ppp model in organization of health services:...

International Conference: “Global Challenges in Public Private Partnerships: ��

Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013, University of

Antwerp, Belgium

Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences

1

PPPMODELINORGANIZATIONOFHEALTHSERVICES:TURKEYCASE*

Assoc.Prof.KorayKarasu

UniversityofAnkara

After1980withthe implementsofneo-liberalpoliciessuchasprivatizationandderegulation,both

functionsandorganizationalstructureofthestatehavebeenre-determined.Ithasbeenseenthatthe

alternative methods grounding on providing substantially from the market has superseded the

traditionalmethodsinproduction/deliveryofpublicservicesinthisperiod.Partnership/cooperation

modelswhicharefoundedinvariouswaysandcalledasPublic-PrivatePartnerships(PPP)inthewidest

sensearealsoacceptedamongthealternativemethods(Flinders,2005:218).Utilizationofprivate

sector has been seen for many years in the organization of public services. Nevertheless, wide-

spreadingofPPPmodelhasbeencomeintoquestionfromthebeginningof1990swhenthe“riseof

contractinthepublicsphere”wasexperienced(Auby,2007;Osborne,2000:1).

IsPPP,whichisdescribedasathirdway,apublicprocurement,atypeoforganization,servicedelivery

method, method to have public services provided by private entity, finance method?1 PPP is an

inclusivedefinitionthatincludesinsomefeaturesofalloftheseranged.Inthisrespect,itisnottrue

toregardPPP limitedwithanyof thequestionsabove.PPP isamodel thatapartnership inwhich

private organizations from various sectors (such as construction, service and finance) exist the

*Citation:Karasu,Koray(2013),“PPPModelinOrganizationofHealthServices:TurkeyCase,”Paperpresentedat the International Conference: Global Challenges in Public Private Partnerships: Cross-sectoral and Cross-disciplinarySolutions?6-7November2013,UniversityofAntwerp,Belgium.1Undoubtedly,PPPisaprivatizationmethod.PPPisdescribedinthewaythat“publicinvestmentswhichwillbemadeinfutureisprivatizedtoday”intheofficialreportsofthePrimeMinistry(Basbakanlik,2008:21).

International Conference: “Global Challenges in Public Private Partnerships: ��Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,

University of Antwerp, Belgium

2 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences

partnership is included in theorganizationofpublic serviceswithdifferent roles (providinggoods,

servicesandconstructionwork),administrationrelationisbaseduponthecontract,withthisaspectit

embodiesthedistinctivefeaturesofcontractualrelation,andthatforeseestheflexibleorganization.

InrelevantliteratureagreatnumberofPPPhasbeendiscussedwithdifferentdenominations.Among

PPP models, “design-build-operate”, “design-build-finance-operate”, “design-build-finance-own-

operate”, “build-operate-transfer”, “build-own-operate”, “build-own-operate-transfer” are ranked

(OECD,2008a).WithitsmanyfeaturesPPPdifferentiatesfromthemethodsoftraditionaldelivering

serviceorpublicprocurementorconcessionsorotherformsofprivateparticipation(e.g.outsourcing)

whichhavebeenpreviouslyimplemented.Provisionofgoods,servicesandconstructionworkenbloc

from one single organization, finance method, and the roles and the risk undertaken by the

governmentandthemarketcouldberankedatthefirstglance,amongthefeaturesmakingthemodel

different.

PPPpreference is justifiedfundamentallywithtwobasicneeds.One isgettingtheprivatefinancial

support toovercomebudget constraints/limitations in theorganizationofpublic services, and the

other is theutilizationof the capacityand techniquesof theprivate sector (LI-AKINTOYE,2003:3;

OECD, 2010: 22; Council of Europe, 2004: 3). PPPwhich is brought into questionwith the aim of

efficiencyandreductionofpublicexpendituresis,infact,aproductionofthepursuittoextendand

deepencommercializationandmarketizationinpublicservicesinanewphasefollowingprivatization

anddecentralization (Leys,2011).PricewaterhouseCooper (PwC),consultancy-audit firm,described

PPPmodelasa“revolution”(PwC,2010:1).Inthiscaseonequestioncancometoone’smind:What

arethefeaturesofPPPmodel,unlikethepreviousprocurementororganizationmethods,whichcause

themodeltobecalled‘revolutionary’?PwCdefinedthemodelasaprofitableinvestmentarea,which

haslong-standinggrandpotentialundergovernmentguarantee,intermsoftheprivatesectorinthe

verysamereport(PwC,2010:5).Standard&Poor’sperformedtheassessmentofhighprofitabilityand

lowriskandrecommendedthismodeltoinvestors(Standard&Poor’s,2005:14-16).IntheUSA,large-

scaleinvestmentswhichwillbemadewithPPPmodelhavebeendescribedas“fromdreamtoreality”

byfinance,constructionandmanagement-consultancyfirms.2Asit isseeninthesestatementsPPP

modelisaconsiderablyprofitableinvestmentareawithregardtotheprivatesector.Consequently,

2“TheIntegratedHealthCampus—FromDreamtoReality”RealEstateJournal,February12,2010,p.14.




duetothegovernmentguaranteeslowrisk/highprofitabilityratiooftheprivatesectorhasbeenput

forthinmanyresearches(Parker-Hartley,2003:97).PPPisstatedgenerallywiththe“win-win”formula

in relevant literature or the statements of governments implementing themodel (Gerrard, 2001;

Miraftab,2004:89).Whatkindsofacquisitionwemayspeakforpublicsector?Inthisstudywewilltry

tolookforananswertothisquestionfromcertainaspectsspecifictoTurkey.

1.AIMOFTHESTUDY

ThisstudyisaimingtoanalyzealargenumberofIntegratedHealthCampus(IHC)orcityhospitalswhich

are in thetenderprocess in thehealthsector inTurkey,andwhich is tobeconstructedbypublic-

privatepartnershipmodel. Inthisstudy,analyseswhichfocusontheadministrativestructureand

processwillbemade in two interrelated levels.The first ismacro level (organizationofhealthcare

servicesingeneral);thesecondismicrolevel(organizationalstructure,processandrelationsinPPP

hospitals inparticular). Thestudiesonboth levelwillbemadewithintheframeofpolicyprocess,

decisionmakingprocess,tenderprocess,administrativevalues,organizationalstructureandrelations

(aspectsofintraorganizationalandinterorganizational).Thepurposeofthisstudyistopresent,ata

certainlevel,thepointsthatPPPmodeldiffersfromtraditionalpublicprocurementorconcessions.

Inthisstudy,thePPPprojectsareevaluatedwithacriticalpointofviewalsotestedintermsofthe

hypothesisofneo-liberalorganizationtheoriesthatthemodeldependson.

Themethodologyof thestudy isbaseduponadetailed literature review, legal regulations,official

documentsandanalysisofthePPPpilotprojects.Datawasobtainedfrompubliclyavailablesources.

Thedataofprojectsarereceivedforconsideration.However,theanalysiswillbemadebasicallyon

themostadvancedprojects.Aswedon’thaveaPPPhospitalenteredintoserviceyet,wecan’tgetany

directevidenceofoutcomesofPPPmodels.Therefore,theoutcomesofthePFImodelinUK(whichis

paralleltoTurkishapplications)willbeanalyzedincomparativeperspective.

2. WHY PPP PREFERENCE IN TURKEY: NECESSITY OR POLICYTRANSFER?

PPPmodelhasbecomerapidlywidespreadbothhorizontally(varioussector)andvertically(ineach

sector) in recent years. PPPhasbeenwidely seennotonly in thedeveloped countriesbut also in




transitionaleconomies(Yang&Wang,2013:1).PPPhasbeenmoreandmorewidelyimplementednot

onlyinthesupportservicesbutalsointheorganizationofbasicpublicservices(thecoreservice).The

implementationsofPrivateFinancingInitiatives(PFI)startingintheearly1990shavebecomerapidly

widespreadinotherstatesintheforthcomingyears.PPPmodelhasbecomecommoninrecentyears

inTurkeyaswell.Inhealth,education,transportationandinfrastructuresectors,PPPprojectsremain

ontheagendawithnewlegalregulations.PPPprojectsparticularlyinthehealthcarefieldhavebecome

moreprominentthanothersectorsconcerningbothinnumberandfinancialsize.

HowcanweexplainthepreferencesofPPPmodelinTurkey?PPPpreferenceandwidespreadingof

themodelshouldbethoughtregardingtopolicytransferintermsofperipheralcountriesespecially

like Turkey. In his detailed research Holden draws a parallelism between widespreading of PPP

implementations in various states and health industry exportation policy of British government

(Department of Health of UK, HerMajesty’s Treasury and the organization called as UK Trade &

Industry) (Holden, 2009). It is possible to evaluate the onsite visits of the committee under the

presidency of Minister of Health that examines PPP implementations in UK, within this scope.

DevelopmentsinPPPmodelinTurkey,intheearlyyears,havebeendirectlyconnectedwithEuropean

Unionasinmanyreforms.IthasbeencriticizedinProgressReportsofEuropeanCommissionthata

legalregulationonPPPpertinenttoEUlegislationhasnotbeenmade,andinPPPimplementationsthe

expected point could not be reached. During the EU harmonization process, State Planning

OrganizationhascontinuedthepreparationsforthePPPlawdraft.

Inrecentyears,governmentshaveusedsomecomparativeanalysismethodsinpointofbeingbasefor

thechoiceconcerningthemethodofprovidingtheservice;moreover,theyhavemadeacommitment

toimplementthesemethods.Nearlyallofthesemethodsdependentoncost-benefitanalysishave

been among the essentials of governments implementing neo-liberal program.3 For instance,

RegulatoryImpactAnalysis(RIA)whichattributesproductionofapublicservice,undertakinganew

service,establishinganewpublicorganizationby the state to the resultofadetailedcost-benefit

analysisisoneofthesemethods.AnothermethodisPublicSectorComparatorusedtodeterminethe

3Wehavethoughtthatsuchmethodsaimingthatpublicpolicieswillbedeterminedaccordingtoananalysisoncost-benefitground,excludingthesocial-politicalaspecttotallyandgroundingon“technicalrationality”shouldbediscussed.ThemethodssuchasRIAputforwardbyneo-liberalorganizationaltheoriesfrequentlyappearas‘scientific’‘technical’legitimizationmeansforthepreferencesofgovernmentsnottoproducepublicservice.




choicesrelatedtoserviceorganizationinstatessuchasUnitedKingdomandAustralia(Grimsey-Lewis,

2005:354;OECD,2008a:69;NationalAuditOffice/NAO,2002).

In Turkey, as required by laws, for the certain amount of expenditure and investments RIA is an

obligation.Inthatcase,havetherecentlytenderedPPPhospitalsbeenpreferredbecauseofthereason

ofvalueformoney,asaresultofRIAanalysis?Weshalllookforananswertothisquestionbylooking

throughdecisionprocessofhealthcarePPPsinTurkey.AccordingtoPPPLaw,HigherPlanningBoard

(HPB)4decidesthehealthcarepremiseswhichwillbeconstructedwithPPPmodel.ThePPPlawhas

foreseenthatthePreliminaryFeasibilityReportcontainingthecomparativefinancialanalysisabout

feasibility, price, guarantee and risk shall be presented to the HPB by Ministry. However, when

prefeasibilityreportspresentedtoHPBbytheministryhavebeenanalyzed,ithasbeenseenthatthese

reportsdonotcontainacomparisonbetweenthemethodsbybeingbasedupondetailedcalculation

andanalyzes.Inthesuperficialreports,ithasbeengivenplacemostlytoimplementationsintheworld

andthebenefitsexpectedfromthemodel.Thelackofsuchanalyzesmakeitdifficulttoestablisha

relationbetweentheadministrationrealityandapplicabilityofthemodel.5

It ispossibletocarryouttheevaluationof“policytransfer”fornearlyall thepublicadministration

reforms in Turkey. Policy transfer has beenmore specifically seen in the countries that the legal

regulationandtheimplementationstrategieshavebeenpreparedsubstantiallywiththemethodof

copylikeinTurkey.AgreatnumberoflawssuchasPublicFinanceManagementandControlLaw,(Law

No.5018), LawonRegionalDevelopmentAgencies (LawNo5449)havebeenbased largelyon the

translatedtexts.AsimilarsituationisalsoeffectivefortheNewPPPLaw.PPPmodelwhichhavebeen

implemented in thehealthcare field inmanycountries fornearly20years isalsonotanauthentic

modelforTurkey.PPP,oneoftheprominenttargetsofthegovernmentinthehealthcarereforms,is

notamethodofdeliveringservice,afinancialmethodoramodeloforganizationwhichwascreated

foritsownneedsofTurkishhealthcaresystem.6

4TheBoardcomposedofseveralministersandbureaucratsunderthepresidencyofPrimeMinister.5TurkishMedicalAssociation(abbreviatedasTTBinTurkish)-anationalprofessionalassociationofphysicians-madeacomparisonbetweentraditionalmethodsandPPPbasedonthedataoftheMinistry,anddeducedthatPPPmodelhashighercosts.(www.ttb.org.tr)6 As the PPP is a model shaped by policy transfer, it is significant to study the consequences of PPPimplementationsoftheoriginalcountry.Inthisstudy,ithasbeenreferredtothereportsofvariousgovernment




TheeffectsofPPPwhichhavebeenmademodelandimplementedbythedevelopedcountrieshave

beenquitedifferentintheperipherycountries(includingTurkey,aswell)havingdifferenteconomic

andsocialorganizationforms.PPPhasbeenintenselycriticizedbyvariousorganizationsinterestedin

thehealthcarefieldsuchasWorldHealthOrganization7,BritishMedicalAssociation,8TurkishMedical

Association,9TurkishDentalAssociationwithregardstonotablyitsimpactsonequalservice,rightto

health,righttochooseandsocialstate,anditssocialgroundshavingthepro-marketcharacteristic.In

addition they criticize the rupture of the relation between tax revenue and public service, and ill

workingconditionsofthehealthcareworkers.10Aconsiderablepartofpublicunionandlaborunions

hasopposedaswell.Threebigoppositionparties (CHP,MHP,BDP)havedissentedto thePPP law

during the assembly debates. As stated above, the Council of State lodged an appeal to the

Constitutional Court on the ground that the previous PPP legal regulation conflicts with the

Constitution.(Thiscasehasnotendedyet).Inregardsofthecomponentsofservicesithasbeenseen

that a significant part is against PPP model. The criticism of these organizations about the

consequencesofPPPmodelcouldnotbeignored.Inthesameway,thecriticalviewsoftheunions

which have mentioned the adverse impacts of the implementation of the model over the labor

agenciesinUKwhichhavecontainedsignificantcriticismaboutPPP.TheexpressionsinHMTreasuryreportspublishedin2012areremarkable:“ItrecognizestheconcernswithPFIandtheneedforreform.Therehasbeen

widespreadconcernthatthepublicsectorhasnotbeengettingvalueformoneyandtaxpayershavenotbeen

getting a fair deal now and over the longer term… the PFI procurement process has often been slow and

expensive…there has been a lack of transparency… inappropriate risks have been transferred to the private

sector…”(HMTreasury,2012:5-6).PPPmodelhasbeenimplementedinUKforover20years.Asit isseen,despitetheelapsedtime,theproblemswhichshouldbeovercome,andthenecessitythatPPPmodelshouldbereformedhavebeenstillmentioned.Theemergentoutcomeshaveresultedfromthestructuralproblemsofthemodel,notfromthebadimplementationsinPPPprojects.TheseoutcomesinUKshouldsetanexampleforthecountriessuchasTurkeyjuststartingtonewlyimplementthismodel.AsitcanbeseenintheTreasuryReport(HMTreasury,2012),BritishgovernmenthasvirtuallydesiredtogetridofbadheritageoftheunsuccessfulPFIimplementationswiththeproposalofanewnamingasPrivateFinance(PF2).7InBulletin,theperiodicalofWorldHealthOrganization,therearemanycriticalarticlesaboutPPPmodel.Forexample,(Mckeeetal,2006).8HouseofCommons,2011:19-22;www.bma.org.uk.9 TTB has criticized PPP projects in the healthcare field, and brought a great number of actions. See:www.ttb.org.tr10InthecommonreportofOECDandtheWorldBankexpressingthat“strictglobalupperlimit”shouldbesettotheexpendituresoftheSocialSecurityInstitution,ithasbeenmentionedthatextrapaymentsinrespecttoboththemedicalservicesandthehospitalityservicesforthe‘fiscalsustainability’shouldbecomewidespread(OECD,2008b:115). ItcouldbethoughtthatwhenPPPhospitalsenterintoservicewithintheframeworkofthesepolicies,thecitizenswillfacewiththeextrapaymentslikepatientshareforthe“comfortable”servicesaccordingas intheothercountries. InPPP implementationswhichthefinanceofservicehasbeenremovedfromthebudget,benefitingequallyfromthehealthcareservicehasbecomelesspossible(Ataay,2008).




relationsandthehealthcarepersonnel’srightsshouldalsobetakenintoconsideration.Nonetheless,

thegovernmenthasgivenaninfluentialpoliticalsupporttoPPPmodel,particularlyinrecentmonths,

despitethewholeobjections.

3.PPPINHEALTHSERVICESINTURKEY

Thehistoryof theregulationsongettingprivatesector to render thepublic services inTurkeyhas

datedbacktooldtimes.TheConcessionsLawenactedin1910isoneoftheexamplesofthis.Thefirst

legalregulationonthebuild-operate-transfermodelisthelawenactedin1984(LawNo.3096).During

1990s,manylawswereenactedlikethePrivatizationLaw(LawNo.4046).Involvingprivatesectorin

deliveringpublicserviceshavebecomewidespreadparticularlyinthefieldsofenergy,transportation

andinfrastructurewhentheprovisionthatthebuild-operate-transferandthealikecontractscouldbe

pursuanttotheprovisionsofprivatelawenteredintotheConstitutionin1999.

TheBasicActonHealthServices(LawNo.3396)enactedin1987isoneofthefirstimportantstepsof

marketization and commercialization in the healthcare field in Turkey. The autonomous health

enterprisesandoutsourcinghaveobtainedalegalgroundthroughthislaw.Theessentialuptrendto

becomemarketableinthehealthcarefieldhasbeenwitnessedwiththeJusticeandDevelopmentParty

comingintopowerin2002.TheHealthTransformationProgrammepublishedbythegovernmentin

2003isthemainpolicydocumentofthereformsinthehealthcarefield(MoH,2003).

In2005,anarticlehasbeenaddedtotheBasisActofHealthServices(LawNo.3396)withtheLawNo.

5396.ThePPPmodelthatwearedealingwithhasfirstlyenteredintoTurkishpublicorganizationwith

thisSupplementaryArticle.In2006,subsequenttothisPPPLaw,theRegulationcameintoforce.Even

ifthelegalregulationhadbeenenactedin2005,thefirstPPPtenderprocessinthehealthcarefield

hasstartedinTurkeyin2009.ThefirstPPPProjectagreementwassignedin2011(KayseriIHC).11From

2011untilnow,manylarge-scaledPPPhospitalswereputouttotender,andthecontractwassigned

forsomeofthem.

The legal basis of the PPP was only one article between 2005 and 2013 and this caused serious

problems.Makinglarge-scaledPPPtenderswithoutanysolidlegalgroundhasbeencriticized.During

11Anyprogressconcerningthisprojectcouldnotbemadeduringthelasttwoyears.




the tenderprocesses,many individualsandNGOshavebroughtanaction forPPP. In the lawsuits

broughtforAnkara-Etlik,Ankara-BilkentandElazighospitalsbyTurkishMedicalAssociationadopteda

motion for stay of execution, and applied to the Constitutional Court with the claim of

unconstitutionality.Thelawsuithasnotbeenconcludedyet.

InTurkey, since2009TheMoHhasbeenconducting tendersandcontractnegotiations for19PPP

HealthProjectswithaninvestmentamountedofapproximatelyUSD5billions.

PPPHealthProjects:PresentCondition(September2013)12

3.1.NEWPPPLAWONHEALTHCARESECTOR

Thegovernmentstartedtoprepareanewlawmostlikelytoovercomethelegalproblemsmentioned

above.Whenwelookatthelegislationprocessofthenewlaw,wecanseethattheoppositionparties

and professional organizations have not supported PPP projects. However, theNewPPP Lawwas

accepted in the Parliamentary in March 2013. (Law on Building and Renewal of Facilities and

ProcurementofServicesthroughPublicPrivatePartnershipModelbyMoH)(LawNo.6428).Thus,PPP

hasobtainedanewlegalgroundinthehealthcarefieldwiththisnewlaw.

Althoughitisbroaderthanoldlaw,andspecialtoPPP,theNewLawhasmanydisputablematters.The

existinglegalgroundinrespecttoPPPinTurkeyhasnotbeensufficientandsolidfromtheinvestor’s

12 Source: Official web site of MoH (PPP Branch), http://www.kamuozel.gov.tr/koo/?q=en/main-page,01.09.2013.13Ithastobestatedthatnoprogresshasbeenobtainedintheprojectsunderconstruction.

Phase NumberofProjects NumberofBedsinTotalConstruction13 4 9.850Contract 8 11.628FinalBid 3 4.170Bid 1 1.180

Pre-Qualification 1 1.060Pre-QualificationTenderAnnouncement 2 1468Total 19 29.356




point of view.14 There are legal and institutional deficiencies and disparities in terms of PPP

implementations.ThissituationhasmadePPPapotentialconflictfield.

AccordingtotheNewLaw,thedefinitionandthescopeofPPPmodelinthehealthcarefieldhavebeen

asfollows;

1. Constructionofthehealthcarepremise:TherealpropertiesownedbytheTreasurythrough

establishingfreeofchargerightofconstructioninfavorofsuchrealpersonsorprivate

lawlegalentitiesforaperioduptothirtyyears,

2. Renovationoftheexistinghealthcarepremises,

3. Consultancy,researchanddevelopmentservicestobereceivedfortheseprojects,

4. Getting some services, which require advanced technology or high financial resource,

rendered.

UndertheNewLaw,asitwasundertheoldone,allabovementionedworkswillbetransferredenbloc

toonesingleentityformedbyvariousprivateorganizationsfromvarioussectors(suchasconstruction,

serviceandfinance).ThisentityisajointventureandiscalledSpecialPurposeVehicle(SPV).

Intheformerlaw,adistinctionasmedicalservicesandnon-medical(medicalsupportandcommercial)

services was made and the medical services were not absolutely included in the services to be

transferred.Inthenewlaw,intermsofservicessuchadistinctionwasnotmade.Aframeworkabout

PPPhasnotbeendetermined.Themedicalserviceshavethefeaturesmentionedintheitem(4)above.

Inthelaw,thereisnotanyexplicitprovisionwhetherthemedicalserviceswillbeamongtheservices

to be transferred to SPVwithin the context of this article. The government has not alsomade a

statementonthissubject.Thisarticleofthelawhasbeensubmittedtothecourt.

14TheRegulationforenforcementofthisnewlawhasnotbeenenactedyet.However,tendershavecontinued.




AccordingtotheNewLaw,PPPcontractwillbesubjecttotheprovisionsofprivatelaw.15Inthenew

law,thetermofcontracthasdroppedfrom49yearsto30years(exceptfortheinvestmentperiod).

Directgovernmentguarantees16andexemptionshavebeenobviouslyincludedinthenewlaw.

ThePPPLawhasgivendecision-makingauthoritytotheHighPlanningCouncil(HPB)theconstruction

ofanewpremisethroughPPP.HPBhasallowedmanyPPPhospitalstobeconstructedonthecondition

thattheywillnot“increasethenumberofbed”.17Itisnotpossibletostatethatthenumberofbedhas

increasedwithPPPhospitalsbecauseithasbeenforeseenthatagreatnumberofpublichospitalswill

beclosedwiththeimplementationofthemodel.Inthisrespect,itismorecorrecttocallPPPhospitals

asarenovationprojectratherthangrowth.

3.2. WILL THE MEDICAL (CORE) SERVICES BE TRANSFERRED TOPRIVATECOMPANYINPPPPROJECT

Theunderlyingacceptanceoftheneo-liberalreformsinthelastthirtyyearsisthatthewholepublic

services includingthecoreservicecouldbeoperatedaccordingtotheprinciplesofmanagerialism.

ShouldthemedicalservicesbeincludedinPPPmodel?Thesubjectwhetherthemedicalservicecould

betransferredtotheprivatesectorinPPPprojectshasbeendiscussedintherelevantliteratureand

in the reports of the international organizations playing a crucial role in formation of themodel

(Edwardsetal,2004:16;OECD,2008a).InmanyEuropeancountries,themedicalserviceshasbeen

gradually included in PPP implementations. For instance, Alzira Hospital in Spain has been shown

amongthemodelimplementations.IntheoncologyhospitalconstructedwithPPPmodelinGermany,

themedicalserviceshavebeenincludedintheprojectaswell(PwC,2010:8,20).

TheinclusionofthemedicalserviceinPPPmodelhasbeenbasedonapragmatistreasonratherthan

being principal. The MoH has clearly exhibited its choice of becoming marketable in the Health

15AlthoughithasbeenstatedthatPPPcontractsisa‘contractofprivatelaw’inthenewlaw,PPPisakindofconcession.Forthisreason,PPPcontractsaresubjecttothepubliclaw(Karahanoğulları,2011).Thecontractsignedwith the SPVwill naturally include the provisions concerning right to health, organization of healthservices, andworking conditions of healthcare personnel. All of these fields are directly the field of publicservice,andcouldnotberegulateddirectlyinaccordancewiththeprovisionsofprivatelaw.InthecasethatthemedicalservicesaretransferredtoSPV,thelegalstatusofthesecontractswillgainfurtherimportance.16Forexample,Article8/a,hasguaranteedtheoutsourcingover500millionTurkishliras(about250millionsUSD)bytheTreasury.17See:HPBDecision,27.9.2009,B.02.1.DPT.0.05.01.233-3507.




TransformationProgramthatitisinitiatedin2003.TheMinistryhasacceptedtransferofthemedical

services inat theprincipal level,aswell.Nonetheless, in the firstPPPLaw(2005)andtherelevant

regulations,themedicalserviceswerenotincludedinPPPproject.Consequently,inthetenderslodged

duringtheperiodthatthelawwasinforcethemedicalservicedidnotexistintheprojects.

New PPP Law (2013), has not given place to the differentiation of ‘medical services-non-medical

services’asitwasintheformerlaw.Insteadofthis,aprovisionwhichveststheadministrationwith

broader discretion has been inserted. It has been resolved that “The services required advanced

technologyorhighfinancialresource”couldbeincludedinPPPprojects.Inthiscaseitcouldbesaid

thatthemedicalserviceshavingthesecharacteristicscouldbealsoincludedinPPPproject,andare

enabledtobetransferredtotheprivatecompany.ThegovernmentdepartmentsincludingtheMoH

havenotmadeanystatementonthissubject.Thegovernmenthasfrequentlyemphasized“public”

hospitalinitsstatements.IfitisconsideredthattheonlylinktomaintainthecontinuityofPPPhospital

aspublichospitalisthemedicalservice,itcouldbestatedthattransferofthemedicalservicesarenot

onthefrontburner,atleastforthenonce.

From2005untiltoday,thegovernmenthadpreferrednottoincludethemedicalservicesinPPPmodel,

becauseof thematurity levelof themarket. Thepoint,whichhasdetermined thepreferencesof

governmentsconcerningthatthemedicalserviceshavenotbeenincludedinPPPyet,isthematurity

levelofthemarket.

Providing the medical services by public in the current PPP implementations in terms of current

healthcaremarkethasimportanceinthesenseofinternalcycleofthesystem.Furthermore,wecould

mentionanecessitycausedbythemarket.Intheeventthatthemedicalservicesaretransferredto

theprivatecompanybyincludinginthemodelaswell,PPPmodelwillbetransformedintothemethod

of“build-operate-transfer”implementedduringthepreviousperiods.Inthiscase,PPPhospitalwillbe

indifferent from any private hospital in terms of healthcare enterprises. Transfermeans that the

privatecompanyundertakesagreatnumberofrisksparticularlytheriskofdemand,andthissituation

is not attractive for the capital. However, continuance of providing the medical service by the

governmenthasremovedtheriskofdemandoftheprivatecompanyintermsofthemedicalsupport




servicesandcommercialareas.Inbrief,thereisapragmaticpreferenceregardingthematuritylevel

ofthemarketinrespecttothetransferofmedicalserviceinthecurrentsituation.

TheroleoftheMoHintheorganizationofhealthcareservices,thelevelofbecomingmarketablewill

changeconcerningwhetherornotthemedicalserviceinPPPimplementationistransferred.Inthis

respect,theuseornon-useofthe“authorityoftransfer”iscrucialforthefutureofPPPmodel.

4. STRUCTURE OF ORGANIZATION AND RELATIONS OFADMINISTRATIONINPPPMODEL

PPP is amodel thatwill influence totally the production process of healthcare service through its

dimensions such as organizational structure, intra-organizational relations, inter-organizational

relations,workingconditionsofhealthcarepersonnelandformofemployment.

What kindof organizational structurewill shapeatmacro (healthcare field as awhole) andmicro

(withinthePPPhospitals)levels,afterthetenderedlarge-scaledPPPhospitalswillenterintoservice?

In thecurrentorganizational structure,greaterpartofhospitals is in theorganizationof theMoH.

Revolving fund enterprises exist in these hospitals at the status of public hospitals. In addition,

hospitalsdonothaveseparatelegalentityexceptfortheuniversityhospitals.In2011anewlawon

theorganizationoftheMoHwasenacted.Withthislaw“publichospitalunions”whichgathersthe

hospitals in the same city, was founded. The unions in the structure of the MoH differentiate

considerablyfromNHSTrustsinUKinconsiderationoftheauthorityandtheorganizationalstructure.

Even if the legalentitywasgiven to thepublichospitalunions in the firstdrafts in theenactment

process,thehospitalunionswerenotbestowedwiththelegalentity.Therelationbetweennewhuge-

scaledPPPhospitalswhichwillbeconstructedandtheseunionsisstillambiguous.Thethirdsector

organizationsintheformofcommunityinterestcompanieswhichrunpublicserviceandatthesame

timecouldbeengagedincommercialactivitiesasinUnitedKingdomhavenotexistedinTurkeyyet.

Inthisrespect,whilecomparingPPPimplementations inthehealthcarefieldwithUnitedKingdom,

suchstructuralandfunctionaldifferencesshouldbetakenintoconsideration.However,itisnecessary

toindicatethatacoursetowardstructuringintheorganizationofhealthcaresimilartothestructure

inUnitedKingdomexistsinthegovernment’splans.




PPPhasbeengenerallylegitimizedbytheadvocatorsandexecutorsofthemodelwithoutincludingits

politicalpurpose.Theeconomic-basedorganizationaltheoriessuchasnewpublicmanagementand

governance have formed the ‘scientific’ basis for this justification. In the government field many

notions,definitionsregardingorganizationhavebeenfrequentlyseenintheneo-liberalorganizational

theoriessince1980s.Amongthese;“gettingfreefrombureaucracy”,“neworganizationalstructures

whichareflexible,participative,responsivetotheadvancedtechnology,changesandinnovations”,

“extinctionoftheold-fashionedpublic-privatedichotomy”,“thethirdwayintheprovisionofpublic

services”, “superseding of hierarchy by market/partnership/networks” and “participative contract

governance”couldberanked(Grimshawetal.,2001;Argyriades,2010).Itispossibletocomeacross

nearlyall explanations in the literature concerningPPPmodelwith thedimensionoforganization.

Well,couldthesebeexplanatoryforPPPmodel?

Ascanbeseeninthedatathatwehavealreadyconveyed,integratedhealthcampus(IHC)andcity

hospitalshavebroughtgrowthandintensifyinginworkandtransactionsizeandbyextensionhave

alsobroughtscale-upwithitsadministrativeandfinancialdimension.Whenanalyzingfromthepoint

ofPPPhospitalinthenewlargescale,thequestionsasfollowscomeintomind:Havetheoptimalsizes

related to the organization of healthcare services been regarded as standard in terms of these

hospitals?Whatsortofoutcomescouldbeshapedbyscalingupintermsofhealthcareservices?Are

PPPhospitals,whicharelarge-scaledintermsofsomedimensionssuchasplanning,auditing,finance,

personneletc.,atthesize/scaletobeabletobeadministered?When“smallandefficient”structures

andthedelegationofauthorityhavebeenarguedwiththeapproachesofnewpublicmanagement,

and post-fordism particularly after 1980, the existence of these huge structures could be solely

explained with the demand/expectation of monopolization. While bureaucratic structures were

describedasefficientandproductivemeansoforganizationtoreachthegoalsduringthemajorpart

ofthe20thcentury(Eisenstadt,1959:302),after1980sintheneo-liberalorganizationaltheoriesthey

havebeenindicatedasthemainspringofunproductivity.Neworganizationpreferences,makingbig

organizations smaller by splitting intended for debureaucratization have been grounded on the

operationof services through small, flexible, project-orientedadhoc structures (Argyriades, 2010:

275).




Inthatcase,hasPPPasasmall,efficientstructureassertedinthetheoriesformingabasisforitself,

debureaucratized? Is PPP rational organizational formgroundingoneffectiveness andproductivity

with its typeassertedagainby the theoriesonwhich it isbased? It isdifficult tostate that inPPP

implementations,expressions suchasavoidance,alienation,anddecrease in termsofbureaucracy

havebeen carriedout. Theexplanations givenbyadministrative science studiesupon the relation

amonggrowth,bureaucratizationandcentralizationhave formeda sufficientbasis at thispoint. It

shouldbenoticedthattheprocessesexpressedwiththenotionswhichareusedwithnegativeprefix

“de-” in some language to describe the new, alternative organizational structure (for example,

debureaucratization or decentralization) after 1980s have reconstructed the process in the form

without prefix. In PPP debureaucratization has not occurred, bureaucracy has not been removed

contrarytowhatisclaimed.Inthisstructurewehavebeenfacedwithanewbureaucracyandformof

bureaucratizationinwhichtheadministrationrelationsincludingnewcontrolformsare.Whileithas

beenclaimedthatdebureaucratizationhasbeencarriedoutthroughreconstructionofthesecondary

and tertiary public hospitals, in the new organizational structure based on PPP contracts a new

bureaucratizationwhich ispossiblydifferentqualitativelybutnotdifferentquantitativelyhasbeen

created. Bureaucratization (with the dimension of area, population, work, transaction size and

relations)hasalso inevitably increasedasa resultof scale-upPPPhospitals. InPPP,organizational

structurehasnotbecomesmaller,onthecontraryithasgrown.Ifthereisonethingwhichbecomes

smallerinPPPhospital,itisthepublicpartofthehospital.Theriskofungovernablenessispossible

duetoscale-upandsplitoffPPPhospitals.Inthesameway,decentralizationhasnotbeenexperienced

inPPPintermsofdecisionprocesses.HospitalscouldnotgobeyondthecontractexecutiveoftheMoH

inthesenseofPPPprojects.

Creatingapowerfulcenterwiththevisionofdecentralizationisoneofthetypicalfeaturesof‘new

publiccontractsystem’onwhichPPPmodelisbased.Anotherfeatureofthissystemisbeingquite

inflexibleinpracticeasaresultofthecontractualrelationdespitethediscourseofflexibilitydeveloped

againsttheinflexibilityofbureaucracy.Themainproblemofthemodels/structures(includingPPP)of

the organization presented as alternative that they embody the contradictory

principles/implementationswithineachother.Thisoriginatesfromthetheoreticalbasis(neo-liberal

organizationaltheories)onwhichtheorganizationalstructureshavebeenbased(Hoggett,1996:17-

18;Vincent-Jones,2007:266).PPPisamodelcorrespondingnottoamanyassumptionsofnewpublic




management(small,efficient,decentralizedorganization),buttothefinalpurpose(attainingaplace

in themarket). PPP hospitals are not appropriate for NMP in consideration of structure or scale.

However,PPPhospitalsareconvenientforthetayloristorganizationbasedonthesenseofrational

work processes and industrial productivity. In this respect, PPP hospitals are the construct

corresponding fairly to the targets of neo-liberal organizational theories on the grounds that PPP

hospitalspartakeofafactory(Leys,2011:41;Sönmez,2011:13).

In PPP hospitals the private company (SPV) is a huge structure that dominates nearly the whole

horizontal administrative processes of the organization. SPV has a power to transform thewhole

working conditionsand relations inPPPhospitals includingalso themedical serviceby forceof its

authorityandorganizational institutionalization.Thephysiciansandtheotherhealthcarepersonnel

have to maintain intensive and direct contact with this managerialism oriented company while

delivering the services. Before this managerialism oriented structure, the alienation of the public

elementsof thehospital (healthcarepersonnel andhospital administrators) from theprinciplesof

administrativeandoccupationalpractice,isinevitable.

WhatwillbetheroleoftheMoHinPPPmodelthatthewholeserviceandcommercialareasexcept

forthemedicalservicearedevolvedtotheSPV?WhatsortofrelationwillbebetweentheMinistry

and PPP hospitals?We shall look over the roles of the organizations and the interorganizational

relationsofadministrationinPPPmodel.

4.1. THE ROLE OF THE MINISTRY OF HEALTH IN PPP: EXCESSIVECENTRALIZATION

InTurkeythereisnotanydepartmentatthecentrallevelwhichgovernsdirectlyPPPimplementations.

AunitrelatedtoinvestmentsintheMinistryofDevelopmenthasundertakensomedutiesconcerning

PPP.Intherelevantlaw,authorizedbodyhasbeendeterminedinvariousservicefields.Forinstance,

inthehealthcarefieldtheMoHisauthorized.

InTurkey,TheMoHhasbeennaturallyinthepositionofmainactorofthesystemwiththespecial

authorities concerning PPP implementation that have been given to it. Some of duties and

responsibilitiesstatedintheLawareasfollows:Decision(determiningwhichservicesandcommercial




areasshallbehandedover,leasingtermandannualpaymentamount);Preparation(preparationof

preliminaryproject);TheWholeTenderProcess;Regulation-Supervision(determiningproceduresand

principles concerning the scope of contracts and the other procedures, setting the fundamental

standardsregardingprojectdesign,construction,maintenanceofhealthcarepremise,andhowthe

commercialareasandserviceareasapartfromthemedicalareasinthepremiseshallbeadministered,

conducting supervisions, providing to recover the losses to be incurred from the actions and

transactionsof the contractor during the termof the contract, imposingpenal sanctions for this);

Providing Guarantee-Taking PreventiveMeasure (providing income support for the revolving fund

enterprises to guarantee the lease payments and in this connection taking all themeasurements,

undertakingtheriskofdemand).

PPPisaconvenientmodelfortheregulatory-supervisoryroleforeseenfortheMoH.Alongwiththe

transitiontothismodel,thestructureoftheMoH,itsorganizationalformofhealthcareservicesand

its relations with the organizations operating healthcare services have taken the form that the

contractualrelationrequires.TheMoHhastransformedintoahugetenderdepartmentwiththePPP

model. Although annual lease payments of the hospitals will be rendered by the revolving fund

enterprises, as the final responsible, theMoHhas become a huge debtmanagement department

again.Onepointshouldbethoroughlyscrutinized.Intermsofinternallogicoftheneo-liberalreforms

it is not consistent that the sameactor becomes simultaneously policymaker, provider, financier,

regulatorandsupervisorinanorganizationofservice.Ontheonehandtheargumentofautonomy

and,inthiscontextdelegationofauthorityargued,ontheotherhandallofthe25yearandlonger

term PPP projects being put out to tender by the Ministry, which has a say in the contract

administration,isatotalcontradiction.

IntheforthcomingperiodtheMinistrycoulddelegatesomeoperationalauthorities,whichhavebeen

entitledto it,concerningPPPprojectstothehospitals.However,theauthoritiesofthehospitals in

executingthecontractwillbequitelimitedsinceeachandeverydetailhasbeenresolvedandhave

beensignedforlongterminthecontracts.Delegationofauthorityinrealtermsasclaimedwillbeout

ofquestionexceptforthesimpleoperationalworkswhicharenotimportant.Inthismodelthemost

criticalmattersofdecision(tender-contract)havebeenalreadycentralizedattheoutsetoftheproject.

Paradoxically,thediscourseofdelegationandthetighteningofthesupervisionofcentralauthority




over the sub-units, coexist in themodel. The visionof decentralization and gaining autonomyhas

indeedfunctionedasconcealingcentralizationforthestrategicdecisionsoccursimultaneously.

ItisnotrealistictothinkthattheMinistrywillcompletelybeoutofthesystemandwillrecedefrom

thecriticaldecisionsinPPPimplementationsinTurkeyasinsomecountries.Thepreferencesabout

the mode of neo-liberal organization adopted by the government will not allow this, as well. As

mentioned before, ‘powerful center” exist contrary towhat has been claimed in the spirit of the

approachofneo-liberalorganizationtheoriesincludingthediscourseofdecentralization.Itisobvious

thatPPPisnotanoutcomeofthepursuitsofmakingthebigorganizationssmallerbysplitting,andthe

organizationofservicesassmall,flexible,projectoriented.PPPistheimplementationofnewstyleof

centralization.

4.2.INTEGRATEDHEALTHCAMPUS–CITYHOSPITALS

IHCandcityhospitalswhichhaveenteredintoTurkishhealthcaresystemwithPPPprojectsarenew

organizationalstructures.Whyhavethelarge-scaledintegratedorganizationstructureswhichconsist

of several branch/specialty hospitals been needed in the healthcare services? In regard of

administrationprocess,isanintegratedserviceorganizationaimedwithIHCinPPPprojectsasitbeen

givenplaceintheorganizationaltheoriesduringthe20thcentury?Itshouldnotbethoughtthrough

PPPhospitalsareturnintohierarchy-basedintegratedpublicserviceorganizationhasbeentargeted.

Well,whathasbeenintegratedthen?Forinstance,thehospitalwhichwillbeconstructedinBilkent,

AnkaraisanIHCthatwillsiton1.200.000m2land,willincludeseightdifferentbranchhospitalsand

has3660inpatientbedavailability.

ThereisnotanyinformationontheadministrationofIHCinthecurrentlegalregulations.Itisunclear

whetherthisorganizationwillbeautonomous,andhaveaseparatebudget.Itisalsoambiguouswhat

sortrelationofthisorganizationwillhavewiththeMinistry,hospitalsinthecampusandSPV.

Consideringthecurrentlegalstatus,theadministrationofIHCwillbeintheorganizationoftheMoH.

However,itdoesnotseempossiblethatthesehuge-scaledhospitalsareadministeredunderthesame

conditionswiththeexistingpublichospitals.Asmentionedbefore,theauthoritiesofPPPhospitalson




the implementations of the contract are quite limited in accordance with the provisions of the

comprehensiveanddetailedcontractsignedjustatthebeginningoftheproject.

Intheorganizationofhealthcarewhichhavereconstructedasrequiredbythecontractualrelation,the

administration of hospital has been passivated in terms of the basic decision subjects of an

organizationsuchasdoingitsownplanning,auditingtheorganizationbyvirtueofboththeessentials

ofcontractdeterminedcentrally(MoH)andpowerfulinfluenceareaofSPV.

PPPcontractshaveanimposingcharacteristicintermsofthehospitalswhichruntheserviceitself.

Beyondbeingexecutionunitintheoperationalsubjects,thehospitalshavehardlyanyauthorityinthe

organization of healthcare service. For instance, in the current structure, the public hospitals

themselvesdeterminestheirownneedsthegradeofgoodsandservicestobeprovidedandtermsof

contract. They provide their procurement requirements with the short-term outsourcing tenders.

However,theauthoritiesonallofthesesubjectsinPPPhospitalsbelongtotheMinistry.

InmanycountriesthemainactorinPPPsystemistheautonomousorganizations.Forinstance,the

authoritiesconcerningPPPtendersinUKhavebeencarriedbytheunionsofhospitaleachofwhichis

autonomoushealthcareenterprises (NHSTrusts) (NAO,2010:38). Inotherwords, theMoHor the

NationalHealthServiceinthepositionoftheoperatorofhealthcareservicehasscarcelyhadauthority.

Evenifithasbeenlegallyforeseenthattheleasepaymentsshouldberenderedbytherevolvingfund

enterprises of the hospitals, in Turkey the PPP system has been completely executed under the

tutelageandcontrolof theMoH.PPP implementationshavenotdominatedover theautonomous

healthcareenterprises.

InTheHealthTransformationProgramme(2003)oftheMoHithasbeenstatedthatallofthehospitals

will be given administrative and financial autonomy (MoH, 2003: 32). In the past decade, the

government has not carried out this policy. Even if they have been included in the Draft Law as

autonomousstructure,thePublicHospitalUnionsLaw(2011)hasnotgivenautonomytotheunions.

Theexistingnew lawhasnot any regulationonautonomy forPPPhospitals aswell.Although the

discoursesofdecentralizationandautonomyarefrequentlyincludedinthepolicytexts,PPPmodelof

the government, and its centralization preference and implementations should be scrutinized

additionally.




IntheexistingPPPlawandtheotherlaws,thepublichospitalshavenotbeengivenautonomyyet.

Even thoughPPPhospitalswill begivenadministrativeand financial autonomy in the forthcoming

years, these hospitals do not have administrative and financial tools, authorities for autonomy.

Because themovement area of these hospitals has been already determined centrally andmore

preciselylimitedatthebeginningofprojectwiththe30year-contractssignedbytheMinistry.

AlthoughthecontractshavebeensignedbytheMinistry,PPPisnotaninvestmentoranexpenditure

whichwillbecoveredfromthebudgetoftheMinistry.(IntheNewPPPLawithasbeenstatedthat

whenrequiredthefundcouldbetransferredfromthebudgetoftheMinistrytotherevolvingfund

enterprisesofhospitals.Thiscouldalsoberegardedasagovernmentguarantee).Themostimportant

pillarofPPPintermsoffinancialdimensionistherevolvingfundenterprises.TheNewPPPlawhasnot

drawnaparallelismbetweentenderpricesofthehealthcarepremisestobeconstructedthroughPPP

and the financial opportunities and the rules of budget. When the 25-year term of contract is

considered,itisdifficulttoforeseetherevenuesoftherevolvingfundenterprises.Themainsourceof

revenuesoftherevolvingfundenterprisesispatients.Inorderthattherevolvingfundenterprisesof

hospitalcouldrendertheannualrentalanditsotherpaymentstoSPV,thenumberofpatientshould

notdropbelowacertainlevel.Otherwise,thehospitalswhichcouldnotgeneratesufficientrevenue,

asintheexamplesinmanycountries,likeUK(HouseofCommons,2011:221),willhavetoadoptnew

methodswhichwill bring additional payment for citizens in the billing of services, or dismiss the

healthcarepersonnelfromemployment,orreducethenumberofbeds.

4.3.ENBLOCPROVIDEROFPROFITABLEINVESTMENTAREA:SPECIALPURPOSEVEHİCLE/JOINTVENTURE

WecouldconsiderthestateofSPV,fromtwoaspectsinPPPprojectsinTurkey.Firstoneisrelated

withtheadministrationprocessesofPPPhospital,andthesecondoneisthecommercialdimension

thatconcernsthecitizensbenefitingdirectlyfromservice.

Incomparisonwiththeexistingpublichospitals,PPPhospitalsarelarger-scaledprivateorganizations

thatwillexistbeforetheadministrationofhospital.




Thelongtermenblocprovisionofagreatnumberandvarietyofgoodsandservices,andmanagements

ofcommercialareas,byasingleorganizationhasledtosignificantconsequencesintherelationsof

administrationinhospitals.Itisafactthateveryorganizationwillgenerateitssphereofinfluencein

proportionatetoitsscale(fromtheorganizationalorthefinancialaspect)anditsinstitutionalization.

Inthepresentcondition,exceptPPP,outsourcingtendershavesomefeaturesasfollows.Tendershave

been separatelymade fordifferent services (forexample, cleaning, catering,medical imaging, and

laboratory).Termofthecontractisshort,generallytwoyears.Thescaleoftenderisnotconsiderable.

Generallythesmallandlocalcompaniesareawarded.Duetolegalregulationtheadministrationof

thehospitalispowerfulovertheawardedcompanies.

WhenPPPtendersareevaluatedfromtheaspectofallthesepoints,maindifferencesoccur.Thescale

oftenderismajor. Itdoesnotgiveanyopportunitytothelocalandsmallcompaniestobid.Inthe

presentcondition, incomparisonwiththeprivatecompanyprovidingservicethroughthecontract,

SPV(jointventure)beingtheenblocproviderhasmoresignificantrightsandauthorities.SPVformed

particularly forPPPprojectwithgreatcapitalshasacrucialpower.Aswehavementionedbefore,

autonomyofthehospitaladministrationisconsiderablylimitedinPPPhospitalswiththedimensionof

the relations of administration. By reason of the powerful provisions of contract and the sizes of

capital,theSPVhave‘extensive’andfurthermore‘excessive’autonomyinsomeways.

SPVsettlinginthewholeelementsoftheorganizationofthehospitalhasattainedasignificantpower

ontheonehandinthehospitalbybeingthemaincomponentoftherelationofadministration,and

ontheotherhandinthehealthcaremarketwiththeguaranteedadvantagesthatthiscontracthas

provided.Thispower that theSPVhas in thehospital could lead toaconsequence to restrain the

hospitaladministrationfromhavingcontrolovertheenvironmentforwhichtheyareresponsible.The

researchbyD.Grimshawetal.hasshownthatwithinthatperiodtheadministrationhaslostnotonly

its dominance over the organization, but also, andmore importantly, lost gradually its control of

service(Grimshawetal.,2001:425).

Whenweevaluatewith its financialdimension, theSPV isanorganizationthatprovidesserviceas

monopolyunder the great guarantees (suchas Treasury guarantee, currency risk, riskofdemand)

whichareincludedinthePPPLawandprovidedbythegovernment.Aswehavementionedbefore,a




greatnumberofmultipurposeorspecialtyhospitalswhicharelocatedinvariousregionsofthecities

havebeen(orwillbe)closedbecauseoftheIHC.Amajorpartofcitizenshasbeenorwillbeforcedto

gotowardsthese IHCduetoclosuresofthehospitalsandalso,thesocialsecuritysystem. It isnot

difficulttoestimateitsnaturalconsequence.Primarily,citizens’rightofchoiceonhospitalshasbeen

revoked.IncaseofanproblemsintheIHC(hospitals),thiswillcauseaseriousproblemregardingthe

righttohealthsincetherewilllimitedalternatives.Citizenshavebeensubjectedtosingleproviderin

termsofboththehealthcareservicesandthecommercialservicesinthestructurethatcompetition

doesnotexist.IHChavebeengenerallyconstructeduptownandinalargeandisolatedarea.Inthis

respect,nearlyallpeopleinthehospitalareobligedtomeetalltheirneedsfromSPV.Themonopole

SPV,intermsofmedicalsupportservice(suchasimaging,laboratory)andmanagementofcommercial

areas(notmedicalservicesatleastfornow),hasobtainedtheopportunitytoprovidetheseservices

non-alternatively to the customermass.With this form, PPPhospitals are the structuresprecisely

similarto‘shoppingmall’.Inthisrespect,thereisnotanyriskofdemandoftheSPV.(Moreover,inthe

contractsgovernmentguaranteehasbeenprovidedonthesubjectofdemand).

PPPhospitalshasmadetheadministrationandcitizens“excessivedependent”onasinglecompany,

whichprovidesagreatnumberandvarietyofgoodsandservicesenbloc, for longduration(Mols,

2010:242).

Theemphasisofhighprofitablemanagementofcommercialareas,madebycorporationsrelatedto

PPP,gainsimportanceatthispoint(PwC,2010:11).Themostattractivesidesofthismodelaremost

likelyboththefeatureofbeingmonopolyandabsenceoftheriskofdemand.Itisobviousthatthese

features which provide significant advantages to SPV will not provide the same consequence for

citizens.

5.CONTRACTADMINISTRATION

PPP isamodel thatarose ina structuredefinedas “thenewpublic contracting”by someauthors

(Vincent-Jones,2007:265).InPPPmodel,thecontractswhichbecomenearlymainregulatoryformof

theprovisionofserviceandtheemploymentofpersonnelhavesurroundedcompletelytherelationof

administration.ThecontractualrelationinPPPisintensiveanddeepenoughtotransformthevalue

andtheprincipleoforganizationbelongingtothepublicservice.WithgreatnumbersofPPPprojects




conducted concurrently, the contract system in Turkey has become general (generalization of the

contractsysteminpublicservices)(Karasu,2011).

PPPcontractsaremorecomplicated,comprehensive18andlongertermincomparisonwiththeexisting

outsourcingcontracts(ThetermofcontractinTurkeyis49yearsintheformerLaw,is30yearsinthe

NewPPPLaw).For this reason, in termsof suchprojects the implementationofcontract, inother

wordstheadministrationofcontracthasgainedfurtherimportance.

Infact,thereisnotonesinglecontractinPPPmodel.Thecontractualrelationisnotonlybetweenthe

government and SPV. SPV is a joint venture.A contractual relation exists between the companies

formingthejointventure,aswell.AnothercontractualrelationisbetweenSPVandnumeroussub-

contractors.19 The existence of a great number of actor and contract has posed one of themain

administrativeandfinancialrisksofPPPmodel.

Thecomprehensive,complicatedandlongtermedPPPmaincontracts,withtoomuchcomponents,

causetoomuchuncertainty.Inthiskindofcontracts,thereareproblemsincontrollingthedetailed

andintenseworktraffic.Inevitably,agreatnumberofsubjectswhichhavebeensuperficiallyregulated

orunforeseen(forexample,technologicaldevelopments,changingsocialneeds)havebeenincluded

in the contracts. In such cases, negotiationhasnaturally formedabasis between theparties. The

administrationofnegotiation-basedcontracthasgeneratednewcontrolmodeswhichgivetheprivate

sectormorepower.Itisdifficultforthepublicsectortocompetewiththeprivatesectorinthefieldof

thelawandadministrationofcontractasaparticularfieldofspecialization.Thereisclearlyimbalance

ofpowerinfavoroftheprivatesectorintheadministrationofcontractbetweenthepublicsectorand

theprivatesector(Hoggett,1996:9;Grimshawetal.,2002:477).AsclearlystatedinNationalAudit

Office reports inUK, theprivate sectorhasbeenmore institutionalized in the fieldof the lawand

administrationofcontract(NAO,2011).

18Forinstance,thecontractofKayseriIHCtenderwasformedof600pageswithitannexes.19Sub-contractorcompanieshavebeenmostlyusedinPPPprojects.Thatcausesseriousproblems(CouncilofEurope,2004:14).Widespreadingofsub-contractorhas ledtoadverseresultdirectlyoverthefinancialandsocialrightsofemployeesbybringing laborforcetobeemployedwithoutsecurity.Atthesametime, ithasbrokenthelaborpeacebycreatingadualpersonnelsystemintheorganizationofhospital(Grimshawetal.,2002:478;Hall,2004:6).




InPPPprojects,thepointsthatSPVbeingthemostpowerfulandderivingthehighestprofit,arethe

issues which have not been clearly regulated in the contract. Amendment requests of the

administrationwhichhavenotbeenensuredclearlyinthecontractinordertomeetthenewoccurring

needscouldbealsoconsideredinthisscope.Ithasbeenknownthatallofthesearetheelementsof

incrementalcost.Forthisreason,itisnottruetoqualifyPPPmodelas“win-win”,aswell.Afterthe

experiencesover20years,theassumptionthatPPPmodel“isefficientintermsoftransactioncost”

becomesgroundless(Parker-Hartley,2003:107;Edwardsetal.,2004:9-10;NAO,2011).Thecostof

project-consulting-law companies has constituted a considerable amount. The administration of

contractitselfisasignificantcostelement.

Infact,manypointswhichhavebeenputforthas‘problem’abovearenotintrinsictoPPP.Generally,

it is possible to see the similar problems in all of the implementations based on the contractual

relation.Forinstance,similarproblemshavebeenexperiencedintheimplementationsofinvolvement

of private sector in delivery of public services through the methods such as contracting out,

outsourcing.Besides,theproblemsoriginatingfromthecontractsaremuchmoreinPPPduetobeing

basedoncompletelyanintensiveanddeepcontractualrelation.

6.PPPINTURKEY:SOMECONSEQUENCES

6.1.SCALEOFPPPTENDERS(CHOICEOFCAPITAL)ANDCOMPETITION

PPPhasbeendefinedascompetitivemodelinmanystudiessinceitsfirstappearance(OECD,2008a).

Nonetheless,agreatnumberofresearchesinvariouscountrieshavepropoundedthatacompetitive

structuredoesnotactuallyexistinPPPatall(HMTreasury,2012;Mols,2010:242;Grimshawetal.,

2002:484;Grimsey-Lewis,2005).ItispossibletomentionasimilarcircumstanceforPPPtendersin

Turkey.OneofthemostmainfeaturesofPPPimplementationsinthehealthcarefieldwhichattract

attention is that the exceeding growthof scale in comparisonwith the current contractingout or

outsourcingtenders.Onlylimitednumberoffirmscouldbidbecausethescaleoftenderisfairlyhigh

inPPPsinthehealthcarefield.Accordingtotheinformationobtainedfromtheofficialwebpageofthe

MoHithasbeenseenthatthesamecompaniesconsiderablyhavebidedinPPPtendersindifferent

cities, and the awarded companies have been substantially the same. This situation prevents the

competitivestructure,aswell.ThehealthcarePPPsintheformofIHCandcityhospitalshaveledto




monopolizationinthehealthcaremarket.IthasbeenseenthatwithPPPsmall-scaledcompaniesin

thehealthcaremarkethavebeenwounduptoalargeextent.

The consequences of PPPmodel should be evaluated generally together with the horizontal and

verticalintegrationswhichhavebeenseeninthehealthcaremarketinrecentyears.Ithasbeenseen

thattheintegrationsthroughpurchaseandchainhospitalsandtheprivatehospitalshavebeenalso

gatheredunderthecontrolofseveralgroups(Sönmez,2011:21,77).Forthisreason,itcouldbestated

thattheintensesupportofthegovernmentforPPPmodelinrecentyearsinTurkeyhasalsoreflected

apoliticalpreferenceconcerningthecompositionofcapitalinthehealthcaremarket.

6.2. LARGE-SCALED HOSPITALS: SOCIAL AND ECONOMICCONSEQUENCES

It is necessary to mention briefly two consequences of the implementation of large-scaled PPP

hospitalswhichhavebeenignoredusually,aswell.Aswehavementionedbefore,agreatnumberof

hospitalsinvariouslocationsofcitieswillbeclosedforthenewPPPhospitals.Thecircleoftradeof

thesmall-localenterprisesaroundthehospitalstobeclosedwillfadeaway.Itisalmostimpossiblethat

these small-local enterprises take part in the newPPP hospitals. This situation has led to adverse

consequenceswiththeirsocial-economicaspectsintermsofthesesegments.

Anotherconsequenceisrelatedtotheurbanlife.Forinstance,AnkaraBilkenthospital isahospital

that has 4376 beds, 3662 ofwhich standard and, has 10.200 employees and 25 thousand-people

capacitydaily.Besides,aUniversityofHealthSciencesandCenterofHighTechnologyandthemain

building of the MoH will be also constructed in the campus. This campus is a life area that

approximately50thousandpeoplewillmoveinaday.Thismobility,whichwillcausetoflockofpeople

in certain region of the city, could pose serious problems in urban planning, transportation,

environmentetc.

6.3.POLICYFORMATIONANDPOLITICALRESPONSIBILITY

Budgetingisthemostimportantinstrumentdoingpolicywhichestablishesalinkbetweenplanning,

decision making, responsibility and controlling. The “off-balance sheet” PPP model, disable this

instrumentandapoliticizesthefuturepolitics.




Around20large-scaledandlong-termedconcurrentPPPcontracts,putinpledgetopolicychoicesof

thepredecessorgovernments,inbothhealthandpublicfinance;moreoveriteliminatestheirrightto

choose.Consideringthe28years-longcontracts,executionofthePPPmodelinregardtopublicpolicy,

means tomakea long-termedandcomprehensiveplan.With the tensofconcurrentPPPprojects,

currentgovernment(MoH)hasformedatleast30yearsofTurkishhealthcaresystem,fromnowon.

WhilePPPprojectstowithgreatamountannualpayoutarecontinuing, it isdifficult for thefuture

governmentstomakeotherchoicesofanewhealthcarepolicyandorganizationinaccordancewith

theirownpolicies.Atthesametime,PPPmodelshavealsoacharacteristicthatinvalidatesthepolitical

responsibility.Thegovernmentstakemakechoiceaboutthemodelwillbenaturallyunabletotakethe

politicalresponsibilityrelatedtotheimplementationresultsofthemodelbecausethecontractsarea

verylong-termed.Inthisrespect,itcouldbesaidthatPPPprojectshavecreatedaconsequencethat

makes the fundamentalprinciplesof the representativedemocracywith respect to the relationof

budget-democracy-politicalresponsibilityunenforceable.

6.4.TRANSPARENCYANDPUBLICOPINION

According to the PPP law, the administration has to provide transparency and public opinion

supervisioninPPPtenders.However,itisdifficulttostatethatinTurkeytheprinciplesincludedinthe

law are actualized. For instance, the public opinion has not been informed about the details of

projects.20Moreover,informationabouttheproject(forexample,thepreliminaryfeasibilityreports

which formabasis forHPBdecisionandcontain comparativeanalyses)hasnotbeengiven to the

professional organizations which are constitutional organizations on the grounds that it is

“confidential”.Inthelawsuitbroughtagainstthetenders,theCouncilofStatehasdecreedthatthe

Ministryshouldgivetheinformation(forexamplethepreliminaryfeasibilityreports)whichisnottrade

secret.21Transparencyandpublicopinionsupervisioncouldbeprovidedtosomeextentthroughthe

judicialdecree.Inthisrespect,“therehasbeenalackoftransparency”inTurkeyaswellasinUK(HM

Treasury,2012:5).

20DuringPPPtenderprocess,theinformationaboutthetenderhasbeendemandedonthepurposeofscientificresearch.However,theMinistryhasnotgiventhisinformation.21TheCouncilofState,Division13,InterlocutoryDecree,DocketNo.2011/3392.




Unlikeotherpublicprocurementimplementations,manyexemptionsareavailableforPPPtenders.

Forinstance,theNewPPPlawhasexemptedPPPimplementationsfromthePublicProcurementLaw

andtheStateBidTendersLawonthecontrarythattheEUdirectiveshaveforeseen.

7.CONCLUSION:PPPMODELINTURKEY–‘EXTREMENESS’

ThepresentationofthePPPmodelunderthenameofpartnershipis“aninfluentialmarketingstrategy

of thenewright” forenablingtheembraceof thenewrolesprovidedtothestateandthemarket

(Linder,1999:35,40).IthasbeenseenthatwithPPPwhichhavebeenintensivelyimplementedfor

manyyearsinUK,thetransferofrisktotheprivatesectorhasnotoccurredasclaimedatthebeginning

ofproject(HMTreasury,2012).AccordingtoShaoul,wheninfactthepublicservicesareinquestion,

thenotionofthetransferofriskis“essentiallyimperfect”(Shaoul,2003).PPPhospitalsareaproject

ofindustrializationofhealthonthebasisofcommercialareaswhichhavehighprofitability.Thedirect

supportofthegovernmentfortheprivatesectorinthehealthcarehasincreasedwithPPPprojects.

Therefore, it is possible to describe themodel as ‘publicmoney for private profit’. Considering its

consequences of government guarantees and exemptions on one hand, and the consequences of

accesstothehealthcareservices,chargesandcostincreasesontheotherhand,PPPisthemodelof

privatizationofgainsandprofits,publicizationofrisksandcosts(Karasu,2011).

InTurkey,PPPisnotsolelyfinance,publicprocurement,orconcessionmechanisms.PPPprojectsare

anewstyleofbureaucratisationwhichhasanewdivisionof labour, structure, controlmodesand

employmentconditions,andwhichhascentralisationandflexibilityfeaturesatthesametime.This

modelwhichspreadsswiftlyinhealthsectorisanorganizationmodelbasedonnewpubliccontracting

system which embrace and convert the administrational relationships. In PPP model, the private

companiesarenotonlyanorganizationthatprovideshealthcareserviceorsuppliesgoodsandservices

withonlyacontractualrelation.PPPmodelisalsoenablingprivatecompanies(thecapital)todirectly

takepartorgetinvolvedinthewholeadministrationofhealthcareprocess.

Variousnationalandinternationalorganizationsinthehealthcarefieldhavemadeintenseopposition

toPPP.Moreover,inUKwhichistheownerofthemodel,thefailureofthemodelhasbeenregistered

inmanyofficialreports.Despiteofallthesethings,intensivelyimplementingthismodelwhichentered




intothepublicorganizationintheformofthe“TrojanHorse”(Miraftab:2004)inTurkey,hasshown

thatthepolicyforthispreferencedoesnothaveanytiewiththehealthcareserviceitself.

With around 19 different large scale PPP projects, tendered concurrently, the preference of

organizationinhealthservicesforthenext30yearshasbeendeterminedbythecurrentgovernment.

(Excessivecentralization).Butafterthelaunchingofthehospitalstheawardedjoint-venturewillbein

very powerful position with the privileges acknowledged by laws and contract terms. MoH, IHC

hospital administration andotherpublic organizationshave very little decision and control on the

activitiesofthejoint-venture,oritisverycostly(ExcessiveautonomyforSPVinoperations).Theen

bloctransferofalargenumberoffunctionstoasingleproviderforatoolongperiodwillcausean

excessivedependence.Thelargescaleofthetenderscausetolackofcompetitionandthis leadsto

excessivecentralizationandconcentrationofcapital,whichbringsthemonopolization.Andthelarge

scale of PPP hospitalswill naturally result in excessive bureaucratization. In brief, it is possible to

expressPPPimplementationsinTurkeyinaword:“Extremeness”.

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