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PUBLIC PRIVATE PARTNERSHIPS IN CARE DELIVERY
LESSONS FOR INDONESIA?
INA-HEA 2015
Thanks to April Harding
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Public-Private Partnerships
Contracting:Government or public agency
establishes contractual relations for a private entity to deliver healthcare
services.
Co-investment or assetuse transaction
Harding, 2012
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Indonesia Private HospitalsContracted Under BPJS
1000900800700600500400300200100
0Private Hospitals Contracted
14 Mar-15
919
690
Jan-
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Why are contracting initiatives and PPPs happening?Seen as a possible solution to various challenges in finance and deliveryof health services
Contracting and PPPs can potentially:• mobilize private finance• increase access (?)• introduce efficiencies (?)• improve quality (?)in the delivery of health services and improve health outcomes
5
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Contracting/PPP Categories• Buying Services (Romania)
– Non-clinical (catering; drug purchasing)– Specific clinical services (off-site, from a private facility; on-site,
within a public facility)
• Buying packages/ coverage (Estonia)– PHC (low capital)– Hospital (public capital)
• Finance & facility access (PFI in UK)
• Combined – facility and services/operation (Spain)
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1. CONTRACTING
7
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Contracting/ Public Private Partnership ExamplesEstonia PHC contracting
• Established PHC package
• Social health insurance organization began to contractprivate primary care practices
• Payment goes to provider patient chooses and registers with
Impact
• Increased responsiveness/ quality (practitioners wantto attract patients)
• Increased efficiency (more care delivered at PHC level)
• Independent evaluation
8
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ISTC Program UK
Early 2000s, NHS tendered for specified outpatient servicescontracts with initial contracts for 5 years dx &tr
NHS patients are treated free
Operators are paid on the basis of fixed volume contract
per treatment
Operator provides capital and services at their facility
Over 20 ISTC’s currently openISTC’s delivering care for 250,000 patients each year
Mobilized capital -- expanded services
Reduced waiting listsImproved efficiency/ cost savings; some signs of better quality from high
volume of services).
Contracting/ Public Private Partnerships Examples
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Contracting/ Public Private Partnership ExamplesRomania Dialysis Centers
• PPPs for 8 dialysis centers covering 25% of the country’s dialysispatients, to address unmet demand, aging facilities, shortage oftrained staff, and lack of national standards
• Operators receive per treatment payments
• New best-practice national standards developed and implemented
• Improved facility and services quality
• Significant capital mobilization (private operators invested US$40m to upgrade facilities)
• Improvements in management• Cost savings: nearly US$4.5m in savings created for the National Health
program
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Contracting/ Public Private Partnership ExamplesRomania Dialysis Centers
Price and Quality !!
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2. CO-INVESTMENT OR ASSET USEPPP…FOR PURISTS
12
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Valencia, Spain
SOURCE: Health Policy Monitor; Observatory; WHO Bulletin, Dec 2009; McKinsey team analysis
Deficiencies in the Spanish health system before 1999
Transformation process in the Valencia region, since 1999
Budget deficit▪ Public finance deficits; the budget did not
cover middle- and long-term needs
Inefficient use of public resources▪ Lack of inefficiency, flexibility, and
participation of medical staff in hospital management (Abril Commission 1991)
▪ Process of▪ E.g., political promise to build a hospital in
Alcira in 1982, however, no sufficient funding for such kind of investment
Quality lower than government'sexpectations▪ Insufficient medical care for chronically ill
population▪ Access to registered medical facilities only
▪ Management of health system in5 out of 21 health districts in theValencia region was successivelyoutsourced to private consortia
▪ Capitation financing system
▪ Health departments with privatized health systems performwith lower cost, higherproductivity, and more flexibility than other privatization models in Spain and the NHS – achievedby combination of lower cost and increased efficiency
▪ Structured evaluation lacking
Enablers
regionalization and decentralizationcompleted
▪ Aligned politicalsituation1
▪ Changes in legalframework allowinginvolvement of private sector2
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Capitated full risk contracts for third party operators (TPOs) to deliver integrated model of care
Healthcare system management in 5 districts is outsource to private Third PartyOperators (TPOs)
1
5
2
3
4
▪ TPOs are experienced (private) companies with capabilities in financing and managing large-scale projects
▪ TPOs are given full autonomy to manage the network of providers andsystem governance in a given district, within the terms (standards, capitationfee) defined by the Department of Health in the SLA
▪ TPOs have strong incentive to improve service/reduce costs:– Freedom of patient to choose provider also outside the district of
residence1
– Fixed income per patient (capitation fee)14
▪ 21 healthcare districts in Valencia, with population ranging from 140-250 thousand people each
▪ Each district include a large set of providers,ranging from FDs, to policlinics, to generaland (sometimes) specialized hospitals
▪ As of today, 5 healthcare districts of theValencia region are today operating underleadership of (different) private TPOs
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• Sao Paolo State Government financed, built and equipped 16 new hospitals under traditional public works contracts
• State then contracted with ‘not -for-profit ’ hospital operators to operate the hospital under a services coverage contract (including all clinicaland non- clinical services)
• Operator obliged to treat all local residents
Contracting/ Public Private Partnership ExamplesHospital Geral de Pedreira Brazil
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l
• Sao Paolo State Government financed, built and equipped 16 new hospitals under traditional public works contracts
• State then contracted with ‘not-for-profit’ hospital operators to operate the hospital under a services coverage contract (including all clinical and non-clinica services)
• Operator obliged to treat all local residents
• Operator receives global fixed budget (Capital and Variable)•Specified patient volume targets and quality parameters such
as hospital acquired infections•Financial management systems standardized and monthly
reports sent
Contracting/ Public Private Partnership ExamplesHospital Geral de Pedreira Brazil
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Sao Paulo: Impacts
SOURCE: Health Affairs – Public-Private Partnerships And Public Hospital Performance In São Paulo, Brazil
Study in 2003 compared 12 hospitals each under PPP and directly managed. The PPP hospitals are more efficient andcost saving.
4
1
53
5
4Bed substitution rate2
Bed turnover rate1
Average length of stay
Discharges perbed (General) 46
60
Efficiency Indicators
34Per discharge
Per bed 187177
Annual spending (‘000s Reals
1 Annual number of discharges per bed2 Average number of days a bed remains unoccupied between patients
Red=BeforeBlue=After
17
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A NOTE ON HOSPITAL MARKETS IN EUROPE
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Europe’s Hospital systems’ Organized in 2 WaysSegmented• private hospital services are separate from public
hospitals (UK, Nordics, Soviet Union)• Start as charitable institutions/niche business• private hospitals receive private payment
Integrated• private services are core element of public delivery
system• some private hospitals receive significant public funding
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Hospitals by Ownershipin the United Kingdom
Public hospitals; 1161
Private;162
Total: 1323
Public hospitals serve public patients;private hospitals serve private
• Direct governance & funding arrangements
Gove
rnm
ent
Public hospitals
• Regulation
Public patients
Private payers
UK: PPP even in Public Sector
• Direct governance & funding arrangements, throughprivate financingarrangements (PFI)
Gove
rnm
ent
Public hospitals
• Regulation
UK: PPP even in Public Sector
• Direct governance & funding angements, throughvate financingangements (PFI)
arrpriarr
Gove
rnm
ent
Public hospitals
Generated Private CapitalBuilt according to NHS standards
• Regulation
But…long term contract (30 years)… locks in baseline rigidities –demographics and technologychanges over time
Integrated Systems:Many common policy instruments for public & private
•Funding arrangements/ contracts
•Regulation (capacity planning and quality)
• Informationflows
Gove
rnm
ent
• Governance (public only)Public & private
hospitals
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Hospitals in Germany: 90% SHI, 10% PHI
Public; 630
Privatenon-
profit; 755
Source: Roeder, F. C. (2012). The Private Sector within a Public Health System: The German Example, Montreal Economic Institute.
Privatefor-
profit; 679
Total: 2064
Ever more Quality information is Public
More information can be found at: http://www.health.gov.on.ca/english/public/contact/hosp/hosprep.html
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Take Away Messages
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Harding’s 5 Factor Framework
1. Service contractibilityHow hard to contract for the services? Well defined? Easily
priced? Easily regulated?
2. Investment s ize and “exposure” How much private sector investment? How repaid? (fiscal space?)How flexible? (PFI issues)Will the Government be ready to “bail out” if fails?
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Take Away Messages
Non-clinical services
How hard to purchase services?
Clinical services- on-site
Clinical services- on-site
PHC coverage
Hospitalcoverage
Combined
How
risky
topr
ivat
epa
rty?
Take Away Messages from Europe/Global(Harding’s 5 Factor Framework)
1. Service contractibilityHow hard to contract for the services?
2. Investme nt size and “exposure”How much private sector investment? How repaid?How re-deployable?
3. Sectoral Goals – Are We Clear?Sector goals contracting/PPP potentially contributes to(and how much)? More funding, but for Whom? The Poor or
Rich? EG % of poor served in every contract?
4. Implications of non-performanceLarge or small?Only PPP/contracted provider effected or system
5. Impact evidence strength (always evaluate)
Take Away Messages from Europe/Global
5. Impact evidence strength (always evaluate)
(Harding’s 5 Factor Framework)
1. Service contractibilityHow hard to contract for the services?
2. Investme nt size and “exposure”How much private sector investment? How repaid?How re-deployable?
3. Sectoral Goals – Are We Clear?Sector goals contracting/PPP potentially contributes to(and how much)? More funding, but for Whom? The Poor or
Rich?
4. Implications of non-performanceLarge or small?Only PPP/contracted provider affected or entire system
Potential Gains….and Risks
Nonclinicalservices
Clinserv - on-site
PHCcoverage Hospcoverage Combined
Costsavings QltyImprvmt CapMob Coremgmt Perf Risk
0
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TERIMA KASIH