Public Private Partnership in
Health Service Delivery:
Experiences & Lessons
A.Venkat Raman
Faculty of Management Studies
University of Delhi
WHY PARTNER WITH THE
PRIVATE SECTOR?
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Omnipresence of the Private
Sector
93% of all hospitals
 64% of all beds
 80% doctors
 80% of OP and
 57% of IP ….are in the Pvt. Sector

•
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(World Bank 2001)
Estimated at Rs. 1,56,000 Cr. in 2012 +Rs.
39,000Cr.. for health insurance (NCMH 2005)
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Share of Pvt. SectorNon- Hospitalized care (60 NSS-2004)
th
100
90
80
70
60
50
40
30
20
10
0
Rural
Urban
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Share of Pvt. SectorHospitalized care (60th NSS-2004)
90
80
70
60
50
40
30
20
10
0
Rural
Urban
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Share of Private Sector in Rural Areas
(NCMH,2005)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
X-Ray
ECG
CT Scan
MRI
MTP
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Cataract
Acute
Myocardia
6
Relative expenditure in the private
sector - in Rural Areas (NCMH,2005)
6000
5000
4000
Private (Rs.)
3000
Public (Rs.)
2000
1000
0
Normal Delivery
Caesarian
Surgery
ECG
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Blood Test
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Who Pays for the Services?
Percentage of Private Expenditure
(NHA-2004-05)
All India
W.Bengal
Uttar Pradesh
Tamil Nadu
Rajasathan
Punjab
Orissa
Maharashtra
Madhya Pradesh
Kerala
Karnataka
Himachal
Haryana
Gujarat
Bihar
Andhra Pradesh
0.00%
20.00%
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RAMAN FMS-DU
40.00%
60.00%
80.00%
100.00%8
Implications
>80% of health expenditure is out-of-pocket.
(NSS 2005; NHA,2004-05)
Debilitating Effects on the poor: Liquidation
of assets, indebtedness. 40% of hospitalized
& 2% in the country every year end up BPL
(World Bank, 2001).
Compounded by poor regulation of private
sector
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Private sector is needed because....
India needs an additional
750,000 beds
520,000 doctors
overall investment of Rs 1,50,000Cr.
80% likely to come from the private
sector (NMCH,2005)
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PPP MODELS & TYPES
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Not all interactions between the
Government and Private sector are PPPs
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Financing vs Delivery:
Public vs Private modes
(Bloom, 2001)
Public Provision
Private Provision
Public Financing
Public Hospitals
?????
Voucher
Contracting
??????
Private Financing
User Fee
Private Hospitals
??????
Hospital Autonomy
????????
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Common PPP Models

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Contracting (‘in’ and ‘out’)
Joint Ventures
Build/ Rehabilitate, Operate, Transfer
Health Financing (Vouchers, CBHI, Illness fund)
Mobile Health Units
Franchising
Social Marketing
Technology demos (e.g. Telemedicine)
Public-Private Mix
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Core Principles of Partnership
True partnerships entail
◦ Relative Equality between partners
◦ Mutual Commitment to Public Health
objectives
◦ Benefits for the Stakeholders
◦ Autonomy for each partner
◦ Shared decision-making and accountability
◦ Equitable Returns / Outcomes
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PPP Models in Practice:
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Uttaranchal Mobile
Health and Research
Clinic
Clinical & Radio
diagnostics through
health camps, lab tests
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Free to all BPL
cardholders.
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Mobile (Boat)
Health Service
in
Sunderbans,
WB
Diagnostics;
All services are free; All
Consultationbeneficiaries are
health clinics;
assumed to be BPL
Drugs; Health
promotion
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SMS Hospital
Jaipur
Rajasthan
Radiological
(CT/MRI Scan)
Diagnostics
Free for all BPL Patients;
Subsidized rate for others
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Karuna Trust,
Karnataka
Management of PHCs
and sub-centers; 24-hrs
clinical services
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Free services- diagnosis,
consultation, treatment
and drugs.
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Shamlaji
Hospital,
Sabarkantha,
Gujarat
Management of a
government built CHC;
24-hrs services
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Except select surgeries
all services are free for
poor patients
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Arpana Swasthya
Kendra, Delhi
(CO)
Management of
Maternity health center
under RCH
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Free Lab Tests, ANCs,
select surgeries,
community health
services, sanitation, IEC
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Rajiv Gandhi
Hospital, Raichur
Karnataka
Super-specialty
clinical and surgical
services
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40% beds are for BPL
patients; Free OPD
services to poor.
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Karnataka
Integrated Telemedicine & Telehealth,
Chamrajnagar
Tele-diagnosis and
consultation in
cardiac care and
specialist care
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Free diagnosis,
medicines and treatment
for the BPL patients
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Yeshasvini
Hospitalization and care
Health Insurance for more than 1600
Scheme
surgeries
Karnataka
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Only for the members of
farmers’ co-operatives
and their dependents
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Chiranjeevi
Yojana,
Gujarat
Institutional deliveries
through private
obstetricians and
gynecologists
Scheme is primarily for women
from poor families, with prior
ANCs from a govt. hospital
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Voucher Scheme,
Haridwar,
Uttarakhand
ANC, PNC
Institutional
Deliveries
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Primarily for BPL women
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OTHER MODELS IN OPERATION
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Arogyasri
Hospitalization &
Free Hospitalization/
Scheme, Andhra Surgical Procedures Medicines/Follow-up
Pradesh
(more than 800
procedures)
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Franchising / Social Marketing
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EMRI/ HMRI
Hyderabad/
Ahmedabad……..
Call 108
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Emergency, Accident/
Trauma services
ALS / BLS
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EMERGING MODELS
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Regional Diagnostic Centres- Hub/Spoke
Medicity
Co-location of Specialty services
District Hospital + Medical College (Hub)
Franchised /Accredited Health Units
RBF – Incentive Contracts
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Key Lessons & Challenges in PPP:
Indian Experience
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Political and Administrative
Commitment
 Half hearted support for PPP
 Top officials are enthusiastic, but
success takes them away- leadership
vacuum;
 Lower level officials suspect PPP as
‘privatization’ or show disdain towards
the private provider
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Institutional Capacity
 Need for technical / managerial skills for
designing, negotiating, implementing
and monitoring PPP contracts
 Develop institutional capacity at all
levels, including oversight role.
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Policy and Institutional
Framework
 Lack of policy driven strategy towards PPP
in health sector. Need for a PPP policy.
 Lack of information on Private sector thus
poor regulatory leverage.
 No institutional structures to manage PPP
contracts. Need for specialized PPP cell in
Health Dept.
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Social Context of PPP
 Antipathy or suspicion towards the
private sector and govt’s failure to
regulate -raise suspicion.
 Unwillingness of ‘civil society’
organisations to explore PPP as an
option.
 ‘Squeamishness’ about profit making in
services meant for poor patients
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Diversity and Complexity of
Private Sector
Private sector is diverse; Predominantly
individuals (owner operated units) and from
both recognized and unrecognized systems of
medicine;
 Diversity of tariffs, thus complicating
information on cost vs tariff and tariff
negotiations

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Process of Contracting :
Partner selection
 Primarily ‘input’ based contracting rather
than outcome based.
 (Only) competitively selected partners
are less effective.
Priorities of :
◦ Govt. Officials: Compulsion of L1 &
Completing procedural formalities.
◦ Private Sector: Winning the bid by all means
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Risk
 Financial risk to the private partner- Non-
timely release of funds; Fear of enquiry.
 Risk of unsuccessful/ failed contract
leading to lack of services – patinets
suffer, resources wasted.
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Enabling conditions for success

Successful partnerships are contextual.
Enabling conditions include
◦
◦
◦
◦
◦
◦
leadership from both partners;
prior consultation;
relational / trust based contracting;
pilot testing,
timely payment;
periodic review and amendments / revision of
contract;
◦ specific performance indicators…..
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Key Constraints
Payment delays
 Personality styles and trust level
 Local political interference / political flip-flaps
 Non-revision of contract clauses (Tariffs)
 Lack of capacity or willingness to supervise /
monitor / guide the project
 Perceptual and attitudinal orientation to
private sector
 Lack of clarity of the objective of PPP

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Limitations in Contract Features
Defining and verifying beneficiaries (BPL
patients)- especially high cost services
 Defining Quality or Performance or Outcome
indicators;
 Supervision and Monitoring mechanism;
 Timely revisions / updating of contract;
 Ombudsman for dispute settlement;
 Clarity on user fee

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Summary

Public-private partnership (PPP) is not
privatization

Government continues to play a key role

Requires high degree of institutional
capacity
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In conclusion….
Public Private Partnership
 ……does help benefiting the poor.
 …………one of the pragmatic options for
health service delivery, but not an
alternative to public delivery or better
governance.
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THANK YOU
Ref. Book:
A.Venkat Raman & J.W.Bjorkman
Public Private Partnership in Health Care in
India: Lessons for Developing Countries.
Routledge, London, 2009
http://south.du.ac.in/fms/idpad/idpad.html
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