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Beyond health PPPs

PUBLIC-private partnerships are the new mode of governance in Pakistan being championed by successive governments. Originating from the infrastructure sector, PPPs have leapfrogged into human development services, including health. Unlike infrastructure projects, health PPPs have focused less on construction of hospitals and more on operating health services. Health PPPs did not wait for an official policy direction but grew as a result of public despondency with slow-changing government service delivery.

After devolution during Gen Musharraf’s government, district administrations in a number of KP districts, started contracting with medical charities and NGOs for management of district hospitals. Around the same time the Lodhran and Rahim Yar Khan district pilots in Punjab were initiated out-sourcing the management of Basic Health Units to a state-sponsored NGO; this snowballed into a larger initiative across Pakistan. Sindh has moved beyond BHUs to outsourcing the management of 164 secondary health centres and regional blood centres, whereas Punjab has also contracted secondary hospitals although in smaller numbers. Other provinces are sitting on the fence, waiting to see if indeed the functionality of secondary hospitals can be improved through the magic bullet of private-sector management.

Health PPPs continue in the backdrop of private-sector friendly governments, but can PPPs help deliver national health targets or just provide a cosmetic facelift to government health facilities? Functional hospitals through health PPPs pull in votes but also draw negative media headlines when things go wrong. The question is not whether to continue health PPPs, but to make PPPs meaningfully deliver accessible and quality health services.

Challenges exist. On the government side, weak standard-setting during the selection of tenders makes it difficult to differentiate capable medical entities applying for PPPs from the less capable ones. Lack of independent audits of quality of care makes the government vulnerable to payments without proof of performance. For the private medical sector, the politics of managing government ‘permanent’ staff, slow release of payments and instability caused by successive leadership changes within government results in frustration; many leading medical providers choose to stay away from PPPs. Financial viability — government hospitals made functional through health PPPs can also bring about an unprecedented increase in patient volume at previously poorly performing hospitals making the arrangement financially unsustainable.

Political will is required to persevere and bring maturity to public-private partnerships.

Political will is required to persevere and bring maturity to PPPs rather than abandoning them. PPPs are not about quick inking of contracts; they require third-party monitoring, establishment of neutral autonomous structures to procure PPPs and investment in legal, financial and digital capability to make strategic purchasing work.

Can the state provide universal health access with the help of health PPPs? Even with fully functionalised government hospitals, BHUs and dispensaries, it must be understood that the government cannot deliver access to all. Growing population and rise in chronic diseases that are expensive to treat, is putting pressure on the health services beyond the current capacity of the government health systems. Unabated population migration to secondary cities and squatter settlements of megacities creates geographical hot spots where government health infrastructure is already sparse and needs an influx of affordable, quality services. In particular, satellite hospitals, family practice clinics and diagnostic centres are required to plug the supply shortfall and also decongest the overflowing larger hospitals.

What has gone unnoticed on the policy front is that Pakistan is experiencing the rise and rise of the private health sector. Available data shows at least 497 private hospitals of all sizes in Sindh alone, 269 medium-large sized private hospitals in Punjab with several-fold numbers of smaller hospitals, an estimated 1,100 private practitioners in KP comprising mainly clinics but also including several hospitals. Balochistan also has a distinct private medical sector although aggregates are not available.

While the private sector is a mishmash of providers offering varying quality services in return for patients’ money, it must be realised that Pakistan has a growing presence of medium to large private medical entities, with the potential to grow further into national health networks. Many of these emerged as SMEs in the last 15 years in response to the shortfall in health services rather than a conscious effort by state policies. Most are located in megacities, catering to a mix of the affluent and poor.

Can investment in expanding health service supply, quality and affordable services be bundled together to be addressed by the formal organised private-sector entities?

Understanding the ecosystem in which organised private medical entities operate is the first step to influencing downstream penetration into low-income neighbourhoods of megacities, establishment into secondary cities and hub-and-spoke models in rural districts. Large-medium private medical entities are conscious of their quality branding which is recognised also by the poor, seek international accreditation and usually have better clinical governance capacity than the government regulatory commissions supposed to audit them. Large non-profit hospitals essentially compete for charitable donations, and in a populous Muslim country such as Pakistan, zakat donations by citizens is a sustainable funding pipeline for health services. But beyond zakat, non-profits require access to business capital for expanding their network, support through land grants, and a relaxation of conservative lending policies — data from the International Finance Corporation reports that 56 per cent of private hospitals require business assets for growth and 17pc require working capital.

Large private commercial outfits operate on a revenue-earning model with profitability from affluent patients used to cross-subsidise the less affluent ones. These do not require capital to grow; they need the right bundle of tax concessions for selected underserved geographies and monitored pricing policies to break into underserved market segments.

Universal health coverage by 2030 is the new global mandate. Four years have passed since its adoption but Pakistan is yet to come up with a strategy. Harnessing the private sector for affordable quality services must clearly feature in the modus operandi for UHC. Existing PPPs can functionalise underperforming district hospitals if properly designed and not taken as a handout, but the supply shortfall of credible health services still remains. This requires deliberative market management of Pakistan’s private health sector to grow towards quality affordable services and de-fragment a much-fragmented health system.

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