PUBLIC/PRIVATE INTERFACE FOR SUSTAINABLE INFRASTRUCTURE
Autor: Moacir Rocha | Publicado: 2013-07-08T21:17:00-03:00





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ASSESSMENT
TASK THREE - MAJOR INDIVIDUAL ASSIGNME











ALEX DANIEL SALOMAO DA CRUZ ROCHA

ID: 1796097











LCM 703 PUBLIC / PRIVATE INTERFACE FOR
SUSTAINABLE INFRASTRUCTURE

MBM 703 BUSINESS ISSUES IN PUBLIC
PROJECTS





MR.
TERRY LANDELLS





















24
MAY 2013



Table of Contents



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Introduction................................................................................................................................................................ <!--[if supportFields]><span
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Public Private Partnerships in the Health Sector............................................................... <!--[if supportFields]><span
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Health System in Brazil............................................................................................................................................. <!--[if supportFields]><span
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PPPs in Brazil................................................................................................................................................................. <!--[if supportFields]><span
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The Suburban Hospital in Salvador: Brazil’s first
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Rationale....................................................................................................................................................................... <!--[if supportFields]><span
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Transaction.................................................................................................................................................................. <!--[if supportFields]><span
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Issues................................................................................................................................................................................ <!--[if supportFields]><span
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Framework to evaluate The Suburban Hospital PPP....................................................... <!--[if supportFields]><span
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Accountability and Transparency..................................................................................................................... <!--[if supportFields]><span
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Stakeholders Engagement..................................................................................................................................... <!--[if supportFields]><span
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Risk Sharing.................................................................................................................................................................. <!--[if supportFields]><span
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Costs and Quality...................................................................................................................................................... <!--[if supportFields]><span
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Equitable Access to quality health services for the
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Evaluating The Suburban Hospital in Salvador................................................................... <!--[if supportFields]><span
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Recommendations...................................................................................................................................................... <!--[if supportFields]><span
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Conclusion.................................................................................................................................................................... <!--[if supportFields]><span
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References................................................................................................................................................................... <!--[if supportFields]><span
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&nbsp;

&nbsp;









Executive Summary





Currently, many countries around
the world have formal programs of Public Private Partnership (PPP), which has
been used not only as alternative to fiscal restrictions, but also as a means
to improve the quality and efficiency of public services. Savas (2000) suggests
that the rationale for embracing PPP arrangements includes both ideological and
pragmatic perspectives. Ideological refers to the superior capacity of the
private sector in providing better services, while pragmatic argues that these arrangements
are ways of borrowing expertise, funding, and innovation from the private
sector to address complex public policy problems.

In fact, the success of various PPP projects in many countries,
has been leading other nations to encourage PPP procurements for infrastructure
projects, instead of using traditional methods to achieve such benefits, being
their experience extremely favourable for new projects. 

However, due to the complexity of these new milieus, where
challenges are constantly changing and becoming more complicated, continuous
improvements seem mandatory as a means to achieve the optimum balance between
diverse interests of multi stakeholders and therefore guarantee viability and
long-term sustainability of PPP projects.

In countries such as UK and
Australia for instance, where the programs are more consistent, there seems
increasingly adoption of concepts into innovative initiatives, in which the new
challenges refer to the reduction of costs and deadlines in the bidding
process, the standardization of contracts, the dissemination of good practices,
and also the establishment of competencies in project management in the public
sector.

In Brazil, the
use of PPPs is relatively a new phenomenon. Only in 2002, through the union of every segments of the Brazilian
society in collaborative governance alliances, the country took its first step
toward Public Private Partnership infrastructure projects in essential sectors of the economy. Since then,
Brazil has developed various PPP infrastructure projects as an inevitable
requisite for its economic and social development.

The purpose of
this report is to analyse a PPP project in healthcare in Brazil, with specific
reference to the
Hospital do Subúrbio in
Salvador, the state of Bahia, providing a framework to enable an effective
evaluation of the project, identifying and analysing its strengths, weaknesses
and areas of improvement. 

The framework
to evaluate The
Hospital do Subúrbio PPP
includes:

<!--[if !supportLists]-->·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Accountability
and Transparency

<!--[if !supportLists]-->·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Equitable
Access

<!--[if !supportLists]-->·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Stakeholders
Engagement

<!--[if !supportLists]-->·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Cost
and Quality

<!--[if !supportLists]-->·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Risk
Sharing

The strengths of
the PPP are:

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Effective
monitoring of services

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->High
quality

The weaknesses
of the PPP are:

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Low
staff commitment

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Insufficient
community involvement

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Inefficient
assessment of political and social risks

Areas of
improvement are:

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Incentives

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Government
support







Introduction





It is more and more
evident that the success of implementing PPP
projects in many countries has been leading others nations to encourage PPP
procurements for infrastructure projects, instead of using traditional methods,
as a means to promote economic and social development in diverse sectors of the
economy; some sectors showing higher priorities (Sen1999).

In health, the increasingly costs of delivering services has
been a significant issue for the state. Thus, PPP seems a universal adopted
mechanism to reduce costs while increasing health services quality and capacity
of the system, by investing in infrastructures.

In Brazil, health services have been rising considerably.
The country has found in PPPs not only a solution for mitigate public issues,
but also a way to provide equitable access to good quality health, benefiting
the community, and at the same time enabling return to the private sector, in win-win-win
arrangements.

This report analyses the
PPP of the Hospital
do Subúrbio in
Salvador, capital of the state of Bahia in Brazil. The main objective here is
to build a framework to evaluate this PPP project, identifying issues that affected the
development and maintenance of its effectiveness and providing critical
analysis of strengths, weaknesses and areas of improvement. In despite of the Hospital do Subúrbio PPP being considered one of the
world’s most innovative projects by KPMG in its “Infrastructure 100: World
Cities Edition” report (Infrastructure 100: world cities edition 2012), issues
still need to be addressed, such as low staff commitment, insufficient community involvement,
and inefficient assessment of political and social risks.

This
report explores the importance of effective PPP projects in promoting health
services in Brazil, approaching some relevant features for the achievement of effectiveness.
It also develops a framework that may effectively evaluate the Hospital do
Subúrbio PPP, providing some detail of this completed project.

While
the literature explores various elements on evaluations of PPP projects, this
report then focus on some key features to evaluate this particular social infrastructure
PPP. Finally, this report addresses the issues based on the presented framework,
identifying and analysing strengths and weaknesses of this project, pointing
some recommendations for improvement when appropriate.





































Public Private Partnerships in the
Health Sector





The increasingly costs of delivering health services has forced
the public sector to look at alternative mechanisms in order to reduce cost
while increase efficiency of services. PPP rises as a solution to contain this growing
health care costs and government budget constraints (Blanken &amp; Dewuful
2010). 

In
fact, successful PPP projects developed in many countries around the world has
led other nations to encourage PPP procurements for social infrastructure
projects, instead of using traditional methods, motivated by the potential to
transfer risks and some revenues to the private sector, as a means to create
efficiency and control costs in the health public sector (Blanken &amp; Dewuful
2010). Notwithstanding, due to high complexity, it is unclear to what degree
PPP arrangements are capable to respond to changing demands in health sector. 



Health System in Brazil



Brazil has a Unified Health System (Unified Health System 2013).
Created in 1989 from the merger of two state systems, one for those in formal
work and the other for everyone else, it is exceptional in Latin America, which
by and large continues with the two-tier public system Brazil abandoned. The
1988 constitution declared health care to be the right of the citizen and its
provision the duty of the state (Law 11.079/2004
establishing general rules for bidding and contracting for public-private
partnership 2004). However, there is a big gap between the aspirations of the
Government and the reality. Funding is inadequate and varies wildly from place
to place, affecting mostly poor people living in remote rural areas or violent
urban slums where the service is lacking. 



PPPs in Brazil



In the past decade, Brazil in
a very successful initiative, brought together business, labour and civil
society organizations to advise the government on its economic policy,
resulting in a considerable development for the nation, evidencing the power of
collaborative governance alliances (Landells 2013).

As private
organizations play an increasingly role in the global economy, public-private
collaborative alliances have been strongly defended by credible experts and
institutions as essential for the global community welfare. The private sector,
because it is motivated by something other than good public policy, is prepared
to make tougher decisions and act more quickly to get outcomes (Bovis 2010).

In recent
years, Brazil has developing various PPP infrastructure projects as an
inevitable requisite for the economic and social development of the country. In 2002, the society finally understood the importance
of reviewing its investment policy, started involving businesses, labours and civic leaders to advise on
economic aspects in order to promote the engagement of business in the
development of the nation (Nobre et al. 2012). By the union of every segments
of the Brazilian society in collaborative governance alliances, the country
took its first steps toward Public Private Partnership infrastructure projects in essential sectors of the economy. 

After having executed concession agreements for
the construction of several large infrastructure projects, the Federal Government
also transferred the management of many others to the private sector. Besides, it
has recently launched the first part of its Investment Program in Logistics,
which provides for the application of approximately US$ 67bn in the renovation
and construction of federal motorways and railways (PPP Brazil 2013). Furthermore,
since 2010, states and municipalities have also engaged on a variety of
infrastructure projects in diverse sectors of the economy, including the health
sector.











The Suburban Hospital in Salvador:
Brazil’s first healthcare PPP 





&nbsp;“Brazil’s first public-private partnership (PPP)
in health dramatically improved health services for Salvador’s community,
establishing a new paradigm of quality into the Health Care Network in Brazil”.


Brazil: Hospital do Subúrbio 2013



Rationale





Brazil
is a country with widely diverging income levels, where the access to quality healthcare
is unfortunately very unfair. People
with high-income levels have the privilege to access private hospitals, while
those with low incomes, that is, the majority of the population, must rely on
public hospitals, which are often poorly equipped and serviced, as well as
overcrowded. With the objective to reduce social inequalities in health (Sen 1999) by ensuring that all its population had access
to high quality health services, the government of Bahia embraced this PPP
project. 

As
Brazil’s first healthcare public-private partnership (PPP), the Hospital do
Subúrbio effectively made an impact, improving emergency hospital services for
more than one million people living in an extremely underserved district in
Salvador, the capital of the state of Bahia. According to Bahia Hospital - better
access to Healthcare for Poor (2013) the district where was built,
presents ranks much lower than the state and national average on the Human Development
Index (PPP Development stage-establishing principles 2012). Although not
initially planned as a PPP project, the state government looked at the private
sector as a partner to supply equipment and carry out all services and
maintenance. 

&nbsp;

Transaction





Prodal Health SA, consortium
composed by Promedica, a leading Brazilian regional healthcare company, and
Dalkia, a French company specializing in facilities management and non-medical
services, won the bid. The concessionaire is responsible for equipping,
maintaining and operating both clinical and non-clinical services at the
hospital for a term of ten years. The short time was set because the
construction was excluded. The
construction was conducted by the State, requiring investments of approximately
US$ 54 million while Promedica &amp; Dalkia invested US$ 23 million to equip the
hospital, being expected more US$ 9 million over the life of the concession (Brazil:
Hospital do Subúrbio 2013).

The
payment to the consortium is linked to key performance indicators based on
quantitative and qualitative expectations, therefore creating incentives for
high levels of performance. The agreement established that regular auditing is
to be conducted by qualify companies, analysing not only performance indicators,
but also financial statements. In auction at BOVESPA, Sao Paulo stock exchange,
the consortium requested maximum annual payments of R$ 103.5 million
(approximately US$ 52 million), wherein seventy per cent would be volume based,
and the rest linked to quality indicators.&nbsp;
As the payment mechanism is the principal means for allocating risks and
providing incentives in the PPP contract, it was settled to minimize the
state’s credit risk thus increasing interest by the consortium and the
possibility of obtaining financing for the project (Brazil:
Hospital do Subúrbio 2013). The deal closed in just 90
days from when the contract was awarded until the project reached financial
agreement. The results evidence not only the quality of services, but also the
constraints of the project. 

Issues





The issues identified in this social
infrastructure PPP are: lack of
public transport in the area; high rates of absenteeism; and overcrowding which
are associated to the low staff commitment, insufficient
community involvement, and inefficient assessment of political and social
risks.

As the
number of patients is higher than expected, the public sector is under pressure
imposed by both, the community that calls for more and more beds; and the
consortium, which added beds but wants to negotiate a higher payment. Besides,
concerns about quality have been raised around the facility’s low capacity, by
which the principal of equitable access to quality health services for poor
people is directly affected. Moreover, the lack of public transport in the area
evidences a public controversy in achieving social goals.

Framework
to evaluate The Suburban Hospital PPP 



According to Wettenhall
(cited in Hodge &amp; Greve 2005), public-private partnerships are
based on win-win-win arrangements by which the public sector, the private sector
and the community are simultaneously benefited in a synergistic interaction. Thus,
there are many concerns around the achievement of effective public-private partnerships.
&nbsp;Trafford and Proctor (2006) suggest that
indentifying critical features that may impact these multi-sector alliances is crucial
to achieve long-term sustainability. 

In order to consolidate
benefic and successful public-private partnerships, expectations, risks and
responsibilities need to be mutually agreed and clearly specified in advance. Additionally
it is critical that the contractual arrangements are complete and effective,
preserving good relationships between partners, communication efficiency, goals
and value alignment and continuous adjustment for mutual benefits. Furthermore,
Bresnen (2007) states that diversity may be an important factor to recognize
differentiation as a tool to reach efficiency and adaptability. Moreover,
affordability and value for money, project design, compliancy of rules and
limits, risk sharing, communication, transparency, legality, monitoring, and
political support may be key elements that may compose PPP’s frameworks of good
practices (Public-Private Partnerships: In Pursuit of Risk Sharing and Value
for Money 2008). 

Formulating
arguments around PPP effectiveness or good practice, as well as determining the
appropriateness of partnerships are not easy tasks, as they can vary
considerably across sectors (Rosenau 2000). The holistic understanding of
contextual factors on a case-by-case basis may be paramount in identifying and addressing
issues therefore helping overcome a number of challenges, especially in the
Health Sector.

PPPs
in health distinguish from others for their social nature, by which
expectations are strongly defined in terms of outcomes for specific groups or
communities. 

According to Buse and Walt
(2000) there are key elements that must be in place when developing PPPs in
health, such as transparency and accountability, common understanding, risk and
responsibility sharing, and clear definition of expectations. 



To evaluate the Suburban
Hospital PPP five key features are considered relevant to this particular
project:



<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Transparency
and Accountability 

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Stakeholders
engagement

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Risk
sharing

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Costs
and Quality

<!--[if !supportLists]-->-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<!--[endif]-->Equitable
access 



Accountability and Transparency&nbsp; 





Rosenau (2000) suggests that
it is difficult to define which of the parties involved in PPPs is more
accountable or that policies and regulations increases or decreases
accountability, especially regarding social sensitive projects such as
healthcare, where the public sector is seen as the rescuer when projects fail. 

Notwithstanding, ensuring
accountability in healthcare PPPs is fundamental, therefore the public sector
needs to be well informed about potential partners and their proposals, and the
private sector have to be held accountable to the community by providing
complete and equal information. Furthermore, if PPPs are to improve performance
(Flinders 2005), partners need to be accountable to each other as well as
transparent. 

Reports of performance indicators by the public
sector in Brazil, is not a common practice. Thus to ask the private sector to
adhere to this idea, it is necessary that the state also release information to
the public, so the society can form concrete opinions about the public sector
actions. However, in many developing countries, including Brazil, the
communication between the government and the community is ineffective and not well
supported, for the fact that some information may indicate significant room for
improvement. Besides, corruption and frauds has been affecting the
accountability and transparency of many public sector initiatives in Brazil (Changing
the rules of the game: a diagnosis of corruption in Brazil 2011).

&nbsp;

Stakeholders Engagement





Kwak et al. (2009)
suggest that good stakeholder
communications is essential to ensure that people close to the project have the
opportunity to have their views considered before decisions are made.
Innovative approaches to communications and stakeholders’ management can help
PPP projects achieving sustainable outcomes. Furthermore, early engagement with stakeholders creates
opportunities to build relationships, understand concerns, mitigate issues, and
involve those who will be most affected by the PPP project. Yet, the outcomes
of PPPs in health are difficult to predict, as they are dependent on the way
the internal stakeholders interpret policies and how the community react to them
(Rosenau 2000). 

For
a better understanding of the tensions and pressures involved in PPPs, cultural
perspectives and stakeholder analysis need to be considered. According to Flinders (2005)
organizations that share value with their stakeholders and involve them in
their strategic decisions, could gain unmeasurable benefits. Bresnen (2007)
mentions stakeholders as partners, with different perceptions, thoughts and
feelings, who can encourage knowledge sharing to generate both economic and
social values. Besides, social capital may also be regarded, as it may clarify
the level of synergy as well as identify weaknesses or strengths of
relationships and interpersonal connections. Moreover, breakdowns in the
relationship between the parties involved in PPPs may represent a high
strategic risk for the project (Kwak et al 2009).
In healthcare PPP projects, internal stakeholders commitment to public good and
external stakeholders involvement in planning and monitoring of services seem
essential considerations in such social and political sensitive projects
(Rosenau 200).



Risk Sharing





English (cited in Hodge &amp; Greve 2005)
suggests that social infrastructure PPPs are usually considered safe for the
private sector, based on the idea that the state is always prepared to
interfere in these projects to protect them to fail, as in some cases the costs
for replacing the consortium, in social sensitive PPPs, can be higher than
political costs. Indeed, in healthcare PPPs there is a great chance of public
sector intervention, including financial renegotiation (Akintove &amp; Beck
2008), requiring a deliberate risk analysis to guarantee their viability.

Hence, the anticipation of the government
support, regardless contractual arrangements, may promote unrealistic bids, assuming
that the risks, not specified in the proposal, will be absorbed by the public
sector (Hodge
&amp; Greve 2007).
Thus, PPPs in health call for effective appreciation of risks in order to find
the proper balance of its stakeholders’ interests.

In fact, risk sharing is often pointed as one of
the major benefits in PPPs, but if inappropriate managed it can result in
insufficient risks transferred to the sector that can better deal with them,
therefore affecting PPPs outcomes (Flinders 2005). 



Costs and Quality





The quality of public services in Brazil is
traditionally very poor. Many hospitals provide low quality services, where
lack of accountability, inadequate supervision of staff, inadequacy of
equipment, lack of drugs and materials, and excess of bureaucracy, are clearly evident.
On the other hand, private hospitals in Brazil are known for excellent quality
but unfortunately they serve only the minority.

Health care costs in Brazil
are abusive. Although some improvement can be expected due to recent regulations
enforcement (Public-Private
Partnership 2013),
health services costs are associated with technology improvements and
population growth. Thus, some relief from increasing costs may rely on
efficiency improvements brought by PPP projects, by which quality needs to be
also guaranteed. In fact, providing quality services and offering cost
advantages are not only objectives of PPPs in health, but also challenges in
achieving value for money (McKee et
al. 2006).

Notwithstanding,
governments increasingly use PPP’s to pursue value for money. A PPP project
achieves value for money when it costs less than the best realistic proposal in
providing the same services (Infrastructure Australia 2008). 

According to Trafford &amp; Proctor (2006) an effective assess of value for money depends on
simultaneous considerations of qualitative and quantitative aspects, not
independently. Qualitative aspects are related to operations requirements,
service delivery, and project management, while quantitative aspects involve costs
that can be measured using Public Sector Comparator (Quiggin 2004).



Equitable Access to quality health
services for the poor people





There is a broad understanding that governments
are to provide health services to poor people that cannot pay for them. Poverty
in Brazil is common and there are wide disparities in both income and health
among the wealthiest and poorest parts of the society. Promoting equitable
access is one of the biggest challenges for PPPs in health, since the private
sector concentrated in maximizing profit is normally less concerned with issues
of equitable access for poor people (Mills 1998). In PPPs projects maximizing profit means cost reduction, which may
affect performance and quality (McKee et al. 2006). Notwithstanding, when
establishing a PPP in health, the concerns remain not in the profit
maximization by the private sector, but whether the minimum standard of quality
will be maintained. In long-term equitable access can change value for money
considerations (Rosenau 2000), therefore affecting viability of the project.
Moreover, not providing equitable access in healthcare PPPs may also affect the
reputation of the project. According to Benoit &amp; Pang (cited in Tricia et al. 2007), projects’ reputation is usually threatened
when it is held accountable for an undesirable event.





Evaluating The Suburban Hospital
in Salvador



Based on the evaluation
framework developed and justified above, this section critiques the Hospital do
Subúrbio PPP in Brazil, pointing strengths and weaknesses of the project as
well as evidences some areas of improvement.&nbsp;


Despite the fact that the
Hospital do Subúrbio PPP was chosen as one of the world’s most innovative
projects (Infrastructure 100: world cities edition 2012), perfection is not the
right word to describe this initiative. With the objective of providing
equitable access to quality health services for the poor people from the local
community in Salvador, in Brazil, this PPP has been facing some issues such as innumerous
complaints from the patients regarding the difficult access to the Hospital due
to the lack of public transport in the area; high rates of absenteeism; and
overcrowding. 

Although corruption and fraud are considered to
be constraints on government’s activities in Brazil (Changing the rules of the game: a
diagnosis of corruption in Brazil 2011), surprisingly transparency and accountability
are pointed as strengths of this PPP, while, controversially, stakeholders’
engagement seems weak. Procedures have been executed in open manner, and
monitoring of services shows efficiency by assessing performance to
benchmarking against best practices. However, external stakeholders could be
more involved in planning, and internal stakeholders could be more committed in
promoting equitable access to quality health services for the local community,
by helping to speed up treatment and reduce the length of stays, clearly
affected by the high rates of absenteeism. Further, it also calls for more
government support, as the lack of public transport in the area has been
recognized as the main cause of absenteeism and difficult access. Consequently,
the Brazilian society started questioning the Government about the real
intention of this PPP, since without public transport, the poor people, who do
not have own vehicle, are unable to access the hospital, raising doubts about
equity and access considerations in this project. Hence, social, political and
reputational risks appear to be poorly explored.

In fact, the holistic appreciation of risks,
highly recommended for this type of PPP, seems inefficient, considering the
social and political sensitivity of the project, wherein only financial risks
appear to be taken into account, even thought ignoring operating costs in the case
of increasing demand. It is worth mentioning that this analysis, made by a
proud Brazilian, does not consider the possibility of hidden risks in order to
reduce bid’s price which follows the principle that the public sector cannot
allow this type of project to fail, regardless their contractual
responsibilities. 



As mention above, this project has been
regarded as very successful, however problems with increased demand have been
raising debates around quality. The Government, worried about the maintenance
of quality, has been making contractual adjustments to increase payments for
the private sector, but it may affect the expected value for money. The private
sector, on the other hand, having its payment associated to performance
indicators, started showing discontentment around political support and
inappropriate risk assessment, thus threaten the long-term sustainability of
the partnership. 

Indeed, despite some issues, the Hospital do
Subúrbio PPP can be referred as innovative, since its financial arrangements
include payments to the private partner that is linked to key performance
indicators, based on quantitative and qualitative targets, therefore creating
incentives for high levels of performance. As a means to guarantee long-term
viability for the partnership, these arrangements has been focused on the possibility
of obtaining financing for the project by minimizing the government’s credit
risk, which directly benefits the private sector.

Finally, joint initiatives have been
implemented to address these issues, indicating that the partners involved in
this first healthcare PPP in Brazil, are becoming gradually more aware of the
importance of commitment and mutual support to build an ideal public-private
partnership, where, public and private interests are transformed into benefits
and opportunities to achieve public outcomes.



Recommendations



Based on the analysis above it is recommended
that a horizontal communication plan takes place in order to stimulate staff in
promoting equitable access to quality healthcare for the community, by sharing
with their managers, issues that could affect their commitment to the project.
Besides, a formal external communication plan is also recommended, as it may
help addressing reputational threats for the project as well as assist managing
issues around equity and access considerations. . Managers, on the other hand,
may have to concentrate in finding the best means of linking public values to
the public interest. Benoit
(1995) states that when an
organization’s reputation is threatened, whether or not the accusations are
true is irrelevant, as the public perception is all that is needed to damage
its image, calling for urgent actions.

Moreover, due to increasing concerns around
contractual adjustments, the parties may focus on improving their
relationships, as a weak interconnection may represent high strategic risk for
the project (Landells 2013).

Further, managing stakeholders participation
and involvement may help clarifying the level of synergy as well as identifying
weaknesses or strengths of relationships and interpersonal connections. According
to Landells (2013) organizations that share value with their stakeholders and
involve them in their strategic decisions, could gain unmeasurable benefits, by
encouraging knowledge
sharing to generate both economic and social values.



Moreover, rigorous process of risk
identification, assessment, analysis, and mitigation are recommended to allow a
more effective risk allocation of this PPP. Thus, when risks are understood and
their consequences are measured, decisions can be made to allocate risks
(Flinders 2005) in a manner that minimizes costs, promotes project goals, and
ultimately aligns stakeholders with the needs and objectives of the partnership
(Hodge &amp; Greve
2007). Furthermore, based on the
proposition that optimal risk sharing with the private partner delivers better
value for money for the public sector and ultimately for the end user, the aim
is not maximize risk transfer but optimize it (Delmon 2009).













Conclusion



Public Private Partnership is gradually
becoming a universal, adopted form of procurement to improve performance of
health systems worldwide, wherein the public and private sectors collaborate to
deliver better health services, improving efficiency, quality, and innovation
of public health networks. 

According to
(PPP Development stage-establishing principles
2012), countries with differing government and
legislative frameworks sign an impressive number of common features associated
with successful implementation of PPP
programs, however there is no defined solution to address many issues in the health
system in Brazil and around the world. 

If PPPs in health are to facilitate the
improvement of health services, providing equitable access for the poor people,
stakeholder engagement is one of the first priorities as it may bring in unmeasurable
benefits from different perspectives.

Moreover,
a holistic and continuous appreciation of risks in healthcare PPPs due to its complex milieus, is extremely
important, as it can reduce the probabilities of unexpected financial, social
and political crisis that could negatively affect long-term outcomes.



Finally, a
lot of work still need to be done, not only in Brazil but worldwide, to improve
the accountability and transparency, the regulatory framework, and the mutual
trust in healthcare PPPs projects to enable governments, by these type of
procurement, accommodate problems of access and equity, quality improvement and
cost containment.

&nbsp;

&nbsp;



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