Public private partnerships in health

Increasing opportunities for public private partnerships in the health sector

Background  
  • Faced with unsustainable cost pressures and increasing demand, there is a move within the health system to break down the barriers between primary and secondary care, and public and private systems, to keep communities healthy in the most cost-effective way. 
  • Public Private Partnerships (PPP) have the potential to deliver innovative and cost effective models of health care. PPPs are a contractual arrangement between a government and a private entity where each sector shares skills and assets of delivering a public facility or service. PPPs aim to deliver improved services and better value for money by transferring significant operational, technical and financial risk to the private sector. While initially focusing on large scale infrastructure projects such as hospitals, PPPs in the health sector have evolved to include clinical service delivery.  
  • The 2013 Blueprint for Better Healthcare in Queensland provides for increased efficiency and partnerships across all sectors of health (community, not-for-profit, private, and public) and a greater focus on innovation and practice redesign. This is evidenced by greater partnerships between private and public hospitals to deliver hospital infrastructure and clinical services and increased investment in Hospital in the Home (HiTH) services delivered through the non-government sector. Blue Care is one of two HiTH providers in the $28 million statewide trial commenced in 2013 and UnitingCare Health hospitals are engaged in PPPs with the Queensland Government to reduce long wait elective surgery waiting lists as part of a $55 million commitment over four years. The Queensland Government’s “wait time guarantee” for elective surgery will increase opportunities in this area.    

Challenges and Opportunities 
  • PPP tender processes can be expensive and complicated for both the public and private sectors. Factors include limited risk sharing (particularly demand and construction costs on large infrastructure projects), high financing costs, lack of transparency and high transaction and bid costs including strict probity requirements that limit opportunity for dialogue and flexibility. There have also been examples of unsuitable projects resulting in poor outcomes for both public and private partners These factors can limit opportunities for, and scope of PPPs, stifle innovation and result in significant costs impacting elsewhere in the health system.  
  • Australian and overseas experience suggests that more flexible approaches to PPP can lead to greater public and private sector confidence and engagement and ultimately provide better value for money for taxpayers. Reforms have focussed on less onerous information requirements; adherence to schedules and transparent timeframes; standardisation of contracts; more streamlined bidding stages; sensible management of probity, and government contribution to the significant financial outlays by the private sector (1)(2).    

UnitingCare Queensland Position
UnitingCare Queensland considers there are increasing opportunities for governments and private providers to deliver health infrastructure and clinical services through Public Private Partnerships. To realise these opportunities governments and private providers need to work together to actively pursue approaches that provide equitable benefits including shared risk management and positive financial returns, and fosters innovative partnership and service delivery models.  


References

1 Luke van Grieken and James Morgan-Payler Australia: Improving PPP tender processes and procurement,  2012, Norton Rose Fulbright Australia

2 Improving the outcomes of public private partnerships, Clayton Utz, 2013

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