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alternative methods grounding on providing substantially from the market has superseded the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.
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
3 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
4 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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.
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
5 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
6 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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).
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
7 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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.
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
8 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
9 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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.
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
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10 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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.
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11 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
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12 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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.
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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).
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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
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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
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16 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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
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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
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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.
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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.
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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
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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
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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).
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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
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24 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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.
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
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25 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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.
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
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26 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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
International Conference: “Global Challenges in Public Private Partnerships: ����������Cross-sectoral and Cross-disciplinary Solutions?” 6-7 November 2013,
University of Antwerp, Belgium
27 Assoc. Prof. Koray KARASU, University of Ankara, Faculty of Political Sciences
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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