Advertisement

Public Private Partnerships and the Quality and Efficiency of Healthcare Services

  • Mark Hellowell
Chapter

Abstract

Although the use of public private partnerships (PPPs) is endorsed by agencies at the national and supranational levels, there is little guidance for decision-makers on what good outcomes look like and the circumstances in which such outcomes are likely to occur. Enhanced understanding of these issues can improve the governance of large-scale and complex contracting in the health sector. Drawing on a narrative review of the available theoretical and empirical research, this chapter shows that PPPs have the potential to generate a number of benefits, including (i) better investment decisions, (ii) more efficient infrastructure delivery and (iii) higher quality health services. However, PPPs are also associated with additional transaction and financing costs, and may give rise to affordability challenges. And addressing these threats to the public interest requires diligent and competent managerial intervention.

Keywords

PPPs value for money affordability transaction costs finance costs 

References

  1. Acerete, B., Stafford, A., & Stapleton, P. (2012). New Global Health Care PPP Developments – A Critique of the Success Story. Public Money & Management, 32(4), 311–314.CrossRefGoogle Scholar
  2. Barlow, J., & Köberle-Gaiser, M. (2009). Delivering Innovation in Hospital Construction: Contracts and Collaboration in the UK’s Private Finance Initiative Hospitals Program. California Management Review, 51(2), 126–143.CrossRefGoogle Scholar
  3. de Bettignies, J.-E., & Ross, T. W. (2004). The Economics of Public-Private Partnerships. Canadian Public Policy, 30(2004), 135–154.CrossRefGoogle Scholar
  4. de Bettignies, J.-E., & Ross, T. W. (2011). The Economics of Public-Private Partnerships: Some Theoretical Contributions. In G. Hodge, C. Greve, & A. Boardman (Eds.), International Handbook on Public–Private Partnerships. Cheltenham: Edward Elgar.Google Scholar
  5. Colla, P., Hellowell, M., Vecchi, V., & Gatti, S. (2015). Determinants of the Cost of Capital for Privately Financed Hospital Projects in the UK. Health Policy, 119(11), 1442–1449. https://doi.org/10.1016/j.healthpol.2015.08.018.CrossRefGoogle Scholar
  6. Daniels, R., & Trebilcock, M. (1996). Private Provision of Public Infrastructure: An Organizational Analysis of the Next Privatization Frontier. University of Toronto Law Journal, 46, 375–426.CrossRefGoogle Scholar
  7. Domberger, S., & Jensen, P. (1997). Contracting Out by the Public Sector: Theory, Evidence, Prospects. Oxford Review of Economic Policy, 13(4), 67–78.CrossRefGoogle Scholar
  8. Dudkin, G., & Välilä, T. (2005). Transaction Costs in Public-private Partnerships: A First Look at the Evidence, EIB Economic and Financial Report 2005/03. Luxemburg: European Investment Bank.Google Scholar
  9. Farquharson, F., de Mastle, C. T., & Yescombe, E. (2011). How to Engage with the Private Sector in Public-Private Partnerships in Emerging Markets. Washington: World Bank Group.CrossRefGoogle Scholar
  10. Gaffney, D., Pollock, A., Dunnigan, M., & Shaoul, J. (1999). PFI in the NHS: Is There an Economic Case? British Medical Journal, 319, 4116–4119.Google Scholar
  11. Grossman, S., & Hart, O. (1986). The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Ownership. Journal of Political Economy, 94, 691–719.CrossRefGoogle Scholar
  12. Hart, O. (2003). Incomplete Contracts and Public Ownership: Remarks, and an Application to Public–Private Partnerships. Economic Journal, 113(March), C69–C76.CrossRefGoogle Scholar
  13. Hellowell, M. (2010). The Private Finance Initiative: Policy, Performance and Prospects. In G. Hodge, C. Greve, & A. Boardman (Eds.), International Handbook on Public–Private Partnerships. Cheltenham: Edward Elgar.Google Scholar
  14. Hellowell, M. (2015). Analysis: Borrowing to Save: Can NHS Bodies Ease Financial Pressures by Terminating PFI contracts? BMJ. http://www.bmj.com/bmj/section-pdf/903129/6.
  15. Hellowell, M., & Pollock, A. M. (2009). The Private Financing of NHS Hospitals: Politics, Policy and Practice. Economic Affairs, 29(1), 13–19.CrossRefGoogle Scholar
  16. Hellowell, M., & Vecchi, V. (2010). An Evaluation of the Projected Returns to Investors on 10 PFI Projects Commissioned by the National Health Service. Financial Accountability and Management, 28(1), 77–100.CrossRefGoogle Scholar
  17. Hellowell, M., & Vecchi, V. (2012). An Evaluation of the Projected Returns to Investors on 10 PFI Projects Commissioned by the National Health Service. Financial Accountability and Management, 28(1), 77–100.CrossRefGoogle Scholar
  18. Hellowell, M., Vecchi, V., & Caselli, S. (2015). Return of the State? An Appraisal of Policies to Enhance Access to Credit for Infrastructure-based PPPs. Public Money & Management, 35(1), 71–78(8).CrossRefGoogle Scholar
  19. Iossa, E., & Martimort, D. (2012). Risk Allocation and the Costs and Benefits of Public-Private Partnerships. The RAND Journal of Economics, 43(3), 442–474.CrossRefGoogle Scholar
  20. Irving, J., & Manroth, A. (2009). Local Sources of Financing for Infrastructure in Africa. Washington, DC: World Bank.Google Scholar
  21. Lonsdale, C. (2005). Risk Transfer and the UK Private Finance Initiative: A Theoretical Analysis. Policy and Politics, (2), 231–249.Google Scholar
  22. Lonsdale, C., & Watson, G. (2007). Managing Contracts Under the Private Finance Initiative. Policy and Politics, 35(4), 683–700.CrossRefGoogle Scholar
  23. McKee, M., Edwards, N., & Atun, R. (2006). Public–private Partnerships for Hospitals. Bulletin of the World Health Organization, 84, 890–896.Google Scholar
  24. Montagu, D., & Harding, A. (2012). A Zebra or a Painted Horse? Are Hospital PPPs Infrastructure Partnerships with Stripes or a Separate Species? World Hospitals and Health Services, 48(2), 15–19.Google Scholar
  25. Monteiro, R. (2013). Implementing a Framework for Managing Fiscal Commitments from Public Private Partnerships. Washington, DC: The Financial and Private Sector Development Network.Google Scholar
  26. National Audit Office. (2003). PFI Construction Performance. London: The Stationery Office. Available: www.nao.org.uk/publications.Google Scholar
  27. National Audit Office. (2005). Improving Public Services Through Better Construction. London: The Stationery Office. Available: www.nao.org.uk/publications.Google Scholar
  28. National Audit Office. (2015). The Choice of Finance for Capital Investment. Available at: https://www.nao.org.uk/report/the-choice-of-finance-for-capital-investment/. Accessed 19 Mar 2015.
  29. Pollock, A., Price, D., & Liebe, M. (2011). Private Finance Initiatives During NHS Austerity. BMJ, 342, https://doi.org/10.1136/bmj.d324. National Audit Office.
  30. Reiss, A. (2005). Is the PPP Model Applicable Across Sectors? EIB Papers, 10(2), 10–30. Luxembourg: European Investment Bank.Google Scholar
  31. Reviglio, E. (2012). Global Perspectives for Project Financing. Presentation to the Joint EC-EIB/ EPEC Private Sector Forum, Brussels, 6th June.Google Scholar
  32. Roehrich, J., Lewis, M., & George, G. (2014). Are Public-private Partnerships a Healthy Option? A Systematic Literature Review. Social Science and Medicine, 113, 110–119.CrossRefGoogle Scholar
  33. Shleifer, A. (1998). State Versus Private Ownership. Journal of Economic Perspectives, 12(4), 133–150.CrossRefGoogle Scholar
  34. Välilä, T. (2005). How Expensive Are Cost Savings? On the Economics of Public-private Partnerships. EIB Papers, 10(1), 94–119. Luxemburg: European Investment Bank.Google Scholar
  35. Williamson, O. (1985). The Economic Institutions of Capitalism. New York: The Free Press.Google Scholar
  36. Williamson, O. (1990). Transaction Cost Economics and Organisation Theory. In O. Williamson (Ed.), Organisation Theory: From Chester Barnard to the Present and Beyond. New York: Oxford University Press.Google Scholar
  37. Yescombe, E. R. (2008). Public-private Partnerships: Principles of Policy and Finance. London: Elsevier Finance.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Mark Hellowell
    • 1
  1. 1.University of EdinburghEdinburghUK

Personalised recommendations