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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
