Public-Private Partnership in Funding Public Health: The European Experience

Public-Private Partnership (PPP) is expanding rapidly as an alternative for the provision of goods and services by governments around the world. Although PPP is usually only seen as a way to privatize public services, PPP implementation could deter excessive pressure from building up within public systems to move toward privatization. PPP is a type of public procurement that makes it possible to combine market efficiency and public interest while also satisfying needs of the population. That combination implies private production along with guarantees of public regulations and institutions.

This paper analyzes the PPP phenomenon and focuses on relevance as regards healthcare services. Methodology is centered on literature review and a detailed description of the Private Finance Initiative (PFI) in the United Kingdom as a case study. In the UK Her Majesty's Treasury publishes an updated list of PFI projects. PFI projects signed until April 2008 total 628 with a capital value of 58,560 million pounds (4% GDP). 159 (25%) projects and 11,957.23 (20%) million pounds are concentrated in the health sector. Our findings corroborate a clear predominance of healthcare services provided in recent years through PPP schemes in the UK and in most other European countries as well.

Nevertheless, while better value for money is demonstrated, affordability and budgetary risk must be carefully surveyed in PPP practice. Cautionary risk factors and benefit potentials should be balanced against one another when health authorities initiate a PPP strategy.