| Hospital PPPs: |
| Challenges Uncertainty around future public health care needs. The ever changing nature of both health care demands and medical practice introduces uncertainty into the procurement decision. Aging populations, for example, exhibit different health care needs than previous populations. As such, health and hospital procurement strategies must be flexible enough to meet changing demands. High procurement costs. Hospital PPPs often face high procurement costs, given the modest scale of most projects. Individual hospitals require substantial investment but may offer relatively small returns compared with the expense of procurement. Politics of private ownership. The politically sensitive nature of health care implies that models where the public sector retains ownership and operation are sometimes most appropriate. Who provides the clinical services. This is the most costly element of healthcare. Value for money can be achieved by transferring clinical care, however, doing so is often complicated and politically difficult. Solutions Health technology advances at an astonishing rate. Existing hospitals must be flexible enough to accommodate new technology and willing to invest continually in new medical services. This requires PPPs to pay careful attention to life-cycle issues such as goal alignment, trust, and flexible governance structures that can accommodate change. The choice of a financing and delivery model is also critical. The integrator model allows the public sector to introduce the disciplines of private finance, while retaining the required level of flexibility over project design. This might be particularly suitable for a program of upgrade and refurbishment. The political sensitivity of private ownership can be ameliorated through a clear separation between core hospital services (medical services), which remain in public control, and ancillary ones (such as cleaning and maintenance), which may be outsourced as part of the arrangement. |