Public Private Partnership in Health Avoid pitfalls & aim at Success

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WHO Collaborating Centre 14 th Arab Conference on New Trends in

1 Public Private Partnership in Health Avoid pitfalls & aim at Success Salman Rawaf MD PhD FRCP FFPH Professor of Public Health Director of WHO Collaborating Centre 14 th Arab Conference on New Trends in Hospital Administration 7 th 9 th December 2015 Amman, Hashemite Kingdom of Jordan

2 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

3 Today s World Rapid health and medical advance - Many of the interventions/practices are challenged continuously: - The Case against science: *

4 The Case Against Science The Case Against Science is straightforward: much of the scientific literature, perhaps half, may simply not true Richard Horton, The Lancet, 2015;385:1380 (April11)

5 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 *

6 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.

7 What is a PPP? Any collaboration between public bodies, such as local authorities or central government, and private companies tends to be referred to a public-private partnership (PPP)

8 Why PPP? 1. Logic 2. Cost 3. Risk 4. Liabilities 5. Priorities 6. Profit 7. Shifting Burden

9 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

10 Common Models of PPP Health & Products Innovations Contracting With Pharmaceuticals With Manufacturers Service Contacts { Facilities Contract { Management Contract { Lease Contract { Outsourcing BOT Build Operate Transfer DBFO Design Build Finance Operate [PFI] BOO Build Own Operate

11 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)

12 What is Private-Finance Initiative (PFI)? United Kingdom PFI 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.

13 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

14 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

15 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.

16 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

17 PFI UK House of Common 2014

18 PFI UK House of Common 2014

19 PFI UK Channel 4 (2105)

20 The Cost of PFI UK

21 Cost of PFI UK

22 The Real Cost of PFI

23 UK PFI Projects

24 Criticisms of PFI Public Finance is always cheaper than private finance

25 Criticisms of PFI Public Finance is always cheaper than private finance PPI process hinder accountability

26 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)

27 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

28 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

29 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)

30 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

31 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

32 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

33 How to succeed?

34 Successful Partnership

35 Lessons learned Design to meet policy objectives Political commitment Planning and piloting Enabling legislation Transparency Good governments get good PPPs

36 Four Basic Dimensions of PPP Each PPP is unique, but: Shared goals Shared resources (time, money, expertise, people) Shared risks Shared benefits

37 Be Reasonable. Think about Health before Profit!!

38 Thank you Thank You

Plenary 2: Public-Private Partnerships. Monday, 12:00 to 13:00

Plenary 2: Public-Private Partnerships Monday, 12:00 to 13:00 Session agenda 1. What is PPP? 2. When are PPPs appropriate and where have they been used? 3. PPI in South Asia 4. Key terms 5. Summary and