A Study On Public - Private Partnership Model In British Public Hospitals

Objective:The object of study is the patterns of Public-Private Partnership(PPP),especially focuses on the Private Finance Initiatives (PFI) used in public hospitals in UK, which is a form of Public-Private Partnershi. The study aims to provides an international experience of the using social capital to support the construction of hospital, which would provides a useful reference for the medical reform in China.Since the implementation of Chinese new medical reform in 2009, the State Council has issued on The Opinions of Further Encourage and Guidance for Social Capital to Held the Medical Institutions in 2009; five ministries in 2010 have drafted Document of A Further Encourage and Guidance for Social Capital to Invest in Medical Institutions, in which the formation of investment subject diversification and investment ways diversification to medical system have been put forward, and social capital holding medical institutions has also been clearly encouraged. These documents reflect the basic idea of government reform, that is, to play the role of market mechanism under the leadership of the government. For a long time, "government" and "market" divide and conquer played a separated roles in Chinese health field, and the supply of medical services has been mainly the accomplished by government run owned public medical institutions, with the private sector to do private hospitals as supplement, which failure to failed to effectively combine the advantages of the private sector with the advantages of the public sector. PPP is a tool for infrastructure reform, project financing and service, which introduces private capital into the field of hospital and makes the government and private capital to play their respective advantages, share benefits and risks, by which and to achieve diversification of investment operations, increase the supply of medical services, improve the quality and efficiency of medical services and the quality of medical services. PPP is a kind of public service, a supply model which provides a combination of the advantages of both private sector and social capital.PFI is a form of public-private partnership, originated in the United Kingdom, and it has been widely used in the construction of public hospitals. The main feature of PFI is it replacing the tradition of providing infrastructure by the government, taking newly methods to promote private capital to participate in building construction, infrastructure, public goods and services, and accepting the public hospitals’brand, human resources and medical services. With the regard to PFI’s system designing, it overcomes the inherent disadvantages of private capital medical institution’s Trust, manpower, policy and public opinion issues. Public hospitals still bear the external effects of large supply of medical services, and the external effects of smaller medical services still regulated by the market. It is of great significance to the development of private capital to hold medical institutions, to optimize the allocation of medical resources, to release the medical market, and to achieve the development of private capital.This paper studies the present situation of Public-Private Partnership’s development, and its application in the UK public hospitals (PFI’s historical changes, operational procedures, the advantages of the implementation of the effect, and its problems, etc.), and analyses the specific implementation of the hospital PFI case, to provide the experience of the United Kingdom as an international experience; to provide a policy reference for the construction of public hospitals in China based on the comparison of the Chinese and British medical system and the development status of Chinese public private medical institutions.Research Methodology:Through literature research, this study has the defined the PPP and PFI in public hospitals, analysis the policy background, research status and research value; Through policy analysis, elaborated the development of the public privatepartnerships in British public hospital, Feasibility Analysis of project, financing and bidding negotiation, the distribution of benefits and risk sharing; Through unstructured interview and empirical study methods, this study expounds the achievements, main advantage and shortcomings of the PFI in British public hospital; Through case study, this study takes James Cook University hospital in northeastern England as an example, demonstrates the implementation of PFI in public hospitals can achieve the value for money by compared with Public Sector investment. Through a comparative study, this study compares the differences between medical system construction in China and the UK, in the aspects of government investment, fairness and efficiency, and health insurance coverage, and then combines the practice of public-private partnership hospital in two countries, in order to conlude the international experience which is worthy of understanding and using for reference to China..Result:1. Clarified the definitions and connotations for PPP and PFI. The study object PPP in this study especially indicates the PPP in medical realm, and this study mainly focuses on the construction of public hospitals. PPP actually can be divided into three categories:outsourcing, franchising, privatization, however, these three categories can still can be divided into different groups considering their operation model, property ownership. PFI in British public hospital is the research emphases of this study, PFI is belong to the PPP category of franchising, and the group of Design-Build-Finance-Operate, which is generally practiced in the UK.2.Analyzed the PPP operation model in British public hospitals, by studying the project’s assessment, acceptance, contract, service target, profit model, potential risk and some other perspectives, this have revealed the operation pattern of PFI.3.Discussed the efficiency of the undergoing PPP projects in the UK:Within 145 public hospitals, the hospitals applied PFI model can reach the profitability at 76.2%. Application of PFI can enhance the efficiency for the hospital, including increasing operation efficiency, improving performance, and controlling risk. However, the disadvantage is it might increase the financial burden for the hospital.4. Analyzed and assess the PFI case in James Cook University Hospital. PFI model has successfully combined three small hospitals into the biggest general hospital in northeastern England. In the contract period of 35 to 60 years, this case has proved that PFI can achieve value for money when compared with public sector investment.5. There is a tremendous difference between the British and Chinese health system:both China and the UK have a health system with three levels, but in practice Chinese system did not implemented, there is a huge gap between urban area and rural area. In terms of the investment for healthcare, the healthcare expenditure only counts a small proportion of the GDP of China; The percentage of government investment in toal health expenditure shows that the British government take more responsibility in healthcare rather than Chinese government. In terms of fairness, Chinese public insurance covers about 98% of Chinese population while every single British citizen can enjoy standardized healthcare service provided by the government. Although Chinese insurance coverage rate has reach 98%, the quality of healthcare services differs from the insurance type people have.In terms of efficiency, British people have a longer life expectancy than Chinese people from macro view, however, the awaiting time for treatment is quite long in the UK, on this perspective the Chinese system has been doing a better job.In a word, the Chinese and British health systems differ from each other in health investment, fairness,efficiency, however, there are some hospitals putting PPP into practice in China, like Guangzhou Guanghe hospital, which have already achieved a financial balance.Conclusion:PPP is a model that can benefit from higher service quality, efficiency and better service provision by combing finance form both public and private sectors. PFI has a very clear responsibility for each sector, meanwhile it controls potential risks for hospital and increase its performance. However every coin has two sides, PPP also have some drawbacks like bring a heavier financial burden to the hospital. Even there is a great difference between British and Chinese healthcare system in health investment, fairness,efficiency, and PPP still has a chance to be developed in China. In practice, China should further explore and establish the pattern public private partnership in public hospital according to the characteristics of China’s medical system.In order to establish and optimize the mode of public private partnership and achieve its sustainable development in China. The regulation and rules to protect PPP should be built up to provide a better environment for it further application in Chinese hospitals. Meanwhile, we can consider using primary care organizations as a breakthrough point, and cutting off the interests of chain between increasing healthcare service and the investor, stablishing a corporate governance institutions to ensure that medical institutions operate in accordance with the non-profit goal of public hospital, in order to pull the reform of healthcare system which can maximize the profit and efficiency of PPP hospitals.