Private Sector Involvement in health infrastructure: how to ensure it adds value?

A practitioner's perspective on public private collaboration in capital projects for the health sector:

My practice of public and private collaboration in health infrastructure and capital projects led me to share this opinion with the Decide community.

WHO’s analytics built a strong case to prioritise capital investment in health in order to fast track the realization of health targets across the Sustainable Development Goals. The global estimates of these targets otherwise known as “SDG Health Price Tag” underscored that filling the health infrastructure gap is both a priority and the second cost driver after human resources on the path to universal health coverage.

In order to achieve these ambitious targets, public health stewards have to look at financing solutions beyond the limited availability of public funds and at leveraging private finance opportunities.

In this regard, the terms “blended financing of SDG”, “unlocking private investment to support public infrastructure and services” “increasing private sector participation in delivering public services” are on many key players’ agenda in development cooperation and SDGs committees.

However, the  health sector is  globally characterized by outstandingly low number of private investment projects (with major exceptions in some countries such as Germany, Kenya, South Africa or the United States).

According to recent estimates the latest data from business information provider Inframation in the last 10 years out of total 8523 total PPP projects (ie. infrastructure only) only 289 were health related infrastructure pure projects (click here).

My experience in the last 10 years shows that there are two major reasons for low private sector involvement: unclear commercial attractiveness of the public health sector for private investors, especially in low-income contexts; and absence of a clear pipeline of the projects at country level.

Development banks, private and institutional investors tend to act conservatively and favour project ideas which have already come to fruition. Feasibility studies financed by international financing institutions will be initiated only if there is a rudimentary analysis of the demand, cost structure analysis and potential for the project to be incorporated in the overall health system (e.g. master plan).

Across the world, numerous ministries of health  face limited in-house capacities in areas such as economics or market analysis. Few have  either resources available ,  experience in developing investment cases or have access to recourses to attract advisors at this very early stage.  The DFI funds available for private sector development are not usually allotted to health departments and remain with ministries of economy, trade or investments.

In addition, projects initiated by private sector are not always welcomed and subject to additional scrutiny, when they can even be considered. Consequently, basic steps towards investment projects are at risk of being overlooked and to a certain extent remain the largest obstacle in launching private public initiatives for the health sector.

Capacity building may appear as one important component of the solution. However even in high-income economies these tasks are contracted out to specialized consultancies, prompting the question: where are real capacities available?

There are few solutions emerging, albeit not widely disseminated nor receiving enough support at the moment.

The first is the setting-up of exchange platforms – where government officials can learn from each other, show case the types of projects which are implemented or even failed with free access to information (including basic commercial information).

In this regard, the role of the Decide - Health Decision Hub as a platform for knowledge exchange, access to tools and expertise shall not be underestimated and harnessed though different channels!

Another solution would be  to streamline classical technical assistance with available investment portfolios and agree on common outcomes between the DFI and TA agencies.

In my opinion, the role of the WHO country offices is very important in this process: being close partners of the Ministries of Health they are in a unique position to support a fair and healthy discussion on private sector participation at country level which protects the public interest. This may be key to an operational recognition of the potential role the private sector in improving access to health services worldwide.