Healthcare PPP Projects: Payment Capacity of the Turkish Ministry of Health
Introduction of the public-private partnership (“PPP”) method in the healthcare sector in Turkey has already significantly affected growth of the healthcare sector in the last few years, and new wave of PPP projects over the next five years is expected to be the main driver of expansion in the healthcare services sector. In healthcare PPP projects, the project companies undertake the implementation of the health campus PPP project by executing a private law implementation agreement (i.e., the project agreement) with the Ministry of Health (“MoH”), and the MoH agrees to make certain payments in return. Such payments are used for the repayment of the loans obtained for the project and expenditures of the projects.
One of the attractive aspects of the PPP model in the healthcare sector for investors and funders is to know that the health campus PPP projects are backed by the MoH. As a consequence, the payment capacity of the MoH has become a critical factor to determine bankability of the PPP project. This Newsletter will mainly focus on MoH’s payment capacity, its legal status as a contracting party, and its payment obligations under the project agreements and the budget allocated to the MoH for the year 2016.