1. Private hospitals in health systems: strategies, policies and challenges Introduction to the Private Hospitals Module April Harding World Bank Pathumwan Princess Hotel, Bangkok May 30-June 4, 2011

2.  Your Health Minister just came back from a meeting with potential international hospital investors.  They have expressed interest in investing in existing and new private hospitals in your country.  Your minister asks you:

3. What should my response be? Should I encourage this? If so, Why what potential gains? what potential problems?

4.  More capital ◦ (which is often in very short supply)  Better maintenance of capital investments

5.  More capital ◦ (which is often in very short supply)  Better maintenance of capital investments  Better Management

6. Source: LSE CEP and McKinsey cross country hospital study

8.  Efficient use of resources  Efficient allocation of staff  Efficient cost-risk balance on intervention choice

9.  Broomberg compared PPP hospitals with similar public hospitals.  Conclusion: delivered same quality, at a lower cost (productivity!).  But………  Public sector management of contracting was poor, so public sector paid the same price for public as private (no cost containment)  Insight: public sector action and capacity is KEY to capturing the gains

10.  But challenges: Even if private hospitals are more productive, could:  cause cost escalation;  distortion/inequality;  still have poor quality  What would you advise the minister to: obtain the good, while containing the bad?

11.  That is what this module is about: Finding the combination of policies that fit your setting and help capture the benefits of private hospitals, while containing potential problems.

12.  Private hospitals in health systems: global models  Introduction to module  Goals, Strategies, Policy Instruments  What is so special about hospitals?  Time, capital, complexity, non-profits  Overview of module sessions

13.  Segmented  Edge  Integrated

14. World Health Report 2000 Core Functions of Health Systems  Financing collecting funds; pooling funds; purchasing  Service Delivery public health/ population services; individual & curative services (PHC, hospitals)  Stewardship  Input generation

15. World Health Report 2000 Core Functions of Health Systems  Financing collecting funds; pooling funds; purchasing  Service Delivery public health/ population services; individual & curative services (PHC, hospitals)  Stewardship  Input generation

16. Little or no linkage between public sector and private hospitals Health system with private hospitals segmented: UK example Public sector Private sector Public hospitals Private hospitals Private insurers OOPs Regional health authority Public financing organizations

17. Social health insurers Government exercises stewardship over both public and private hospitals, especially through the funding arrangements Health system with private hospitals integrated: Germany example Public sectorPrivate sector Public hospitals OOPs Public sector stewardship domain Private hospitals

18. Public financing organizations Temporary public purchasing from private providers to fill immediate shortfalls in capacity Health system with private hospital services purchased “at the edge”: UK Independent Treatment Centers example Public sector Private sector Public hospitals Private hospitals Private insurers OOPs Private companies temporarily provide services

19.  Stewardship of private hospital in integrated mixed systems (e.g. Germany, Australia, France, Belgium, Switzerland, US) goes far beyond funding  Yes: public/social sector is funding private hospitals, but also:  Intense regulation  Extensive co-regulation  Information collection and dissemination  Training support  Tax incentives – location, specific services

20. Regulation Nirvana! Non-Profit Organization Hospital License Beneficial NPO Tax Exemptions Social insurance eligibility/ payment Medical Education Provider Subsidized Capital Accreditation Private Hospitals: US Regulatory Regime Example Fed. Statute: Commercial Code State Govt FederalTax Code Federal Govt (Medicare) Joint Commission Med. School Regulator Local Gov’t Disease Reporting/ SurveillanceFed. Center for Disease Control Participation in Disaster Planning & Response Local Gov’t

21.  Often have large private hospital sector, but public sector is not exercising stewardship  Funding (rare)  Regulation (on the books….)?  Co-regulation (rare)  Collaboration on disease reporting, disaster response (rare)  Training (rare)  Tax incentives – location, specific services (some)  Much potential to improve private hospital contribution to sector goals….by changing this

22.  Goals  Strategies:  Policies:

23.  Goals: which are the most important goals which policymakers engage with private hospitals to achieve? ?

24. Access Quality Cost containment

25.  Strategies: which strategies do policymakers pursue toward private hospitals?

26. Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003. Grow A well-functioning part of the private sector  could contribute to expanding access by increasing investment & service provision Romania dialysis contracting A well-functioning part of the private sector  could contribute to expanding access by increasing investment & service provision Romania dialysis contracting Private Hospital Situation

27. Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003. Harness A large existing private sector with good quality  could be leveraged to provide good public services at lower cost (contain costs) South Africa hospital contracting A large existing private sector with good quality  could be leveraged to provide good public services at lower cost (contain costs) South Africa hospital contracting Private Hospital Situation

28. Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003. Convert Well-performing non- profit hospitals  could run public hospitals more effectively (quality; cost containment) Sao Paulo Brazil hospital PPP initiative Well-performing non- profit hospitals  could run public hospitals more effectively (quality; cost containment) Sao Paulo Brazil hospital PPP initiative Private Hospital Situation

29. Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003. Grow Contracting Regulation & deregulation (enabling environment) Accreditation Taxation Contracting Regulation & deregulation (enabling environment) Accreditation Taxation Private Hospital Situation Policies used to implement strategy

30. Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003. Harness Contracting Regulation Accreditation Information dissemination & exhortation Taxation Contracting Regulation Accreditation Information dissemination & exhortation Taxation Private Hospital Situation Policies used to implement strategy

31. Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003. Convert Contracting PPPs Contracting PPPs Policies used to implement strategy

32.  Time  Capital  Complexity  Non-profits

33. Access Efficiency/ cost containment Quality of Care Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003. Contracting/ purchasing Regulation Accreditation Information dissemination & exhortation PPP transactions Contracting/ purchasing Regulation Accreditation Information dissemination & exhortation PPP transactions Ownership For-profit corporate For-profit small business Non-profit Capacity planning Ownership For-profit corporate For-profit small business Non-profit Capacity planning Grow Harness Convert Strategy Policies Goal Focus Private Hospitals Public Sector Restrict

34.  Today ◦ Capacity Planning, Shita ◦ Ownership and Taxation, Dominic ◦ Regulation, EK Yeoh  Tomorrow ◦ Contracting + Purchasing, Jack Langenbrunner ◦ Thai Case on Hospital Contracting, Chantal/Siripen ◦ Case Workshop: (1) Accreditation, Jiruth,(2) Contracting, William Ho ◦ Field trip  Thursday ◦ Exhortation /Information Dominic ◦ Hospital PPP - Intro and Models, April ◦ (Jakarta Case), Shita ◦ Facility and Financing PPPs (PFI), Dominic ◦ Services Contracting PPPs (Operating Contract), April ◦ Putting it all together, April and Dominic

35. Private Hospital Share Private Public Low Medium-Low Medium-High High