quinta-feira, fevereiro 24, 2011

No substitute for good PPP contract management capabilities

Contribution to the e-conference on Health PPPs on the Global PPP Network

We could list three objectives when evaluating health PPPs as well as other initiatives in the health sector:
1.            Equitable access and health coverage
2.            Service quality and health outcomes
3.            Efficiency and sustainability

It is importante to optimize these three criteria, since a health system with insuficient coverage and poor quality cannot be sustabinable, and inefficiencies do great damage to both quality and coverage.

While health coverage and quality may be important in developing countries with underserved and growing populations,  the challenge in developed countries with ageing populations is increasingly focused on economic sustainability and on containing total health spending. 

From the perspective of economic sustainabiliy, health PPPs often show remarkable savings of 20-35% when compared to the Public Sector Comparator at the time of adjudication. 

This is too soon, however, to evaluate true Value for Money.  When dealing with 25-year health facilities contracts, or even with 10-year clinical services contracts, it is important to monitor how the contract is implemented and managed over time. On occasion, the private partner may present claims and seek to additional compensation, within one year of contract signature. These claims and renegotiations can involve specific things like a change in the access road, or great imponderables like “sharing” the costs of câncer treatments back to the public sector.

We know that health financial management is all about managing the relationships between the health service provider, the consume patient and the third-party payer, be it the taxpayer through a National Health Service, the health insurer or the patient’s family. 
Managing healh PPP contracts has all the delicate challenges of managing health services and the complexities of managing  long term complext PPP contracts. 

That’s why Governments considering PPPs in the health sector need to to develop good contract management capacities, to keep contracts relatively simple and transparent, and to sustain a fair number of competing suppliers. The list of potential partners for integrated health PPPs is certainly smaller than the list for providers of hospital facilities, which is why facilities-only contracts can be more attractive. In addition, banks don’t like clinical risk, so there are fewer funding sources available for integrated health PPPs, even in good financial times. 

Being more opaque than other forms of contracting, PPP contracts can present significantly more fiscal risks in terms of budget sustainability than traditional public works, especially when they are subject to frequent renegotiations and changes in risk allocations.  In some countries, changes in risk allocations between the public and private sector are not permitted after adjucation.

There’s no substitute for expert professional health management on the part of the third-party-payor, which in PPPs   is usualy the Government.