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
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 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)
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 companies tends to be referred to a public-private partnership (PPP)
Why PPP? 1. Logic 2. Cost 3. Risk 4. Liabilities 5. Priorities 6. Profit 7. 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 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
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 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.
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!!
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