Delivering European Healthcare Infrastructure Through Public-Private Partnerships : The Theory and Practice of Contracting and Bundling

This chapter reviews the European experience in delivering healthcare infrastructure and services through public-private partnerships (PPPs), a strategic alliance between public and private partners over extended time periods. We investigate the concepts of contracting and bundling public sector infrastructure and services and draw lessons learnt across European Union (EU) member states. If contracts could be “complete”, with all contingencies predictable, it would be easy to write a contract which maximized the benefits from the abilities of the respective public and private parties. In the real world, however, this condition is lacking. We explore payment to a private party for service provision, and sharing of risk with that private party, as conceptual features characterizing a public-private partnership. Both these features relate to the idea of “bundling” together capital asset development and output of various services. Bundling creates a particular profile of property rights, across time or services, and the effect is theoretically to internalize externalities. We explore whether more extensive bundling seems to be associated with improved outcomes – whether for example extensions beyond hospital accommodation to hospital medical services or additionally primary care services bring benefits. The policy recommendation to be drawn is that limited PPP models are inadequate to handle the dynamic quality and demand nature of health services, but there is no definitive answer as to whether extensive bundling models are optimal. Nevertheless, there is now a growing case for much greater roll-out of more encompassing models incorporating clinical services and franchises