FIMDP 2013

DEPT OF COMMUNITY MEDICINE

SRM MEDICAL COLLEGE ,SRM UNIVERSITY
&
UNSW AUSTRALIA

9TH & 10TH JAN 2013

Public private partnership in the
healthcare sector

Padmanesan Narasimhan MBBS MPH PhD

School of Public Health and Community
Medicine
 Outline

 Overview of the Indian healthcare system

 PPP model and structure

 Case studies from India

 Indian health care system
 1.26 billion population spread across 30 states
 70-80% of the health care is provided by the private
sector (70% in urban and 63% in rural)
 Only 20-30% of the health care is public funded
 Only 20% of outpatient and 45% of inpatient services
were availed from government sector
 Health is a state affair, with central government
contributing to policy, medical education, immunization
etc.
 Health status differs by states, socio economic status
 Spending on healthcare- only 5% of GDP (total value- 40
billion USD)
Indian health care spending
Cont.…

 Public health system

 Inadequate infrastructure
 Non availability of staff, poor access
 Weak referral system
 Recurring funding shortfalls
 Lack of accountability for quality of care

 Private health system

 Most preferred (Est. 70% of all hospitals are in the
private sector)
 Emphasis more on secondary and tertiary care
 Unregulated
 Mandatory registration not practiced
 Health spending in select countries
Country Population Infant Health Public
with income mortality expenditure expenditure
of less than rate/1000 to GDP (%) on health to
1$/day (%) total health
expenditure
(%)

India 44.2 57 4.8 17.3

China 18.5 31 2.7 24.9

Sri Lanka 6.6 16 3 45.4

UK - 6 5.8 96.9

USA - 7 13.7 44.1

Out of pocket expenditure as percentage of
private expenditures on health
 Major challenges

 Growing population- more aged population

 Increasing middle class- disposable income to

spend on healthcare

 Resurgence of communicable diseases and

increase in non-communicable diseases

 Healthcare divide- the two Indias

Health Infrastructure
State records most dengue cases and deaths this year
Dated 16 October 2012
 Major challenges cont…
 Absence of regulation and control, and quality standards
in private health care

 Inadequate and ineffective management of existing

infrastructure

 Inadequate number and quality of health care

professionals

 Declining public investments and expenditure in health

89 dead in Kolkata hospital fire
Dated 09 December 2011
 The need for Public Private Partnership (PPP)

 Improve access and reach

 Improve equity

 Better efficiency

 Opportunity to regulate and system accountability

 Improve quality and rationale practice

 Augment resources
 PPP models
 Hard infrastructure PPPs (eg. Power, ports, roads etc.)
well developed framework and operate under more
developed markets

 Social structure (education and health) unique

challenges
 Cross subsidy and bankability
 Incentives for the private sector
 Complex governance structures
 Political sensitivity
 Human resource intense
 Operations and maintenance
Framework for PPP
Value chain

 Inputs to outcomes is the value chain

 Key inputs- physical, human resources and financial
 In health care certain inputs are complex eg.
Pharmaceuticals
 Assessment of interdependent nature of the value chain
is important
 Need to unlock hidden values in value chain eg. Utilise
real estate potential of health facilities located in prime
locations
Sector constraints, risks and opportunities
 Disparities in health system eg. States like Uttarakhand
and Odisha have a weak primary care system, ICT
awareness varies by state
 Limited scope for certain models- eg. Cross subsidy in
PPP in India as private sector has developed a
financially viable model
 Unique problems with public health sector- Unionism,
lack of appropriate skills, shortage of personnel and poor
supervision- makes PPP a less attractive proposal
 Combining preventive and curative care in revenue
generation models
Evaluation framework

 Effectiveness

 Efficiency

 Equity

 Financial sustainability
Evaluation- Effectiveness

 Level of success in meeting the objectives

 Effectiveness in monitoring the delivery of the program

 Scalability

 Local stakeholder buy-in

Evaluation- Equity and political considerations

 Ability to benefit the poor and not subsidize the rich

 Political resistance

 Need for wider public sector reforms

Evaluation- Financial sustainability

 Economic return to private sector

 Financing risk

 Private sector appetite and capability

Summary- core principles

 Mutual commitment to health objectives

 Shared decision making and accountability

 Equitable returns and outcomes

 Benefits to the stakeholders

 Limitations- poor quality baseline data

 Potential public private partnership models in
Healthcare industry
 Adoption and management contracts- Primary
healthcare centres

 Build, Own and Operate- Diagnostics centres

 Private Finance Initiative scheme- Improving and

developing hospital infrastructure

 Mobile health units

 Telemedicine units

 Insurance schemes
Adoption and management contracts in Primary
healthcare centre
 Addresses the access gap in rural areas

 Two possible ways – Taking over existing PHCs by private sector

and/or mobile clinics

 Limitation- Overall scarcity of skilled healthcare professionals

Built Own and Operate (BOO) - Diagnostics
services
 Addresses the need for creating additional diagnostics

 Private sector will install, maintain and operate diagnostic services

 User charging based

 Limited by the lack of referral network between doctors and health

centres
Private Finance Initiative (PFI) scheme- Hospitals
 Popular in the UK

 Public sector purchase services from private companies

on a long term basis

 Private sector companies construct and maintain

infrastructure to deliver required services

 Collect fee- unitary charge covering the principle and

interest payments

 Payments depend on the performance of the private

contractor
Private Finance Initiative (PFI) scheme- Hospitals
 Addresses the need for developing and improving
infrastructure

 Hard infrastructure and facilities management

 No direct health benefits therefore limited in stakeholder

acceptability
Disease control- Tuberculosis management
 PPM in nearly 270 medical colleges

 Infrastructure, personnel training and monitoring

 Patients benefited with additional services- counselling,

diagnosis and follow up
 Insurance schemes

 Yashaswini scheme
 Launched in 2002, in the state of Karnataka

 Premium- Rs 60 annually, provides coverage for

major surgical operations

 No direct health benefits therefore limited in

stakeholder acceptability

 Tamilnadu CM scheme
Summary

 PPPs in health are still at initial stages of development

 Inevitable

 Critical to improve capacity and address the gaps

 Needed to strengthen/deliver quality services

 State/region specific study of the models are required

 A well planned model may deliver a high impact/quality

health care
Challenges for PPP

 No organisational structure/institutional capacity

to manage PPP

 Bureaucracy- distrust private sector

 Long term sustainability

 Legal/regulatory framework
References
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