PUBLIC-PRIVATE PARTNERSHIPS: TURNING FAILURE INTO SUCCESS

p3 partnership

Four years ago I was working as a junior doctor in a small district general hospital just outside of Cambridge in the UK.  The hospital was failing – £40 million in debt, no bail out from the government, no other hospital or health care trust willing to step in and lend a hand.   Rumours were rife amongst staff regarding job cuts and possible hospital closure.  At the start of 2012, the hospital received a lifeline, a knight in shining armour in the form of a private company called “Circle”.  Circle took over the management and running of the hospital and began a 10-year ambitious plan to turn the hospital around.  In the UK, this was the first case of a National Health Service hospital being taken over by a private firm and the fear and uncertainty surrounding the decision resulted in a lot of raised eyebrows.

Many questions were asked in the weeks building up to Circle taking the helm.  How would this private company, whose goal was to cut running costs and generate profits for its shareholders, balance the care and needs of patients?  How would the new management affect the autonomy and decision making of the physicians working at the hospital?  In the first few months of the new regimen, the company streamlined services, increased efficiency of service delivery, increased physician autonomy, and made huge steps towards improving patient satisfaction at the hospital.  The initial signs of improvement were extremely positive, with the hospital being rated one of the top performers in the region (BBC 2012).

Light soon began to shed on the motives behind the venture for Circle.  If they succeeded in reversing the hospital’s fortunes then the first £2 million of any profits would go straight into their pockets.  Additionally, they would keep a percentage of any profits between £2-10 million, with anything over this mark going towards paying off the hospital debts.  Is this a bad thing?  Some would argue that any profits should be reinvested directly into the hospital or go towards paying off the debts.  However, without Circle’s investment and management expertise the hospital would have been forced to close and countless numbers of staff and patients would have suffered. It was the poor management of public, government hired-staff that put the hospital into this situation in the first instance, so any profits that this hospital makes should surely go towards the firm that stepped in to save it.

The above case is an example that shows that public-private partnerships (PPP) in healthcare have the potential to work.   However, this example takes place in a high-income country in a hospital where there was already a strong infrastructure and abundance of medical staff, and interestingly the strategy implemented was long-term and horizontal in nature.  This contrasts with the majority of PPPs in low- and middle-income settings, which have been criticised for focusing too narrowly on disease-specific, short-term, vertical approaches (Richter 2004, Utting 2006).  The goals of profit making and increasing the access and quality of health can be difficult to align, however the potential for success is great.  Private companies bring with them a great deal of resources and expertise, which if combined with appropriate incentives and strategies, as well a lot of patience, can turn failing institutions into great success stories.

References:

BBC (2012). “Hinchingbrooke: Is Circle meeting its transformations targets?”. from http://www.bbc.co.uk/news/health-17936745.

Richter, J. (2004). Public-Private Partnerships and International Health Policy-Making: How can Public Interests be Safeguarded? Helsinki, Ministry of Foreign Affairs of Finland.

Utting, P., Zammit, A (2006). Beyond Pragmatism. Appraising UN-Business Partnerships. Markets, Business and Regulation Programme Paper Number 1. Geneva, United Nations Research Institute for Social Development.

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