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    Harnessing the power of public private partnerships in Healthcare Harnessing the power of public private partnerships in Healthcare Document Transcript

    • Perspective Gabriel Chahine Jad Bitar Dr. Nikhil IdnaniHarnessing the Powerof Public–PrivatePartnerships inHealthcareImperatives for GCCGovernments
    • Contact InformationAbu Dhabi DohaRichard Shediac George AtallaSenior Partner Partner+971-2-699-2400 +974-44026-777richard.shediac@booz.com george.atalla@booz.comBeirut DubaiGabriel Chahine Dr. Karim SabbaghPartner Senior Partner+961-1-985-655 +971-4-390-0260gabriel.chahine@booz.com karim.sabbagh@booz.comFadi Majdalani Dr. Nikhil IdnaniPartner Senior Associate+961-1-985-655 +971-4-390-0260fadi.majdalani@booz.com nikhil.idnani@booz.comJad BitarPrincipal+961-1-985-655jad.bitar@booz.comDr. Samer Abi Chaker and James Saliba also contributed to this Perspective. Booz & Company
    • EXECUTIVE The Gulf Cooperation Council (GCC)1 countries will face a significant challenge in managing future healthcare costs.SUMMARY Healthcare spending is accelerating, in part because of the rising incidence of chronic diseases. Thanks to systemic transformation, strategic planning, and population screening programs, governments understand that the current model, in which the state shoulders most of the direct financial burden and other social costs, is unsustainable over the long term. Governments need a different approach that invites the pri- vate sector to play a role as a means of taming costs, improv- ing quality of service, and providing access to expertise. The GCC should use the public– GCC governments will need to private partnership (PPP) remove institutional hurdles to the mechanism, which has been deployment of PPPs and create an successfully applied globally, to enabling regulatory, operational, and increase private-sector participation. financial environment. This requires Governments can shape PPPs the correct legal and institutional depending upon the different framework for PPP governance and capabilities and appetites for risk oversight, followed by a structured of the public and private partners. process for identifying and executing PPPs come in many varieties and a pipeline of PPP healthcare projects. they can be customized for each The careful and rigorous introduc- country’s circumstances. Health tion of PPPs into healthcare can systems in the GCC provide a range provide citizens with three mutually of opportunities for private-sector supporting healthcare improvements: players, including care provision, greater accessibility, higher qual- financing, healthcare supplies, and ity care, and an affordable price for health education. patients and governments.Booz & Company 1
    • KEY HIGHLIGHTS FUTURE capacity gaps and provide recom- mendations for developers, investors,• GCC countries can use PPPs DEMANDS ON and healthcare providers. Qatar has as a means of managing GCC HEALTHCARE developed its National Health Strategy 2011–2016 around a comprehensive rising healthcare costs, as program of reforms that are aligned a mechanism to enhance with the Qatar National Vision 2030, the capabilities of the the country’s long-range national healthcare system, and as social and economic development part of a program of systemic program. The Dubai Health Authority transformation of the sector. GCC healthcare systems have (DHA) is implementing a 2011-2013• PPPs need to be structured significant accomplishments, includ- health sector strategy to establish a so that they are customized ing widespread provision, rising world-class integrated system that to the specific requirements professional standards and regula- promotes the emirate as a destination of the particular GCC member tion, generous funding, and grow- for healthcare services. state and its healthcare ing levels of investment. Among the system. Wholesale adoption most important advances have been Major expansions in care provision of PPP models from abroad is population screening programs and are occurring across the GCC. These inappropriate. long-range strategic planning efforts state-funded investments will meet cur- that are putting these countries at the rent and future demand for inpatient• Services that are the furthest forefront of the healthcare industry, and outpatient services, will reinforce from patient contact and with along with impressively rapid system- trust in local healthcare provision, and the greatest commercial value wide transformation programs. These reduce outbound medical tourism. As are well suited for PPPs. Those forward-looking initiatives will be part of its healthcare transformation services with mostly social value, most effective if the region can find a program, Saudi Arabia is building such as health education for the new way to pay for its future health- healthcare services hubs, so-called population, should be retained in care needs and build its health sys- medical cities, as well as hospitals and the public sector. tems’ capabilities. The current model, primary healthcare centers. In October in which the state absorbs most of the 2012, Saudi Arabia inaugurated 420 cost, is unsustainable in terms of both health projects and laid the founda- financing and healthcare delivery. tions for another 127 health facilities at a cost of SAR 12 billion (US$3.2 As part of their national development billion). GCC countries have also programs, governments are currently begun to introduce mandatory health engaged in major efforts to improve insurance to meet the growing cost of accessibility and quality of care. These healthcare provision. A compulsory healthcare changes and investments insurance scheme already operates in have the ambitious goal of putting the Abu Dhabi as of 2006 and there is GCC on the top rung of the healthcare mandatory private insurance in Saudi industry for care provision and quality. Arabia. Qatar began introducing a Central to the upgrading of healthcare private health insurance plan in 2012, in the region is the formulation of to be fully implemented by 2014. long-term strategic plans, an exercise that only governments can undertake. Despite these increased resources and For example, Saudi Arabia’s Ministry insurance schemes, GCC healthcare of Health has developed a 10-year systems are still struggling with capac- strategy that takes an integrated, ity gaps and inconsistent quality of comprehensive approach to care provi- care. There is a shortage of healthcare sion, a transformation that is instilling professionals and limited availability coherence into a previously fragmented of competent specialized services. For system. Similarly, the Health Authority example, the quality of so-called qua- - Abu Dhabi (HAAD) has developed a ternary services, the most specialized 10-year master plan to identify future level of care, is diminished because2 Booz & Company
    • of suboptimal distribution. There are health services and there is limited ernments to spend more on healthcaresometimes too many hospitals in a differentiation among providers. services. Expenditure is currentlysmall area offering qua­ ernary services, t Finally, increasing healthcare spend- below international benchmarks whenwhich prevents each of them from ing cannot cope with the region’s compared with developed countriesaccumulating the necessary volume of elevated rate of non-communicable on a per capita basis. However, thiscases that would build its competency diseases. The GCC’s incidence of car- will change and the fiscal burdenand quality of care. For example, Abu diovascular disease, diabetes, cancer, on governments will increase. TheDhabi island has three cardiac surgery and mental and respiratory ailments state in the GCC already foots a verycenters, even though the volume of are among the highest in the world. high proportion of healthcare costsadult cardiac surgery cases is only 500 Of the world’s 10 worst countries for by global standards (see Exhibit 1).to 700 per year, requiring just one diabetes, five are in the GCC (Oman Increased expenditure will furthercompetent program. is the exception).2 This chronic strain public budgets, rendering the disease profile is already consuming public-dominated model unsustain-Overall quality of care is also lower considerable resources, a pattern that able. Some governments are alreadythan it should be. There are few cen- will worsen over time. taking a more stringent approach,ters of excellence in the GCC that are with federal ministries in the Unitedon par with leading international pro- These ongoing healthcare challenges, Arab Emirates (UAE) practicingviders. By contrast, developed coun- and in particular the aging of the cur- aggregate fiscal discipline and zero-tries on average have higher quality rent young generation, will force gov- based budgeting.Exhibit 1GCC Governments Pay More of Healthcare Costs than Most CountriesHEALTHCARE SPENDING 2010, PERCENTAGE OF PUBLIC VERSUS PRIVATE 100% 15% 21% 22% 23% 25% 30% 36% 38% 49% 51% 51% 63% 85% 79% 78% 77% 75% 70% 64% 62% 51% 49% 49% 37% Kuwait Oman Qatar UAE Bahrain Saudi European Western Eastern African Americas Southeast Arabia Region Pacific Mediterranean Region Asia Private PublicSource: World Health Organization, Global Health Observatory Data Repository; Booz & Company analysisBooz & Company 3
    • Governments will logically seek The result would be lower quality of Given the complexity of the GCC’smore private-sector participation, care and excess capacity. As the CEO healthcare challenge, and how itbut this must be introduced in a of a private hospital group in the differs among the six countries, it ismanner that uses regulation to GCC told us, “The public sector is important to recognize that there isprevent private players from cherry- competing with the private sector (rather no silver bullet. Instead, the carefulpicking profitable patients and than cooperating with it) for scarce and targeted use of partnershipsservices. Without proper regulation, resources such as talent.” To avoid between public and privateprivate companies will also compete such difficulties, governments can take stakeholders can begin to addresswith each other and the government a regulated, multidimensional, multi- the core issues of accessibility,for manpower in a market with stakeholder approach that will ensure quality, and affordability.a limited supply of skilled labor, the private sector brings complementarythereby escalating costs. capabilities to the table.“The public sector is competing withthe private sector for scarce resourcessuch as talent.”4 Booz & Company
    • OPPOSITES The most effective method for combining the complementary by leveraging its expertise in such fields as clinical, administrative,ATTRACT: capabilities of public- and private- or support services. Moreover,PUBLIC–PRIVATE sector players is public–private partnerships (PPP). Both sides bring the private sector can call on financial resources to inject capitalPARTNERSHIPS different strengths to the table, into profitable opportunities, and strengths that can drive positive mobilize entrepreneurship to spur change in healthcare systems. innovation. As the CEO of a GCC Governments can forecast and medical supplies company told us, identify healthcare gaps from the “A PPP is a win-win situation for perspectives of accessibility and both parties involved.” quality. This stems from their unique positions as the licensors Numerous roles are available for of the health sector, and because private-sector players in the health- of their knowledge of health needs care space. They can act as providers derived from strategic planning. of care, payors for care, suppliers More important, governments have of products, or they can operate the power to regulate the market, academic institutions. Private-sector introduce incentives, and sometimes participants can be international play- simply enforce reform. ers or locally based firms. They can be independently owned; or they can be From its side, the private sector tied to private equity funds or invest- can improve the efficiency and ment companies. effectiveness of health operations “A PPP is a win-win situation for both parties involved.”Booz & Company 5
    • The nature of collaboration between can manage existing services or build underlying risk or can structure the PPPprivate players and the public sector new infrastructure; they can simply run to transfer that risk to the private com-can range from service delivery to full facilities, or can own them outright for pany. Another option is full or partialownership of healthcare assets decades during which the state leases or privatization of the numerous healthcare(see Exhibit 2). Private companies buys them; governments can retain the facilities owned by GCC governments.Exhibit 2Ownership and Risk Distribution Determine the PPP StructureSELECT EXAMPLES OF HEALTHCARE PPP MODELS Role Privatized Management Concession/Build Private Finance PPP Model Turnkey Lease Contract Operate Transfer Initiative Private sector 1 Design designs the public infrastructure asset Private sector invests 2 Finance funds for construction Private sector is 3 Build responsible for building the asset Private sector 4 Manage provides oversight/ strategic direction Private sector 5 Operate operates the asset to deliver the service Private sector 6 Transfer transfers the asset to the public sector Private sector manages Private contractor Private sector operates Private sector builds, Private sector assumes the public asset without selected through a infrastructure, receives operates, and owns the all risk (including assuming operational bidding process to revenues from the asset; eventually financial) for the asset Description risks design and build asset public sector through a transfers it to the public until its eventual transfer for a fixed fee lease fee sector to the public sector Extent of Private-Sector ParticipationSource: Booz & Company6 Booz & Company
    • Valencia’s Alzira Model of Healthcare PPPs An innovative healthcare PPP is the Alzira model used in the Spanish region of Valencia. The regional government sought to control spiraling healthcare costs by awarding a private company a contract to build and operate an integrated health zone. The public sector funds, regulates, and monitors the health services inside the zone. The private sector builds, owns, and operates the facilities. The government pays an annual fee to the private provider and ultimately assumes ownership of the assets after a 20-year concession. The Alzira model’s strengths are a clear objective specified up front, well defined roles and responsibilities, commensurate sharing of risk and reward, and continuous performance management. • Objective: the private sector will manage costs better than the public sector. • Roles and responsibilities: the government grants the private company access to a captive population through a long-term concession, reimburses the private provider for care provision. The private partner provides services in line with the government’s cost objectives and its clinical performance criteria. • Risk and reward sharing: The government transfers the cost risk by making the private sector responsible for all costs. However, the government ensures a volume of demand for the private partner through a concession. This takes the form of a monopoly over care provision to a geographically defined population. • Continuous performance management: The PPP has defined key performance indicators (KPIs) of financial and clinical success. One Alzira example is the Manises integrated health zone around Valencia. Managed by Sanitas, a subsidiary of the U.K. health insurer Bupa, Manises provides acute and primary care to roughly 150,000 people in over a dozen municipalities. The charge is €600 ($785) per capita, 25 percent less than the cost of providing care in the region directly from the Sistema Nacional de Salud (SNS, the state-run health system). Patients do not pay at the point of delivery. The SNS bears the cost of care. Patients can also choose their healthcare provider, although they must pay to switch. This places the onus on Sanitas to perform. The result is that Manises has successfully introduced Sanitas’ private management principles into the delivery of public care through health information technology and standardized care pathways.Booz & Company 7
    • On the lighter end of the spectrum At the other end of the spectrum, the because of concerns over value forin terms of what PPPs encom- private partner takes on the financing, money and long-term fiscal liabilities.pass are management contracts. building, operating, and ownership ofFor example, the DHA has out- the facility, gradually selling it to the The arguments over PFI in the U.K.,sourced the management of the government over the long term. This and the restructuring of the scheme inRashid Hospital Trauma Center PPP model allows the government to December 2012, serve as a cautionaryto InterHealth Canada. The DHA avoid the large up-front capital costs tale for GCC governments seeking toremains responsible for capital and involved in healthcare investment. The elaborate models for healthcare PPPs.operating costs associated with best-known example is the U.K.’s pri- What the GCC should not do is copyrunning the facility. Typical man- vate finance initiative (PFI), which has approaches wholesale such as theagement arrangements involve the signed more than 100 PPP agreements Alzira model (see “Valencia’s Alziraprivate partner receiving a fixed for the National Health Service (NHS) Model of Healthcare PPPs,” page 7),annual fee in return for running the since the early 1990s worth over £11 no matter how successful it has been.facility through key leadership staff billion ($18 billion)—an approach that Instead, GCC governments shouldand establishing its model of care. has been controversial in some cases take an approach that customizes PPPs8 Booz & Company
    • according to their particular economic increasing private sector participa- public sector were to undertake thecircumstances.3 Governments should tion in healthcare provision. venture alone. Value for money there-be careful to ensure that their interests fore ensures accountability. It providesare protected. As the director of a GCC A particular concern for the health- reassurance to the public payor, in thisgovernment institution told us, “PPPs care sector is value for money. In case the government, that its money ishave to be a marriage of equals.” terms of healthcare PPPs, value for being spent wisely, and allows patients money relates to a quantitative mea- to know that they are being treatedGCC governments should also sure that compares the net present fairly and consistently.4 A healthcareconsider the privatization of public value cost of a PPP to the best and PPP should clearly indicate that valuehealthcare facilities, such as hospi- most realistic public-sector alternative, for money is an objective from thetals. This transfers the entire asset, the so-called public-sector comparator. beginning and define KPIs that willand all of the associated responsibili- PPPs should always strive to deliver measure value for money during theties, to the private sector thereby better value for money than if the lifetime of the project. “PPPs have to be a marriage of equals.”Booz & Company 9
    • WHERE TO PLAY: Determining what activities can and should be opened to the private sector appropriate it becomes for a PPP. By contrast, services that have largelyOPPORTUNITIES involves examining market dynamics. social value are best kept in the publicFOR THE PRIVATE A healthcare sector model indicates that the public sector is responsible for sector. For example, as the main policy setters, governments should provideSECTOR regulation, licensing, and monitoring. preventive care and basic health The private sector can provide services education (see Exhibit 4). with commercial value such as cardiac surgeries and medical equipment In terms of healthcare subsectors, manufacturing (see Exhibit 3). Another opportunities lie in provision, payment, consideration is the relationship to supplies, and education spaces in the patient. The further the service individual GCC countries rather than is from the point of delivery, and the across the whole GCC (see Exhibit 5). greater its commercial value, the more Exhibit 3 The Government is the Sole Regulator and Licensor; Other Services Can Be Open to the Private Sector BOOZ & COMPANY HEALTHCARE SECTOR MODEL Regulator L i c ens i n g Suppliers Research Development and g Providers in Lo t ur Supplies g is fac Sourcing P t ic s l u r Man Bui ita Ca ision p ld ov Hos re Patient g O ro nt B a c ce Highe rainin O ffi e ffi c F k M id dle dT r Ed O ffi c e ze Reg uc rin g a li on Pa y o r s at e ci ula i Sp it o tio C o n tin uin g on ns Mas n s E d u c a ti o M E d uc ators Potentially within Private-Sector Scope Out of Private-Sector Scope Source: Booz & Company10 Booz & Company
    • Exhibit 4Public Sector Focuses on Social Value, Private Sector Provides Commercial ServicesEXAMPLES OF PUBLIC/PRIVATE DIVISION OF SERVICESCommercial Private Sector Public or Private Sector Value Medical equipment manufacturing Adult cardiac surgery servicesValue Public or Private Sector Public Sector Educators of healthcare professionals Preventative health screeningSocialValue Non-Patient Service Patient Facing FacingSource: Booz & CompanyExhibit 5Opportunities Exist in GCC Countries Across Four Major AreasPPP POTENTIAL IN GCC HEALTHCARE Providers Payors Suppliers Educators General pharmaceutical/vaccine Higher education of health Rural care systems Case/disease management manufacturing professionals Patient transportation systems/ Diagnostic services (e.g., emergency medical services Third-party administration laboratory/radiology) Continuous medical educationSource: Booz & CompanyBooz & Company 11
    • Providers ensure financial and clinical feasi- imports most pharmaceuticals and vac-Healthcare providers have an bility.” Providing such guaranteed cines. This is costly, limits the develop-opportunity to develop robust rural amounts of demand for healthcare ment of local capabilities, and puts thecare systems. Some governments services to private firms is also in the country at the mercy of global supplyregard improved rural healthcare as government’s interest. One of the patterns in the event of an emergencya strategic priority given the growing factors impeding the development of such as an epidemic. The private sectoryoung population in the countryside quality care is the haphazard nature can manufacture generic pharmaceuti-and issues of social inclusion. There of coverage, which prevents existing cals and vaccines locally, partnering withare also openings to provide robust facilities from developing their skills. its public-sector client to identify thepatient transportation systems or areas of highest need.emergency medical services to sup- An important payor opportunityport the aim of having integrated sys- stems from the introduction of Another opportunity is carving outtems. The private sector can improve mandatory health insurance schemes. diagnostic services for GCC health-the efficiency and effectiveness of These programs will need private care systems. This would allow theexisting services in terms of safety companies that can offer services for private sector to leverage its capabili-and equipment. Although some coun- front, middle, and back office func- ties to reduce test turnaround times,tries already have these assets, such tions. In the front office, the private such as the provision of centralizedas the Saudi Red Crescent Authority, sector can supply actuarial services, laboratory and radiology services tothese public or charitable providers’ design benefit packages, and deter- hospitals. Private suppliers can alsocapabilities are not always strong mine premium and reimbursement improve services in medical procure-across the whole value chain (which rates. In the middle office, oppor- ment and facilities management.encompasses call reception, dispatch- tunities exist for providing diseaseing, transportation of the patient, and management services to the public Educatorsadministration of care). payor. For example, the HAAD is Educators have an important role seeking private partners to set up and to play as the GCC needs a largeOther provision opportunities exist in run the disease management aspect of number of healthcare profession-areas demanding considerable capital the Weqaya (“Protection”) cardiovas- als. GCC countries have to meet theinvestment. These include more cular screening program. As one of demand for provision of care andspecialized care facilities and centers HAAD’s goals is to drive innovation, have more nationals enter healthcareof excellence, which will address the authority plans to reimburse the as part of their national educationthe regional shortage. Similarly, private providers on a “pay for per- and skills goals. There are shortagesgiven the GCC-wide push for more formance” basis that links revenues of doctors as well as nurses and alliedknowledge-based economic activities, to KPIs. Finally, private firms can staff, such as technicians. The lack ofthere might be occasion for PPPs in sell the public sector such back-office such support staff means that doctorshealthcare research and development administrative services as claims are distracted from clinical work andand the development of electronic management, processing, and adjudi- forced to spend time on administra-healthcare platforms. cation. Daman in the UAE provides tive tasks. One existing PPP venture third-party administrative services to is the Weill Cornell Medical CollegePayors the Abu Dhabi government’s health in Qatar set up by Cornell UniversityPrivate companies looking at payor insurance scheme. and the Qatar Foundation. To meetopportunities will require a minimum its need for medical professionals,volume for the projects to be clini- Suppliers Saudi Arabia plans to have 27 medi-cally and financially viable. As the The private sector’s expertise allows cal schools training doctors withinvice president of a healthcare private for the supply of reliable and low-cost just a few years, an increase from theequity firm in the GCC told us, “Any healthcare necessities to the public 21 operating today.opportunity needs a certain volume to sector. For example, Saudi Arabia12 Booz & Company
    • LAYING THE tion of PPPs. This includes the capabili- ties to govern PPPs, whether in terms its future requirements. This informs private-sector providers and helpsFOUNDATIONS of oversight or technical expertise. them to avoid poor decisions. ForFOR PPPs Important enabling factors also need to be introduced. For example, Saudi example, some private players wishing to establish healthcare businesses, Arabia’s health sector regulations limit whether alone or with the public the ownership of outpatient clinics to sector, often secure land and initiate Saudi doctors. Similarly, the UAE has construction without first discover- not yet enacted a PPP law. ing whether the healthcare regulatorThese opportunities notwithstanding, even needs their services. To avoidPPPs’ potential is limited by challenges GCC governments also need more such misunderstandings, the DHAin the institutional setup, the enabling robust processes to identify and adver- now conducts industry soundingsenvironment, and the process for devel- tise PPP opportunities (see Exhibit 6). when looking into PPP feasibility andoping opportunities. GCC countries This requires a holistic understanding is mandated to provide assistance tooften lack the institutional framework of healthcare needs, which clarifies potential investors and to collaborateto govern the development and promo- how the public sector wishes to meet with stakeholders.Exhibit 6PPPs Require Supporting Institutions, an Enabling Environment, and Clear OpportunitiesFOUNDATIONS NEEDED FOR PPPs Description 1 The institutional setup for attracting and retaining PPPs should be established through cross-sectoral bodies such as: Set Up the - PPP management offices Institutional - Investment promotion entities Framework Governments should create an environment that is conducive to the initiation and execution of PPPs through three main areas: 2 - Legal and Regulatory Create a PPP Enabling - Operational Environment - Financial A structured process should be followed for planning and executing PPPs in the healthcare sector that includes activities at the: 3 Develop the - System level Opportunity - Opportunity level PipelineSource: Booz & CompanyBooz & Company 13
    • Set Up the Institutional Framework ment for PPPs in healthcare. These are of interest that arise when the publicGovernments can address these prob- the legal and regulatory, the opera- sector regulates itself as a providerlems through capabilities that ensure tional, and the financial. Governments and eliminates unhealthy competitionoptimal governance of PPPs. In addi- should adopt the necessary laws and between the public and private sectors.tion to the existing healthcare regula- regulations to attract private inves-tor, governments need highly trained tors through PPPs. Some of the legal In terms of financial enabling, gov-cross-sectoral PPP management offices aspects of PPPs, such as the eventual ernments have multiple approachesand investment promotion entities reversion of assets to the public sector available to offer incentives to pri-that can initiate, execute, and super- at the end of a project, are complex vate players. Much depends on howvise PPPs. Kuwait has established the and represent uncharted territory in the two sides wish to allocate risk.Partnerships Technical Bureau (PTB) the GCC. In this regard, Dubai is Governments can provide direct guar-as the main body responsible for drafting a PPP law that will specifi- antees that allow the private sector toimplementing PPP projects. The PTB cally cover the healthcare sector. raise financing for projects. Similarly,aims to use private-sector skills and governments can pledge minimumexpertise to maximize value for money Operationally, GCC healthcare entities volumes of usage or revenues, guaran-and service quality. will need to decide where to place their tees to mitigate any damage to profits efforts to clear the way for private should the anticipated level of demandSuch PPP management offices can entrants. Over the long term this not materialize. Governments may evenalso ensure that private players deliver means a separation between setting choose to make low interest rate loanson the agreed terms. They can act as policies and delivering services. By available. Saudi Arabia, for example,a sounding board for private-sector concentrating their efforts on policies, is offering up to SAR 200 million ($53partners encountering implementa- standards, and regulations, govern- million) of subsidized loans for privatetion problems. The management ments can limit their role in service investors in healthcare. Alternatively,office can also ensure that the public delivery to areas of social rather than governments may wish to explicitlyentities involved in the PPP deliver the commercial value. This division is transfer risk to the shoulders of thecorrect support to the private play- neither neat nor achievable overnight. private sector to ensure that the publicers. Investment promotion entities are Governments will need, for example, purse does not accumulate long-termessential to attract private investors to to remain responsible for handling fiscal liabilities.GCC markets. With this aim in mind, emergency preparedness and medicalSaudi Arabia has established the Saudi catastrophes, such as epidemics. Develop the Opportunity PipelineArabian General Investment Authority Governments will need a structuredas a gateway for investors seeking to This change in the role of governments process to plan and implement health-enter the country. is important as it lays the groundwork care PPPs. This requires five phases, for healthcare PPPs. It allows govern- the first two of which are system-level,Create a PPP Enabling Environment ments to hand commercial value ser- with the last three at the operationalGovernments need to focus on three vices and facilities to the private sector. level (see Exhibit 7).areas to create a favorable environ- As important, it avoids the conflict14 Booz & Company
    • The first phase is in essence a system- The process then moves to the opera- The PPP can then move into thelevel capacity plan that identifies tional level. The third phase develops fourth and fifth phases of thecurrent and future opportunities to a PPP framework. This defines at process. These involve drawing upfill gaps in healthcare coverage. The the beginning the objectives of the the implementation plan and thensecond system-level phase carves out public–private collaboration and how actually executing it. As PPPs area subset of these opportunities for the achievement of these goals is moni- multiyear projects, the government’sprivate sector based on the healthcare tored. The framework also chooses monitoring and oversightsector model. Communication with the governance model, which includes capabilities, as well as the necessarythe private sector is an important part delineating the partners’ roles and regulatory and legal measures, playof this process, as it allows private responsibilities and the performance a vital role in this final phase.entrants to learn of the opportunities management mechanisms. This phaseand, as important, to understand the is critical because it specifies what isprocess for realizing them. expected from each partner.Exhibit 7The PPP Pipeline Proceeds from the System to the Opportunity LevelHEALTHCARE PPP PLANNING AND IMPLEMENTATION PROCESS 1 2 3 4 5 Assess Healthcare Draw Boundaries for Develop PPP Draw Up the Implement PPP System to Identify Gaps Private-Sector Participation Opportunity Framework Implementation Plan Opportunities- Understand healthcare - Identify sub-set of - Develop a PPP framework - Select partner for each - Execute the implementation market dynamics opportunities for the private that defines each side’s opportunity plan- Assess healthcare demand sector roles and responsibilities in - Finalize operating model - Monitor performance, and supply to identify gaps - Communicate opportuni- terms of: for the PPP opportunity mitigate risks- Articulate gaps as ties, establish process for - Objectives - Develop KPIs and opportunities entry of private-sector - Governance model implementation plan players System Level Operational LevelSource: Booz & CompanyBooz & Company 15
    • CONCLUSION PPPs can help the GCC to alleviate the growing burden of healthcare however, fall to governments alone. The private sector should not wait spending. By determining the for governments to do all the foun- role of the public sector and dation work for PPPs. Instead, the PPP-appropriate opportunities, private sector can be proactive, con- governments can clear away ducting its own analyses, such as fea- institutional obstacles, build their sibility studies, and sharing market own capabilities, and encourage intelligence with the public sector. By private-sector participation. feeding into the PPP process in this manner, the private sector can assist The task of making PPPs deliver governments and so create opportu- healthcare that is accessible, high nities for PPPs through a cooperative quality, and affordable does not, relationship based on trust.16 Booz & Company
    • Endnotes1 The Gulf Cooperation Council consists of Bahrain, Kuwait,Oman, Qatar, Saudi Arabia, and the United Arab Emirates.2 International Diabetes Federation. IDF Diabetes Atlas, 5th edn.Brussels, Belgium: International Diabetes Federation, 2011(http://www.idf.org/diabetesatlas).3 George Atalla, Karim Aly, and Mirian Itani, “Partnerships forTransformation: Using Public–Private Partnerships in the GCC,”Booz & Company, 2012.4 Peter C Smith, “Measuring Value for Money in Healthcare: Con-cepts and Tools,” Center for Health Economics, University of York,September 2009 (http://www.fgcasal.org/aeets/Documentos/Measuringvalueformoney_CRE2009.pdf).About the AuthorsGabriel Chahine is a partnerwith Booz & Company in Beirut.He leads the firm’s media,consumer and retail, and healthpractices in the Middle East. Hespecializes in strategy-basedtransformations, strategic plan-ning, and marketing.Jad Bitar is a principal withBooz & Company in Beirut.He focuses on healthcareproviders and public healthorganizations, specializing instrategic planning, transforma-tion, operational excellence,and e-health.Dr. Nikhil Idnani is a seniorassociate with Booz & Companyin Dubai. He specializes instrategic planning, operatingmodel design and performancemanagement for healthcareproviders and regulators.Booz & Company 17
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