PPP model in the healthcare sector being questioned

Public-private partnerships (PPPs) in the healthcare sector have intensified over the last few years. It is a win-win situation for both. It enables the government to concentrate on policy formulation, planning, and regulatory functions while entrusting the day-to-day operations to the private sector. The private sector possesses resources, structure, efficiency, and skills that can significantly alleviate the burden on the government. High-quality healthcare is delivered at lower costs by delegating tasks to the private sector.

As health is a state subject, most PPP projects in this sector fall under the state government expenditure and development plans. Viability gap funding and design-build-finance-operate-and-transfer model of PPP projects encourage private capital inflow in the healthcare sector.

However, questions are being raised about the increasing role of the private sector in healthcare. Recent research findings published in The Lancet Public Health Journal have challenged the theory that privatization improves healthcare quality through increased market competition and enables a more flexible and patient-centered approach. The researchers found that the higher profits at hospitals, converting from publicly owned to privately owned, mainly came from reducing staff and lowering the number of patients having limited health insurance coverage. Higher levels of hospital privatization were linked to higher rates of avoidable deaths.

Another study, Impact of Privatization on Healthcare System: A Systematic Review, points to inconclusive evidence. Eleven studies are included. The findings revealed diverse perspectives on the impact of healthcare privatization, with four studies (36.4%) supporting privatization (two of these were conducted in Saudi Arabia), six studies (54.5%) opposing it (three of these were conducted in European countries), and one study (9.1%) taking a neutral stance. Two studies investigated the impact on healthcare quality, and both revealed that privatization negatively impacts uninsured patients and low-income populations. In addition, five studies investigated the healthcare access and equity dimensions following privatization – one was in favor, one was neutral, and three opposed it. Four studies investigated the cost-effectiveness dimension, with three in favor and one study opposing it.

This review highlights different perspectives on healthcare privatization. While studies, as those from Saudi Arabia, suggest benefits in terms of efficiency and innovation, others, particularly from European countries, emphasize negative consequences, such as inequity and reduced quality. This emphasizes the need for more investigations to understand privatization’s impact on healthcare.

This comes at a time when the Supreme Court of India has raised concern over the wide variation in treatment costs between government and private healthcare centers. How this pans out is expected to impact the sector in more ways than one!