financing opportunities available to member states …...assessment of financing opportunities...

Financing eHealth European Commission, DG INFSO & Media

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December 2007

D2.1 Financial opportunities

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About Financing eHealth

The Financing eHealth study was commissioned by DG INFSO and Media, unit ICT for Health, with the aim to assess different financing opportunities against the financing needs of eHealth investment. The overriding goal is to provide assistance to Member States and the European Commission in their efforts to meet the eHealth Action Plan objective of "supporting and boosting investment in eHealth".

Full project title

Assessment of financing opportunities available to Member States to support and boost investment in eHealth

Contract details

Contract number: 30-CE-0121896/0042

Starting date: September 01, 2007

Ending date: August 31, 2008

Number and title of deliverable

This report is deliverable D2.1 of the Financing eHealth study, based on tasks WT2.1 and WT2.2. It provides a preliminary treatment of sources of funds for eHealth in Europe, addressing mainly the supply side of financing eHealth investments.

Authors

Tom Jones, TanJent, UK

Alexander Dobrev, empirica, Germany

Anne Kersting, empirica, Germany

Contact

For further information about the Financing eHealth study, please contact:

empirica Communication and Technology Research Oxfordstr. 2, 53111 Bonn, Germany

Fax: (49-228) 98530-12

www.empirica.com

TanJent Hereford UK

Tel: +44 7802 336 229

www.tanjent.co.uk

D2.1 Financing opportunities

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Table of Contents

List of exsibits......................................................................................................... 4

1 Introduction ....................................................................................................... 5

2 Available financing opportunities for eHealth investments...................... 5

2.1 Overview........................................................................................................................... 5

2.2 Sources of financing eHealth projects..................................................................... 6 2.2.1 Sub-European sources.................................................................................... 6

2.2.1.1 Institutional funds ............................................................................. 6 2.2.1.2 Regional funds ................................................................................... 7 2.2.1.3 National funds .................................................................................... 7 2.2.1.4 Private and commercial financing sources .............................. 10

2.2.2 European level funds ..................................................................................... 11 2.2.2.1 Structural Funds .............................................................................. 11 2.2.2.2 Directorate Generals and research programmes.................... 20 2.2.2.3 The European Investment Group ................................................ 35 2.2.2.4 Other European-level funds.......................................................... 43

2.2.3 International financing sources .................................................................. 52

3 Financing arrangements for eHealth .......................................................... 63

3.1 Overview......................................................................................................................... 63

3.2 Public-private partnerships (PPP)........................................................................... 64

3.3 Procurement and pre-procurement ........................................................................ 68

3.4 Collaboration and purchasing power in procurement....................................... 69

3.5 eHealth investments in services, not products ................................................... 70

3.6 Industry-health authority relationships and networking................................... 70

3.7 Reimbursement mechanisms for health services provider organisations .. 71

3.8 Charitable donations................................................................................................... 72

3.9 Citizen contributions................................................................................................... 72

4 Conclusion ....................................................................................................... 73

5 Disclaimer ........................................................................................................ 73


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List of exsibits

Exhibit 1: Bank für Sozialwirtschaft, Germany........................................................................... 8

Exhibit 2: European Regional Development Fund .................................................................. 13

Exhibit 3: European Social Fund.................................................................................................. 17

Exhibit 4: The Seventh Framework Programme ...................................................................... 21

Exhibit 5: Competitiveness and Innovation Programme ....................................................... 24

Exhibit 6: The Entrepreneurship and Innovation Programme.............................................. 27

Exhibit 7: Information and Communications Technologies Policy Support Programme........................................................................................................................................................ 29

Exhibit 8: Public Health Programme ........................................................................................... 32

Exhibit 9: European Investment Bank ........................................................................................ 36

Exhibit 10: European Investment Fund ...................................................................................... 40

Exhibit 11: European Bank for Reconstruction and Development ..................................... 44

Exhibit 12: Central European Initiative ....................................................................................... 47

Exhibit 13: Council of Europe Development Bank .................................................................. 50

Exhibit 14: World Bank ................................................................................................................... 53

Exhibit 15: World Health Organisation ....................................................................................... 57

Exhibit 16: European Economic Area Financial Mechanism............................................... 60


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1 Introduction

This pre-report to the Financing eHealth study addresses financing opportunities available to Member States to support and boost investment in eHealth. An eHealth investment is defined as expenditure on an eHealth solution and associated change management to achieve an improvement in healthcare quality, access, or efficiency.

The deliverable is based primarily on preliminary results of desk research and focuses on the supply side of financing eHealth investments. The next section is dedicated to different organisations and initiatives that provide financial support, including support for eHealth. These financing sources are the current tools that Member States and the European Commission (EC) have at their disposal to boost investment in eHealth. They are presented descriptively, highlighting their specific relevance to eHealth.

Chapter 3 deals with various financing arrangements for securing the financial resources for healthcare and eHealth projects. The tools available to Member States to influence investment levels, in particular the conditions of subsidy and funding schemes, must be geared to and supported by these arrangements, accounting for the actual volume and type of demand for financing investments.

The analysis of the match, or mismatch, between supply of and demand for financing investments in eHealth is the subject of the subsequent work of the Financing eHealth study. This report provides a thorough basis for upcoming research in workpackage 2, which includes further information on financing sources and financial arrangements, as well as insights into boosting, protecting, and managing investments in eHealth.

2 Available financing opportunities for eHealth investments

2.1 Overview

Given the wide range of models for financing healthcare and healthcare investment in Europe, financing methods and sources for eHealth investment can also be expected to differ across Member States. This is not likely to change over the next decade. Nevertheless, there is always a mix of options that can include some international sources, such as EC, European Investment Bank (EIB) or Word Bank (WB) funding.

Frequent themes of eHealth investment are their dynamics that require sustainable temporary, or longer-term, increases in annual healthcare expenditure. These increases can include revenue expenditure for arrangements by leasing and borrowing from institutions, or one-off injections of venture capital. An underlying, sustainable financing source from increased annual expenditure invariably needs an additional injection of finance to support the humps in eHealth investment curves, especially during implementation and change management. Achieving an appropriate, sustainable mix is critical to success.

In this context, it is important to stress that the options listed in the following subsections are not mutually exclusive, and that the optimal mix of sources for financing an eHealth


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investment, or project, over its whole life-cycle needs to be determined by its investment profile.

2.2 Sources of financing eHealth projects

This section deals with the supply side of financing sources for eHealth investments. It provides information on relevant funding schemes on sub-European, European, and international level. Appropriate sources that present opportunities for eHealth investment have been identified.

2.2.1 Sub-European sources

At this stage of the study, we have focused on European and other international sources of financing eHealth investments. Information on the sources available only on sub-European level, that is national, regional and institutional funds, will become available during the upcoming field work.

2.2.1.1 Institutional funds

Institutional funds includes reallocations within one of the entities of the eHealth users and beneficiaries and new finance that is set aside by entities from surpluses and available for allocation and investment. Thus, money from the overall hospital or GP practice budget allocated for investment in eHealth is defined as institutional funds. It includes re-organisations, and releasing financial and real resources for investment in eHealth.

Increasingly, effective, appropriate eHealth should lead to improvements in quality, access, and cost-effectiveness that translate into a more effective utilisation of healthcare resources. eHealth should enable some resources to be transferred from conventional working practices and administrative activities to eHealth.

An example is Asklepios, a leading international hospital chain with headquarters in Germany. Asklepios is currently executing the OneIT Project, which is decreasing the operating costs of healthcare by improving ICT standards. The aim of the project is to change the ratio between costs and expenditure on investment and operating activities. ICT can help reduce operating costs, which can then free conventional resources for redeployment and investment, including eHealth. Currently, some 2% of annual turnover is invested in ICT. As it increases, its impact on resource utilisation should increase, leading to increased and sustained resource re-allocation. ICT spending does not need extra justification at Asklepios, as it has been adopted as part of the corporate strategy1.

ICT is becoming a factor of production itself. Thus, by substituting and re-allocating resources, access to institutional finance for eHealth becomes easier. This is the way the Irish hospital management authorities sees it2. For instance, PACS is not an additional cost when the base-line medical personnel are not available, and therefore need to be substituted by ICT.

1 Based on the Invitation Only Workshop “Innovative Approaches to Financing eHealth Solutions”

held as a by-event to the World of Health IT 2007 Conference, Vienna, 25 October 2007 2 Based on the Invitation Only Workshop “Innovative Approaches to Financing eHealth Solutions”

held as a by-event to the World of Health IT 2007 Conference, Vienna, 25 October 2007


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The County of Norrbotten, Sweden, invests in eHealth as part of the healthcare provision, financed by taxation3. EC funding plays only a small role in the overall financing arrangements. The driver has been, and still is, that without eHealth the county would not be able to deliver healthcare services in its sparsely populated region, with 2.6 inhabitants per km2.

The eHealth financing challenge in these contexts is to be able to accumulate sufficient impact over the shortest practical time so that the liberated resources can be converted into cash, which can then be redeployed into eHealth investment. This is extremely demanding for health services provider organisations (HPOs), because much of the initial productivity gain can be in many small margins of staff time, which remains as a fixed cost. It is essential that the change management effort seeks ways to change working practices so that these productivity gains can be unfixed and released. This usually requires a large-scale eHealth impact, removal of pre-eHealth processes as soon as possible, and extra finance available for the eHealth investment hump. Whilst the re-allocation models are demanding, creating and implementing these is a new and essential objective of finance directors in HPOs.

2.2.1.2 Regional funds

Regional funds in general include additional funds from public sources, being either taxation or statutory health insurance, directed at specific eHealth initiatives, or ongoing investments in eHealth. It can be seen as a role equivalent to third party payers in providing additional finance for eHealth investment in return for benefits to their patients and themselves.

Examples are direct contributions from regional governments and bodies to support eHealth investments. This can be in the form of additional income, or short-term support for the liberation of resources for redeployment. Such a re-organisation can come from new models of healthcare available to communities as a result of eHealth, such as telemonitoring and telemedicine applications. For instance, a telecardiology solution for the Lombardy region in Italy is being partly financed by the Regional government.

2.2.1.3 National funds

National funds include initiatives by Member States and other funds provided by non-government bodies that operate on a national scale. Research on national funds is still ongoing. An example is a Bank in Germany which specialises in providing loans to organisations in the social services sector, whose business models are often not supported by, not understood by, or too risky, for mainstream commercial banks. Exhibit 1 summarises the role of the Bank für Sozialwirtschaft, Germany.

3 Based on the Invitation Only Workshop “Innovative Approaches to Financing eHealth Solutions”

held as a by-event to the World of Health IT 2007 Conference, Vienna, 25 October 2007


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Exhibit 1: Bank für Sozialwirtschaft, Germany

Source of eHealth Finance Bank für Sozialwirtschaft (BFS)

Summary

Characteristics Groups

Institutional Regional National x European

Level

Other International Public Private

Sour

ce s

uppl

ied

by

Sector

Public-Private mix x National or sub-national x Cross-border

Scope

International Planning, development, experiments, pilots

x

Start-up, implementation, roll-out x

Focus

Continuous, routine operation SME x HPO x NGO x Public authorities Industry

Applicants

Academic actors Yes No x

Sour

ce a

imed

at

EEA and accession countries Only

Project based/one-off financial injection

x

General R&D or other experimental budget

x

Targeted time scale

Part of recurring healthcare financing

Grant Loan x Guarantee Equity Resource re-allocation

Con

ditio

ns

Type of funds

Additional recurring revenue

Comments

Supplier of financing

The BFS is a joint stock company. Its main shareholders are all six major independent charities in Germany: the Federal Workers’ Assistance Association, the German Red Cross, the Caritas Association of Germany, the Diaconal Charity of the German Evangelical Church, the German Joint Association of Assistance and the Israelite Central Office of Assistance.

Short description

The BFS was founded in 1923. It specialises in the social and health sectors and is geared towards organisations and institutions


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in the co-operative, mutual and non-profit sector. Its client portfolio of institutions and organisations in the social economy and the health sector distinguishes it from other banks. The BFS provides finance for their activities concerned with social exclusion, education, development aid, health, housing, and helping to create social employment. As a general bank, it offers loans and credits, deposits and payment services to social economy institutions and organizations, in particular. It also offers advice on all questions relating to banking, management and financing.

The BFS has set itself a consulting duty on all banking, corporate management and financing issues, emphasising the European dimension. Hence, in 1997 it set up an office in Brussels to improve its support for its customers in pursuing their European strategies. The office offers individual consulting services and operates a European Union (EU) information system called EUFIS, which includes information about EU funding and EU policies.

Examples of the BFS priorities in the social, educational and health sector, are financial support for: homes for the elderly, hospitals, facilities for the handicapped, sheltered workshops, facilities for the children and youth welfare services, rehabilitation homes, guest houses and facilities for addicts.

The BFS has two affiliates: the BFS Service GmbH, which focuses on consulting activities, and the IS Immobilien-Service GmbH, which supports major financing projects.

Size of financial

resources available

No boundaries for eHealth financing are identifiable.

Figures (31/12/06) Capital : € 36,400,000 Total balance : € 4,550,000,000

(see: http://www.sozialbank.de/finale/inhalt/banklei/PDFs/GB_2006.pdf)

Timeline of availability

Ongoing.

Conditions / Access path

The BFS is a professional bank for facilities and organisations providing welfare and community healthcare services. It works closely with non-profit organisations.

Special lending facilities are provided to non-profit bank customers.

An application form for loans of up to € 50,000 is available at:

http://www.sozialbank.de/finale/inhalt/banklei/kkkredit.pdf

For higher amounts, conditions may vary. Information can be obtained via the bank’s branches:

http://www.sozialbank.de/finale/inhalt/ueberuns/ueberuns14322.shtml

Contact point

Bank für Sozialwirtschaft AG Wörthstrasse 15-17 50668 Cologne Germany Tel: + 49 (0)221 97356 - 0 Fax: + 49 (0) 221 97356 463 Email: bfseu’ ‘sozialbank.de


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Brussels Office: Rue de Pascale 4-6 1040 Brussels / Belgium Tel: + 32 (0) 280 27 76 Fax: + 32 (2) 280 27 78

Further information

The text is mainly based on internet research, see main page and associated websites:

http://www.sozialbank.de/

http://www.sozialbank.de/finale/inhalt/banklei/PDFs/GB_2006.pdf

2.2.1.4 Private and commercial financing sources

Private and commercial financing arrangements can be seen as part of conventional investment arrangements. They include loans and leases, as well as venture and equity capital. Loans tend to cover expenditures only for assets, and leases usually are for assets, but are not appropriate for the often very substantial eHealth costs like change management. Commercial sources of eHealth finance require interest, or dividend, payments on finance raised by the entity that provides such services to the eHealth users. Returns will tend to be at market rates and returns. In addition, loans will have to be repaid, and these repayments will represent revenue expenditure for HPOs as eHealth users. Equity may have to be redeemed at some stage.

Assets financed by loans need to be depreciated, resulting in appropriate annual charges against income. These represent real financial constraints on the amounts that eHealth users can raise from private and commercial sources, and will be reflected in affordability assessments and risk evaluations. Another constraint may be the regulative environment of HPOs and public health service entities, which, in some Member States, may explicitly specify limited numbers and types of financing sources for investments that exclude private and commercial sources.

An example of an eHealth supplier providing eHealth finance marketed through SAP Financing, operated by Siemens Financial Services. It was launched in October 2005 with the aim to meet the cash flow needs of SAP customers, and operates in over 18 countries, including Denmark, Estonia, Finland, Norway and Sweden, and provides services to both private and public HPOs of all sizes. Coverage is expected to grow to 41 countries over the next few years. This supports the concept that general financial solutions for ICT investment can also be effective for eHealth.

A relatively new practice for fund raising in the health services sector are Real Estate Investment Trusts (REITs)4. Here, the investor sells assets to a REIT and leases it back over time. Similar lease and lease back models have been used for several years in the business and local government sectors, especially in finance needed to develop fixed assets.

4 see “Auf Geldsuche”, kma, 02/06


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Venture capital is available mainly to private institutions, due to regulations of public organisations, yet can enter any investment initiative, including eHealth, through a partner in the implementing consortium. An example is in eHealth that fits directly into a new healthcare model for patients, such as telecardiology. An incentive, and contributor to financial viability, is the resulting new healthcare models that create new reimbursements, and so income streams that can sustain the venture capital investment. This can be supplemented by improved utilisation of healthcare resources provided by a conventional healthcare model.

The impact of commercial financing on modern healthcare models, such as Academic Health Science Centres, may be a new and critical aspect of eHealth financing. It may be helpful for current leading edge eHealth activities, such as virtual physiological and simulated human models as part of sophisticated research programmes.

2.2.2 European level funds

Financing opportunities at the European level mainly include funds directly from, or in some way related to, European Union (EU) institutions. Funds include the various regional development, health-related investment support, as well as research programmes.

2.2.2.1 Structural Funds

The European Social Fund (ESF) and the European Regional Development Fund (ERDF) are two of the four Structural Funds that allow the EU to grant financial assistance to resolve structural economic and social problems5. The other two, the Financial Instrument for Fisheries Guidance and the European Agricultural Guidance and Guarantee Fund, are not relevant in the context of the study.

The funds are large sources of finance and have specific investment objectives. The ESF fosters balanced social and economic development to support national policies that promote full employment, improved quality and productivity at work and reduced social exclusion and disparities at work. This includes eHealth investments with specific goals, like facilitating easier access to healthcare for minorities in border regions, and cooperation across borders. The ERDF currently operates in some 60 regions in 13 Member States. One aim is to improve Convergence; the increased human capital and improved governance across the EU. Financial support up to 75% of investments for convergence, and up to 50% for projects for regional competitiveness and employment, are available. The main focus is on innovation, co-operation between regions and across borders equal opportunities, promoting integration of immigrants and minorities.

The current focus of EU funding for healthcare, is on health infrastructure. For the period 2007-2013 the scope of eligible healthcare projects is expected to extend to include a variety of measures. “These will then include: the modernisation of health infrastructure, technical assistance, productive investment including medical equipment, medical devices, laboratories, the introduction of IT systems in medical services, exchange of

5 http://ec.europa.eu/regional_policy/funds/prord/sf_en.htm


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experience projects, and health-related projects in other funding areas such as research”6.

For the period 2007-2013, the scope and eligibility for health-related projects under Structural Funds will be extended, notably to include technical assistance, ICT systems for medical services, productive investment including medical equipment, and exchange of best practice.

6 “Mobilising EU Funding for Health – EU Financing and National Opportunities in the New

Member States”, brochure by ‘Gesellschaft für Versicherungswissenschaft und – gestaltung e.V. (GVG)’, April 2005: http://www.gvg-koeln.de/xpage/objects/pub_sonstiges/docs/1/files/EU_Funding_for_Health.pdf


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Exhibit 2: European Regional Development Fund

Source of eHealth Finance European Regional Development Fund (ERDF)

Summary


Institutional Regional National European x

Level

Other International Public x Private

Sour

ce s

uppl

ied

by

Sector

Public-Private mix National or sub-national x Cross-border x

Scope


x


Focus

Continuous, routine operation SME x § HPO x § NGO x § Public authorities x § Industry x §

Applicants

Academic actors x § Yes No x

Sour

ce a

imed

at



x


Targeted time scale


Grant x * Loan x * Guarantee Equity x * Resource re-allocation

Con

ditio

ns

Type of funds


Comments

* Conditions depending on country, region, applicant and project. Operational Programmes often provide technical assistance as well § Applicants depending on country, region, applicant, Project etc. Private organisations only in public-private-partnership under specific conditions


European Commission (EC).

Short description

The ERDF is one of four European Structural Funds (ESF). Its aim is to reduce disparities in the development of regions and to support social and economic cohesion within the European Union (EU). The


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ERDF currently operates in some 60 regions in 13 Member States.

It can support health projects in the context of its Objective 1, which is to promote the development and structural adjustment of regions whose development is lagging behind. Projects are supported that help less-favoured regions to raise their level of the use of technology, including in the health sector. As ERDF’s innovative measure to improve the use of new information and communication technologies (ICT), it can finance up to 80% of a projects total cost in Objective 1 regions. The ERDF is an EU fund with indirect support, and is managed through national and regional authorities. See:

http://www.myeucenter.org/download/fundopp/finbrief.pdf

The ERDF can intervene in the three objectives of regional policy

• Convergence

• Regional Competitiveness and Employment

• European Territorial Cooperation.

Funding priorities include research, innovation, environmental protection and risk prevention, while infrastructure investment retains an important role, especially in the least-developed regions.

The ERDF is the largest EU financial instrument benefiting small and medium-sized enterprises (SME). In order to strengthen the creation and competitiveness of SMEs, the ERDF co-finances activities in a broad range of areas, including: entrepreneurship, innovation and competitiveness of SMEs; improving the regional and local environment for SMEs; inter-regional and cross-border co-operation of SMEs; and investment in human resources along with funding from the European Social Fund (ESF).

(http://ec.europa.eu/enterprise/entrepreneurship/docs/financing/sp_2007_en.pdf)

Size of financial

resources available

No boundaries for eHealth financing identifiable.

Allocations 2007 to 2013

http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/pdf/2007/publications/memo_en.pdf.

http://ec.europa.eu/regional_policy/atlas2007/fiche_index_en.htm.

For the period 2007 to 2013 the strategy and resources of cohesion policy of the ERDF,, the ESF and the European Cohesion Fund (ECF) are grouped into three priority objectives, with a total allocation of €308 billion:

- Convergence: speed up the economic convergence of the less developed regions taking 81.54% of the budget;

- Regional competitiveness and employment: strengthen regional competitiveness and attractiveness and help workers and companies to adapt themselves to economic changes taking 15.94% of the budget;

- European territorial co-operation: strengthen cross-border, trans-national and interregional co-operation, taking 2.52% of the budget.

Timeline of The ongoing programme is running from 2007 to 2013. The past


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availability period covered the 2000 to 2006.


After distribution of the ESF budget and the rules for its use have been defined and guidelines on cohesion policy have been found, each Member State has to propose a National Strategic Reference Framework (NSRF), which will approved by the European Commission. Then, each Member State or region has to propose an Operational Programme (OP). The Operational Programme comprises the priorities of the Member State. The Member States and regions have to implement the programmes and choose individual projects, and monitor as well as assess them. The European Commission assigns the expenditure. The European Commission as well as the Member States have to deposit strategic reports throughout the 2007 to 2013 programming period. See: http://ec.europa.eu/regional_policy/policy/etap/index_en.htm.

Conditions

Lisbon targeting:

The funds must target the EU priorities of regarding the promotion of competitiveness and job creation. The EC and the Member States oversee that 60% of the expenditure of all Member States for Convergence and 75% of the expenditure for Competitiveness and Employment target these priorities.

Maximum rate of co-financing for each objective:

- Convergence: between 75% and 85%

- Competitiveness and Employment: between 50% and 85%

- European Territorial Cooperation: between 75% and 85%

- Cohesion Fund: 85%

Eligibility of expenditure:

For expenditure to become eligible, it must be incurred between 1 January 2007 and 31 December 2015. Co-financed transactions must not be completed before the start date for eligibility. Rules are established at national level except where the specific rules of the fund state otherwise. This is different from 2000 to 2006 where the rules were set at the EU level.

Unlike many other EU funding sources, ERDF programmes are not directly managed by the EC but by national and regional authorities. These are also contact points for funding applications and project selection.

Contact point http://ec.europa.eu/regional_policy/manage/authority/authority_en.cfm.

http://ec.europa.eu/regional_policy/country/gateway/index_en.cfm.

Further information


http://ec.europa.eu/regional_policy/funds/feder/index_en.htm.

Information on 2000-2006 programming, see: http://ec.europa.eu/regional_policy/funds/prord/prord_en.htm.

Information on Structural Funds regulations, see: http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/newregl0713_en.htm.


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Specific programmes related to the ERDF and ESF for 2007 to 2013, in cooperation with the European Investment Bank and other financial institutions, include :

- JASPERS (Joint Assistance in Supporting Projects in European Regions), supporting large infrastructure projects

- JEREMIE (Joint European Resources for Micro to Medium Enterprises)

- JESSICA (Joint European Support for Sustainable Investment in City Areas), which focuses on urban development, including social housing – a potential target for in-vestments in ICT infrastructure supporting tele-homecare, for example.

For more information, see: http://ec.europa.eu/regional_policy/funds/2007/jjj/index_en.htm.


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Exhibit 3: European Social Fund

Source of eHealth Finance European Social Fund (ESF)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope

International Planning, development, experiments, pilots x


Focus

Continuous, routine operation SME x § HPO x § NGO x § Public authorities x § Industry x §

Applicants

Academic actors x § Yes No x

Sour

ce a

imed

at


Project based/one-off financial injection x


Targeted time scale


Grant x * Loan x * Guarantee x * Equity x * Resource re-allocation

Con

ditio

ns

Type of funds


Comments

Funding types include: reimbursable grants, loan interest rebates, micro-credits, guarantee funds and the purchase of goods and services in compliance with public procurement rules

* Conditions depending on country, region, applicant, and the project

§ Operational Programmes are implemented through a wide range of organisations, both in the public and private sector. These organisations include national, regional and local authorities, educational and training institutions, non-governmental organisations (NGO) and the voluntary sector, as well as social


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partners, for example trade unions and works councils, industry and professional associations, and individual companies.


European Commission (EC)

Short description

The ESF is one of the four Structural Funds. It fosters balanced social and economic development to support national policies that promote full employment, improved quality and productivity at work and reduced social exclusion and disparities at work. This includes eHealth investments with specific goals, like facilitating easier access to healthcare for minorities in border regions, and co-operation across borders.

One aim is to improve convergence; the increased human capital and improved governance across the EU. Financial support up to 75% of investments for convergence, and up to 50% for projects for regional competitiveness and employment, are available. The main focus is on innovation, co-operation between regions and across borders equal opportunities, promoting integration of immigrants and minorities. The ESF is a European Union (EU) fund with indirect support; the ESF is managed through national and regional authorities. See:

http://www.myeucenter.org/download/fundopp/finbrief.pdf

The ESF strategy and budget is negotiated and decided between the EU Member States, the European Parliament and the EC. On this basis, seven-year Operational Programmes are planned by Member States together with the EC.

These Operational Programmes are then implemented through a wide range of organisations, both in the public and private sector, including national, regional and local authorities, educational and training institutions, NGOs and the voluntary sector, as well as social partners, for example trade unions and works councils, industry and professional associations, and individual companies.

The ESF is based on the principles of co-financing and shared management; co-financing, because EU financial support always runs alongside national public or private financing. The level of EU intervention is linked with the situation in each Member State. Depending on a number of socio-economic factors, the co-financing may vary between 50% and 85% of the total cost of interventions. Shared management because the guidelines for ESF actions are designed at European level, whereas implementation is managed by the relevant national or regional authorities in each Member State. These authorities prepare the Operational Programmes and select and monitor the projects.

Detailed information about legal regulation can be accessed under http://europa.eu/scadplus/scad_en.htm or under http://eur-lex.europa.eu/Result.do?RechType=RECH_eurovocMTH&code=1021*&repihm=1021%20Finanzen%20der%20Gemeinschaft.

Size of financial

resources available


Allocations 2007 to 2013:

http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/pdf/2007/publications/memo_en.pdf

http://ec.europa.eu/regional_policy/atlas2007/fiche_index_en.htm

For the period 2007 to 2013 the strategy and resources of cohesion


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policy of the ERDF, ESF and ECF are grouped into three priority objectives, with a total allocation of €308 billion:

- Convergence: speed up the economic convergence of the less developed regions, taking 81.54% of the budget;

- Regional competitiveness and employment: strengthen regional competitiveness and attractiveness and help workers and companies to adapt themselves to economic changes taking 15.94% of the budget;

- European territorial co-operation: strengthen cross-border, trans-national and interregional co-operation, taking 2.52% of the budget.


The ongoing programme is running from 2007 to 2013. The past period covered the years from 2000 to 2006.


Each Member State has to propose a National Strategic Reference Framework (NSRF), which will approved by the EC. Then each Member State or region, together with the EC agrees an Operational Programme for ESF funding for 2007to 2013. Operational Programmes set up the priorities for ESF intervention and their objectives. The Operational Programme comprises the priorities of the Member State.

The Member States and regions have to implement the programmes and choose individual projects, and monitor as well as assess them. The EC assigns the expenditure.

Potential participants in ESF actions should contact the ESF Managing Authority in their own Member State. See: (http://ec.europa.eu/employment_social/esf/discover/participate_en.htm).

The level of ESF funding differs from one region to another depending on their relative wealth. EU regions are actually divided into four categories, based on their regional gross domestic product (GDP) per head compared to the EU average, with 25 or 15 Member States.

The convergence objective addresses the following regions: European Regional Development Fund (ERDF) and the ESF assist regions with a GDP <75% of the EU25 average (with an allocation of 58% of the funds inside the Cohesion policy) and regions with a Gross domestic product /head <75% of EU15, but >75% in EU25, due to the European enlargement and the statistical effect, with an allocation of 4%.

Information about how to apply and more requirements to access funds can be detected on the particular national homepage concerning ESF.

Contact point

For contact addresses in particular countries, see

http://ec.europa.eu/employment_social/esf/index_en.htm (drop-down-menu down left, “ESF in Member States”)

For more general information, you can also contact the information service of Directorate-General Employment, Social Affairs and Equal Opportunities (Information service of Directorate-General Employment, Social Affairs & Equal Opportunities; Unit "Communication & Speechwriting"; B-1049 Brussels; Fax.: +32 2 296 23 93; E-mail: empl-info’ ‘ec.europa.eu).


20 ©


Further information


http://ec.europa.eu/employment_social/esf/

http://ec.europa.eu/employment_social/esf2000/index_de.html

http://ec.europa.eu/employment_social/emplweb/esf/esf_matrix_en.cfm

Specific programmes related to the ERDF and ESF for 2007 to 2013, in co-operation with the European Investment Bank (EIB) and other financial institutions, include :

- JASPERS (Joint Assistance in Supporting Projects in European Regions), supporting large infrastructure projects

- JEREMIE (Joint European Resources for Micro to Medium Enterprises)

- JESSICA (Joint European Support for Sustainable Investment in City Areas), which focuses on urban development, including social housing – a potential target for in-vestments in ICT infrastructure supporting tele-homecare, for example.

For more information, see: http://ec.europa.eu/regional_policy/funds/2007/jjj/index_en.htm.

2.2.2.2 Directorate Generals and research programmes

Activities of diverse Directorate Generals, especially Information Society and Media and SANCO, already provide finance for eHealth projects. The 7th EU Framework Programme for Research has started and provides a valuable contribution to meeting the financing needs of many eHealth investments.

Until 2006, the eTEN (Trans-European Network) programme had a brief to support development in transport, communications and the energy sectors. Its eHealth goals were to improve health and prevent illness by better access, quality and efficiency in healthcare across Europe, and increase the impact of medical advances. In the period 2007 – 2013, the successors of a number of programmes including eTEN, the Information and Communication Technologies Policy Support Programme (ICT PSP) of the Competitiveness and Innovation Programme (CIP), will play an important role in financially supporting initial investments and thus supporting and boosting investment in eHealth.


21 ©

Exhibit 4: The Seventh Framework Programme

Source of eHealth Finance The Seventh Framework Programme (FP7)

Summary



Level


Sour

ce s

uppl

ied

by

Sector

Public-Private mix National or sub-national Cross-border x

Scope

International x Planning, development, experiments, pilots

x


Focus

Continuous, routine operation SME x HPO x NGO x Public authorities x Industry x

Applicants

Academic actors x Yes x No

Sour

ce a

imed

at




x

Targeted time scale


Grant x * Loan Guarantee Equity Resource re-allocation

Con

ditio

ns

Type of funds


Comments * Three forms of grants are proposed for the EC´s financial contribution: reimbursement of eligible costs, lump sums, and flat-rate financing.



Short description

FP7 is the short name for the Seventh Framework Programme for Research and Technological Development. It is an EC research programme and the European Union's (EU) main instrument for funding research in Europe, and will run from 2007 to 2013. The


22 ©


FP7 is an EU loan programme to support actions in the field of research and development.

The FP7 is organised into four different programmes, all representing important European research policies. The four programmes are: Co-operation, Ideas, People and Capacities. Co-operation is divided into sub-programmes, three of them relevant to eHealth: Health, Information and Communication Technologies (ICT), and Security and Space. Also the Ideas and Capacities programmes may offer possibilities for eHealth initiatives.

The programme encourages small to medium-sized enterprises (SME), research centres, universities and technological development activities. FP7 is a Community Programme and EU fund managed by the EC Directorate Generals.

Participation is open to organisations from the EU Member States, Candidate Countries, Associated States and Third Countries. Third countries cannot have financial contributions. In the case of participation of entities from Candidate Countries, an additional contribution from the pre-accession financial instruments could be granted.

Typically, EC programmes require at least three participants from three different Member or Associated States, of which at least two are Member States or Associated Candidate States. In practice, however, to achieve ambitious objectives there are likely to be significantly more partners per consortium.

Size of financial

resources available


The FP7 total budget is € 67.8 billion for 2007 to 2013. The amount made available for health projects is estimated to €7.35 billion and for ICT projects €11.2 billion. The amount possible to achieve for a single project differs with the nature of the project. Research and demonstration activities may receive a contribution of up to 50%, SME:s, public bodies, secondary and higher education establishments and non-profit research organisations have a top limit of 25% for research activities. Frontier research actions can be reimbursed at 100% for all entities. All other activities, also activities related to coordination and support of projects, may receive reimbursement up to 100% for all entities.

The EC budget for the next seven years is €50.5 billion. For the Cooperation area, €32,365 million are allocated. Research actions in health get €6,050 million from this Cooperation block.


The FP7 will run from 2007 to 2013


When a potential participant has an idea or a vision for a research project, it is advisable to have a look at the rules for FP7 research (http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/l_391/l_39120061230en00010018.pdf).

Subsequently, the recipient has to seek out other EU partners or participants from abroad, with which you can cooperate Obtaining financial support needs at least three legal entities to participate, each of which must be established in a Member State or associated country, and no two of which may be established in the same Member State or associated country, and all three legal entities


23 ©


must be independent of each other. See:

http://cordis.europa.eu/documents/documentlibrary/2748EN.pdf.

Applications have to be submitted to the EC according to the Call for Proposal deadlines and dedicated work programme. EC evaluators review the submission. After receiving a positive reply, contract negotiations, and include contract signature and start of the project. For each year, the EC services will develop an in-depth annual work programme which specifies the priorities to be funded. In most cases, funding will be made available through so called calls for proposals.

See:

http://cordis.europa.eu/fp7/dc/index.cfm?fuseaction=UserSite.CooperationDetailsCallPage&call_id=11.

Through these public calls, applications for funding in the activity specified are invited. The Research Enquiries Service, provides support for potential participants. See http://www.ec.europa.eu/research/enquiries

Detailed information about general provisions, eligible countries, eligible consortia, calls for proposals, the budget, funding schemes, research themes and financial rules can be extracted under: http://cordis.europa.eu/fp7/participate_en.html.

Organisations, including universities, research centres, multinational corporations, SMEs, public administrations, and individuals can participate in FP7.

Contact point For the network of contact points, see: http://cordis.europa.eu/fp7/ncp_en.html.

Further information


http://cordis.europa.eu/fp7/home_en.html http://www.myeucenter.org/download/fundopp/finbrief.pdf http://www.2007-2013.eu

Detailed information about legal regulation can be accessed under:

http://europa.eu/scadplus/scad_en.htm


24 ©

Exhibit 5: Competitiveness and Innovation Programme

Source of eHealth Finance Competitiveness and Innovation Programme (CIP)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope


x


Focus


Applicants


Sour

ce a

imed

at



x


Targeted time scale


Grant x Loan Guarantee Equity Resource re-allocation

Con

ditio

ns

Type of funds


Comments Supplier of financing


Short description

The CIP is one of the frameworks developed as a response to the renewed Lisbon strategy. The CIP supports the various fields critical for enhancing the European productivity, innovation capacity and sustainable growth, and at the same time, addresses environmental concerns. It will be running from 2007 to 2013, and will operate with, and complement, other EC programmes covering cohesion


25 ©


activities, research, technological development and demonstration activities and lifelong learning. The CIP is a bundle of measures that support the Lisbon agenda, with its goals of increased competitiveness and growth.

Detailed information about legal regulation can be accessed under http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/l_310/l_31020061109en00150040.pdf.

Size of financial

resources available

The CIP budget is €3,621m. The amount allocated to the Entrepreneurship and Innovation Programme (EIP) amounts €2,166m, for the ICT Policy Support Programme, €728m is allocated, and the amount allocated to Intelligent Energy Europe Programme is €727m.

The EC will provide co-financing of up to 60% of eligible costs. There is no predefined allocation of funds for each Member State, but the eventual allocation will reflect, to a certain extent, the socio-economic criteria that correspond approximately to the total population in Member States.

For any details on the budget related to a specific measure, work programme of each CIP pillar should be consulted.


CIP will be running from 2007 to 2013. Timeline of availability will vary depending on the particular pillar, the type of projects and the support actions required for success.

Calls for proposals are published in the web page of each CIP programmes. There is no specific deadline for publication of proposals. Each of the three CIP pillars has a separate work programme. These provide a clear statement of the details of the actions covered by the calls for proposals to be published each year.


All EU member states participate in CIP. Non-EU countries can participate under certain conditions. The CIP is also open to European Free Trade Association (EFTA) countries which are members of the European Economic Area (EEA), candidate countries benefiting from a pre-accession strategy, countries of the Western Balkans, and other third countries, when agreements so allow. Details are at http://ec.europa.eu/cip/thirdcountries.htm .

Actors who can apply include: research centres, corporations, federations, unions, administrations, states, agencies, chambers; small and medium-sized enterprises (SME), banks, investment funds.

Projects should involve various partners from different countries. Details about partnership and consortia will be published in the work programme for each sub-programme.

Each of the three CIP pillars has a specific annual work programme and support measures. By consulting these documents one can have a clearer idea about the details of the actions covered by the CIP, including possible calls for proposals.

Contact point CIP Secretariat and EIP E-mail: entr-cip’ ‘ec.europa.eu Postal address: European Commission – Enterprise & Industry Directorate General


26 ©


B-1049 Brussels Belgium Fax: +32 (0)2 29 87950 Website: http://ec.europa.eu/enterprise/enterprise_p olicy/cip/index_en.htm

ICT Policy Support Programme E-mail: infso-cip-ictpsp’ ‚ec.europa.eu Postal address: European Commission – Information Society and Media Directorate General B-1049 Brussels Belgium Fax: +32 (0)2 29 61740 or +32 (0)2 29 51071

Intelligent Energy-Europe Programme

http://ec.europa.eu/energy/intelligent/contact/index_en.htm

Further information

At the beginning of each year the European Commission publishes its annual EIP Work Programme and its associated support measures for 2007 that give detailed information on the specific actions to be supported that year.


http://ec.europa.eu/cip/


27 ©

Exhibit 6: The Entrepreneurship and Innovation Programme

Source of eHealth Finance The Entrepreneurship and Innovation Programme (EIP)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope


x


Focus


Applicants


Sour

ce a

imed

at



x


x

Targeted time scale



Con

ditio

ns

Type of funds




Short description

The EIP is one of the three sub-programmes under the Competitiveness and Innovation Programme (CIP). The EIP brings together activities in the areas of entrepreneurship, small and medium-sized enterprises (SME), industrial competitiveness and innovation. The EIP will bring together activities on entrepreneurship, SMEs, industrial competitiveness and innovation.


28 ©

Source of eHealth Finance The Entrepreneurship and Innovation Programme (EIP)

It specifically targets SMEs, both from the high-tech sector and from traditional micro-, and family-run, companies in the industrial and services sectors. The EIP brings together actions previously carried out under the Multi-annual Programme for Enterprise and Entrepreneurship (MAP) and the environmental technologies part of the LIFE environmental and nature conservation projects.

Put simply, the activities aim at providing access to finance for SMEs, including risk capital, facilitating exchange of best practices and enhancing the role of innovation and business support networks. SMEs will have easy access to the EU through these support networks, including the Euro Information Centres and the Innovation Relay Centres.

Detailed information about legal regulation can be accessed under http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/l_310/l_31020061109en00150040.pdf

Size of financial

resources available

The EIP budget is €2,166m.


CIP will be running from 2007 to 2013. Timeline of availability vary depending on the particular projects and support actions. For the 2007 Work Programme for the EIP, see:

http://ec.europa.eu/cip/docs/eip_wp2007.pdf

http://ec.europa.eu/cip/docs/eip_wp2007_measures.pdf


The 2007 Work Programme 2007 for the EIP shows the access arrangements, and is available at http://ec.europa.eu/cip/docs/eip_wp2007.pdf.

http://ec.europa.eu/cip/docs/eip_wp2007_measures.pdf.

Contact point

EIP E-mail: entr-cip’ ‚ec.europa.eu Postal address: European Commission – Enterprise & Industry Directorate General B-1049 Brussels Belgium Fax: +32 (0)2 29 87950

Further information


http://ec.europa.eu/cip/eip_en.htm


29 ©

Exhibit 7: Information and Communications Technologies Policy Support Programme

Source of eHealth Finance

Information and Communications Technologies Policy

Support Programme (ICT PSP)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope


x


Focus


Applicants


Sour

ce a

imed

at



x


Targeted time scale



Con

ditio

ns

Type of funds


Comments


European Commission

Short description

The ICT PSP is one of the three sub-programmes under the Competitiveness and Innovation Programme (CIP). The ICTPSP will promote the speedy adoption of ICT and comprises existing measures such as eTEN, eContent or Modinis.


30 ©



Support Programme (ICT PSP) The aim of ICT PSP is to stimulate innovation and competitiveness through the wider uptake and best use of ICT by citizens, governments and businesses. The outgoing eTEN, Modinis and e-Content programmes, which ran in the last funding period, are integrated into this area of the CIP programme.

The ICT PSP replaces the previous e-TEN, Modinis and e-Content programmes adding several new dimensions. It has been set up as an instrument to realise the third pillar goal of i2010: “promote an inclusive European Information Society, supported by efficient and user-friendly ICT enabled public services”. It aims to stimulate the new converging markets for electronic networks, multilingual media content and digital technologies. It will test solutions to the bottlenecks that delay European-wide deployment of electronic services. It will also support the modernisation of public sector services that will raise productivity and improve services.

The ICT PSP’s main targets are to underpin regulatory and research actions in ICT, provide a bridge between research investment and wide adoption, reinforce European cultural and linguistic identities by supporting European digital content and to assist in the development of an open and inclusive European Information Society. By doing so, ICT PSP contributes to the new integrated strategy i2010 - European Information Society 2010. Aims and goals as well as implementation mechanisms are described in more detail below.

Three types of instruments have been identified:

• Pilot (Type A) - building on initiatives in Member States or associated countries;

• Pilot (Type B) - stimulating the uptake of innovative ICT based services and products;

• Thematic Networks - providing a forum for stakeholders for experience exchange and consensus building.

These instruments are defined in detail in the Work Programme. They provide complementary financing tools in order to reach the ICP PSP objective of a wider uptake and best use of ICT by citizens, governments and businesses and in particular small and medium-sized enterprises (SME).

Size of financial

resources available

The ICT PSP budget is €728m.


CIP will be running from 2007 to 2013. Timeline of availability vary depending on the particular projects and support actions. The Work Programme 2007 for the ICT PSP, see:

http://ec.europa.eu/information_society/activities/ict_psp/library/ref_docs/docs/cip_ictpsp_wp.pdf


The Work Programme 2007 for the ICT PSP shows the access arrangements, and is available at: http://ec.europa.eu/information_society/activities/ict_psp/library/ref_docs/docs/cip_ictpsp_wp.pdf


31 ©



Support Programme (ICT PSP)

Contact point

ICT PSP Secretariat E-mail: infso-cip-ictpsp’ ‘ec.europa.eu Street Address: European Commission - Directorate-General Information Society and Media B-1049 Brussels Belgium Phone: +32 2 29 69076 Fax: +32 2 29 61740 (or +32 2 29 51071)

Website: http://ec.europa.eu/ict_psp

Further information


http://ec.europa.eu/information_society/activities/ict_psp/index_en.htm

http://ec.europa.eu/information_society/activities/ict_psp/library/ref_docs/docs/ict_psp_presentation_2007.pdf


32 ©

Exhibit 8: Public Health Programme

Source of eHealth Finance Public Health Programme (PHP)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope

International x Planning, development, experiments, pilots x


Focus

Continuous, routine operation SME x HPO x NGO x Public authorities x Industry

Applicants


Sour

ce a

imed

at



General R&D or other experimental budget x

Targeted time scale


Grant x Loan x Guarantee Equity Resource re-allocation

Con

ditio

ns

Type of funds



EC, DG SANCO

Short description

The Second Programme of Community Action in the Field of Health 2008 to2013 will come into force from 1 January 2008. This follows the first Programme of Community action in the field of public health for 2003 to 2008, which financed over 300 projects and other actions. It is a loan program of the EU. The aim is to protect human health and to improve public health. Objectives are to improve


33 ©


citizens' health security; to promote health, including the reduction of health inequalities, and to generate and disseminate health information and knowledge. The financial envelope for the programme is €321.5m.

The Health Programme for 2008 to 2013 is intended to complement, support and add value to the policies of the Member States and contribute to increased EU solidarity and prosperity by protecting and promoting human health and safety and by improving public health. Under the new Programme, participation and consultation with stakeholders will be promoted.

To ensure full participation in the Programme by organisations which promote a health agenda in line with the Programme objectives, a wider variety of financing mechanisms are offered. These include:

- Co-financing of projects intended to achieve a Programme objective;

- Tendering actions to achieve a Programme objective;

- Co-financing of the operating costs of a non-governmental organisation (NGO) or a specialised network;

- Joint financing of a public body or NGO by the EU and one or more Member States;

- Joint actions with other EU programmes, which will generate coherence between this instrument and the other EU programmes.

The new programme is based on three general objectives: health information, rapid reaction to health threats and health promotion through addressing health determinants. Activities such as networks, co-ordinated responses, sharing of experience, training and dissemination of information and knowledge will be inter-linked and mutually reinforcing. The aim is to embody an integrated approach towards protecting and improving health. As part of this integrated approach, particular attention is paid to the creation of links with other EU programmes and actions.

For the legal regulation and the EU action programme for public health., see:

http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=32002D1786&model=guichett.

Size of financial

resources available


The financial envelope for the Second Programme of Community Action in the Field of Health for 2008 to 2013 is €321.5m.

According to the annual work plan the budget available for 2007 is €40m. This amount includes the operational budget of €3.8m, which will be used by awarding grants for projects and by issuing calls for tenders, and resources for technical and administrative assistance and support expenditure of €1.2m.

The intention is to allocate the operational budget in a balanced way between the three objectives of the programme: health information, rapid reaction to health threats and addressing health determinants unless particular public health emergencies arise, justifying a reallocation of resources.


34 ©



For deadlines related to Calls for Proposals and Calls for Tenders, see: http://ec.europa.eu/health/ph_programme/howtoapply/how_to_apply_en.htm.


To be eligible for financial support from the public health programme projects must contribute to a high level of health protection and be consistent with one or more of the specific objectives set out in the programme. Measures under the public health programme are eligible for funding through project subsidies and public contracts. The Financial Regulation is at http://ec.europa.eu/health/ph_programme/projects/#1. Its Implementing Rules are at (http://ec.europa.eu/health/ph_programme/projects/#2, and the reference documents for the implementation of the PHP are at http://ec.europa.eu/health/ph_programme/projects/#3. These documents make the grants and monitoring of subsidies subject to specific provisions. Grants must comply with the following principles: co-financing rule, non-profit rule, non-retroactivity rule, non-cumulation rule. Eligible projects are identified following calls for proposals and are selected and funded according to the relevant decision.

The running period of any project to be co-funded, should normally not exceed a maximum of three years.

It can be applied through Calls for Proposals and Call for Tenders. For more information, see: http://ec.europa.eu/health/ph_programme/howtoapply/how_to_apply_en.htm.

Contact point

Public Health Executive Agency (PHEA)

Postal Address: European Commission/PHEA L-2920 Luxembourg Visiting Address: PHEA (Public Health Executive Agency) 11 Rue Eugene Ruppert L-2557 Luxembourg/Gasperich E-mail: phea’ ’ec.europa.eu Phone: +352-4301-32015 Fax: +352-4301-30359

For National Focal Pont contact addresses, see: http://ec.europa.eu/phea/documents/list_NFPs.pdf.

Further information


http://ec.europa.eu/health/ph_overview/pgm2008_2013_en.htm

For an overview of funded projects, see: http://ec.europa.eu/health/ph_projects/project_en.htm.


35 ©

2.2.2.3 The European Investment Group

The European Investment Group consists of the European Investment Bank (EIB) and the European Investment Fund (EIF). The EIB established its Innovation 2010 Initiative (i2i) in response to the Lisbon agenda of 2000. The objective for i2i is to mobilise approximately €50 billion during 2000-2010 for support of i2i projects.

The EIF has as main objective to support creation, growth and development of Small and Medium-sized Enterprises (SMEs) in the EU Member States and the Candidate Countries. It is the EU specialist financial institution providing venture capital and guarantee instruments for SMEs, using either its own funds or those available within the framework of mandates entrusted to it by the European Investment Bank (EIB) or the European Union.

Economic support to i2i projects from the EIB is given in the form of loans or as venture capital investments. Depending on the size of the project and the category of enterprise, different loan solutions are offered. Generally 50% of the investment costs can be given permission of loans from the EIB, depending on the size of the investment. Venture capital investments are given by the EIF. The repayment form varies with the different types of loan granted, semi-annual or annual systems. During the construction phase, the repayment sees a grace period. Repayment periods are between 5 and 20 years depending on loan form, project size and category. The EIB offers loans with a fixed, variable or revisable interest rate. The loans can be denominated in Euro, the currencies of the EU Member States not in the Euro zone, or other currencies such as the US dollar, yen, Swiss franc or a Central or Eastern European currency.


36 ©

Exhibit 9: European Investment Bank

Source of eHealth Finance European Investment Bank (EIB)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope


x


Focus


Applicants


Sour

ce a

imed

at



x


x

Targeted time scale


Grant Loan x * Guarantee Equity x § Resource re-allocation

Con

ditio

ns

Type of funds


Comments

* Subdivided into Individual Loans, Intermediated Loans and Special Instruments targeting different projects and beneficiaries, and linked with particular conditions.

§ One of the Specific Financial Instruments is the Structured Finance Facility (SFF) that provides funding to projects with a high-risk profile and pursues equity financing and guarantee operations in favour of large-scale infrastructure schemes.


EIB was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union (EU).


37 ©


Short description

The EIB and the European Investment Fund (EIF) comprise the European Investment Group (EIG). The EIB is the financing institution of the EU, and established its Innovation 2010 Initiative (i2i) in response to the Lisbon agenda of 2000. The objective for i2i is to mobilise approximately €50 billion during 2000-2010 for support of i2i projects.

The EIB’s current Corporate Operational Plan runs from 2007 to 2009, and is available at

http://www.eib.europa.eu/Attachments/strategies/cop_2007_en.pdf

Four strategic areas are identified under i2i for its lending:

• Research, development and innovation – private and public sector investment in research, development of centres of excellence and academic research centres

• Human capital formation – support for university training by improving access to training as well as life-long learning, integration of research into tertiary education projects, helping to finance upgrading of IT infrastructure, digital literacy and eLearning

• The diffusion of technologies and development of information and communication technology – creation of communication networks in a number of sectors, such as health and transport, the development of e-Commerce platforms and the roll-out of fixed and mobile broadband networks and access technologies

• Support for entrepreneurship – financing solutions for innovative small and medium-sized enterprises (SME).

i2i Objectives are:

- Education and training

- Research and development, including downstream development

- Information and communications technology (ICT) networks, including audiovisual

The first and third areas are particularly relevant for the eHealth domain. By November 2005, loans granted for i2i-projects had reached €32 billion. EIB loans to ICT networks amounted to €7.7 billion from 2000 to November 2005.

The EIB, with the European Investment Fund, offers a supplementary source for funding opportunities for eHealth. Implementation is coordinated with main EU funds.

See http://www.myeucenter.org/download/fundopp/finbrief.pdf.

Size of financial

resources available


In 2006, the EIB lent over €45.7 billion in support of the objectives of the European Union: €39.8 billion was in the Member States of the Union and €5.9 billion in the partner countries.

For information on future targets and orientations see: EIB - Corporate Operational Plan 2006-2008.

http://www.eib.org/Attachments/strategies/cop_en.pdf


38 ©


Disbursement (€m)

2007

target

2008

orientation

2009

orientation

Total EIB 36,910 38,820 40,455

Total EU + Accession and

Candidate Countries

34,390 36,020 37,500

Total Neighbouring and Partner Countries

2,520 2,800 2,955


The EIB offers various financial services over different time-scales to support projects, depending on eligibility and project category.

The EIB provides long term loans for large capital investment projects, running from approximately 4 to 20 years, and possibly longer

In addition, the EIB promotes SMEs through:

- Medium and long-term credit lines to intermediaries in the banking sector (known as EIB Global Loans)

- Venture capital activities in Facility for Euro-Mediterranean Investment and Partnership (FEMIP) and African, Carribbean and Pacific (ACP) projects

- Individual loans

- Structured Finance Facility (SFF)


No special formalities are attached to the submission of applications to the EIB for individual loans. Project promoters are required simply to provide the EIBs Operations Directorate with a detailed description of their capital investment together with the prospective financing arrangements. Initial contacts to discuss a proposed project can be in any form, by telephone, fax, e-mail or letter. Assuming a satisfactory outcome of the EIB review, a loan proposal will be put forward for approval by the EIB’s Management Committee of the Board of Directors, which meets ten times a year.

Once approved by the Board, the loan facility can be drawn down in one or a number of instalments according to the borrower's requirements, usually starting within 12 months of the approval date. See http://www.eib.org/Attachments/strategies/cycle_en.pdf.

In special cases, namely projects where the total cost is under €25 million, the EIB provides intermediated loans, called credit lines to local, regional and national banks.

The lending decision for EIB loans through credit lines remains with the financial intermediary. Promoters interested in EIB financing for projects under €25 million should contact the banks and other intermediaries involved directly with a detailed description of their capital investment together with the prospective financing arrangements.

Furthermore applicants should ensure that their project adheres to


39 ©


the EIB’s strict environmental and procurement policies and conditions.

For further information, the EIB’s helpdesk is available by email at:

info’ ‘eib.org.

Contact point

EIB Switchboard:

Contact a member of staff in a specific service by calling (+352) 43 79 1

General information: Enquiries regarding the financing facilities, activity, organisation and objectives of the EIB, should be directed to: Information Desk - Communication Department Info’ ‘eib.org Tel: (+352) 43 79 31 00 Fax: (+352) 43 79 31 99

Further contact depending on particular interests, see: http://www.eib.org/about/contact/index.htm.

Further information


http://www.eib.europa.eu/


40 ©

Exhibit 10: European Investment Fund

Source of eHealth Finance European Investment Fund (EIF)

Summary



Level


Sour

ce s

uppl

ied

by

Sector

Public-Private mix National or sub-national x Cross-border

Scope



Focus

Continuous, routine operation SME x* HPO x NGO Public authorities Industry

Applicants

Academic actors Yes x No

Sour

ce a

imed

at




Targeted time scale


Grant Loan Guarantee x Equity x § Resource re-allocation

Con

ditio

ns

Type of funds


Comments

* EIF does not invest in small and medium-sized enterprises (SME) directly but instead, works through financial intermediaries, who are given full delegation of activity: the EIF is not involved in individual investment or credit decisions. Rather, it is guaranteeing for loans.

§ The EIF's venture capital instruments consist of equity investments in venture capital funds that support SMEs, particularly those that are in their early stages of development and those that are technology-oriented.


41 ©



The EIF was set up in 1994 as an agency of the European Union (EU) for the provision of finance for SMEs.

Short description

The EIF and the European Investment Bank (EIB) comprise the European Investment Group (EIG). The EIF is the risk capital arm of the EIB and the EU specialised vehicle providing venture capital and guarantee instruments for SMEs. IT does not invest in SMEs directly, but always works through financial intermediaries. It is never involved in credit decisions of SMEs.

The EIF’s main objective is to support the creation, growth and development of SMEs in EU Member States and Candidate Countries. It uses either its own funds, or those available within the framework of mandates entrusted to it by the EIB or the EU. EIF uses its financial intermediaries to invest in SMEs, which means that EIF never invests directly in a SME or are involved in credit decisions. The EIF has provided €3 billion for venture capital investments in i2i projects from 2000 to November 2005.

EIF is rated the highest possible credit rating, AAA/Aaa/AAA, by the rating agencies Standard & Poor's, Moody's and Fitch.

Implementation is coordinated with main EU funds. See http://www.myeucenter.org/download/fundopp/finbrief.pdf. for details.

Size of financial

resources available

No boundaries for eHealth financing identifiable. Key figures of European Investment Fund €m Signatures Venture capital (21 funds) 368 Guarantees (35 operations) 1,685 Commitments Venture capital (24 funds) 468 Guarantees (35 operations) 1,685 Situation as at 31.12.2005 Venture capital (220 funds) 3,208 Guarantees (165 operations) 9,307 Subscribed capital 2,000 of which paid in 400 Net income for year 43 Reserves and provisions 212


Open-ended.


SMEs in search of finance are requested to contact an EIF intermediary in their country or region for information on eligibility criteria and application procedures.

Currently, only financial institutions from the Member States of the EU, the Accession Countries, including Turkey, and three European Free Trade Association Countries (EFTA) countries of Norway, Iceland, Liechtenstein, are eligible for an EIF investment or guarantee.

Investment Target

EIB seeks a minority position of between 10 and 35% of the total


42 ©


capital committed in a fund. The exact size of the EIF's investment varies according to the size and characteristics of each fund.

Eligibility Criteria

The EIF requires that its portfolio funds to:

- Raise at least €15 million.

- Focus principally their investments in the EU and the Acceding/Accession Countries.

- Focus primarily their investments on early-stage, development or expansion capital, preferably in technology-oriented SMEs.

- Target mainly SMEs, defined as businesses with less than 250 employees, with total turnover not exceeding €50m, or a balance sheet total not exceeding €43m, and that are independent, defined as not more than a third of their capital owned by a by non-SMEs at the time of the fund’s first investment. In exceptional cases, a target of enterprises with more than 250 employees can be considered.

- Be mainly independently and professionally managed, relying on monitoring by a dedicated management team of professionals with appropriate experience and skills; Investment and divestment decisions taken either by the management team or by an independent board whose members are independent from the investors.

- Provide a risk-adjusted return in line with that of the private equity market.

- Be mainly funded by private sector investors, with the public sector investors, including the EIF, not exceeding 50% to total committed capital.

For the EIF Corporate Operational Plan 2007-2009, see http://www.eif.org/attachments/pub_corporate/COP_2007-2009.pdf

For further information, please use the email contact: info’ ‘eif.org

Contact point

EIF MAIN OFFICE 43, avenue J.F. Kennedy L-2968 Luxembourg LUXEMBOURG Tel.: +352-42 66 88 - 1 Fax : +352-42 66 88 - 200 EXTERNAL OFFICES EIF in Belgium Rue de la Loi 227 / Wetstraat 227 B-1040 Bruxelles / Brussels Belgium Telephone: +352 42 66 88 1


43 ©


EIF in Spain 29, Calle Ortega y Gasset E-28006 Madrid Spain Telephone: +34 91 43 60 863

Further information


http://www.eif.org/index.htm.

For questions of general nature, please contact the 'Information Desk' by email at: info’ ‘eif.org

2.2.2.4 Other European-level funds

Other European-level funds are available from organisations and schemes offering general financial assistance, but without specifying the subject matter of proposed investments too narrowly from the outset.


44 ©

Exhibit 11: European Bank for Reconstruction and Development


European Bank for Reconstruction and Development

(EBRD)

Summary


Institutional Regional National European

Level

Other International x † Public x Ω Private

Sour

ce s

uppl

ied

by

Sector

Public-Private mix National or sub-national x Cross-border (x) Scope



Focus

Continuous, routine operation SME x HPO x NGO Public authorities Industry x

Applicants

Academic actors Yes x § No

Sour

ce a

imed

at




Targeted time scale


Grant Loan x Guarantee x Equity x Resource re-allocation

Con

ditio

ns

Type of funds


Comments

§ only some countries, mainly in Eastern Europe. For a list of benefiting countries, see: http://www.ebrd.com/country/index.htm.

Ω The EBRD is owned by public sector shareholders (61 countries and two intergovernmental institutions).

† For an overview of shareholders, see:

http://www.ebrd.com/about/basics/members.htm.

Supplier of EBRD


45 ©



(EBRD) financing

Short description

The EBRD was established in 1991 when former soviet countries needed support to nurture a new private sector in a democratic environment. Today the EBRD uses these investment tools to help build market economies and democracies in countries from Central Europe to Central Asia. Project finance is the EBRD's core business.

One of EBRD’s nine policy domains is the field “telecoms, informatics and media”. It also supports health projects, a recent example supports for healthcare in Central Europe and the Baltic States with a €30m syndication package

http://www.ebrd.com/new/pressrel/2001/01mar19x.htm)

The EBRD is the largest single investor in Central and Eastern Europe and the Commonwealth of Independent States (CIS), and mobilises significant foreign direct investment beyond its own financing. It is owned by 61 countries and two inter-governmental institutions, including the European Union (EU) and the European Investment Bank (EIB). The EIB's share capital is provided by its members. Voting power is in proportion to the number of shares.

The EBRD invests mainly in private enterprises, usually together with commercial partners. It provides project financing for banks, industries and businesses, new ventures and investments in existing companies. It also works with publicly owned companies, to support privatisation, restructuring of state-owned firms and improvement of municipal services. The EBRD uses its close relationship with governments in regions to promote policies that will bolster business environments.

Direct investments generally range from €5m to €230m; the average amount is €25m. Smaller projects are financed both directly by the EBRD and through financial intermediaries. By supporting local commercial banks, micro-business banks, equity funds and leasing facilities, the EBRD has helped finance over 1 million smaller projects. The EBRD provides loan and equity finance, guarantees, leasing facilities and trade finance, and also finances professional development through support programmes.

Size of financial

resources available


With a subscribed capital totalling €20 billion, €5 billion paid-in and €15 billion on call, the EBRD has a solid capital base. The strength of the EBRD's capital and its prudent operational and financial policies are reflected in its credit AAA ratings.


Open-ended.


The EBRD mandate stipulates that it must only work in countries that are committed to specific principles, including democratic, environmental and humanitarian ones.

EBRD funding criteria for projects from €5m to €250m:

The project must be located in an EBRD country of operation. It must have good prospects of being profitable. Significant equity contributions in cash or in kind are required from the project sponsor. The project must benefit the local economy and must


46 ©



(EBRD) satisfy the host country’s and EBRD's environmental standards.

The EBRD finances many small projects directly, especially in the Early Transition Countries. But to give entrepreneurs and small firms greater access to finance, the EBRD also supports financial intermediaries, such as local commercial banks, micro-business banks, equity funds and leasing facilities. Smaller projects are almost always financed through financial intermediaries. In exceptional circumstances, the EBRD can consider financing smaller projects.

The EBRD funds up to 35% of the total project cost for a greenfield project or 35% of the long-term capitalisation of an established company. Additional funding by sponsors and other co-financiers is required. The EBRD may identify additional resources through its syndications programme. Typical private sector projects are based on at least one-third equity investment. Significant equity contributions are required from the sponsors, who should have a majority shareholding or adequate operational control. In-kind equity contributions are accepted.

For conditions of different funding schemes, see: http://www.ebrd.com/apply/index.htm.

Contact point

EBRD One Exchange Square London EC2A 2JN United Kingdom Switchboard: +44 20 7338 6000 Central fax: +44 20 7338 6100

For particular interests, see: http://www.ebrd.com/about/contacts/index.htm.

Further information

The text is mainly based on internet research, see main page and associated websites: www.ebrd.com.

The EBRD Turn-Around Management (TAM) and Business Advisory Services (BAS) Programmes are complementary schemes aiming to help enterprises adapt to the demands of a market economy. While TAM has a broad approach focusing on substantial managerial and structural changes within the company, BAS supports narrowly defined projects with a rapid pay-back.

Both TAM and BAS work directly with individual enterprises, providing industry specific advice. Areas of assistance include restructuring of the business, improving its products, reducing operating costs, advising on local and export markets and helping to develop business planning skills at management level.

(For further information, see: http://www.ebrd.com/apply/tambas/about/index.htm)


47 ©

Exhibit 12: Central European Initiative

Source of eHealth Finance Central European Initiative (CEI)

Summary



Level

Other International x Public x Private

Sour

ce s

uppl

ied

by

Sector


Scope


x


Focus

Continuous, routine operation SME HPO NGO Public authorities x Industry

Applicants


Sour

ce a

imed

at



x


Targeted time scale


Grant x Loan (x) Guarantee Equity x Resource re-allocation

Con

ditio

ns

Type of funds


Comments


Financial support for CEI activities is provided through the CEI Trust Fund at the European Bank for Reconstruction and Development (EBRD).

The CEI Trust Fund benefited from a total cumulative contribution by the Italian Government of €28 million

Short description

The CEI is composed of 18 Member States: Albania, Austria, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Italy, Macedonia, Moldova, Montenegro,


48 ©


Poland, Romania, Serbia, Slovakia, Slovenia and Ukraine.

The CEI was established in 1989 as an inter-governmental forum for political, economic and cultural co-operation among its Member States. Its main aim was to help transition countries in Central Europe come closer to the European Union (EU). In the second half of 1990s, the extension of its membership to South-Eastern and Eastern Europe, refocused its priorities on countries in special need.

One of CEI’s objectives is to bring the countries of Central and Eastern Europe closer together and assist them in their preparation process for EU membership.

With the last EU enlargements, the CEI’s interest shifted towards the 9 Member States staying outside the EU. The new CEI programme aims at facilitating and co-financing the transfer of know-how on fresh transition and negotiation experience.

For a description of organisational structure, see:

http://www.ceinet.org/main.php?pageID=15.

Until now, health has not been such an important topic of funding activities. But according to one of the 18 working groups, a main objective of the CEI will be strengthening co-ordination and co-operation with other international stakeholders in transport, environment and health. The main stakeholders are the United Nations Economic Commission for Europe (UNECE) the World Health Organsiation (WHO) the EU and the United Nations Environment Programme (UNEP). Particular attention will be given to support projects and co-operation with the Eastern and South-Eastern CEI Member States that are not members of the EU, in order to improve the health and environmental conditions and quality of life in these countries.

The CEI funds consist of: the CEI Trust Fund at the EBRD, the CEI Co-operation Fund and the CEI Solidarity Fund. The most important fund regarding project financing is the CEI Trust Fund established 1991, which benefited from a total cumulative contribution by the Italian Government of €28 million. The Trust Fund is mainly utilised to support Technical Co-operation (TC) linked to EBRD investment projects. It is also used for funding the Know-How Exchange Programme (KEP), and financing the organisation of the annual CEI Summit Economic Forum. Up to end of 2006, the Fund also supported Co-operation Activities in economic sectors including agriculture, energy, environment, SMEs and transport.

Size of financial

resources available

The CEI´s funds are limited.

Most important is the CEI Trust Fund which amounts to €28 million since 1991. A recent EBRD analysis showed that TCs, supported by the CEI Trust Fund since 1991 with approximately €16.5 million committed, have resulted in over €415 million of EBRD investments for a total project size.


The current CEI Plan of Action runs from 2007 to 2009.


Financing is provided for TC assignments alongside EBRD investments and for development programmes in Central-Eastern and South-Eastern Europe. Priority sectors for intervention are:

• Transport, in particular the development of corridors in the


49 ©


region, road and railway transport and urban transport development

• Infrastructure, including municipalities, urban regeneration and real estate

• Finance, including the provision of financial products and support to SMEs

• Agriculture, including the development of agri-businesses, support to wholesale markets and micro-finance.

The CEI's financial allocation is limited to a maximum of 50% of the total project costs. In such cases, another partner is indispensable. Another form of assistance is the CEI Technical Co-operation for Investment (TCFI), which is mainly offered in conjunction with the EBRD or other International Financial Institutions. The CEI has, indeed, frequently provided financing together with other organisations such as the United Nations Educational, Scientific and Cultural Organisation (UNESCO), UNECE, the Organisation for Economic Co-operation and Development (OECD) and the Food and Agricultural Organisation of the United Nations (FAO).

Contact point

For addresses of the executive secretariat, see: http://www.ceinet.org/contacts.php?pageID=35.

For addresses of the project secretariat, see: http://www.ceinet.org/contacts.php?pageID=36.

For further contacts, see: http://www.ceinet.org/main.php?pageID=9.

Further information


http://www.ceinet.org.

The CEI Plan of Action 2007-2009 outlines the organisation’s current intentions, see: http://www.ceinet.org/download/CEI_PoA_2007-2009.pdf. .

Technical co-operation is offered in the form of grant-type assistance in support of specific components of a project, such as management training, feasibility study or pre-loan audits. It is considered an invaluable channel to mobilise investment capital and expertise in the countries of operation.


50 ©

Exhibit 13: Council of Europe Development Bank

Source of eHealth Finance Council of Europe Development Bank (CEB)

Summary


Institutional Regional x National European

Level


Sour

ce s

uppl

ied

by

Sector


Scope



Focus

Continuous, routine operation SME x HPO x NGO x Public authorities x* Industry x

Applicants


Sour

ce a

imed

at




Targeted time scale


Grant Loan x Guarantee x Equity Resource re-allocation

Con

ditio

ns

Type of funds


Comments *Applicants can be Member State authorities or any legal entity approved by them.


CEB

Short description

Set up in 1956, the CEB is the oldest international financial institution in Europe and the only one with an exclusively social vocation. The CEB is the financial instrument of the policy of solidarity developed by the Council of Europe. The CEB is a multilateral development bank placed under the supreme authority


51 ©


of the Council of Europe. It has its own full legal status and financial autonomy. By granting loans, the CEB helps to finance social projects, responds to emergency situations and thus contributes to improving living conditions and social cohesion in the less advantaged regions of Europe. The CEB grants loans in Europe, in the Member States.

Objectives are strengthening social integration, managing the environment, and developing human capital. Health is one of two subordinate objectives to human capital. Furthermore eHealth issues might be a priority associated with the main aim of “strengthening social integration”.

The action of the CEB is based on a balance between the requirement to be profitable, so as to ensure its financial independence, and its social vocation. It grants loans and guarantees, not subsidies, to its Member States, to local authorities or to financial institutions. Its loans are intended to implement social projects, which can then enjoy the benefit of favourable financial conditions.

Since the CEB receives no annual contributions from its members, its financial activity is based on its paid-up capital and reserves and the resources it raises on the financial markets.

Size of financial

resources available


As at 31 December 2006, the Bank had a subscribed capital of €3,294m, shared between 38 member states. The CEB's capital has been increased regularly since its inception in 1956 in order to sustain the development of its activity whilst simultaneously preserving its financial soundness. The latest capital increase, the fifth, was approved in November 1999 and closed in September 2001. As at 31 December 2006, the CEB had reserves totalling almost €1,316m. The CEB's total funds stand at €4.7 billion, including available owns funds amounting to €1,767m.

The CEB is rated by the three most prestigious international rating agencies: Fitch Ratings, Moody's Investors Service and Standard & Poors. It enjoys the highest rating, AAA/Aaa, which mirrors its strong financial profile, the support of its shareholders and its stringent management policy.

For details, see:

http://www.coebank.org/en/presentation/frchiffres.htm. Timeline of availability

Open-ended.


Member States submit projects for the Administrative Council to consider and approve their financing, according to the fields of action defined in Articles of Agreement and Administrative Council Policy for loan and project financing, as set in 2006.

To finance these projects, the CEB borrows on the international money markets by means of public issues and private investments. The quality of its financial structure guarantees the quality of its rating and enables it to raise resources on the capital markets on the best possible terms. This in turn enables the CEB's own borrowers to significantly lower the cost of their resources for the financing of social projects.

General conditions for obtaining financing


52 ©


In order to obtain CEB financings, the projects presented must meet the following general criteria:

- Compliance with Council of Europe conventions

- Respect for the environment on the basis of international conventions and compliance with standards of quality

- Participation in the financing of projects may not exceed 50% of the total eligible cost, the balance may be co-financed by other international institutions

- Compliance with bidding procedures in accordance with national and international directives.

Contact point For particular contact addresses sorted by different requests, see: http://www.coebank.org/en/presentation/frorganigramme.htm.

Further information


www.coebank.org.

2.2.3 International financing sources

International financing sources include funds made available by institutions or initiatives beyond the scope of EU institutions and their activities. Three specific options are: The World Bank (WB), the World Health Organisation (WHO), and the European Economic Area Financial Mechanism (EEA FM).

The WB is the world’s leading development institution for raising private and public sector money. Its mission is to alleviate poverty. The World Bank Group comprises five institutions: International Bank of Reconstruction and Development (IBRD); International Development Association (IDA); Multilateral Investment Guarantee Agency (MIGA); International Finance Corporation (IFC); and the International Centre for Settlement of Investment Disputes (ICSID). IBRD and IDA are seen as the two core WB institutions. The IBRD serves middle-income countries with capital investment and advisory services. The IDA focuses on the poorest developing countries, providing grants and interest-free loans as credits.

The WHO has a track-record of collaborating with the EU and commercial agencies, such as the European Space Agency (ESA), on eHealth projects. The WHO programme on eHealth aims to support countries in developing their health systems by using ICT to improve access, quality and efficiency.

Another international source of financing is the EEA Financial Mechanism, with a priority of sector for improving health and childcare for each country. In May 2004, the three non-EU members of the European Economic Area (EEA), Iceland, Liechtenstein and Norway, established the EEA Financial Mechanism and the Norwegian Financial Mechanism to support the then ten new member countries in the EEA, as well as Greece, Portugal, and Spain.


53 ©

Exhibit 14: World Bank

Source of eHealth Finance World Bank (WB)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope



Focus


Applicants


Sour

ce a

imed

at




Targeted time scale


Grant x Ω Loan x Guarantee x Equity x * Resource re-allocation

Con

ditio

ns

Type of funds


Comments

* The WB private sector investment arm, the International Finance Corporation (IFC), promotes private sector growth in developing countries through direct lending, equity investments and syndicated lending.

Ω a limited number of grants are also available through the WB, either funded directly or managed through partnerships. Most are designed to encourage innovation, collaboration with other organisations, and participation by stakeholders at national and local levels.


54 ©



The WB is like a cooperative, where its 185 member countries are shareholders. The shareholders are represented by a Board of Governors, who are the ultimate policy makers at the WB. Generally, the governors are member countries' ministers of finance or ministers of development. The WB includes the IBRD and the IDA (see below).

The International Bank for Reconstruction and Development (IBRD) lending to developing countries is primarily financed by selling AAA-rated bonds in the world's financial markets. The capital consists of reserves built up over the years and money paid in from the Bank's 185 member country shareholders.

The International Development Agency (IDA), the world's largest source of interest-free loans and grant assistance to the poorest countries, is replenished every three years by 40 donor countries. Additional funds are regenerated through repayments of loan principal on 35-to-40-year, no-interest loans, which are then available for re-lending.

Short description

The WB is the world’s leading development institution for raising private and public sector money, with the mission to alleviate poverty.

The World Bank Group consists out of five institutions:

- IBRD

- IDA

- Multilateral Investment Guarantee Agency (MIGA);

- IFC

- International Centre for Settlement of Investment Disputes (ICSID).

IBRD and IDA are seen as two of WB’s core institutions. The IBRD serves middle-income countries with capital investment and advisory services, while the IDA is focused on the poorest developing countries, providing interest-free loans as credits and grants.

A limited number of grants are offered by the WB to support projects that encourages innovation, co-operation and increases local stakeholders’ participation in projects. Some of the grants are funded from the administrative budget of the WB, others are funded by donor partnerships and trust funds. The WB has an integrated overall strategy where all the grant funds are reconciled into the Development Grant Facility (DGF).

The WB ensures that procurement in projects financed by the IBRD and the IDA complies with its Articles of Agreement.

The WB provides two basic types of lending: Investment loans and development policy loans. A limited number of grants are also available through the WB, either funded directly, or managed through partnerships. Most are designed to encourage innovation, collaboration with other organisations, and participation by stakeholders at national and local levels.

Finally, the WB offers several types of guarantees and risk-management tools to protect commercial lenders from risks associated with investing in developing countries.


55 ©


Health Systems & Financing:

The WB's Health Systems & Financing Group (HSD) is part of the Human Development Network's Health, Nutrition & Population Unit. The HSD group works on a number of issues related to health systems, including health finance, health insurance, human resources for health, pharmaceuticals, public/private partnerships and hospital management. The HSD supports WB projects through the development and dissemination of knowledge and technical assistance.

(see: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTHEALTHNUTRITIONANDPOPULATION/EXTHSD/0,,menuPK:376799~pagePK:149018~piPK:149093~theSitePK:376793,00.html.)

According to the WB, earlier eHealth and heath management information systems (HMIS) projects focused on pilot or limited national activities in specific areas such as hospitals or health insurance. Lately, there has been an increasing focus on eHealth related activities, including EHR and integration and sharing of information across various parts of the health system.

The WB plans to easier long-time eHealth financing by long-term and particular adjusted loans, accompanied with technical assistance/support.

The WB´s approach is to plan phased eHealth projects, not pilots, and to undertake economic analysis, as well as consider the wider eHealth policy system. In this context, eHealth financing should be seen in a wider health system reform. Hence resource reallocation might be one way of eHealth financing.

Size of financial

resources available


In recent years, the WB has been providing developing countries with grants and loans totalling around US$18 billion to US$20 billion a year. The world's poorest countries receive grants and zero interest loans. Countries are generally restricted to $13.5 billion in terms of total WB borrowings


Generally open-ended.


Two basic types of lending are offered by IBRD and IDA: Investment loans and development policy loans. The investment loans have a focus of 5 to 10 years and support economic and social development projects necessary for poverty alleviation and sustainable development.

Investment loans has on average accounted for 75% to 80% of all WB lending over the past two decades. Development Policy loans have a shorter time limits of 1 to 3 years and provide financial support for policy- and institutional reforms in one sector or in the economy as a whole.

Loans are available to the member countries not in debt to the World Bank Group. Each project that gets provided with financial support from the WB has to be governed by a legal agreement between the WB and the government agency who receives the funds. Eligibility for a Development Policy Loan also requires agreement on monitorable policy and institutional reform actions,


56 ©


and satisfactory macroeconomic management.

WB projects and activities are governed by Operational Policies, which are designed to ensure that they are economically, financially, socially and environmentally sound. The WB Operational Manual spells them out, and provides guidance on how to comply with the WB Procedures and Good Practices. Among the key types of policies catalogued in the manual are:

- Policies on business products and instruments, which establish rules for lending instruments, country economic and sector work, technical assistance, grants, guarantees and other WB products.

- Safeguard policies, which include Environmental Assessments and policies designed to prevent unintended adverse effects on third parties and the environment. Specific safeguard policies address natural habitats, pest management, cultural property, involuntary resettlement, indigenous peoples, safety of dams, projects on international waterways, and projects in disputed areas.

- Fiduciary policies, including rules governing financial management, procurement, and disbursement. There are also detailed guidelines for the selection of consultants and the procurement of goods and works in projects financed by the WB.

- Management policies covering such areas as project monitoring and evaluation.

World Bank financing support for eHealth is mainly within the context of the broader health reform agenda and has a catalyst role for future development efforts.

Contact point

HEADQUARTERS The World Bank 1818 H Street, NW Washington, DC 20433 USA tel: (202) 473-1000 fax: (202) 477-6391

For addresses of all country offices, see: http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/EXTANNREP/EXTANNREP2K6/0,,contentMDK:21046854~menuPK:2915768~pagePK:64168445~piPK:64168309~theSitePK:2838572,00.html.

Further information

The text is mainly based on internet research, see main page and associated sites:

http://www.worldbank.org/

http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/0,,pagePK:180619~theSitePK:136917,00.html

The World Bank Group also provides analysis, advice and information to its member countries through economic research on broad issues such as the environment, poverty, trade and globalisation and through country-specific economic and sector work by evaluating a country's economic prospects, as well as trade, infrastructure, poverty and social safety net issues.

Another core bank function is to increase the capabilities of its staff, partners and the people in developing countries.


57 ©

Exhibit 15: World Health Organisation

Source of eHealth Finance World Health Organisation (WHO)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope



Focus

Continuous, routine operation SME HPO NGO Public authorities Industry

Applicants


Sour

ce a

imed

at




Targeted time scale



Con

ditio

ns

Type of funds



Donors

Short description

The WHO has a track-record of collaborating with the EU and commercial agencies such as the ESA, on eHealth projects. An example is the Vision for Citizen centred eHealth in Europe by the year 2010.

The WHO eHealth programme aims to support countries in developing their health systems by using ICT to improve access,


58 ©


quality and efficiency. The main objectives of the programme are:

• To support Member States in the identification of the most suitable applications, considering country needs, objectives and context

• To facilitate development of ethical and legal policies related to the collection, storage and use of health information, to ensure privacy and confidentiality; and to facilitate the sharing of best practices among Member States

• To support the implementation of technical programmes in countries, providing information on opportunities and risks.

Size of financial

resources available

No specific boundaries for eHealth financing identifiable. Generally, funds available beyond the internal budget activities, i.e. direct support by the WHO human and other non-financial resources, is limited.

The ongoing framework for the financial resources and expenditures of WHO is derived from the 11th General Programme of Work, covering 2006 to 2015.

From 2008, a medium-term strategic plan will form the framework for WHO's results-based management. The six-year plan from 2008 to 2013, will cover three biennial budget periods, starting with the biennium 2008 to 2009.

The strategic plan and its first Programme Budget covering 2008 to 2009 were adopted by the World Health Assembly in May 2007.

For the medium-term strategic plan for 2008 to 2013, as well as the proposed programme budget for 2008 to 2009, see: http://www.who.int/gb/e/e_amtsp.html

Regarding eHealth, several focus points are of interest:

• Strategic objective 10 aims “to improve health services through better governance, financing, staffing and management, informed by reliable and accessible evidence and research”. In order to achieve this aim in Europe the WHO proposes to provide 48,567,000 US$. Inside this part, point 10.7 includes “Knowledge management and eHealth policies and strategies developed and implemented in order to strengthen health systems” For this area, Europe gets 4,553,000 US$.

• Strategic goal 11 is to “improved access, quality and use of medical products and technologies” in Europe, the WHO plans to provide 6,971,000 US$.

For the proposed programme budget for 2008 to 2009, see: http://www.who.int/gb/ebwha/pdf_files/AMTSP-PPB/a-mtsp_6en.pdf.

For Financial Tables regarding the Proposed Programme Budget for 2008 to 2009, see http://www.who.int/gb/ebwha/pdf_files/AMTSP-PPB/a-mtsp_7en.pdf


The framework for the financial resources and expenditures of WHO is derived from the 11th General Programme of Work, which covers the period 2006-2015.

Referring to following work programmes: open-end. Conditions / Access path

Generally, the WHO provides direct assistance in kind, instead of financial support. Relevant operational activities can be found at:


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o WHO Collaborating Centres (WHOCC) http://www.who.int/kms/initiatives/collaboratingcentres/en/index.html

o http://www.who.int/mediacentre/en/

o http://www.euro.who.int/telemed.

Information on a small number of grants, covering specific topics, is available at:

http://www.who.int/reproductive-health/tcc/grants.html.

Contact point

Contact WHO headquarters Avenue Appia 20 1211 Geneva 27 Switzerland Telephone: (+ 41 22) 791 21 11 Facsimile (fax): (+ 41 22) 791 3111 Telex: 415 416 Telegraph: UNISANTE GENEVA General information email: info’ ‘who.int. WHO eHealth project WHO Barcelona Office Marc Aureli, 22 - 36 08006 Barcelona Spain tel: +34 93 241 8270 fax : +34 93 241 8271 email: who’ ‘es.euro.who.int www: http://www.euro.who.int/telemed Media Information: Health Technology and Pharmaceuticals Daniela Bagozzi Essential Drugs and Medicines Policy Blood Safety and Clinical Technology Telephone: +41 22 791 4544 Email: bagozzid’ ‘who.int Health Systems and Services P. Ben Fouquet Global Health Workforce Alliance Telephone: +41 22 791 3554 Email: fouquetp’ ‘who.int Joel Schaefer Health Systems and Services Telephone: +41 22 791 4473 Email: schaeferj’ ‘who.int For more specific addresses, see: http://www.who.int/mediacentre/contacts/healthareas/en/index.html.

Further information See main webpage and associated websites: www.who.int


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Exhibit 16: European Economic Area Financial Mechanism

Source of eHealth Finance European Economic Area (EEA) Financial Mechanism (FM)

Summary



Level


Sour

ce s

uppl

ied

by

Sector


Scope


Start-up, implementation, roll-out

Focus

Continuous, routine operation SME x Ω HPO x NGO x§ Public authorities x Industry x Ω

Applicants

Academic actors x Yes x * No

Sour

ce a

imed

at




Targeted time scale



Con

ditio

ns

Type of funds


Comments

* The mechanism supports the ten new member countries in the EEA, plus Greece, Portugal and Spain.

§ Grants for individual projects, programmes and specific forms of grant assistance, including block grants, seed money facility and grants to non-governmental organisations (NGO)

Ω Small and medium-sized enterprises (SME) and industry only can apply in co-operation with a public sector actor, usually as a Public-Private Partnerships (PPP), or enterprises that operate in the public interest; see: http://www.eeagrants.org/projects-applications


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The three non-EU members of the EEA: Iceland, Liechtenstein and Norway.

Short description

In May 2004, the three non-European Union (EU) members of the EEA, Iceland, Liechtenstein and Norway, established the EEA FM, and the Norwegian Financial Mechanism, to support the ten new member countries in the EEA plus Greece, Portugal and Spain.

Through the Norwegian Financial Mechanism, funding is also available for four other sectors, one of them more directly relevant for eHealth initiatives – regional policy and cross-border activities. The EEA FM and the Norwegian Financial Mechanism support individual projects, programmes, implementation of smaller projects, and the development of promising projects. Of the total funding, 60% is earmarked for individual projects. This creates opportunities for financing support of a large diversity of eHealth investments within the benefiting countries.

Size of financial

resources available

No specific boundaries for eHealth financing identifiable.

Through the EEA FM, the three EEA and European Free Trade Association (EFTA) states Iceland, Liechtenstein and Norway will make a total €600m available to the 10 countries that joined the EU and the EEA in May 2004, as well as to Greece, Portugal and Spain.

Through the Norwegian Financial Mechanism, Norway will make an additional €567m available to the 10 countries that joined the EU and the EEA in 2004.

The three donor countries offer a total amount of €1.17 billion during the five year period of 2004 – 2009. Approximately 12%, €140 million, of the total funding will be available for projects within the health and childcare sector.

Norway, as the largest of the three donors, will contribute with close to €1.14 billion. The EEA FM will also make available €72 million to Bulgaria and Romania, which joined the EU in 2007, over a two-year period until 2009. Norway will contribute an additional €68 million to the two new EEA members over the same period through bilateral co-operation programmes.


Both mechanisms run over a five-year period from 2004 until 2009.


Funding is available for projects within the 13 beneficial countries, in five priority sectors, one of them health and childcare. Money can be made available for projects within the public or the private sector. There is also a possibility for NGOs to obtain EEA grants.

All public or private sector bodies and non-governmental organisations constituted as legal entities in the Beneficiary States, which operate in the public interest, such as national, regional and local authorities, NGOs, institutions within education and research, environmental bodies, voluntary and community organisations and PPPs are eligible to apply to become programme intermediaries.

The Beneficiary State shall ensure the full financing of projects. The contribution from Norway or the EEA FM in the form of grants shall be determined case-by-case, taking all relevant factors into account. European Commission ceilings for co-financing shall not be exceeded. Grant rates vary from up to 60% until 90% depending on applicants and projects.


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For an overview, see: http://www.eeagrants.org/projects-applications

Rules and procedures for the implementation of the EEA FM and Norwegian Financial Mechanism, see:

http://www.eeagrants.org/downloads/Legal_Framework/Rules_and_Procedures_NOR_FM_(amended_26_March_2007).pdf

http://www.eeagrants.org/downloads/Legal_Framework/Rules_and_Procedures_EEA_(Oct_2006).pdf

Information about application form, guidelines, legal framework etc., see: http://www.eeagrants.org/index.php?name=CmodsDownload&file=index

Contact point

EEA Financial Mechanism Office Postal address: 12-16 Rue Joseph II 1000 Brussels, Belgium Visiting address: 47-48, Boulevard du Régent 1000 Brussels, Belgium Tel: +32 (0) 2 286 1701 Fax: +32 (0) 2 286 1789 Email: fmo’ ‘efta.int Contact Information national Focal Points: http://www.eeagrants.org/contactinfo-focalpoints

Further information


http://www.eeagrants.org/.

The EEA Grant Status Report 2007: http://www.eeagrants.org/downloads/newsletter/Status%20Report%20May%202007.pdf.

Rules and procedures for the implementation of the EEA and Norwegian Financial Mechanism, see:

http://www.eeagrants.org/downloads/Legal_Framework/Rules_and_Procedures_NOR_FM_(amended_26_March_2007).pdf

http://www.eeagrants.org/downloads/Legal_Framework/Rules_and_Procedures_EEA_(Oct_2006).pdf.


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3 Financing arrangements for eHealth

3.1 Overview

Financing arrangements for eHealth include the need for, and sources of:

Additional non-recurring finance for investment humps7

Additional recurring finance for increased revenue expenditure

Existing finance that can be redeployed or reallocated from current budgets.

Many different eHealth financing models are used across EU Member States. They tend to reflect a number of factors, including the:

Models of healthcare financing that are used

Organisation of healthcare

Lifecycle of the eHealth investment

Scale of the eHealth investment over its lifecycle

Types of components of the eHealth investment over its lifecycle

Impact of the eHealth investment over its lifecycle

Affordability of the eHealth investment over its lifecycle

Levels of risk for each partner

Procurement arrangements.

These factors combine to create an eHealth investment model where ICT suppliers need finance for their activities, including, planning, design, development and implementation, and HPOs need finance for all the stages, from planning through to operation, change and benefits realisation, including payments to ICT suppliers. From the operational period onwards, HPOs, as users, can be expected to finance the whole eHealth investment, so it should be justified because it offers a return of net economic benefits.

A typical eHealth investment extends over several activities. These include planning, design, development, building, testing, implementation, operation and change. They can all be undertaken to varying degrees by suppliers and vendors, and by HPOs as users. In this setting, finance may be needed for both capital and revenue expenditure by both sides of the partnership. From an HPO’s perspective, finance is needed for ICT and for change, which can be critical to realising the benefits from eHealth, leading to the need for a financing model that sustains ICT-enabled change.

For a large-scale eHealth investment, such as an Electronic Patient Record (EPR) system for a hospital, a long planning, development, design and build period is needed. Financing this type of eHealth investment may need a period up to seven years for these

7 Investment humps are temporary and untypical increases in expenditure levels, usually during

the implementation and roll-out phases of an investment.


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stages, as identified by the eHealth IMPACT study8. When the implementation, operation and change activities are added, financing eHealth needs to match the whole of the longer-term investment lifecycle. Stable, multi-year budgeting is needed for these timescales, which can be problematic for most HPOs used to a financial horizon between one and five years. This creates a financing challenge for HPOs that eHealth financing models must overcome by linking effectively the general healthcare financing arrangements to eHealth investment life-cycles. Thus, each eHealth investment should be managed as a whole, which enables the requirements for new finance to be managed together with finance redeployed from existing activities, such as legacy eHealth investment that is removed, or change management effort supported by HPO staff who reallocate their time from operational activities to spend time developing and introducing new clinical and working practices.

eHealth investment alongside other strategic investment, such as new assets and new drugs, helps to create the longer-term, financial planning horizon needed to finance these types of investment decisions. This is especially important in assessing factors including:

Longer-term affordability

Links between financing and economic benefits

Impact of benefit realisation on allocating operational resources of HPOs to ICT components of eHealth.

Some of these changes may have to be completed across several types of HPO, especially between primary and secondary, hospital services. Beneficiaries of eHealth are not always the same groups in the healthcare system that pay for and finance eHealth investment. For example, a hospital may finance extensions to its computerised physician order entry facilities so that local GPs can use it to refer test requests. The GPs may be able to achieve significant time-savings, for a small cost, with the hospital achieving small gains for large costs, but with a combined net benefit to all HPOs and patients. Financial arrangements must address these potential financing disincentives by ensuring that each stakeholder reaps at least the value of their share of the investment.

The rest of this chapter provides an overview of different financial arrangements that allow investors and funding bodies to secure the financial resources required for eHealth investments, accounting for the issues discussed above.

3.2 Public-private partnerships (PPP)

A PPP is a contract for services over a number of years, between a purchaser, for example a public HPO, and a private partner as an operator, which can be single entity or a consortium of suppliers. They have been reviewed9 over several years.. A common theme is that suppliers take on an expanded role for design, build, finance and operate. With this extended, transferred responsibility, suppliers take on more work and risk, and so can expect greater rewards. In PPPs, suppliers cannot be expected to provide eHealth financing solutions without a change to the balance of their risk and reward. For HPOs,

8 eHealth IMPACT: Study on Economic and Productivity Impact of eHealth; Reports available at

www.ehealth-impact.org 9 “eHealth and Public Private Partnerships” ACCA 2002


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this can reduce their capital and non-recurring expenditure, and increase their recurring annual expenditure.

Generally, PPPs are contracts for services rather than for eHealth products. A PPP can also include a special purpose vehicle (SPV), which is owned by the operator, and possibly some of the other suppliers, and can be defined and structured differently in different Member States. Connecting for Health in the English NHS for the National Care Records Services (CRS) relies on PPP models. Suppliers are providing ICT and some of the change management resource.

Where assets, such as hardware, are provided for HPOs as part of the services, the supply can be expressed in a lease agreement, and so have to be included on the HPOs balance sheet in line with International Accounting Standard 1710. The scale of a PPP is determined mainly by the economic and financial aspects of a sound business case of the purchaser. Risk transfer and sharing should be explicit in a PPP, and is related partly to the rewards provided to the private partner, and partly by the responsibilities assigned to the purchaser and operator. It is feasible for several eHealth suppliers to be part of a consortium and for several HPOs to provide appropriate rewards. PPPs can require operators to provide direct inputs into their purchasers’ eHealth strategy for at least the medium-term, and this requires the operators to have a sound grasp of health, healthcare and ICT themes.

Direct services that can be provided with a PPP include eHealth strategy, planning, development, design, building, testing, implementation, operation, operational support, project management, and some change management. It is unlikely that it extends extensively into direct change management and benefits realisation in purchasers’ organisations. A PPP is usually a significant, high-value contract extending over several yeas and should be procured rigorously, complying with current EU guidelines on public procurement11.

Two critical PPP themes, and also routine contracts, are demand risk and design risk. Dealing with demand risk needs answers to two questions:

1) Does the purchaser have to pay regardless of the utilisation of the eHealth service?

2) Who will gain if demand is greater than expected?

Where HPOs as purchasers have to pay a minimum sum to the operator, then the HPO carries the risk of utilisation falling away. Where payments by the purchaser are capped, the operator cannot be expected to provide additional capacity much above this level, as a result, risk from increasing demand may appear to be transferred to the operator, but where no corresponding reward is available, risks tend to be left with the HPOs as purchasers. In this respect, the answer to the second question may be straightforward. Where utilisation, and so demand, increases well above contracted levels, it is possible that the operators may be able to request increased payments to provide the additional capacity needed to meet the increased demand. In this setting, the risk remains with the HPOs as purchasers.

10 International Accounting Standard (IAS) Board 11 available at

http://ec.europa.eu/internal_market/publicprocurement/docs/guidelines/services_en.pdf


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Design risk usually reflects the nature of the health informatics requirements of each Member States’ health service. These are usually reflected in purchasers’ schedules of data requirements. In this setting, HPOs as purchasers, not the operators, are explicitly determining the key features of the eHealth service to be provided through the PPP. The risk that the eHealth service, even where it is superbly constructed, may not meet the needs of HPOs, remains with the HPOs as purchasers. In PPPs for eHealth, the design can be linked to functionality, interoperability and usability. The role of the HPOs in each of these, as a result of its design specification, will be additional factors in measuring the overall exposure to, and transfer or retention, of risk. For eHealth investment such as EPR systems, the HPOs have a direct role in setting their requirements at the development and design stage. For eHealth that is more integral to the care model, and applies to a narrower range of healthcare, such as PACS and telecardiology, suppliers can take a more direct role in setting development, design and requirements, and so take more of the risk. For this type of eHealth, where suppliers can provide the ICT component of the eHealth investment, PPP may be less appropriate than conventional, direct procurement.

As a general rule, the longer the time scales of investments, the greater the risks. Identifying and mitigating these risks are essential parts of PPP and should be dealt with in the context of the annual payments from the purchasers to the operators. Generally, the operators can be expected to provide some of the finance for developing, designing and implementing the eHealth solutions. This can be recoverable from the annual fees for the continuing service. This leaves the HPOs as purchasers to finance their part of the planning, development, design and implementation stages, together with the operational and change costs. The overall effect, compared to a conventional eHealth finance model, is for HPOs to avoid most of the finance needed for the hump, and to need increased finance for the additional recurring revenue expenditure incurred on the PPP annual fees. The financing value of PPP is where non-recurring finance is constrained, but finance for increased annual revenue expenditure is available.

Decisions on risk exposure translate into annual PPP payments, especially the extent to which they are either fixed within a floor and ceiling, or are set as an annual value, then varied, probably by marginal prices, in line with changes in demand or utilisation, affect the financing requirements of PPPs. Decisions to switch from a conventional finance model to a PPP must be based on a realistic risk assessment alongside an affordability assessment that includes all the income and expenditure for the whole eHealth investment. It is critical to approach risk transfer rigorously. Risk models tend to be part of the HPO PPP model and not public data. Purchasers in PPPs have little data from research or practices to draw from, increasing their potential vulnerability to risk. It may be that their perception of risk transfer or sharing may not match the reality. From this position, a PPPs potential can be assessed.

The general advantages of PPP include:

Provides a solution for shortages of capital and non-recurring finance

Introduces private sector disciplines to eHealth investment

May build and maintains eHealth to a higher quality and longer life


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Non-core, highly skilled services handled by those most capable, usually excluding clinical and medical skills

Risks can be transferred to the party best capable of mitigating it.

Disadvantages include:

Cost of capital to a PPP operator can be higher than for governments and NGO

HPOs can take on a significant, fixed commitment for PPP fees, increasing annual revenue expenditure over the longer-term

Potential oligopoly of operators that need direct management by the HPO, especially complex sub-contracting relationships

Some operators may not find PPP appealing and so withdraw from the PPP market

Operational transaction costs reduced through-life flexibility

Lack of integration between eHealth and new clinical and healthcare models

Risks may not be measured realistically, transferred or shared as envisaged.

The oligopoly power of operators and suppliers arises from their greater experience in dealing with the scale of eHealth investment compared to the HPOs as purchasers. The latter does it only once, the former many times with different users. However, as PPP is relatively new, some operators may not have significant experience of eHealth investment in this setting.

PPP contracts can be very long and complex. Seeking 100% contract coverage and completeness usually means that purchasers have to spend extra money on legal advice and work, especially on defining and setting all the performance measures, which cannot be easily specified in advance. When a degree of contract incompleteness is accepted, incentives are significant in aiming to reduce costs over time, but, relatively weak at aiming for quality improvements over time. This can create a dilemma where quality change is required of HPOs in the future, and the quality of their information, measured as appropriate, accurate, complete and available, will be critical to success.

The impact of incompleteness can be seen in the Care Records Service (CRS) project that is part of the National Programme for IT (NPfIT) in the NHS in England. The timescales through planning, development, design build, and to implementation, referred to as deployment, are several years. It is extremely difficult to be explicit and complete about performance measures over the whole time period and over different segments of the investment. CfH is aiming to reset some of these PPP contracts now that they have entered the deployment stage.

Interoperability is a vital part of these types of eHealth investments. Generally, is the HPOs as purchasers manage interoperability, markets may be able to become more competitive, purchasers may have increased choice of operator and suppliers, services may become cheaper and, as a result, purchasers may be able to make the available money go further. However, this remains to be seen.

Features of PPP are that most, and possibly all, annual payments will be higher than the revenue expenditure of conventional finance models, and they also tend to be fixed, reducing the flexibility of, and executive influence over, a proportion of eHealth financing. This limitation should be seen in the context where increase debt commitments arising


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from PPP can help to accelerate change and benefit realisation. Debt then becomes a good discipline.

3.3 Procurement and pre-procurement

An important part of any eHealth investment is the potential sharing of effort needed at the planning, design, and development stages. More sophisticated procurement models transfer and share these roles either as a pre-procurement step before the ICT solutions are procured formally, or for larger scale regional or national projects, made available to HPOs as part of a call-off contract. The timescales for these pre-procurement stages can be up to seven or eight years for complex, large scale projects such as EHR and EPR systems, and with this elapsed time, both suppliers and HPOs will be exposed to significant risks that need very specific, and costly, mitigation measures. These extend across a sequence of roles and activities of:

Management

• Leadership > Strategic Fit > Clinical Engagement

Technical

• Requirements > Functionality > Interoperability > Usability > Acceptance

The goals should be to combine each of these activities in order to facilitate an eHealth solution that would otherwise not be feasible because the ICT components have to be created. From this position, HPOs can expect to pursue their eHealth investment and realise the benefits needed for their strategic goals, and suppliers can expect to gain the business benefits from the availability and sales of new ICT products and services. These translate into an expectation that the pre-procurement will glide effortlessly into full procurement.

When pre-procurement is part of a PPP arrangement, it reflects one of the goals of PPP from the perspective of HPOs. The procurer is to be able to manage the market, competition and the availability of appropriate suppliers. For more complex eHealth investments, it is unlikely that suppliers will invest unless there is a potential market for the products, and this is an important feature of HPOs financing fully their role in this stage of the eHealth investment. This situation has several implications for eHealth finance:

Finance must be sustained throughout the whole pre-procurement period

Finance must be provided to procure the resulting ICT products and services, and to complete the remainder of the eHealth investment

Finance must be provided for contingencies

Risk and optimism bias must be managed and reflected in the finance provided.

These factors are prevalent in England’s NPfIT for the CRS, managed by Connecting for Health (CfH). Several suppliers developed the electronic CRS for payment on implementation, to the healthcare contractor, supporting the take-up of the resulting ICT applications. In some parts of England, the transition from pre-procurement to the implementation stages has resulted in some dissatisfaction of HPOs with some of the CRS products, which has triggered a review by CfH of the original contracts with an aim to reset them. Additional finance in excess of £5m has been provided for this.


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3.4 Collaboration and purchasing power in procurement

Some procurement models, examples of which are found in Canada, Sweden and the UK, seek to maximise the purchasing power of combined HPOs and related organisations acting in various forms of consortia. These can be effective in reducing products’ costs, improving the affordability position and so maximising the available real financing for investments in eHealth. For more complex eHealth solutions, this can be matched by suppliers working in partnership and sub-contracting relationships. A general principle is that procurers should seek ways to maximise and use their purchasing power in the eHealth market.

Financial resources can be liberated and enhanced by reorganising procurement, helping to sustain eHealth investment. For example, centralisation of procurement for hospitals in a region, streamlining the supply chain by sharing one procurement department, leads to synergies, economies of scale and potentially lowers unit prices of purchases, liberating staff and other resources. These can be redeployed into planning, development, and implementation of eHealth solutions, thus representing an indirect source of financing. The re-organisation itself can also include implementation of one or more eHealth solutions, as in the case of MedicalORDER®center Ahlen (MOC), in Germany12.

CfH in England aims to procure specified ICT centrally for the NHS in England. A core principle in this undertaking is the transfer of risk by contracting vendors to develop and supply solutions, such as CRS, and arranging payments only on delivery. Suppliers take the risk because they get access to the NHS as a customer. However, much of the risk remains with HPOs in the NHS which are providing much of the finance for change management and carrying the cost of disruption where CRS may not perform as required.

CfH has three large-scale procurement projects:

1) National Programme for IT (NPfIT) Procuring the Core Contracts

2) Additional Supply Capability and Capacity (ASCC) Project

3) Enterprise Wide Agreements

The core contracts include five geographic sector contracts and three national ones: the Spine, connectivity and infrastructure in HPOs, and the Choose and Book solution.

The ASCC concept is to procure once, and allow HPOs to choose between two or three suppliers and thus implement the solutions quicker. Participation is not mandatory; trusts can choose to go through the process separately. Through the enterprise wide agreements CfH uses combined NHS buyer power to secure cheaper licences, such as from Microsoft and Novell. For a common EPR for England, CfH estimates in 2003 were that the total estimated ICT cost of local procurement would be some £11.5 billion, compared to the initial CfH estimate of some £6.2 billion for the original value of the eight core contracts for five local service providers in the five regions, the NHS Spine, the N3 network and Choose and Book.

Lessons learnt to improve future performance include:

12 An eHealth IMPACT case study report on MedicalORDER®center Ahlen (MOC), Germany, is

available at http://www.ehealth-impact.org


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Procurers must know what the market can offer both in providing current ICT products and services, and the capacity and capability of suppliers to develop new products and services

Procurers must be able to commission suppliers as consortia to create the required capacity and capability

Procurers have to be able to work directly with both the sub-contractors of main contractors

Procurers must engage effectively with clinicians and HPOs to be clear about their eHealth requirements, and so avoid a position where a different, inappropriate product is provided at a higher cost when corrections and work-arounds are needed

Shortfalls must be recognised and dealt with, while success should be marketed.

PACS is an example of successful collaboration for CfH. It will be in all appropriate hospitals in England by Christmas 2007, and at a lower cost compared to the aggregate individual, local procurements.

3.5 eHealth investments in services, not products

An important principle of PPP is that the contracts are for services. These include products, but they are set in the context of the assets and tools needed by operators to fulfil their contractual obligations. This concept can be applied to conventional procurement, without the PPP context. Instead of supplying ICT products to HPOs for them to use, suppliers can work with other suppliers to provide the ICT services as an external service needed by HPOs as part of their eHealth investment. This offers the opportunity for some risk to be transferred and mitigated by suppliers, especially some of technology risks and resourcing risks. An example is in France, where Agfa currently has a contract to operate electronic networks that connect hospitals and laboratories.

From a financing perspective, the user, the HPO, does not bear the bulk of the investment costs. In addition, users are able to transfer part, or all, of the responsibility for maintenance and up-grading of the technology elements of the investment to the supplier. Thus, such an arrangement is likely to have a positive impact on the levels of eHealth investments.

These types of service contracts change suppliers’ investment, commercial and financial profiles, and can be problematic for them. Payback periods may exceed five years, which is long timescale for suppliers and their bankers, so some adjustment to pricing and contract periods may be needed for these services to be sustainable on a large scale. However, Agfa’s overall experience is positive, as the service model opens up new markets. It may be that this model could be developed further to meet the financing and commercial needs of HPOs and suppliers.

3.6 Industry-health authority relationships and networking

The concept of eHealth extends well beyond ICT. It includes changes to clinical and working practices as a result of new ICT solutions being available at the point of care that can result in new models of healthcare being available for the benefit of citizens and HPOs. Realising this outcome requires excellent leadership of IT-enabled change. Seldom are the skills and knowledge for all these factors available to one organisation.


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Accessing and using these requires organisations to have an effective relationship that enables long-term partnership and networking.

At the theoretical end of the spectrum, the ICT industry can be seen as having limited knowledge about healthcare, with HPOs at the other end, with limited knowledge about the potential of ICT. Somewhere in the middle is an optimal relationship built on shared and enhanced knowledge. This setting may not provide direct financial support for eHealth investment, but may be a precursor for success. Most contracts for eHealth services have medium to long-term timescales. Over this period, most ICT will become obsolete, but may still be useful, new ICT concepts and applications will become possible and new demands will be made by HPOs on ICT to support new healthcare opportunities and goals. Additionally, risks of inertia may increase.

Effective industry-health authority relationships and networks can lead to new, more comprehensive solutions, sharing of investment costs, financial and economic gains, and better risk mitigation. They should be part of all HPO and supplier relationships. The goals should include:

Sharing good practice in net benefits realisation and risk mitigation from current eHealth investment plans

Identifying the impacts of medium and long-term health and healthcare policies and strategies

Identifying the eHealth investment needs of these policies and strategies

Commissioning health informatics, ICT and skill projects to prepare for future planning, development and design stages of eHealth projects

Helping to develop a market for future eHealth investment.

3.7 Reimbursement mechanisms for health services provider organisations

Healthcare reimbursement schemes for HPOs differ significantly across the EU and some are about to change in an attempt to contain the increasing cost spiral in western healthcare systems. Reimbursement of health services can positively affect eHealth if it provides mechanisms for financing at least the operational costs associated with eHealth solutions. This includes mechanisms like:

Annual lump sum payments, probably within a range for activities such as development, piloting and testing, and in some cases allocating finance nationally or regionally to collaborative activities

Pay-as-you-use models to reflect change in utilisation and demand. An example is the planned German fee per ePrescription, paid to the GP instead of a lump sum payment to cover initial investment. Such attempts to integrate investment financing into the routine operation of the healthcare system already exist13

13 For example in Germany


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Payments for a minimum, routine service with supplementary payments for additional services that can be provided using eHealth

Payments for new healthcare models that can be created with eHealth, such as telecardiology, and that reflect the costs of eHealth in providing the new service.

Generally, it will be more feasible to reimburse HPOs for eHealth where it is integral to care, such as PACS and telecardiology, than where a new healthcare model is created. For eHealth solutions such as EPR systems, which are essentially large interconnected databases that can be available at the point of care, the impact on new healthcare models may be less explicit and direct. In this setting, using reimbursement for eHealth is less feasible. The resources for this type of eHealth can be seen as part of the core healthcare resources and facilities that should be available with modern ICT.

Differences in the healthcare financing models can lead to different degrees of reliance on reimbursement. For tax-based Beveridge models, such as the UK’s NHS and Scandinavian models, finance for eHealth can more easily earmarked and top-sliced nationally and regionally money than Bismark models where several, separate third party payers may be involved in financing healthcare. In these settings, reimbursement models may need to be developed. They could also be used beneficially with the Beveridge models where the flow of funds from commissioners to healthcare providers, especially hospitals, is increasingly reliant on internal prices for diagnosis related groups (DRG) and national equivalents, such as the Nordic DRGs and Healthcare Related Groups in the England.

3.8 Charitable donations

Charity donations can be effective financial sources for some tangible assets, especially for evocative services like those for babies, infants, and cancer patients. Where complex modern medical and scientific equipment is attractive to charitable donations, this can provide new ICT solutions that enhance the clinical services provided by healthcare organisations.

Donations by foundations can also support research, implementation and routine service projects over a certain time period, such as in remote or disaster areas.

3.9 Citizen contributions

Citizens can contribute small part of healthcare and eHealth finance directly. Co-payments for healthcare services are common practice in many Member States already. The willingness of citizens to pay higher co-payments for eHealth supported treatment should be investigated. A preliminary hypothesis is that some willingness exists, as long as the health service outcome is of higher quality.

Some examples, such as the Danish Health Data Network (DHDN), can be found where small increased charges have been introduced as part of an improved service after the implementation of eHealth14. At DHDN, the charges were minimal and were removed. A general assumption is that citizens may not be keen on paying more, in total, for their healthcare. However, they may be prepared to re-allocate their resources for different and better healthcare, or pay small additional sums where they gain a direct benefit.

14 for details see case study from the EC eHealth IMPACT study at http://www.ehealth-impact.org


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4 Conclusion

There are several sources of finance for eHealth investment, and several models of eHealth financing that can be used to procure them. A common theme seems to be that eHealth financing is not robustly integrated into the factors that ensure success. An over-emphasis on finance for ICT to the detriment of change and benefits realisation may be prevalent. Similarly, it seems that finance for the whole eHealth investment life-cycle may not be adequate. Instead, financing opportunities address a limited and often insufficient time period of the life-cycle. When these conclusions are set alongside those of the project’s report Conceptual framework, healthcare and eHealth investment context and challenges, many facets of eHealth financing need to be further developed and improved if investment is to be boosted.

Topics for improvement include enhanced facilities to navigate the diversity of financing sources; integrating the policies and use of funds and improving the co-ordination of EC funds. In addition, a specific focus and understanding of some financing sources on eHealth investment could be a considerable advantage in boosting eHealth investment.

These preliminary observations will be further explored and developed during the rest of the Financing eHealth study.

5 Disclaimer

This report is part of a study on financing opportunities available to Member States to support and boost investment in eHealth (www.financing-ehealth.eu) commissioned by the European Commission, Directorate General Information Society and Media, Brussels. The content of this paper reflects solely the views of its authors. The European Commission is not liable for any use that may be made of the information contained in the report.

financing opportunities available to member states …...assessment of financing opportunities...

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