Improving PPP Implementation in Health Sector through Knowledge Sharing
To support the implementation of PPP in Indonesia, it is necessary for all key players to understand and keep developing their knowledge about the scheme. Directorate of Government Support and Infrastructure Financing Management (PDPPI – as the government facilities and support manager) is one of the key players that also needs to keep updating their knowledge from time to time to be able to improve their service and make things more effective.
In order to enable the improvement, on Monday, 8 May 2017, a workshop on PPP in health sector was held in Jakarta. PPP in Health: Examples from Across the Globe was aimed to share practices and methods about PPP implementation around the world. A part of collaboration between DGSIFM and The World Bank, the workshop invited Mr. Dhawal Jamb from the World Bank to give presentation to DGSIFM staff and other parties that involved in PPP implementation in Indonesia, such as Indonesia Infrastructure Guarantee Fund (IIGF) and the Ministry of National Development Planning.
The workshop discussed different needs of health sector and how PPP can be the solutions they need. Mr. Jamb shared about a few countries which have implemented health PPPs and how in general, PPPs in health sector can be classified in three categories:
- Health infrastructure PPPs – private sector is engaged for creating and maintaining infrastructure; often clubbed with non-clinical operations
- Clinical services PPPs – private sector is primarily engaged for providing clinical services; often clubbed with developing infrastructure too.
- Health continuum PPPs – private sector is made responsible for the health (including prevention) of a defined population.
During the workshop, Mr Jamb also shared an observation about challenges in developing countries for using Private Finance Initiative (PFI) in health sector. The highlight was that PFIs in developing countries are more expensive relative to the developed world. Main reasons for this are:
- Cost of private debt and equity are higher in developing countries
- PFIs in developed world are heavily leveraged
- PFIs are based on regular government payments for a long period of time. Governments in developing countries have lower credit rating than in developed countries – thus PFIs are considered to have higher risk and thus higher returns are expected from investors.
The workshop also discussed the benefits of a health continuum PPP, such as transfer of all risks onto the private partner while still achieving government goals, patients have the option to get treatment at other hospitals too, and least contract management requirements. However, the presentation emphasized that this model can only be adopted only where the country has a health system where all hospitals, public or private, participate in this arrangement and each and every citizen of the country can be identified.
Other examples of PPP implementation from across the globe, like in Romania, Nigeria, India, Egypt, Moldova, Brazil, Lesotho, etc also showed during the event as well as critical features of a PPP contract.