Are PPPs in Asian healthcare helping or harming patients?

Experts weigh in on government and corporate partnerships, and striking the balance between efficiency and equity in patient care.

Asia’s governments and best medical minds might have united to develop vaccines and provide life-saving treatments to more than four billion citizens, but they continue to be divided over one burning question: “Are public private partnerships (PPPs) the best way to go?” Proponents of PPPs argue that such contracts raise the standard of patient experience because of their proven ability to improve infrastructure and deliver more efficient treatments. But critics claim that leaning heavily towards PPPs could pave the way towards a less equitable delivery of health services in a region where millions depend on governments to take care of them.

With many Asian governments finding it increasingly difficult to afford and handle the delivery of public health services, the role of the private sector in healthcare has been increasing in the form of PPPs.

In an interview with Healthcare Asia, Dr. Gerard Servais, a health specialist with Asian Development Bank, says governments agree to enter into PPPs when they feel they can no longer single-handedly address under capacity and increase efficiency of public health services.

In Asia, PPPs in healthcare is a relatively new trend, according to Karen Prosser, EC Harris head of social infrastructure in Asia, even though PPPs have long been used in other countries to develop health care facilities and services.

Right mix

The debate over PPPs is most heated when it comes to determining the optimal mix for each country with stakeholders asking: ‘What is the right PPP mix?’, ‘What should be the government’s role’, and ‘To what extent should the private sector engage?’ “No conclusive evidence has been reached yet to determine the optimum mix that could best respond to new country realities and emerging needs of all actors in the key dimensions of PPP,” reckons Kai Hong Phua, professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. Kai says there is a need to establish a PPP framework to establish balance, equity and efficiency. It should also ensure a greater government role in information exchange and management since it has been noticeable lacking in the past. There is no single perfect model for PPPs in Asian healthcare, analysts agree, because of the diversity of nations in the region.

“Experiences in PPP in health in Asia show the extent of changes in government functions, which are being managed in partnership with the private sector. To understand the interplay of these roles, basic factors need to be considered. One is the changing role of the state versus the market as countries transition from one stage of development to the next. Another is how public and private sector interests influence financing,” he says. Analysts say the “perfect” model continues to evolve based on stakeholders’ changing perspectives and interests. However, among the many concerns at play, the issue of equity in healthcare should arguably be given the most weight.

The problem of equity

“Growing evidence attests to the measurable benefits derived from PPPs particularly in improving accessibility, efficiency, quality, and capacity. However, equity should be considered first,” says Kai. PPPs have been shown to help public hospitals deliver an overall better patient experience by helping them build new and more advanced facilities, as well deliver efficient health services, according to a study by Dr. David Dombkins, CEO at Complex Program Group.

Dombkins revealed that PPP for clinical services “has by far the greatest impact on patients” compared to other kinds of PPP such as for infrastructure, non-clinical support services and specialist medical support services. Still, despite the demonstrative efficiency and effectiveness of PPP in healthcare, governments should not discount the possibility of market failures. Servais says governments should be careful in designing PPPs because it can either reinforce market failure, or reduce it.

He explains that there are particular health services that serve as public goods, including vaccinations to prevent contagious diseases from spreading. A child receiving a shot against the flu will have spillover effects since his protection from the disease helps the community contain it. “[It] is like public lighting. You cannot make people pay for public lighting. It’s for everyone. So it must be taken by the state. So in this context, the state has a role of providing the services,” he says, emphasizing the government’s responsibility to guarantee equity in the society.

Addressing the problems

ADB’s Servais says the interest of the population or the patient must be upheld to ensure equity in health care PPPs. “What is missing in the bargaining is the patient interest. Because the hospital will think about: ‘Well, what is my share in this?’ The provider of the equipment will think: ‘What is my share on this?’ The patients are not represented,” says Servais. “Stronger government regulations and better governance usually contribute to achieving equity when managing PPPs,” reckons Kai, noting that governments will increasingly have to listen and involve civil society in PPP decision-making as countries democratize and globalize.

“The key is applying the right balance. The government must examine areas of competition and assess not only where the market fails but also its own shortcomings in the relevant aspects of PPP. The government should clearly establish balance, equity and efficiency in PPP, and provide affordable social protection in the form of health care reforms, financing public subsidies and others,” he adds. Servais points out that health insurance is one kind of PPP that helps address equity, citing for example, its ability to address equity for poor people who suffer life-threatening illnesses like colon cancer who cannot afford to pay for treatments without insurance coverage.

In addition to equity, it is important to ensure that PPPs in health care will result in efficient and high quality services. Prosser says governments should seek the right advice and work with consultants that understand the PPP procurement structure. International best practices should be assessed and applied if found appropriate.
“By applying best practices from other regions and sectors, key factors that are important to contractors, funders and operators can be raised. This does not mean weakening the commercial or legal position but actually providing earlier insight around whether PPP is the right model to be used and if it is, how it should be applied to get the outcomes that a government requires,” she says.

Achieving a balanced model

Prosser also highlights the importance of developing a legal and regulatory framework to support the PPPs. In the meantime, Kai says recent studies show the potential of hybrid models. “Malaysia, Singapore, and Hong Kong, considered as some of the most advanced in terms of hospital systems, adopt what can be considered as ‘the middle of the spectrum’ approach. That is, between autonomized and corporatized units,” he says. 

To achieve this so-called balanced PPP model, Kai asserts that incentive schemes are important to influence the supply side of PPP while reforms should be made in the areas of good governance, performance-based purchasing, and transparent information management systems. This is especially important since the region has the largest proportion of private financing. Governments should also be brought to ask whether it has done enough to spur public financing in health care through taxation, social insurance or other schemes. 

In the end, countries will have to thoroughly study trends and analyze the ground situation to create a PPP framework that works for them—and preferably sooner than later as Asians increasingly demand quality healthcare services. “In general, there is a need to increase universal health coverage in Asia, side by side with the improvement of basic public healthcare facilities, allowing flexibility for those who want more choices; and promoting healthy competition among the three sectors in PPP,” Kai says.