2.3 Expected Outcome

A PPP is a complex undertaking that needs to deal with a lot of stakeholders. For example, hospitals need to be licensed; therefore, the country's health department is a major partner and stakeholder. (The responsibility for the hospital license may depend on the form of PPP that an organization wants. For example, an organization may decide to offer a management contract only or undertake a joint venture.)

The identification process in Step 2 enables the organization to develop a stakeholder analysis. The stakeholder analysis is important in the development of the PPP as it allows project developers to understand the roles of prospective partners. The following discussion helps users to understand the role of likely partners and stakeholders.

Local government components are vital partners. In the Philippines, the Sangguniang Panlalawigan (Provincial Council) is one such a partner. It not only gives legitimacy to any PPP initiative but also the necessary budget support. Some Philippine governors have taken an initial step by convincing the council to enact a PPP code that is not limited to the health sector. Because PPP is a fairly new phenomenon for many local governments, members of the bids and awards committees may have to undergo training on such matters as the Build-Operate-Transfer (BOT) Law or the Procurement Law. Chief executives of municipalities are also vital partners since they are in charge of public health services.

Social health insurance organizations are major partners. In the Philippines, PhilHealth is considered as the key provider of universal health care, which private investors view as the primary mitigant to payment risks associated with catering to the needs of indigents. This may serve as a form of guarantee for the payment of management services.

Auditors may not be officially involved in the initial steps of developing PPP projects. However, the organization will benefit by ensuring the participation of government auditors, even in an advisory capacity, to ensure that transactions are managed in a way that addresses typical audit issues (e.g., lack of feasibility study, sharing of revenues, etc.).

Personnel concerns invariably crop up when PPP initiatives are discussed. The local civil service commission can provide assistance regarding these concerns, including options for current staff who may be affected. Acceptance and ownership of the PPP initiative depends on allaying fears, real or imagined, of the provincial personnel.

Government financial institutions like the Development Bank of the Philippines have funds dedicated to the health sector (Box 2.4). Local governments in the Philippines have an advantage when dealing with government banks because, unlike in private banks, collateral is not required. The internal revenue allotments of local governments are guaranteed sources of loan payments. Government banks can also provide advice to interested partners. Each country will have its own financing facili-ties. PPP project developers are encouraged to look at the financing landscape diligently to avoid costly mistakes.

Depending on the modality that the organization hopes to develop (which should have been agreed upon already in Step 1), it may look at capital assets acquisition, such as the construction of a hospital building and purchase of hospital equipment. It also needs to consider the human resources component, working capital for inventory buildup, and financing of receivables. The organization (and even its private partner) may consider several financing options, such as bank borrowing, securing of grants and overseas development assistance funds, use of financial instruments, and the Project Development Assistance Fund (see the glossary for a description of the fund). The organization may also consider accessing the Municipal Development Fund.

Should an organization consider bank borrowing, it should look into the requirements, which may include the submission of a local government resolution authorizing its borrowing and designation of authorized signatory to the loan, submission of financial statements for the last 3 years, and the other standard requirements.

The National Economic Development Authority in the Philippines has an office dedicated to PPP. There are prescribed processes that a proponent has to undergo depending on the form and amount of the PPP. (The amount determines whether a PPP initiative is a regional or national concern.) These national government organizations can provide technical assistance on the requirements of the process.

Private organizations and associations can also provide technical assistance to interested PPP project developers. (A directory of health-and PPP-focused organizations is in Annex 6.)