Turkish health ministry to scrap public-private model for city hospitals

The Turkish government has decided to abandon the Public-Private Partnership (PPP) model in city hospital projects, Minister of Health Fahrettin Koca has announced during budget talks, Deutsche Welle Turkish reported.

The change has come due to the high cost of the PPP model, which allows private companies to build on Treasury land and operate infrastructure permanently or temporarily, and a “transfer of operating rights” model.

There are currently 10 city hospitals in operation, with 10 more under construction, and public spending for them is expected to rise exponentially in coming years.

Minister Koca said city hospitals would be built using budget resources in the future.

Turkey in the next three years is set to transfer 57.48 billion liras ($ 10 billion), some 27.8 percent of the budget for the Ministry of Health to the private sector.

According to official data from the Ministry of Health, city hospitals operated by the private sector will receive 31 billion liras ($ 5.4 billion) for rent and 26 billion liras ($ 4.5 billion) for service charges until 2022. The payments will continue to increase for up to 25 years.

City hospitals are built on free public land by private companies, who then rent the facilities to the state over at least 25 years. The state also guarantees that the hospitals are used at a minimum 70 percent capacity.

Main opposition Republican People’s Party lawmaker Mehmet Bekaroğlu called the PPP model a big black hole in the budget. “In this model, the state waives an income of 130 billion dollars for any 59-billion-dollar investment,” Bekaroğlu said.

There has been public resistance to the projects as well, as the hospitals are built outside city centres and  can cause the neglect or shutting down of public hospitals in densely-populated areas.

The total project cost of the 20 city hospitals was $ 11 billion.

A starting fund of 10.41 billion liras ($ 1.8 billion) has been allocated in the 2020 budget for the projects. Annual payment to city hospitals will increase to 16.80 billion liras ($ 2.92 billion) in 2021, and 21.91 billion liras ($ 3.81 billion) in 2022.

The 2018 audit by Turkey’s Court of Accounts (Sayıştay) found that the Ministry of Health unlawfully committed to assume debts for the private sector. 

Minister Koca said the ministry has not made such a commitment.

According to the audit, the ministry is required to provide a court order against companies failing to fulfil their contractual obligations, but the companies do not have the same requirement to demand compensation in case of the annulment of the contract, which the Court of Accounts considers to go against fairness and public interest.

The audit also found that the contract for the city hospital in southern Mersin province referred resolution of disputes to Istanbul courts, while seven others referred to London, which goes against Turkish law.

The audit also found discrepancies between different copies of the same contract on city hospitals and some addendums.