Using public private partnerships to achieve value for money in the delivery of healthcare in Australia

Abstract

This research locates the use of public private partnerships (PPP) within the new public management (NPM) reforms that have swept the Australian public sector. Empirical evidence from policy documents and a case study of a failed public hospital project in Victoria are used to illustrate problems associated with allocating risk in PPP arrangements. Evidence is presented that the government underestimated both sponsor and political risks associated with the arrangement. The bidder failed to understand the ramifications of the funding model, leaving it unable to provide the level of services required. The paper focuses on the changing nature of PPP policy. Initially adopted to transfer risk to private partners to avoid on-balance sheet recognition to achieve macro economic objectives, the aim of PPP has been refined to achieve optimal risk allocation to achieve Value for Money (VFM) in the delivery of infrastructure-based services.