Smarter public-private partnerships - examples from Europe
New public-private partnerships in European healthcare
Prompted in part by constrained national budgets, European governments are increasingly turning to the private sector to underwrite the costs of constructing and operating public hospitals and other healthcare facilities and delivering services. Through such public-private partnerships, governments hope to avoid up-front capital expenditure and to harness private-sector efficiencies, while private-sector partners aim for a return on investment. Some European countries are experimenting with healthcare PPPs that embrace clinical services as well as physical infrastructure and maintenance.
Past research, including work we carried out before this study (below), has shown that early PPP models – for example, in which a private firm builds a hospital and carries out building maintenance – have not always met expectations for achieving greater efficiencies at lower costs. The newer models we are investigating in this project offer greater opportunities for efficiency gains, but are administratively harder to set up and manage. However, given the shortages in public capital for new infrastructure, it seems likely that the attractiveness of these partnerships to European governments will grow.
We have investigated new forms of healthcare PPP in Finland, Spain and Germany in order to better understand their critical success factors in delivering healthcare services and infrastructure. Two papers outlining preliminary work from this project have been published:
Barlow J, Roehrich J, Wright S. Europe sees mixed results from public-private partnerships for building and managing health care facilities and services. Health Affairs, 2013, 32(1). Doi:10.1377/hlthaff.2011.1223
Barlow J, Roehrich J, Wright S (2010) ‘De facto privatisation or a renewed role for the EU? Paying for Europe’s healthcare infrastructure in a recession.’ Journal of the Royal Society of Medicine, 103, 51-55.
Adaptability and Innovation in Healthcare Facilities
The need to design and build hospitals that can adapt to changing conditions – as policies, technologies and care practices evolve – has long been recognised. In the UK, the 1960s and 1970s saw a wave of innovative designs in hospitals to meet this need. This was organised and managed centrally, by the Department of Health. From the 1990s a new approach to funding and procuring new hospitals was implemented, the Private Finance Initiative. Design and development became more fragmented, but the need for flexibility and adaptability in design was still just as important.
With funding from NHS Estates, Catalyst, Alfred McAlpine, St. Bartholomew’s and the Royal London Charitable Foundation, Martina Köberle-Gaiser and I investigated the relationship between the delivery mechanism for healthcare infrastructure – its financial and procurement model – and the potential to accommodate future changing needs through flexibility and adaptability in the built form. We chose case studies of hospitals built in the 1960s and 1970s and contrasted these with hospitals built in the first wave of the PFI programme. Partly because of the way risk is allocated across the supply chain with PFI hospital projects, we found that the incentives to innovation were limited.
For details see
Barlow, J., Köberle-Gaiser, M., Delivering innovation in hospital construction. Contracts and collaboration in the UK’s Private Finance Initiative hospitals program. California Management Review 51(2009), 126-143.
Barlow, J., Köberle-Gaiser, M., The private finance initiative, project form and design innovation, Research Policy 37 (2008), 1392-1402
Barlow J, Koberle-Gaiser M, Moss, R, Noble A, Scher P, Stow D (2009) Adaptability and innovation in healthcare facilities. Lessons from the past for future developments. Howard Goodman Fellowhsip / HaCIRIC.
Barlow J (2010) Delivering Innovation in Hospital Design: Finance, Contracts and the Institutional Context . In Caldwell, N. and Howard, M. (eds.) Procuring Complex Performance: Studies of Innovation in Product-Service Management. London, Routledge.
Based on this research, I was invited to give evidence to the House of Commons Treasury Committee. Private Finance Initiative. Seventeenth Report of Session 2010-12. HC1146.
Demand driven innovation: European Structural Fund supported healthcare projects
The aim of this research was to develop an understanding of how the use of EU Structural Funds stimulates innovation in long-term, complex healthcare infrastructure projects. Jens Roehrich, Kyriakos Hatzaras and are I investigated the planning, procurement and operate phase of these projects, and the outcomes in cases in Greece, Germany, Italy and Slovenia. The research was partly supported by the EUREGIO 3 programme and is currently being written up. Download a presentation on the project here.