Financial Freedom Nigeria

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Get involved in public private partnerships in health

By Onoja Alexander, CEO, WellCare Initiative (WCI) & Cordinator FIWON

 Government spending in the health sector has declined in most states in terms of percentage of the total budget allocations as well as a percentage of the GDP. The public health investment in some states over the years has been comparatively low, and as a percentage of GDP has declined. Almost the entire increase (in absolute terms) in spending by the government on health has been consumed by the increase of the wages so much so that funds meant for infrastructural development, repair and maintenance, drugs and essential medical supplies have been severely curtailed leading to further deterioration of the quality of healthcare services delivered by public health institutions.

Public awareness of and expectations from health services provided by the government are rising rapidly. This is to an extent fuelled by the rapidly escalating cost of medical care provided by the private sector providers who constantly raise the bar on the range and quality of healthcare services available in the country. With the present state of economic health of State governments and the increasing deficit in national budgets, it is unlikely that public sector allocations/spending on healthcare would register any increase. How these opportunities can be harnessed?

The National Health Policy welcomes the participation of the private sector in all areas of health activities – primary, secondary or tertiary. The policy also encourages the setting up of private insurance instruments for increasing the scope of the coverage of the secondary and tertiary sector under private health insurance packages. Public private partnerships can’t work well, provided that both the governments and private sector work in a trusting and collaborative way to achieve common goals. Preconditions for successful partnerships are:

  1. Adequate funding for public services
  2. Consistent rationale for using PPP
  3. A strong public sector partner
  4. Responsible private or voluntary providers
  5. Legitimacy among the general public
  6. An evidence-based approach to policy

Successful public-private partnerships rely on politically and economically supportive environment as well as committed partners. It would be advantageous for hospital managements and health sector players to recognise the beginning of the PPP wave and learn to ride it well. State governments are now actively considering several ways of partnership with the private sector:

  1. Up-gradation and professional management of one or two departments/services within public hospitals
  2. Outsourcing specialised medical procedures and diagnostic services
  3. Handing over entire hospitals/health centres to private] partners to re-equip, upgrade and manage
  4. Health insurance and community health financing
  5. Social marketing of healthcare products/supplies and social franchising of healthcare services
  6. Private pharmaceutical manufacturers/distributors could partner with government to set up and operate a network of fair price pharmacies for generic drugs (essential drugs lists) operated from within/outside the public hospital facilities. Prices of drugs and supplies to be agreed by both partners and the agreements run on profit sharing basis.

Government could invest in the infrastructure such as warehouse & space for the pharmacies and hand them over to private partners to manage, maintain and operate under lease agreements.

  1. Private distribution and rural marketing companies could partner with the government to market maternal and child drugs and supplies at agreed prices. Government could part fund the promotion/ distribution related costs with the rest including profits recovered through sales.

The future trend of public private partnerships is getting clearer by the day. The opportunity is real. Private sector investors, managements and professionals need to wake up to the possibilities and effectively articulate their expectations and terms of business to set the agenda for lasting partnerships with public sector.

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