Privatization of Facility Management in Public Hospitals: A Malaysian Perspective

Copyright © 2016 by Hong Poh Fan.

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Contents

List of Figures

List of Tables

Preface

Chapter 1 The Project

1.1. Brief History

1.2. Rationale of the Privatization

1.3. Objectives of the Project

1.4. Project Overview

Chapter 2 Essence of the Concession Agreement

2.1. Introduction

2.2. Hierarchy of Contract Management

2.3. Technical Requirements and Performance Indicators (TRPI)

2.4. Master Agreed Procedures

2.5. Hospital-Specific Implementation Plan (HSIP)

2.6. Deduction Formula (DF)

2.7. Third-Party Clauses

2.8. HSS Quality Assurance Programme (QAP)

2.9. Reimbursable Works

Chapter 3 Hospital Support Services

3.1. Facilities Engineering Maintenance Services (FEMS)

3.2. Biomedical Engineering Maintenance Services (BEMS)

3.3. Cleansing Services (CLS)

3.4. Linen Laundry Services (LLS)

3.5. Clinical Waste Management Services (CWMS)

Chapter 4 The Monitoring Consultant – SIHAT

4.1. Scope of Service

4.2. Organization of the Consulting Company

4.3. Zone Coverage

4.4. Reimbursable Services

4.5. Training

Chapter 5 Management Information System

5.1. Background

5.2. Access

5.3. Reports

Chapter 6 Comments and Conclusion

6.1. General

6.2. Issues

6.3. Conclusion

Appendix Technical Requirements and Performance Indicators (TRPI)

Glossary of Acronyms

Sources

List of Figures

Figure 1  Project overview

Figure 2  Hierarchy of HSS Contract Management

Figure 3  Deduction application flow chart

Figure 4  CC QAP team

Figure 5  Data collection and verification process flow chart

Figure 6  Data analysis process

Figure 7  Asset life cycle

Figure 8  Typical organizational chart of SIHAT

List of Tables

Table 1  Weightage for monthly service fee

Table 2  Timetable for assessment of periodic deduction for Part B

Table 3  Part A – Monthly service fee

Table 4  Part B – Total fee for assessment period

Table 5  Indicators and standards

Table 6  Examples of maintenance-related and reimbursable works

Table 7  Equipment and personnel in association with a particular agency

Table 8  pH values

Table 9  Disinfectants

Table 10  Reports for facility and biomedical engineering maintenance services

Table 11  Reports for cleansing services

Table 12  Reports for linen and laundry services

Table 13  Reports for clinical waste management services

Preface

This book is intended for readers who are seeking information about and knowledge of facility management and support services in healthcare facilities like hospitals. It is written to enlighten the reader about the detailed organization processes and workings of a hospital, particularly in the developing country of Malaysia, as the environment and operations of Malaysian hospitals are much different from those in the developed nations of the West. The privatization process that was promulgated was supposed to address the shortcomings that the hospital systems faced within Malaysia at the time of implementation.

A brief history of the privatization development, the concession agreement development, the rationale of the privatization, and the objectives is discussed in Chapter 1.

In Chapter 2, the essence of the concession agreement will be looked into. Not every item will be covered, but the more important ones will be discussed, including the technical requirements and performance indicators (TRPI), master agreed procedures (MAP), hospital-specific implementation plan (HSIP), deduction formula, third-party clauses, centralized management information system (CMIS), quality assurance programme (QAP), reimbursable works. These are important aspects which made the concession agreement unique, with the various parties able to effectively administer the contract.

Chapter 3 is about the five hospital support services (HSS) operated by three concession companies under the purview of the concession agreement (CA). The five HSS are facility engineering maintenance services (FEMS), biomedical engineering maintenance services, cleansing services (CLS), laundry and linen services (LLS), and clinical waste management services (CWMS). The chapter will explain in detail the type of services provided by each of these.

Chapter 4 discusses the monitoring consultant Sistem Hospital Awasan Taraf (SIHAT), appointed by the client, Ministry of Health (MOH), Malaysia, to independently administer the CA on behalf of MOH. The consultant’s scope of service is discussed in detail in this chapter. The consultant’s organizational structure is also detailed within the chapter. Some discussions of reimbursable services and training are included.

Chapter 5 discusses the management information system that was applied in the execution and monitoring of the processes and that was used by the concession companies under the CA. The chapter covers the features and items of the management information system. A listing of the type of reports is provided.

The final chapter, Chapter 6, discusses the benefits and obstacles experienced in the execution of the CA. Concluding remarks are provided. An appendix of the TRPI listings of the five HSS is included for the benefit of the reader. It is hoped that readers will apply some of this information to the context of their working situation and the environment within their own organization or country, as the lessons learnt from this project have led to significant upgrades in the healthcare services of Malaysia.

Chapter 1

The Project

1.1. Brief History

Facilities management for many organizations and most facilities managers has always been challenging and made up of unrewarding tasks. It is even more challenging and unrewarding if it is for a hospital or a group of hospitals the assets and systems of which are far more complex than those of any commercial or office buildings. This was the situation confronting the Malaysian government in the early 1990s, when many hospitals were operating at a level of service and with standards that were unacceptable to the public. There was no consistency in the healthcare service. The main consequence was the compromise of public healthcare. This impeded growth and progress for public healthcare services in Malaysia.

In 1996, the government of Malaysia took the drastic step of privatizing five core hospital support services nationwide, which was unique, having no parallel elsewhere in the world. The Malaysian government’s prime intentions and objectives were to improve healthcare for its population. To facilitate the privatization, a concession agreement between the government of Malaysia and three private companies was signed on 28 October 1996. This privatized hospital support services (HSS) in Malaysia.

Prior to the privatization, all HSS were undertaken by individual hospitals, with no clear coordination between them. It was recognized that HSS was an important component of facilities management in hospitals, without which no hospital could function well. These had to be operated efficiently and be well supported by the management of the hospital, both financially and operationally.

Many of the HSS were either duplicated or lacking at each hospital. This caused the services provided by each hospital to be strained and inefficient. There was no marked improvement to the services provided by the hospital, and each hospital faced problems in providing proper healthcare services on account of this poor coordination and inefficiency. In view of this, the government decided that better services could be provided if common HSS were combined by centralized entities that could spearhead the development of HSS in a coordinated manner, which would lead to better healthcare services provided to the population.

It was decided prior to the signing of the concession agreement in 1996 that five hospital support services, excluding clinical services, be combined and coordinated. These were facility engineering maintenance services (FEMS), biomedical engineering maintenance services (BEMS), cleansing services (CLS), laundry linen services (LLS), and clinical waste management services (CWMS). Three companies were awarded the concession agreement contract for a period of fifteen years, which ended on 27 October 2011. After the period, these companies were in negotiation for a new contract term for the next ten years of service. The companies that were awarded this HSS contract were Faber-Medi-Serve Sdn Bhd, Radicare (M) Sdn Bhd, and Tongkah Medivest Sdn Bhd. Tongkah Medivest Sdn Bhd was later taken over by Pantai Medivest Sdn Bhd.

Following is the geographical area covered by these companies:

• Faber-Medi-Serve Sdn Bhd – The northern zones of Malaysia, including Perak, Kedah, Penang, Perlis, Sabah, and Sarawak

• Radicare (M) Sdn Bhd – Central zone of Kuala Lumpur and Selangor, and eastern zone of Pahang, Terengganu, and Kelantan

• Pantai Medivest Sdn Bhd – Southern zone of Johor, Melaka, and Negeri Sembilan.

In the concession agreement (CA), a total number of 127 hospitals and medical institutions were initially included in the contract. This was expended to 148 hospitals and healthcare institutions at the end of the period.

The initial phase of the concession agreement was disorderly. There were requirements to transfer services, such as laundry and linen and cleaning, which normally had been undertaken by the hospitals themselves, to the new concession companies. Hospital personnel involved in the services were also to be transferred to the companies under new terms of employment. The concession companies (CCs) were required to install centralized plants for laundry linen services and clinical waste incineration. They were given a grace period in order to set up. As the service expanded, the concession companies recruited more staff and workers, who had little or no prior or experience with hospital support services. The centralized management information system (CMIS) had yet to be set up. Thus, there were numerous shortcomings to the services at the commencement of the project.

In addition to the concession agreement with the hospitals, a monitoring consultant was engaged to monitor, evaluate, and inspect the services provided by the concession companies. This monitoring consultant acted as the middleman between the concession companies and the government under the Supervision Unit of the Engineering Service Division of the Ministry of Health, Malaysia. This monitoring consultant, under the name of Sistem Hospital Awasan Taraf Sdn Bhd, or SIHAT for short, took an active role in the monitoring the services provided by the contractor throughout the period of the concession agreement.

Included in the contract agreement were the following things:

• Establishment of the technical requirements and performance indicators (TRPI) for each service

• Establishment of master agreed procedures (MAP) for each service

• Establishment of centralized laundry plants and clinical waste incineration plants outside the hospitals

• Use of a deduction formula for non-performance

• Rights of owner to use third-party clauses

• Implementation and maintenance of ISO 9000

• Establishment of a quality assurance programme

• Establishment of a hospital-specific implementation plan (HSIP)

• Training programmes for the hospital

• Establishment of a centralized management information system (CMIS) to monitor the contract

• Provision of technical advice for assets that need upgrading or replacement under reimbursable works.

Besides the above, project operational guidelines (POG) for the five services were established to guide the owners, CCs, hospitals, and consultants on the day-to-day operations. These were drafted by the monitoring consultant and discussed with the Ministry of Health (MOH) and the CCs for effective implementation. During the course of the contract, the contractor made proposals for the hospital engineering planned preventive maintenance (HEPPM) scheme to establish the protocol and checklists for the monitoring of fixed assets and biomedical assets in the hospitals.

The contract was a lump-sum contract for FEMS, BEMS, and CLS on an annual basis, whilst for LLS and CWMS the fee was based on the weights in kilograms of soiled linen and waste respectively.

1.2. Rationale of the Privatization

The reasons for the privatization of the hospital support services in the public hospitals were as follows:

• Inefficient equipment and facilities maintenance

• Inconsistency in hospital support services

• Inadequate budget allocation

• Old and obsolete plants and equipment

• High risk of infection from linens and cleansing

• Involvement of clinical staff

• Improper disposal of clinical waste

1.2.1. Inefficient Equipment and Facilities Maintenance

Prior to the privatization, planned preventive maintenance (PPM) was not carried out for plants or equipment in the hospitals. This led to frequent breakdowns of the plants and equipment. Repairs were carried out on a reactionary and firefighting basis. Response times to breakdowns were slow, which affected the hospitals’ clinical services. Documentation of the life history of equipment was not carried out to monitor the equipment’s efficacy. Skilled engineers and technicians were inadequately recruited to operate in all the hospitals. Biomedical equipment was left idle because it was not maintained, as the maintenance staff were unskilled.

1.2.2. Inconsistency

Before the privatization, there was no standardization of the support services provided by the hospitals. No definite standards or guidelines were in place. Thus, duplications and substandard procedures and practices were the order of the day. One might have found that the level of services in urban hospitals was better than that of hospitals at the district level, which in the majority serve the rural population. Infection control was compromised at the lower-standard hospitals.

1.2.3. Inadequate Budget Allocation

Because of the way hospitals are distributed in the country, there was an inadequately allocated maintenance budget, which led to poor services in the hospitals. Breakdowns were not attended to because the money was not available for repair works or for the purchase of spare parts. At stake was infection control.

1.2.4. Old and Obsolete Plants and Equipment in Use

Many old and obsolete plants and equipment were in use, as no comprehensive assets register existed. So that the old and obsolete plants and equipment could be replaced, the implementation of a replacement programme was urgently