Public Private Partnership in Health - ARADO · Public Private Partnership in Health Avoid pitfalls...

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Public Private Partnership in HealthAvoid pitfalls & aim at Success

Salman Rawaf MD PhD FRCP FFPH

Professor of Public Health

Director of WHO Collaborating Centre

14th Arab Conference on New Trends in Hospital Administration

7th – 9th December 2015

Amman, Hashemite Kingdom of Jordan

Outline

Health Challenges

PPP in Health

Types of PPP in health

Examples of PPP worldwide

Potential Benefits & Risks

UK PFI: case study

How to succeed

Today’s World

Rapid health and medical advance- Many of the interventions/practices are challenged continuously:

- The Case against science:

* http://www.bbc.co.uk/news/health-35008921

The Case Against Science

Richard Horton, The Lancet, 2015;385:1380 (April11)

“The Case Against Science is straightforward: much of the

scientific literature, perhaps half, may simply not true”

Today’s World

Rapid health and medical advance- Many of the interventions/practices are challenged continuously:

- The Case against science:

Escalating Costs of Health Services- HS inflation is high- Treating more conditions (+ pre-emptive treatment)*- Short of public capital investment

Government Role shifts over time [Excel, Blunders]

Social Value shifts over time - Public & Patient Power driving change

Unregulated Private Sector - Social Responsibility

- Social Solidarity

* http://www.bbc.co.uk/news/health-35008921

Contracting Triggers & Drivers

Nature of Medicine (continuous change)

Costs of HealthCare vs Financial Situation

Escalating Public Demands/ Higher Expectations

PFI is significantly more expensive than Government funded projects with the cost of borrowing at least two times higher than Government financed works according to a 2011 HM Treasury Report.

What is a PPP?

Any collaboration between public bodies, such as local authorities or central government, and private companiestends to be referred to a public-private partnership (PPP)

Why PPP?

1. Logic2. Cost 3. Risk4. Liabilities5. Priorities6. Profit7. Shifting Burden

Types of health PPPs

Outsourcing / Joint development (medicine, Technology, services)

Outsourcing non-clinical support services

Outsourcing clinical support services

Outsourcing clinical services

Private management of a public hospital

Private financing, construction and operation of a

public hospital

Common Models of PPP

Health & Products InnovationsWith Pharmaceuticals

With Manufacturers

ContractingService Contacts {

Facilities Contract {

Management Contract {

Lease Contract {

BOT Build – Operate – Transfer

DBFO Design – Build – Finance – Operate [PFI]

BOO Build – Own – Operate

Outsourcing

Examples of Health PPP

UK PFI Hospitals, PC Clinics

Spain Care contract in 8 hospitals

India TB Service (NGO Hospital 0.5 m pop)

Bangladesh Nutrition Service (NGO 15m pop)

Pakistan 103 Basic Health Units (management contract)

What is Private-Finance Initiative (PFI)?

United KingdomPFI began 23 years ago and has been used to build schools and hospitals. It is a way by which Government getting the private sector to take on the financing, construction and operation of public sector infrastructure projects.

In return, firms lease back these schemes to the government, often on long term leases.

Potential Benefits of PPPs

More incentives for private sector to perform

New facilities available earlier

Increased levels of efficiency and innovation

Risks transferred to private sector

Forward spending commitments known and able to be

planned for

Potential Issues with PPPs

PPP contracts can be very complex

Results assessment is often subjective

Public sector may be locked into contracts

while health demands change

PPPs may not gain the population’s trust

Political View: Better

“Our ten year programme of

modernisation includes the

biggest ever hospital building

programme in the history of the

National Health Service.

The PPP Initiative is a vital

element in renewing the fabric

of the NHS”

Alan Milburn - Secretary of

State for Health 2001

Scientific View: Worse

“The political consequences are not to be

under estimated. There will be a mobilization

like hundreds of forest fires burning slowly

against each PPP scheme. They haven’t ignited but they will. You can fool the public

for quite a long time using technical and

arcane jargon but it only takes an Enron for

the public to realize the way in which private

finance is removing rights and entitlements

and the whole thing does begin to come

apart.”

Dr. Allyson Pollock, Head of Health Policy

Research Unit, University College London

2001

PFI UK

House of Common 2014

PFI UK

House of Common 2014

PFI UK

Channel 4 (2105)

The Cost of PFI UK

Cost of PFI UK

The Real Cost of PFI

UK PFI Projects

Criticisms of PFI

Public Finance is always cheaper than private finance

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

PFI bad for public sector staff (T&C of service threatened)

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

PFI bad for public sector staff (T&C of service threatened)

PFI leads to public sector disusing open-ended liabilities

& therefore lacks control over these liabilities

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

PFI bad for public sector staff (T&C of service threatened)

PFI leads to public sector disusing open-ended liabilities

& therefore lacks control over these liabilities

PFI distort spending priorities

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

PFI bad for public sector staff (T&C of service threatened)

PFI leads to public sector disusing open-ended liabilities

& therefore lacks control over these liabilities

PFI distort spending priorities

Public sector tying itself to present day solutions for the

next 30 years (?change public needs)

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

PFI bad for public sector staff (T&C of service threatened)

PFI leads to public sector disusing open-ended liabilities

& therefore lacks control over these liabilities

PFI distort spending priorities

Public sector tying itself to present day solutions for the

next 30 years (?change public needs)

Long term contract may not be always optimal, change

may be weak & biased towards cost cutting rather than

enhanced service activities

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

PFI bad for public sector staff (T&C of service threatened)

PFI leads to public sector disusing open-ended liabilities

& therefore lacks control over these liabilities

PFI distort spending priorities

Public sector tying itself to present day solutions for the

next 30 years (?change public needs)

Long term contract may not be always optimal, change

may be weak & biased towards cost cutting rather than

enhanced service activities

PFI schemes have an adverse design & environmental

impacts

Criticisms of PFI

Public Finance is always cheaper than private finance

PPI process hinder accountability

PFI bad for public sector staff (T&C of service threatened)

PFI leads to public sector disusing open-ended liabilities

& therefore lacks control over these liabilities

PFI distort spending priorities

Public sector tying itself to present day solutions for the

next 30 years (?change public needs)

Long term contract may not be always optimal, change

may be weak & biased towards cost cutting rather than

enhanced service activities

PFI schemes have an adverse design & environmental

impacts

How to succeed?

Successful Partnership

Lessons learned

Design to meet policy objectives

Political commitment

Planning and piloting

Enabling legislation

Transparency

Good governments get good PPPs

Four Basic Dimensions of PPP

Each PPP is unique, but:

• Shared goals

• Shared resources (time, money, expertise, people)

• Shared risks

• Shared benefits

Be Reasonable ……….

Think about Health before Profit!!

Thank YouThank you

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