The case for collaborations in healthcare

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The need for public-private collaboration in health care was neither well understood nor widely embraced until the COVID-19 pandemic, when health systems faced huge demands. Even now, many still believe that during the pandemic, government hospitals served the general population while private-sector doctors catered only to the rich, who could afford them. The reality is far from it. The private sector stepped up and provided critical COVID-19 testing and treated many patients, including the most sick who needed treatment in intensive care units, especially in less-developed economies, where governments faced severe constraints in resources, knowhow, and capacity in responding to the crisis.

The demand for health care during the pandemic is symptomatic of the growing pressures that government health systems are facing as they struggle to meet universal health coverage goals.  According to Lancet Global Health, meeting the sustainable health goals aims to save a projected 97 million lives by 2030, among them more than 50 million infants and children. But getting there will require over 25,000 new hospitals, nearly 350,000 new clinics, 23 million more health workers --and massive investments of $371 billion per year from 2026 to 2030.

Private sector can fill the gaps

Here, the private sector can play a pivotal role. Collaborating with the private sector can help governments in lower-income economies plug existing gaps in health services, better harness considerable private resources and technology, and shift some of the weight of healthcare investment from taxpayers to private investors. It can help make advanced diagnostic equipment available – a study of 32 countries in Africa found that two-thirds of MRIs were in private facilities – and it can build off services the private sector is already providing. The private sector provides 57 percent of health care services in the Southeast Asia Region, with 33 percent of the poorest quintile seeking private care. In the Africa Region, for example, Nigerians seek care in the private sector 52 percent of the time.

So why not tap the private sector’s resources, and what’s stopping the public and private sectors from doing more together? Let’s consider one specific form of collaboration: government contracting for medical services from a private sector company. This model can be an effective route for cutting costs, tapping into specialized expertise, and boosting efficiency, while allowing the government to retain overall management and oversight. So why isn’t it being used more often? 

While the issues are complex and challenges vary from country to country, unrealistic expectations are often the biggest impediment: Governments may ask private contractors to provide services at unworkable price points and private companies have been known to hold out for volume and profit guarantees that governments can’t provide. Moreover, erratic implementation can further undermine the potential benefits of such contracting, with governments unsure who to contract with or even how to go about it.

IFC’s clear framework for contracting

This is why a clear framework for contracting is necessary. Among other things, contracts should clearly define the scope of the services and qualitative outcomes to be provided, clarify price points, and establish criteria for selecting contractors and evaluating their performances.

The International Finance Corporation, which is the part of the World Bank that focuses on the private sector, has identified four key steps to initiate contracts for health services: 

  • Define the contract to clearly spell out, for instance, the contract timeframe, scope and service areas and the type of contract.
  • Plan the procurement, including determining whether the private sector has the capacity to provide the needed services.
  • Execute the procurement in a way to ensure transparency and good governance to foster trust and compliance.
  • Monitor performance, adapting and improving the system as the contract is carried out. This includes developing a strong capacity on the part of the government contracting entity to assess the strategic needs of the investments and contracted services, the cost efficiency and value for money, and the long-term financial stability of the national budgets.

It’s already happening

Britain’s National Health Service is outsourcing more routine eye, hip, and knee surgeries to the private sector to cut patient wait times. This reliance on the private sector is quickly catching on in developing economies as well. For example, in Brazil, IFC advised the structuring, tendering, and implementation of a public-private partnership to provide diagnostic imaging services—including x-rays, mammograms, CT scans, and MRIs—at 12 hospitals in Bahia state. In Albania, IFC advised in the designing and tendering of an agreement for a private partner to invest in and operate 18 laboratories that offer testing to Albanians through the public health system.

And beyond the benefits of enabling higher access to quality services across the referral system, the countries opting for longer-term public-private partnership contracting can create other co-benefits in the form of the transfer of knowledge, capacity building and job creation.

In truth, the public and private sectors are already intertwined in health services. Private companies are subjected to government regulations and laws; and government hospitals are reliant on the private sector for everything from pharmaceuticals to equipment, as well as professionals trained at private universities, and even computer software. Private contracting in health services is a logical, efficient step in our common path toward providing more accessible and sustainable health care for all. 


Raju Narayan

Global Sector Specialist : Health

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