For the last few years, Turkey's hospital campus programme,
also known as hospital PPP's, has been one of the most
discussed topics in the country's infrastructure sector and
Across the globe, the healthcare sector is expanding as
increasing prosperity, changing medical challenges, growing
populations and an ever larger demographic of senior citizens are
creating higher demand for healthcare services. The very same
drivers of global growth are also shaping the development of the
healthcare market in Turkey. The Turkish healthcare market has also
been expanding and is expected to continue its growth as a greying
population, higher incidences of chronic diseases, broader health
insurance coverage, and increasing incomes fuel an upsurge in
In Turkey, the healthcare providers are the Ministry of Health
("Ministry"), universities and the
private sector, with the Ministry accounting for two-thirds of
country's hospitals and hospital beds. The Turkish healthcare
market is high growth, with spending in the sector increasing from
USD 12 billion to USD 44 billion between 2002 and 2008, while
annual patient visits doubled between 2004 and 2008.
World's largest pipeline of PPP hospitals
Public-Private Partnership ("PPP")
involves the collaboration of public and private sector entities to
provide public services that are traditionally provided by the
state. PPP's are mostly used for the construction and operation
of major infrastructure facilities, such as power plants,
motorways, and hospitals.
The considerable potential for growth in the Turkish healthcare
sector provides vast investment opportunities. With the support of
the World Bank, the Ministry is implementing a 42,782-bed
healthcare transformation program. This effort has helped to make
the country's healthcare campus program the largest pipeline of
PPP hospitals on the globe at the moment.
Legislative Framework – The New Law
The first PPP model introduced into Turkish legislation was the
Build-Operate-Transfer model in the 1980s, followed by the
Build-Operate-Own model and Transfer of Operation Rights.
On 9 March 2013, the Build-Lease-Transfer model was introduced
into Turkish legislation by Law No. 6428, commonly known as the
City/Campus Hospitals Law. Under the Build-Lease-Transfer model,
the private sector finances and builds a facility and then leases
it to the relevant public authority, with the state providing the
public service. The infrastructure facility is leased for a maximum
of 30 years and the public authority pays a lease fee to the
private investor and operates the facility during the lease period.
This model was specifically introduced to support hospital
The City/Campus Hospitals Law was enacted following legal
challenges to the current framework for healthcare PPP projects
undertaken by the Ministry. The Council of State has issued stay of
execution decisions for the Ankara Etlik, Ankara Bilkent and
Elazığ hospital PPP projects, effectively halting their
progress pending resolution of this litigation. The disputes are
based on challenges to the free-of-charge allocation of
Treasury-owned land for services that are not directly related to
the healthcare facilities in these PPP projects. In response to the
stay of execution decisions, the City/Campus Hospitals Law includes
a provision nullifying existing tender terms relating to the
allocation of land for commercial purposes. It also contains a
provision applicable to future healthcare PPP projects for
Treasury-owned land to be allocated, free-of-charge, to a project
company to build commercial and healthcare facilities.
Indexing and guaranteed lease payments
Lease payments are increased annually by the average of the
Turkish Producer Price Index (PPI) and Turkish Consumer Price Index
(CPI) for the preceding year. This annual increase may be further
adjusted to take into account the increase in the Central
Bank's currency basket, if such increase is higher than the
average of the PPI and CPI.
To further increase the attractiveness and bankability of the
hospital PPP's, the Ministry guarantees the lease payments
during the term of the agreement. Also, lenders to the project
company must enter into direct agreement with the Ministry, and
step-in rights are granted to them.
It has been a cumbersome process for the hospital PPPs, but the
end result is close to international standards where there is a
true collaboration between the state and the private sector. The
tender processes for hospital PPPs are ongoing, with a remaining
capacity of 22,475 beds offering attractive business opportunities
for savvy investors.
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.
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