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How to build sustainable PPPs

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Balancing risk and rewards, cost and impact and having a patient-first approach are a key to success for PPPs in diagnostics

“In a partnership, it is important that partners align with each other to produce meaning and value,” says Dr Avinash Phadke, Founder, Dr Avinash Phadke Labs, President & Mentor, SRL Diagnostics. This is something he told me in a recent tête-à-tête. Giving an example of a successful alliance with Roche -his company’s technology partner for more than 17 years, Dr Phadke spoke about how both partners understand each other’s needs, share the same vision and possess similar business values. He said that his partnership with the company continues to grow stronger as both parties have kept the right balance between risk and reward, quality and outcomes.
This got me thinking about how India can successfully implement strategic partnerships between government and private sector players in diagnostics that are truly meaningful and creates value for patients.

Strengthening India’s healthcare system
Well, we all know that PPP in diagnostics can act as a great tool to expand healthcare services in India. In the last few years, NITI Aayog has been encouraging state governments to adopt PPP models as part of the government’s UHC programmes to improve infrastructure and care delivery at their regional and district-level hospitals and PHCs. States such as Maharashtra, Andra Pradesh, West Bengal, Bihar, Odisha, Uttar Pradesh, Jharkhand, Haryana, and Uttarakhand all introduced PPP in diagnostics to expand healthcare services in smaller towns and remote villages. Moreover, to further strengthen the Ayushman Bharat scheme, the government plans to further expand PPP models to the national level.

However, unlike the power, water and the infrastructure sector, PPPs in healthcare have yet not become a panacea it was once touted to become. While there are some guiding examples (read Case Study 1 World economic forum example) that have reaped good patient and medical outcomes; cost factors, quality, talent retention and performance/ medical outcomes remain a major issue across various models. Besides these apprehensions, several other conundrums exist such as delayed regulatory clearances, delay in payments, unclear contracts, lack of political mandate, limited availability of long-duration instruments like pension funds and banks saddled with NPAs and accusations of weak governance.

We spoke to some stakeholders involved in PPPs to understand ways by which India can develop and implement effective models that are truly meaningful and creates value for all stakeholders. To begin with we asked them their experiences and key learnings and then they recommended ways by which they could improve and strengthen their strategic partnerships with the government while they deliver better diagnostics services.
Drawing an inference from his experience Dr Amol Naikawadi, JMD, Indus Health Plus says, “PPPs can provide rapid needles of cash from private financiers, ensure delivery of quality services, and bring overall cost-effectiveness to the services which the public sector can’t achieve on its own. In the year 2017 – 18 we did a pilot for diagnostic service for community outreach in UP. The pilot project was community-level screening for the diagnosis of lifestyle diseases in Varanasi. The free screening was largely for diabetes and basic health checkup for one lakh people in remote areas. Indus Health Plus partnered with the Govt under their CSR work for marginal communities. Our key learnings include that we have better integration of healthcare services. Both parties should have a common goal of building up a universally accessible and affordable healthcare screening facilities and the government should come up with similar diagnostic checkup model in different states. Moreover, the essentials for building the right partnership, in my opinion, trust and a win-win situation for both parties. The partners should ensure value for money in terms of project appraisals its costs, risk factors, and service quality. All the applicable processes of selecting, designing, costing, planning and awarding a contract to a business enterprise should be transparent.”

“Every project has only helped us grow and face new challenges eg- Our first PPP project in Himachal Pradesh taught us to work in extreme climatic conditions whereas our project in Uttar Pradesh taught us, how to deal at the remotest locations? The Municipal Corporation projects have been a different experience altogether, especially handling an urban crowd. The experience of effective governance and the use of technology has enriched us in knowing that a strong mechanism has been extremely beneficial for both the parties. It has played an important role to improvise payment mechanism, measurement metrics and improve the operations as well. Moreover, with such procedures in place, patients have started trusting public health systems and are getting benefitted from the same. Additionally, PPP is the best strategy for the government to shift from being a provider to a payer for better patient and doctor centric care as well as optimum utilisation of funds to patients care outcome. By allowing private players like Krsnaa and focussing on ‘pay-for-service’ model, PPP helps government defer immediate outlay, and at the same time manage its budget. Through this model, patients get quality and affordable diagnostics including increased access to healthcare in areas where earlier there was either no or limited access,” shares Pallavi Jain, MD, Krsnaa Diagnostics.

Similarly, Dr Phadke shares, “SRL has had a good experience in Himachal Pradesh PPP. We also had PPPs in UP and Bihar which had its own learning experiences. Getting and retaining appropriate manpower (qualified technicians and doctors) is the biggest challenge in operating a PPP in remote areas of Bihar and UP. As per the MCI guidelines, the reports have to be supervised and signed by an MD doctor only. Therefore, finding doctors and technicians becomes a huge problem.

Secondly, dealing with the government takes a long time for payment recoveries.”

Patient first approach
The patient is not just another stakeholder in a PPP but is the very purpose of such initiatives. Although every PPP is different and requires a unique approach to bring about the best positive impact for patients, its foundation has to be laid keeping the patient at the heart of it. Hence, experts recommend opting for tools and techniques that cater to patient needs and ensure the best medical outcomes. “With a motive to approach healthcare diagnostics from a patient-centric vision, and to constantly learn from other responsible PPP players and State NHM can strengthen good practices and eliminate bad execution. Patient-centric approach, leveraging technology for governance and monitoring financial stability will ensure PPPs are successful. Technology-enabled qualitative and quantitative analysis besides robust patient feedback capture through independent structure and process. Periodic assessment of patient satisfaction. Availability of round the clock services at the remotest of locations,” proposes, Jain.

Open contracts on digital platforms
While the government intends to strengthen and boast of its digital India initiative, it is time that we utilise digital platforms to monitor and govern PPPs in healthcare. Experts believe that this could be a turning point for both the private and public partners to ensure good governance and more. According to Dr Phadke, an effective PPP can be built and implemented successfully if a pool of money is allocated before, and tenders and contracts can be released on a digital platform. “Just like we have the Sugam or the digital platform for start-ups the government should develop a platform to run and manage PPPs in healthcare. This can not maintain transparency but can act as a great tool for governance and monitoring of PPPs from time to time,” recommends Dr Phadke.

Moreover, experts also feel that the government should upload contract guidelines and T&Cs on a digital platform.
Jain suggests that the NHM should jointly help define a document for standardisation of tender and governance metrics. Consider PPP for Govt teaching college hospitals as a part of enhanced learning and technology-driven policies to be considered so has to help clean governance, which in turn can help in smoothing the payment cycles and overall service delivering.

Balancing risk and rewards, cost and impact
The most challenging task in a PPP is balance risk, rewards, cost and impact. According to a report published by the Global Health Sciences, one of the central features and criteria for success of a PPP involves the appropriate allocation of responsibility (risk) between the public and private partners. Any transfer of risk must be closely monitored and managed, with clear roles and responsibilities laid out in the contract. Risks within PPP projects generally fall into three main categories:
1. General and financial risk
2. Planning/design and
construction risk
3. Operating risk (including clinical performance)

The report also mentions that many governments abroad have a stringent procedure for a proposed PPP project. In some EU countries, PPP projects go through a series of reviews before being tendered, to ensure alignment with legal frameworks and strategic plans, and to assess the costs and intended benefits of the project. These reviews help to mitigate potential fiscal risks—especially as projects that default or experience delays in government payments can impact future investor and bank interest. Some governments also engage external advisors to aid them in managing a range of issues related to project structuring, procurement, financing and risk evaluation. Some countries (Turkey, for example), use additional mechanisms such as debt assumption undertakings, in which the government commits to taking on the debt of the PPP private partner should the contract be terminated, as a way of providing guarantees to lenders.

But all this needs a proper policy framework for PPPs which currently does not exist in India. Speaking from his own experiences Naikawadi talks about how there can be better operational risk sharing done. “The partnership should be looked at long term contracts and associations. The natural assimilation of the method through which partners preserve long-term relationships is a key issue in maintaining social well-being, reducing health risk factors, and sustaining public health programmes. In my view, the government should partner with one or two service providers in a city or state to offer diagnostic facilities at primary healthcare centres in remote areas. The challenge at a healthcare centre in rural areas is the availability of resources in terms of doctors and trained medical staff and the latest diagnostic facilities. Therefore, private partners can bring in the technology and manpower to provide accessible healthcare for the masses”, he says.

Likewise, Jain talks about financial risk-sharing. “The public partner leverages the private partner’s skills and assets to perform all significant aspects of the project in hand. The economic-financial risks, including the high capital expenditure on investing in equipment and machines, on the private partner’s side, is addressed by the promise of increased demand for services from customer end, on the public partner’s side. If the Government gives a minimum volume guarantee especially in places where doctors’ presence is yet to pick up, Krsnaa with the extended leverage of our technology in diagnostics can help the needy avail benefits even in such places where doctors are not present, via teleradiology. With such patient-centric approach, the risks shall be mitigated equally. Going ahead, escrow mechanism for predictable cash flow and robust governance with suitable course correction shall be highly beneficial”, she adds.

Regulatory and policy framework for PPPs
While most players in the PPP space talk about the significance of a well-defined contract that lays down rules for risk-sharing, transparency, good governance and more, they also feel that a robust policy can make a huge difference. They feel that certain policy decisions related to PPPs need to be taken at the central level which can be executed at the state level.

Now, this perspective comes from the outlook that diagnostic services will henceforth become essential in the implementation of the Ayushman Bharat scheme. “It’s extremely important that some important policy decisions are taken at the Central level which can be passed at the state level for execution”, reiterates Jain. She further points out that the NHM should jointly help define a document for standardisation of tender and governance metrics. Likewise, technology-driven policies should be considered to help clean governance, which in turn can help in smoothing the payment cycles and overall service delivering. Jain also proposes to consider PPPs for government teaching colleges/hospitals as part of an enhanced learning programme.

In keeping with opportunities that lie ahead, both private and government partners must align with common goals to establish improved patient outcomes. Quick dispute resolution is also essential. It is imperative to focus on the value these PPPs create and ensure improved patient outcomes.

The government cannot abdicate its core functions when it comes to healthcare and private players need to rebuild the trust between healthcare providers and patients in future.

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