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Public/Private Partnership in HealthCare Services in India

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While reviewing the health sector in India, the

World Bank (2001) and the NationalCommission on Macroeconomics in Health

(2003, 2005) strongly advocated harnessing the

private sectors energy and countering its

failures by making both public and private

sectors more accountable. The Tenth Five-Year

Plan (2002-2007) envisioned in detail the need

for private sector participation in the delivery ofhealth services.

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Why Partnership

Neither the public sector nor the private sector alone canoperate in the best interest of the health system.

Public and private sectors in health can potentially gain

from one another (ADBI 2000; Bloom et al. 2000; Agha etal. 2003) - resources, technology, knowledge and skills,

management practices, cost efficiency and even a make-

over of their respective images .

Under partnerships, public and private sectors can playinnovative roles in financing and providing health care

services

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What is Partnership?

A collaborative effort and reciprocal

relationship between two or more parties.

With clear terms and conditions,

Clearly defined partnership structures.

Specified performance indicators for delivery

of a set of health services in a stipulated timeperiod.

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Elements of partnership

Beneficence (joint gains),

Autonomy (of each partner),

Joint-ness (shared decision-making andaccountability)

Equity (fair returns in proportion to investment &

effort).

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Benefits

Help in ameliorating the problem of poor

health services delivery at two levels:

I. Improve delivery mechanisms.

II. Increase mobilization of resources for

health care (Government of India 2005).

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Benefits cont

Better quality of services, Reduced cost of care ( either due to

competition or through economies of scale)

Redirecting the public resources to otherareas,

Reduction in the duplication of services,

Adoption of best practices, Targeted services to the poor

Better self-regulation and accountability

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Succeeding factors

It is often observed that partnerships are

formed between organizations but succeed

because of individuals who are strong leaders

and who champion the partnershipprojectswith vision, energy and enthusiasm.

Partnerships work typically with one

providing the financing and the otherproviding the services (Paoletto 2000; ADBI

2000).

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Health Sector Reforms(HSR).The deficiencies in public sector health system can only be

overcome by significant reforms.

To address the inefficiency and inequity in the health

system.

to collaborate with the private sector through

Public/Private Partnership (PPP).

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HSR definition

A sustained, purposeful change to improve theefficiency, equity and effectiveness of the healthsector (Berman 1995).

a sustained process of fundamental change in

policy and institutional arrangements of thehealth sector, usually guided by thegovernment. ..It is designed to improve the

functioning and performance of the healthsector and ultimately the health status of the

people (WHO 1997) .

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Reform strategies

1. Alternative financing (user-fees, healthinsurance, community financing, private sectorinvestment);

2. Institutional management (autonomy tohospitals, monitoring and management by localgovernment agencies, contracting);

3. Public sector reforms (civil service reforms,capacity building, productivity improvement);

4. Collaboration with the private sector(public/private partnerships, joint ventures)

(World Bank 1993; Thomason 2002; Abrantes 2003).

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Challenges1. Motives of the private sector

2. Scope and objectives of partnership

3. Policy and legal frameworks

4. Benefits of such partnerships

5. Technical and managerial capacity of

governments and private agencies to manage

and monitor

6. Incentives for the private sector

7. Stakeholders perspectives towards partnership,

8. Explicit benefits to the poor

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Issues covered

Type of partnership

Scope and objectives for the partnership

Services covered and special provisions for the poor.

Obligations of the public and private partners.

Mechanisms used for the selection of private partner.

Performance monitoring.

Payment mechanisms.

Incentives to the private provider.

Stakeholder/ beneficiary perspectives.

Sustainability of the partnership.

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Facts

Approximately 29 percent of the Indian population (almost 300

million people) live below the poverty line and depend on free

health services from the public sector.

public spending on health has remained stagnant at around one

percent of GDP (0.9%) compared to the global average of 5.5%.

more than 40% of hospitalized people borrow money or sell assets

to cover expenses.

35% of hospitalized Indians fall below the poverty line because of

hospital expenses.

The poorest quintile of the population uses only one-tenth of the

public (state) subsidies on health care while the richest quintile

accesses 34 percent of the subsidies (Mahal et al. 2002)

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Private Sector

At independence the private sector in India

had only eight percent of health care facilities

(World Bank 2004) later estimates indicate

that 93% of all hospitals, 64% of beds, 85% ofdoctors, 80% of outpatients and 57% of

inpatients are in the private sector (World

Bank 2001).

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Public

Includes organizations or institutions that

are financed by state revenue and thatfunction under government budgets or

control.

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Partnership - Definitions

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I. WHO 1999

Means to bring together a set of

actors for the common goal of

improving the health of apopulation based on the mutually

agreed roles and principles

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II.Axelsson, Bustreo and Harding 2003

A variety of co-operative arrangements

between the government and private sector in

delivering public goods or services provides a

vehicle for coordinating with non-governmentalactor to undertake integrated, comprehensive

efforts to meet community needs, to take

advantage of the expertise of each partner, sothat resources, risks and rewards can be

allocated in a way that best meets clearly

defined public needs

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III. Blagescu and Young 2005

A partnership means that both parties

have agreed to work together in implementing

a program, and that each party has a clear

role and say in how that implementation

happens

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IV. World Economic Forum 2005

A form of agreement [that] entails reciprocal

obligations and mutual accountability,

voluntary or contractual relationships, the

sharing of investment and reputational risks,and joint responsibility for design and

execution.

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Fundamental Themes

Relative sense of equality between the

partners;

Mutual commitment to agreed objectives;

Mutual benefit for the stakeholders involved

in the partnership.

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Enabling conditions ADBI (2000)

i. A clear understanding between the partnersabout mutual benefits

ii. A clear understanding of the responsibilities

and obligations between the partnersiii. Strong community support

iv. Need for some catalyst to start the process

of partnership (maybe an individual, adonor, a compelling vision or even a

political or economic crisis)

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ContV. Stability of the political (government) and legal

climate (laws)VI. Regulatory framework that is followed and

enforced

VII. Capacity and expertise of the government atdifferent levels in designing and managing

contracts (partnership)

VIII. Appropriate organizational and management

systems for partnerships

IX. Strong management information system Clarity on

incentives and penalties.

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Types of partnership1. contracting (contracting-out and

contracting-in);

2. franchising;

3. social marketing;4. joint ventures;

5. subsidies and tax incentives;

6. vouchers or service

7. purchase coupons;

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Cont..

8. Hospital autonomy;

9. Build, operate, and transfer;

10.Philanthropic contributions;11. Health co-operatives;

12. Grants-in-aid; capacity- building;

13. Leasing; and social

14. Health insurance

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Contracting stages

Decision to contract and the services to

contract.

Tendering and selection of the contractor.

Contract design.

Implementation.

Monitoring the performance. Evaluating implications of contract on the

public health system.

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Examples

Yeshasvini scheme, Dr Devi Shetty, founder-

director of Narayana Hrudayalaya

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Thrust areas

1. Infrastructure Development - Development and

strengthening of healthcare infrastructure that is

evenly distributed geographically and at all levels of

care

2. Management and Operations - Management and

operation of healthcare facilities for technical

efficiency, operational economy and quality

3. Capacity Building and Training - Capacity building forformal, informal and continuing education of

professional, para-professional and ancillary staff

engaged in the delivery of healthcare

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Cont

4. Financing Mechanism - Creation of voluntary as

well as mandated third-party financing

mechanisms

5. IT Infrastructure - Establishment of national and

regional IT backbones and health datarepositories for ready access to clinical

information

6.Materials Management - Development of a

maintenance and supply chain for ready

availability of serviceable equipment and

appliances, and medical supplies and sundries

at the point of care

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Key assessment principles

I. Effectiveness or the ability to meet

program objectives

II. Efficiency or the financial efficiency in

transfer of ownership and associated risks

III. Equity or the ability to accrue the benefits

of the program to the poor people

IV. Financial Sustainability or financial viability

of the model

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Policy initiatives

along the key thrust areas

i. Providing help in infrastructure set-up especially inareas like land acquisition

ii. Offer equity participation where possible or extendsubsidized debt and other fiscal benefits

iii. Provide budgetary grants for capital and operatingexpenses of the PPP systems

iv. Ensure a non-compete policy within a predefinedgeographical limit of the PPP facilities

v. Buy-back a share of capacity for governmentidentified beneficiaries

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Infrastructure Development

Planning, Design and Development ofhealthcare facilities in whole or

specialty wise

Owning and Operating diagnosticservices for public health systems

Own and operate other services like

mobile clinics

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Management and Operations

Infrastructure maintenance and upkeep

Key service delivery of medical treatment

Hospital Management including Housekeeping,

Catering etc.

Medicine store and inventory management

Medical equipment purchase and maintenance

Transportation

Security

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Materials Management

Centralized purchase of all consumables forscale advantages and quality standardization

Warehousing of materials for supporting an

efficient distribution network, especially forconsumables

Establishing and managing a distributionnetwork including PPP in areas such asoperating a pan India network of generalmedicine shops

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