The blog of the Urban Institute
September 15, 2021

Could Public Private Partnerships Improve Health Outcomes in Developing Countries?

September 15, 2021

Strong public health systems are key (PDF) to advancing individual and collective well-being, community resilience, and sustainable development. These systems and the benefits they provide depend on the provision of a range of accessible, affordable goods and services such as clean water, prompt medical care, and healthy housing and transportation options.  

But in many developing countries, services do not meet basic needs nor serve growing demand. The scale of the challenge is daunting; some estimates (PDF) place the annual global investment gap in two sectors alone—health and water and sanitation—at $620 billion. Addressing this gap will depend on identifying new sources of investment capital and the technical expertise and managerial know-how to implement and manage complex projects. This underscores the need for alternative approaches to the status quo. A market-based model, which leverages private partners to efficiently expand service access while maintaining specific quality standards, could help.  

Many countries, especially poorer ones, have a large private market for services often considered public services in richer countries. These markets and providers fill a gap but not always in ways that maximize accessibility or significantly advance sustainable development goals. For example, people experiencing poverty in informal settlements often pay more for trucked water than wealthier neighbors with access to piped city water. Yet it is expensive to build infrastructure to deliver water, health care, or other services to people in such communities.  

Governments can try to expand access to better services directly or they can contract out to a private firm. But both approaches can leave the government with a significant financing and management burden and can lead to underinvestment in ongoing operations and maintenance.  

Enter the public-private partnership 

Public-private partnerships (PPPs) are a different model than traditional public contracting or purely private provision of services. Well-functioning PPPs leverage the private sector’s financial and technical capabilities to deliver infrastructure and services that advance public priorities. This model is a long-term contract that shares risks, aligns public-private incentives, and assures private-sector partners’ long-term attention. A successful PPP clearly defines roles and responsibilities in the contract and payment is linked, wholly or in part, to performance. 

PPPs have traditionally been used for large energy and infrastructure projects such as power generation and transmission, desalination plants, highways, and airports. But increasingly, governments and other partners are exploring and using the PPP model to support the provision of health care services and health-affecting services like water, sanitation, and affordable housing. 

In Jharkhand, India, for example, a PPP unlocked a $12 million private investment to create a network of radiology and pathology diagnostic centers. Two service providers signed 10-year concession contracts to build, operate, and transfer the facilities back to the state government. The providers charge service fees to most patients and receive government subsidies to serve patients with low incomes. This project has reportedly enabled 3.5 million patients to access affordable, quality primary and preventative health care.  

But for every PPP success story there appears to be a highly publicized critique. And independently verified successes and failures are both exceedingly rare in comparison with the thousands of PPP projects that have limited or no rigorous independent impact assessments.  

More evidence is needed to understand the effectiveness of PPPs 

Although we have some understanding of good practices on scoping and building PPP project pipelines, there’s a major evidence gap on the use of PPPs for health in developing countries. Most high-quality research on PPPs has been conducted in developed countries or in a handful of middle-income countries, and in non-health sectors. Accordingly, many of the purported benefits and challenges of PPPs are based on informed theory or draw from a handful of case studies.  

To truly understand whether, and under what conditions, the PPP model can effectively scale access to services that enhance public health outcomes, we need more evidence. Philanthropic, bilateral, and multilateral donors, along with national and, where appropriate, subnational governments, could invest in or support independent research to answer critical questions, test widely held assumptions, and build a robust body of evidence on PPPs in practice. 

Such research could include the following: 

  • process studies to understand the true costs of building, negotiating, and managing PPP projects for health 
  • analyses examining whether—and under what conditions and compared with what counterfactuals—PPPs support various co-benefits like technology or skill transfer, allocate risk appropriately across parties, improve service quality, enhance financial sustainability, support private sector development, and more 
  • evaluations of the results of PPP projects versus some counterfactuals (similar projects implemented through traditional public procurement, for example)  
  • case studies to develop more nuanced understandings about what aspects of PPP development and implementation are most vulnerable to wider institutional weaknesses and what alternatives may exist 
  • examination of unsuccessful PPPs to determine what factors hindered them, such as mispricing projects, weak oversight, or poor stakeholder management 
  • meta-analyses that identify themes across many studies of different PPP projects 

Given the scale of health needs and the size of investments already underway and being proposed, there’s an urgent need to invest in research now. Evidence-informed technical assistance could build government partners’ capacity and help ensure PPPs are designed and implemented in ways that maximize public benefits while enabling financial sustainability.  

Juliana Pigey also contributed to this blog post.  


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