. This is a funding mechanism in the Philippines released through the members of the House of Representatives. "This makes possible the implementation, in every congressional district, of small-scale but significant projects which cannot be part of large-scale projects of national agencies. These projects, which are generally in the form of infrastructure, health, education and social aid packages, directly touch the lives of district constituents."1 While this source of funding is sometimes criticized for several reasons, among them the seeming lack of transparency in disbursements,2 local governments should see this as a possible resource for the improvement of health facilities and services.
Public-Private Partnership (PPP). A PPP is a cooperative venture or contractual arrangement between public agencies and private sector partners toward clearly defined public or social needs. It utilizes built-in expertise, experience, and human resources available in the private sector in the provision of services that are normally the responsibility of government. PPP involves a sharing of resources, risks, and benefits between the public and private providers based on clearly defined terms of agreement. A PPP arrangement includes a financial arrangement that clearly defines how the initiative will be financed and whether financing will be shared. It needs a strong management information and monitoring system to support the definition of targets and performance evaluation.3
RA 9184 and its Implementing Rules and Regulations (IRR). The Government Procurement Reform Act (RA 9184), along with its IRR, are the most important reference documents in government procurement. The law, which took effect on 26 January 2003, provides for the standardization and regulation of the procurement activities of the government. The IRR, which took effect on 8 October 2003, initially covered public procurement, but was revised in 2008 to include procurement for foreign-assisted projects in agreement with various development partners. Hence, the Revised IRR of RA 9184 came into being on 22 July 2009.
Universal health care (UHC). Universal health care is often defined as the state where all people have access to needed promotive, preventive, curative, and rehabilitative health services, of sufficient quality to be effective, and where such access does not cause them to suffer financial hardship when paying for these services.4 Universal health coverage has therefore become a major goal for health reform in many countries and a priority objective of the World Health Organization.
Meanwhile, the UHC Study Group in the Philippines defines UHC as "the provision to every Filipino of the highest possible quality of health care that is accessible, efficient, equitably distributed, adequately funded, fairly financed, and appropriately used by an informed and empowered public."5 In tackling PPP under a UHC framework, "needs" are translated to "demands" so health planners and project implementers are on a common ground. This is particularly important in the feasibility study stage, where viability of PPP projects should be thoroughly scrutinized.
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1 Message from the Speaker of the House, House of Representatives, Quezon City, Philippines. www.congress.gov.ph
2 The current administration has imposed new and stricter measures in the release and utilization of the funds through the National Budget Circular 537 issued in February 2012.
3 ADB. 2011. Public-Private Partnership in Health. Inception Report. Manila. (TA 7257-PHI).
4 Adapted from pronouncements of the World Health Organization.
5 Universal Health Care Study Group. www.universalhealthcare.ph/history