Europe Sees Mixed Results From Public-Private Partnerships For Building And Managing Health Care Facilities And Services

TLDR

European governments increasingly partner with the private sector to finance and operate hospitals, aiming to avoid upfront capital costs and leverage private efficiencies. The article seeks to evaluate newer public‑private partnership models that promise greater efficiency gains. These newer models involve more complex administrative arrangements for setting up and managing the partnerships. While early accommodation‑only models have fallen short of cost‑efficiency expectations, the limited public capital suggests that such partnerships will become more attractive to European governments despite mixed results.

Abstract

Prompted in part by constrained national budgets, European governments are increasingly partnering with the private sector to underwrite the costs of constructing and operating public hospitals and other health care 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. Our research indicates that to date, experience with these partnerships has been mixed. Early models of these partnerships-for example, in which a private firm builds a hospital and carries out building maintenance, which we term an "accommodation-only" model-arguably have not met expectations for achieving greater efficiencies at lower costs. Newer models described in this article offer greater opportunities for efficiency gains but are administratively harder to set up and manage. Given the shortages in public capital for new infrastructure, it seems likely that the attractiveness of these partnerships to European governments will grow.