Managing Health Care Facilities and Services Europe Sees Mixed Results from Public-private Partnerships for Building And

Prompted in part by constrained national budgets, European governments are increasingly partnering with the private sector to underwrite the costs of constructing and operating public hospitals and other health care facilities and delivering services. Through such publicprivate partnerships, governments hope to avoid up-front capital expenditure and to harness private-sector efficiencies, while private-sector partners aim for a return on investment. Our research indicates that to date, experience with these partnerships has been mixed. Early models of these partnerships—for example, in which a private firm builds a hospital and carries out building maintenance, which we term an “accommodation-only” model—arguably have not met expectations for achieving greater efficiencies at lower costs. Newer models described in this article offer greater opportunities for efficiency gains but are administratively harder to set up and manage. Given the shortages in public capital for new infrastructure, it seems likely that the attractiveness of these partnerships to European governments will grow. T he use of private finance for key public infrastructure projects, especially in transportation and utilities, grew almost fourfold globally from the early to the late 2000s. These partnerships have also been a growing part of health care infrastructure investment, particularly across Europe. Variants of public-private partnerships have usedprivate finance and for-profit organizations to design, finance, build, and maintain infrastructure, and occasionally to provide operational services. A typical project might be the reconstruction of an outdated public hospital by a private company with private funding. In the United Kingdom alone there have beenmore than 100 such projects, ranging from a private finance commitment for US$15 million for a small communityhospital tomore thanUS$2billion for the redevelopment of the Royal London and St. Bartholomew’s Hospitals in London. In this article we discuss lessons for policy makers and health care providers from the use of public-private partnerships in Europe to develop and deliver health care infrastructure— buildings, large technology systems, and associated services. We suggest that the continuing economic crisis, with its consequent fiscal constraints, is likely to stimulate European countries to increase the use of these partnerships. Major investment in Europe’s health care infrastructure is needed, particularly in European Union countries and candidate countries with health infrastructure inherited from the former Soviet era. Typical of this situation is Slovakia, where an analysis indicates that hospitals are “unsatisfactory and old fashioned, which leads to their ineffective management.” Similarly, Western European countries with more modern infrastructure need to redevelop hospitals as health care service models change and the need for inpatient beds declines. doi: 10.1377/hlthaff.2011.1223