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© Economist Intelligence Unit1
The role of the private sector in healthcare:An approach to assessing national readiness and capacity for PPPs
The Role of Non-State Providers in Delivering Basic Social Services for ChildrenUNICEF-ADB Regional Workshop 19-20 April, Manila
Tony Nash
Global Director, Client Research
Economist Intelligence Unit
© Economist Intelligence Unit2
Agenda
The role of the private sector and PPPs in healthcare Observations from the healthcare sector
The use of benchmarking in developing and implementing PPPs Case study of the Economist Intelligence Unit’s “Infrascope” Index
© Economist Intelligence Unit3
Healthcare in Asia 2010: A public-private affair
Two-day initiative organised by the Economist Group, convening more than 180 healthcare professionals from across Asia
Speakers and participants from the public and private sector including:
health ministers representatives from government academia regulators associations hospital administration pharmaceutical medical equipment insurance doctors and patient groups.
© Economist Intelligence Unit4
There is no single regional model for the public-private split of healthcare funding and provision.
How any country decides to pay for its health system involves a complex balancing act of efficiency considerations with matters of equity and morality. The result is invariably a combination of public and private funding and provision.
As governments in the region struggle to expand and adapt their healthcare systems, there is a growing reliance on the private sector either through choice or neglect.
If wealthier countries are looking at increasing private funding, poorer ones are seeing an even greater role for the private sector and non-state actors.
The profit-seeking tendencies of private-sector involvement may further effect health equity. Already the access gap is manifested in the polarisation of medical facilities and personnel in urban
settings, at the expense of rural patients. The increasing disparity in wealth in many Asian countries will exacerbate problems with access to care.
© Economist Intelligence Unit5
Most countries seem to be heading for a bigger private-sector role in funding and investing in healthcare
Developed Asia
Currently, governments are struggling to contain costs and find new sources of funding.
Taiwan and South Korea, have both attempted to use regulation to cut prescription drug costs and looked at increasing medical tourism.
Hong Kong, meanwhile, is considering raising the level of private financing, either through greater use of private insurance or the creation of medical savings accounts.
Developing Asia
Governments seek the participation of private and non-state actors for the rapid and efficient mobilisation of capacity. Such strategies are typically linked to
short term programmes—with implications for long-term health system sustainability.
For instance, Indonesia is actively encouraging private sector investment to bridge the gaps which the state cannot afford to fill.
The biggest exception to this slow shift towards more private sector involvement is China, which is engaged in a major effort to reform its public-health system.
© Economist Intelligence Unit6
Current healthcare sector thinking on the private sector’s role in driving innovation in healthcare
Healthcare in Asia delegates noted that there is a currently a lack of engagement between governments and the private sector in terms of proactive discussion of policy and reforms.
There is a need for creating such regular frameworks for dialogue at a national level across Asia, so that private sector views are taken into account at an early stage in policy development.
The private sector could work together through industry associations to make substantial progress and greater impact on key initiatives, so that efforts are not piecemeal and of little overall impact.
© Economist Intelligence Unit7
In particular, collaboration and knowledge sharing is required in the development and implementation of health PPPs in Asia-Pacific.
Asian governments that have already made progress with establishing private-publicpartnerships need to engage with other Asian governments, to assist in developingPPPs across Asia.
Healthcare in Asia, 2010 Key questions:
While lessons can be learnt from other Asian countries, can PPP solutions be regional given that healthcare systems are national, or even sub-national creations?
To what extent are Asian countries ready for PPPs?
Are national frameworks in place to manage potentially complex private-public partnerships and contracts, particularly in resource-constrained settings?
© Economist Intelligence Unit8
Lessons from benchmarking research: The “Infrascope” Index
Governments worldwide have long partnered with the private sector to develop and maintain infrastructure economic growth.
But structuring deals between the public and private sectors is complex and time-consuming, with financial and political risks for all sides.
To understand the potential for these PPPs in Latin America and the Caribbean, the Multilateral Investment Fund (MIF) and the Program to Promote Public-Private Partnerships in Latin America and the Caribbean commissioned the Economist Intelligence Unit to measure the readiness of governments in the region to carry out such essential projects.
© Economist Intelligence Unit9
A tool for private- and public-sector stakeholders in designing and implementing PPPs
The index and study that emerged from this research evaluated and ranked the legal, regulatory, institutional and financing environment for public-private infrastructure projects in 19 countries.
The index focuses on a country’s readiness and capacity to carry out infrastructure projects using PPP models.
By placing countries under a microscope for infrastructure project readiness, the “Infrascope” evaluates
a country’s legal and regulatory framework for PPP projects
the institutions that prepare, award and oversee projects;
the government’s ability to uphold laws and regulations for concessions, as well as the number and success rate of past projects (that is, “operational maturity”);
the business, political and social environment for investment, and
the financial facilities for funding infrastructure
Legal and regulatory framework
1 Peru 66.7
2 Chile 61.1
=3 Costa Rica 50.0
=3 Mexico 50.0
5 Brazil 47.2
6 Colombia 33.3
7 Argentina 27.8
=8 Jamaica 25.0
=8 Panama 25.0
=8 Paraguay 25.0
=8 Trinidad & Tobago 25.0
=8 Uruguay 25.0
13 El Salvador 19.4
=14 Dominican Rep. 16.7
=14 Guatemala 16.7
=14 Honduras 16.7
17 Venezuela 8.3
=18 Ecuador 5.6
=18 Nicaragua 5.6
Operational maturity
1 Chile 73.9
2 Brazil 66.7
3 Costa Rica 55.0
4 Peru 53.0
5 Mexico 47.3
6 Colombia 44.7
7 Ecuador 39.4
8 Dominican Rep. 38.6
9 Honduras 21.3
10 El Salvador 20.8
11 Jamaica 17.0
12 Argentina 16.8
13 Uruguay 13.3
14 Panama 8.8
15 Guatemala 8.7
=16 Nicaragua 8.5
=16 Paraguay 8.5
18 Venezuela 4.8
19 Trinidad & Tobago 4.3
© Economist Intelligence Unit10
Indicators
Legal and regulatory framework
Consistency and quality of PPP regulations
Effective PPP selection and decision making
Fairness/openness of bids, contract changes
Dispute resolution mechanisms
Institutional framework
Quality of institutional design
PPP contract, hold-up and expropriation risk
Operational maturity
Public capacity to plan and oversee PPPs
Methods and criteria for awarding projects
Regulators' risk allocation record
Experience in transport & water concessions
Quality of transport and water concessions
Investment climate
Political distortion
Business environment
Social attitudes towards privatisation
Financial facilities
Government payment risk
Capital market: private infrastructure finance
Marketable debt
Government support for low income users
© Economist Intelligence Unit11
Activities Search relevant, publicly available data sources including quantitative resources as well as legal texts and regulatory reports
Interview country and sector experts, distribute survey Review laws and regulationsCompile secondary reports and assessments
Data collection Construction, weighting, scoring of Index
Qualitative analysis of laws, regulations and institutions Data normalisation Compare index results against survey responses, interviews, World Economic Forum Index
Sources World Economic Forum, PPIAF PPI data base, World Bank, Economist Intelligence Unit, Transparency International, Latinobarometro survey, Multilateral Investment Guarantee Agency data, Fitch/S&P/Moody’s
PPIAF sector reports, IADB reports, Economist Intelligence Unit publications (Country Commerce, Country Finance, Risk Briefing)
Economist Intelligence Unit analysts and model builders
Research and analysis
Developing the index
© Economist Intelligence Unit12
Research findings from Latin America
Results from the Infrascope Index were published in a white paper— “Partnerships for Progress? Evaluating the environment for public-private partnerships in Latin America and the Caribbean” (2009)
The index measures countries on a scale of 0 to 100, where 100 represents the perfect environment for PPP projects.
Chile scored 64.3 due to a high degree of project experience, low project-cancellation rates, and a reasonably developed legal, regulatory and institutional framework (albeit one of the best in the region). Attractive investment conditions and good facilities for project finance also helped boost Chile’s score.
The second and third-ranked countries, Peru and Brazil, exhibited similar characteristics.
Venezuela finished last in the Infrascope index, just after Nicaragua and Ecuador. All three countries, with scores ranging from 7 to 15, must improve the consistency and quality of their legal, regulatory and institutional frameworks to better facilitate concession projects. These countries also score in the bottom half of all countries for their investment and financial climates.
© Economist Intelligence Unit13
What are the benefits of benchmarking research for PPP stakeholders?
Increases transparency and accountability for policy makers, regulators and private-sector/ non-state providers
Provides a clear, concise and central source of information on key laws and regulations
Assesses country performance on past initiatives and identifies areas of improvement
Highlights key country strengths and weaknesses
The approach is applicable to social protection, healthcare and other public service “pillars”
OVERALL SCORE
1 Chile 64.3
2 Peru 58.9
3 Brazil 57.8
4 Mexico 47.5
5 Costa Rica 45.1
6 Colombia 39.1
7 Uruguay 27.3
8 Dominican Rep. 25.2
9 Jamaica 25.1
10 El Salvador 23.9
11 Honduras 23.7
12 Trinidad & Tobago 22.9
13 Paraguay 22.3
14 Argentina 21.9
15 Panama 21.0
16 Guatemala 18.0
17 Ecuador 14.5
18 Nicaragua 10.0
19 Venezuela 7.1
© Economist Intelligence Unit14
Thank you
Tony Nash
Global Director, Client Research
Economist Intelligence Unit
Tel: +65 6428 2611
Email: [email protected]
