Turkey: A Glimpse On PPP In The Turkish Health Sector

Last Updated: 4 May 2011

Throughout the 1990's, the growing population of Turkey and its efforts to become an EU member exacerbated the need for diverse and quality public services. Offering these services could have been possible only by realising large investments, in particular, infrastructure projects. However, Turkey was not able to finance these large investments in a short period of time. Further, the Turkish government did not have the relevant expertise to realise these projects. As a remedy, the Turkish government focused on public-private sector partnerships and emphasized build-operate-transfer and build-operate models. As time goes by, however, it became clear that particulars of large investments in a variety of sectors require further PPP models. This led the Turkish government to continue its search for efficient tools to realize the necessary investments.

As a result of the search for alternative PPP models, the Turkish government introduced health sector-specific models in 2005. The Turkish parliament enacted the Law No. 5396 (the Amending Law) amending the Principal Health Services Law No. 3359. The Amending Law introduced alternative PPP models which aimed to facilitate the public and private sector cooperation in major investments in the health sector. The Amending Law set forth the principles on construction and renovation of health facilities under the PPP model. Subsequent to the Amending Law, the Regulation on the Health Facilities to be Constructed in Return for Lease and Renovation of Health Facilities in Return for Operation of the Services and Areas Other than the Medical Service Areas (the Regulation) came into force in 2006. The Regulation provides further details on construction, renovation, furnishing, supply, maintenance and operation (other than medical services) of health facilities within the framework of the PPP models.

Below, is a summary of the major aspects of the Amending Law and the Regulation (the Legislation).

I. The scope of the Legislation

The Legislation is aiming to have "health facilities"1 constructed or renovated via the private contractors who win public tenders and qualify to sign contracts with the Ministry. Unlike the PPP models introduced before, this time it is clear that the contract between the administration and the contractors will be subject to private law. This feature makes investments in the health sector more attractive for private parties which were reluctant to base their investments on administrative law contracts. This is mainly because the administration is generally favoured from the perspective of administrative law.

Under the proposed structure in the Legislation, the private contractors will be entitled to rentals or service fees, respectively for the construction or renovation of health facilities.

Pursuant to the Legislation, a project will be triggered either when:

  • the High Planning Board2 (the Board) approves the construction of new health facilities upon the proposal of the Ministry ; or
  • the Ministry of Health (the Ministry) decides on the renovation of health facilities.

II. Construction of health facilities

In order for health facilities to be constructed, first, the Board must decide on a project among the projects proposed by the Ministry. Subsequently, the Ministry can have the relevant health facility constructed via a private contractor (the Contractor) in return for rentals for a period of maximum 49 years. The Contractor will be awarded via a public tender.

The Contractor must construct the health facility in accordance with the preliminary project, feasibility report and principal standards document and the tender documents prepared by the Ministry. In addition to the construction, the Contractor may be contracted to supply the relevant medical equipment and furnishings. Also, the Contractor may be awarded with the right to operate some or all of the "areas other than medical service units"3 and "the services other than medical services4.

The health facilities may be constructed either on a public or a private property depending on the particulars of the project (i.e. whether there is an available public land in the relevant area). If there is a public property available for the purpose of constructing the health facility, the Ministry of Finance grants right of construction on the property, in favour of the contractor. Such right will be granted free of charge and for a period up to 49 years. A restriction on the property will be registered with the land registry for the purpose of strengthening the administration's position. The restriction will state that the property will not be used for any purposes other than the health facility and that the property will not be transferred to a third party without the consent of the Ministry of Finance and the Ministry. In the event of an available public property, the Ministry will be responsible for obtaining the relevant licences and preparing the reports on the property as per the legislation.

The Ministry may determine the contract term, which is -by law- maximum 49 years, by considering the particulars of the health facility. The contract term includes both the investment (including preparation of the relevant projects/plans and the construction) and the operation terms. Other than the integrated health campuses, construction term cannot exceed four years.

III. Rentals

In return for constructing the health facilities, the Contractor will be entitled to rentals. While determining the rentals, the Ministry will consider the following:

  • whether the relevant land is a public land or privately owned property;
  • total amount of fixed investment;
  • whether any medical equipment and furnishings to be provided by the Contractor;
  • term of the contract;
  • whether areas other than medical service units and services other than medical services to be allocated to the Contractor; and
  • the Contractor's potential profit.

The tender documents and the Contract will clarify the potential adjustments in rentals.

IV. Renovation of health facilities

The Ministry may have the health facilities renovated by the Contractor to be awarded through a public tender. In return for renovating the health facilities, the Contractor will be granted the right to provide services other than medical services and to operate some or all of the areas other than medical service units. In this case, the Contractor is paid a service fee (but not any rentals).

Similar to the case of construction, the term of the Contract can be maximum 49 years (including the renovation period). However, unlike the construction of health facilities, projects based on renovation of health facilities is not subject to the approval of the Board.

V. Tender procedures

The Regulation provides detailed tender procedures including announcement, requirements for bidders, specific tender methods (i.e. open tender method, tender among certain bidders, negotiation method) and assessment of the tender. The competitive dialogue method which is commonly followed in PPP projects worldwide, however, is not mentioned in the Regulation. In our view, the administration would have been granted another efficient tool, if this method had also been mentioned among the others.

If the particulars of the project require subcontracting, the Ministry may require the bidders to provide the list of works to be subcontracted at the stage of tender. Further, the winning bidder must provide the Ministry with a list of the relevant subcontractors for the Ministry's approval. Involvement of subcontractors, however, will not eliminate the liability of the bidders/contractors.

The Ministry is entitled to have multiple health facilities constructed or renovated through a single tender.

VI. The Contract

The Regulation sets out certain issues that should be addressed in the contract to be signed between the Ministry and the winning bidder (the Contract).

The Contract will be subject to private law (not to administrative law). Therefore, the parties' rights will be relatively balanced compared to administrative law contracts where the administrative authority possesses superior powers.

Under the Legislation, the Contract will include exhaustive provisions on numerous issues. This feature will provide comfort to the parties as the Contract will be a good reference and therefore leaves little room for potential conflicts between the parties.

The Contract will cover various issues including the lease term and the prospective adjustments in the rentals throughout such term. The Contract will also include the rules to be followed in calculating the service fees which will be applicable in the cases of renovation of health facilities.

In principle, the Contract will be in the Turkish language. If, however, the Ministry approves the request of the Contractor, the Contract may be signed in two languages namely, English and Turkish. In the event of inconsistency between the two versions, the Turkish version will prevail.

VII. Financing, government guarantees and stamp duty exemption

The Contractor must provide the entire financing required for the construction or the renovation. Further, the equity to be invested by the Contractor may not be less than 20% of the total fixed investment amount designated in the Contract.

To make the investments in the health sector more attractive for the private sector, the Regulation states that the Contract will include penalty clauses which will be triggered if the Ministry fails to pay rentals on time.

Any transaction to be carried out and any document to be prepared by/between the Ministry and the Contractor regarding the investments to be made within the scope of the Regulation are exempt from the stamp duty under Stamp Duty Law No. 488 as well as the charges under Charges Law No. 492. Such exemption will remain valid for a maximum period of 36 months and the construction and renovation periods specified in the Contract.

VIII. End of the contractual term and transfer of the facilities

Upon the expiry of the contract term, the lands on which the right of construction is established in favour of the Contractor together with the health facilities constructed thereon will be transferred back to the Turkish Treasury. In parallel with this, the relevant areas other than medical service units and the services other than medical services will also be transferred back to the Ministry. Further, the right of construction in the land registry will be removed accordingly. The facilities transferred to the Treasury must be operating well and in good condition and free of any encumbrances. At the time of transfer, a commission will be established to determine whether the concerned facilities fulfill the transfer requirements.

In projects where the lands of private parties are concerned, the terms on transfer of the health facilities are to be specified in the Contract.

IX. Judicial review and arbitration

Turkey has a separate body of "administrative courts" independent of "the courts of general jurisdiction". Administrative courts deal with "administrative decisions and actions" stemming from bureaucracy. Administrative decisions are "unilateral" which explains their fundamental difference compared to contracts. Every dispute which is "administrative" in nature falls within the jurisdiction of the administrative courts. (Courts of general jurisdiction, on the other hand, deal with civil law and criminal cases.)

The tender process is completely "administrative", meaning that starting with the decision of the Board or the Ministry respectively; to construct or to renovate health facilities, all decisions granted by the administration may be taken to the administrative courts in the form of an "annulment lawsuit". However, the Contract will be subject to private law. Therefore, any disputes arising from the Contract will have to be taken to a court of general jurisdiction.

The Contract will be governed by Turkish law and Turkish courts of general jurisdiction will have jurisdiction to resolve disputes arising from the Contract. However, parties may alternatively choose arbitration, provided that the arbitration takes place in Turkey and is subject to Turkish law. Even though the governing law must be Turkish law and the seat of arbitration must be in Turkey, reference to arbitration as a potential dispute method may be somewhat encouraging for potential investors in Turkey.

X. Conclusion

In our view, introduction of the Legislation has been a significant and positive development to support public-private sector partnership and also draw more investments into the health sector. Construction of integrated health campuses in various cities (i.e. Istanbul, Ankara, Bursa, Konya, Kayseri, Elazig, Manisa, Mersin and Yozgat) are on the government's agenda. In fact, some progress has been made and the winning bidder for the integrated health campus in Kayseri has recently been announced by the administration.

Having said that it has been a positive development, the Legislation lacks certain issues such as the step-in arrangements and requirement for bankable documents in the Contract. Also the Legislation contains inconsistency on the complementary legislation to govern. The Amending Law states that the works falling within its scope would not be subject to the State Tender Law No.2886 and Public Tender Law No.4734 which could provide complementary provisions. Yet on the other hand, the Regulation states that the provisions of these laws will apply by comparison.

In light of the above explanations on the public-private sector partnership in health sector, in addition to the sector-specific laws, there is a need for a legal framework which would combine all these laws and provide a more investor-friendly environment in Turkey. In parallel with this analysis, the government is currently preparing a framework PPP law. However, enactment of such law may take a while as the general elections in Turkey stand on the way.


1. Pursuant to the Regulation, "health facilities" for which the Ministry is responsible to construct or to have constructed include (but not limited to) integrated health campus, training and research hospital, state hospital, special hospital, outpatient hospital, clinic, clinic hotel, rehabilitation center, cancer research center, vaccination training center, vaccine production center, vaccine research and development center, mother and child health and family planning center, public health center, organ and tissue bank, regional blood center, blood-based products production facility, oral and dental health center, 112 emergency service control center (including the entire land, air and sea equipment), any support units as well as all the other health-related buildings (including the supplementary ones).

2. The Board is entitled to assist the Council of Ministers in respect of economic, social and cultural development. The Board is chaired by the Prime Minister. Other members of the Board are the Undersecretary of the State Planning Agency and the ministers to be appointed by the Prime Minister.

3. Pursuant to the Regulation, "areas other than the medical service units" include the areas which are identified by the preliminary project and the tender documents and compatible with the concept of health facility such as a parking lot, hotel, bank office, restaurant, cafeteria, conference and cultural center, internet and communications center, rest home for seniors, baby nursery, personnel shuttle, taxi service and similar transportation services, slimming and diet center.

Pursuant to the Regulation "services other than the medical services" include the medical support services and data processing, patient consulting, sterilizing, laundry, cleaning, security, cafeteria operating, archiving and similar services and also maintenance, repair and operation of the buildings including lighting, elevator, heating, cooling, ventilation, supplying medical gas, water and power and removing of wastes and waste water and maintenance of parks and gardens and land, sea and air ambulance services and funeral unit services.

4. The lands which are owned by the Ministry (or the Treasury) and transferred to the contractor for the contractual period.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions