People in Bangladesh get 80% of their healthcare from the private sector. Across Sub-Saharan Africa it’s 60%, and the proportion is increasing. The poorer people are the more likely they are to receive private care, and the middle classes consume more publicly funded care than the poor. In these circumstances it’s inevitable that those wanting to improve the health care of the world’s poorest people must work with the private sector – and yet many donors have been reluctant to do so. They are sometimes accused of pushing “a failed model,” the idea of a wholly public system that even Britain abandoned some time ago. A conference held last week at Wilton Park, which was started by Winston Churchill, explored how public private partnerships can strengthen health systems.
Much of the private care that the poor receive in developing countries is, of course, of low quality. It is often provided by unqualified practitioners and is undermined by corruption, but there are – a McKinsey study in Africa showed – “islands of excellence.” The challenge for those struggling to improve health systems in the developing world is to build on the excellent and raise the standard of the rest not to leave it all to the public sector–because government provided health care is also commonly poor, throughout Africa public health systems are derelict, and governments cannot fund, provide, and regulate care. Help is needed urgently.
Across the world governments and peoples are nervous about private sector involvement in health care because they think it means inequity and the diversion of scarce resources to investors through profits. Yet no health system in the world is entirely funded and provided by the public sector, and most of the inputs to those systems (drugs, beds, food, computers, and even water) come from private providers. The time has come to experiment and replace ideology with pragmatism, and that’s what is beginning to happen.
One of the best examples of innovation comes from Lesotho, where the main hospital, the Queen Elizabeth II Hospital, is in a poor state and short of hot water, trained staff, supplies including drugs, and functioning equipment. The government – with the Ministry of Finance leading – proposed that the government should tender for a private company to design, build, partially finance, and fully operate a new hospital, including providing clinical services. There was naturally resistance to the proposal, but the cabinet, parliament, and the doctors have been convinced by a plan that expects the new hospital and feeder clinics to treat five times as many patients a day, offer more specialties, and give doctors much better conditions for roughly the same spend as now. Plus nobody could produce a better alternative. It is “management” that will make the difference, and, although doctors the world over tend to be scornful of managers, the difference between a well managed and a poorly managed hospital is huge.
This difference is well illustrated with experience with the “Alzira model” in Spain. The government in Valencia has entered into public private partnerships to build and run four hospitals together with primary care. The government pays an amount per head for each of the population in a 15 year contract, and the company must build, equip, and run the services for the whole population. Patients are free to go to other facilities and hospitals if they don’t like the services, and the company must pay for their treatment if they do go elsewhere. The company’s accounts are available to the government, and its profits are limited to 7.5%.
The longest established hospital has achieved higher quality than other hospitals but at a cost that is 20% cheaper. The hospital has been named “Best Spanish large hospital” three times, and 95% of patients are happy to come back to the hospital. Again it’s “management” that has achieved these benefits. Firstly, the system has redesigned clinical care – increasing the use of day surgery, getting specialists to see patients in primary care, and working hard to link primary and secondary care. Secondly, the hospital has concentrated hard on how it manages people – attracting the best professionals, ensuring that they feel part of the system, and incentivising them to raise quality and reduce costs. Finally, there has been huge investment in information technology, including providing an electronic record for all patients, allowing doctors to order tests, drugs, and the like, and giving decision support to professionals.
Britain, prompted by Margaret Thatcher, was the first to promote public private partnerships in health care with the private finance initiative (PFI), but it can’t claim to be as successful as the Spanish experience. PFI indisputably delivered large, new hospitals to an NHS that needed them badly, but there are anxieties about the costs and the inflexibility of the scheme. A bolder scheme that included not just the buildings but also the running of the hospital might have been much more successful – because the buildings account for only about a sixth of annual costs with limited room for efficiency savings, whereas delivering clinical care is more than half of costs with substantial room for efficiency savings.
We don’t yet have convincing evidence that public private partnerships in health care can raise quality and reduce costs – apart perhaps from in primary care. But that’s largely because we still have few examples of such partnerships. There’s every reason to think that boldness and risk taking can pay off, which is why more and more governments in Africa and other developing countries are exploring public private partnerships – particularly those that include running clinical services.

Competing interest. These days Richard Smith codirects a programme on behalf of Ovations and the National Heart Lung and Blood Institute to create centres in the developing world to counter chronic disease. He is paid by Ovations, which is part of the UnitedHealth Group, a for profit health and wellbeing company.