Effective Public-Private Partnership In Regional Healthcare

International experience in the development of public-private partnerships in healthcare

Due to the annual increase in the cost of medical care, even countries with a high level of government funding have to use public-private partnership instruments. Some scientists (Buso et al., 2017; Bonfim et al., 2018; Comendeiro-Maaløea et al., 2019; Chauhan & Marisetty, 2019; Kostyak et al., 2017; Kretser et al., 2017; Reich, 2000) claim that public-private partnerships are able to solve accumulated problems in the healthcare sector, improve its technological level and increase the level of comfort and service.

The features of a public-private partnership are:

• Long-term cooperation;

• Significant government support of the projects in the field of creation, renovation, maintenance of social infrastructure funded by the private sector that bears most of the risks;

• High reputation of the organizations, etc.

Effective cooperation between the public and private sectors in the national healthcare system introduces high-tech medical services and innovations and improves the quality of medical care provided to the population. The most popular models of public-private partnerships in international healthcare (DBFO, DBFM, BOO, BOLB, and other) combine various functions, such as designing, building, financing, operating. It is appropriate to review the international experience in developing public-private partnerships in the healthcare sector in the following examples (Table 1 ).

The analysis of international experience in implementing the public-private partnership in the healthcare sector indicates a variety of forms and models that require further institutional development. Such development is necessary for decreasing risks for private investors, improving the level and quality of medical services in order to satisfy the population, and increasing the efficiency of mutually beneficial cooperation between the state and business.

Analysis of the Russian experience in developing public-private partnerships in healthcare

A variety of Russian scientists has examined and described the possibilities of applying PPP in the social sector, including healthcare (Fadyushin, 2019; Molchanova, 2016; Nisan et al., 2012; Varnavsky, 2011).

In Russia, healthcare is a leader in terms of PPP social projects. Currently, 118 PPP projects are being implemented in the healthcare sector (including projects in which a private investor participates not only in the creation but also in the operation of the infrastructure). Moreover, 88% of private sector investments (in relation to the total investment in the project) ensure the implementation of these projects (https://www.economy.gov.ru/material/file/764aafac33fa544aec5b3008619e92a8/reiting_gchp_022020.pdf). The Expert Council for Public-Private Partnership Development under the Russian Ministry of Economic Development (Decree, 2018), established in 2019, is aimed at improving the cooperation between the public and private sectors regarding the development of PPP mechanisms, their methodological support, legal regulation, and project support.

The institutional and contractual forms of the public-private partnership are the most popular in the world. The institutional form implies the joint participation of the state and private business in the capital created for implementing a socially significant project. The contractual form is a strategic partnership between the state and private businesses based on a contract for the performance of certain functions regarding the public infrastructure object without creating a joint venture (Ershov, 2013). In the Russian healthcare, the practice of concession agreements is the most common legislative PPP form that allows the extension of the project implementation period up to 49 years; such PPP projects are usually implemented in the regions or municipalities (Molchanova, 2016).

Table 2 shows various options for implementing PPPs at the regional level.

70% of healthcare initiatives including the application of new public-private partnership models are implemented in such areas as primary health care, specialized, high-tech and innovative medical care, medical rehabilitation and health resort treatment (Zavyalova, & Tkachenko, 2018).

There is a variety of cases of the implemented PPP projects in the Russian healthcare:

– Republic of Tatarstan, Kazan: an educational centre for high medical technologies (the joint project of the Ministry of Health of the Republic of Tatarstan and the company “Johnson & Johnson”); the outpatient haemodialysis centre in Kazan awarded as the best social infrastructural project in Russia by ROSINFRA.

– Novosibirsk: provision of high-tech medical care due to concession of the former Maternity Hospital No. 1 to the private partner CJSC Medical Centre “Avicenna” that reconstructed and restored the building;

– Moscow and the Moscow Region: concession of the City Clinical Hospital No. 63 in Moscow to the European Medical Centre; concession of Moscow regional oncology centres in Balashikha and Podolsk for 12 years, when the Moscow region guarantees the concessionaire the provision of services and tariffs stated in the compulsory health insurance.

–– Saint Petersburg and the Leningrad region: construction of a new building of the City Hospital No. 40 in Saint Petersburg; concession of the Rehabilitation Centre in the Leningrad region for 25 years, etc.

Implementation of public-private partnerships in healthcare at the regional level

The Ministry of Economic Development of the Russian Federation annually ranks the constituent entities of the Russian Federation by the level of the public-private partnership development in each entity. The regions are rated in accordance with the indicator “The level of the public-private partnership development in the constituent entity of the Russian Federation”.

In 2019, the Ministry revised the existing approaches to calculating the indicator in order to increase the transparency of the rating (https://www.economy.gov.ru/material/file/764aafac33fa544aec5b3008619e92a8/reiting_gchp_022020.pdf) and create conditions to stimulate the executive authorities and local governments of the constituent entities of the Russian Federation to more actively use PPP mechanisms. The attraction of private investment in infrastructure development assists in the implementation of the Decree of the President of the Russian Federation of May 7, 2018 No. 204 “On national goals and strategic objectives of the development of the Russian Federation for the period until 2024” (Decree, 2018).

In the 2019 rating of the Russian Federation's constituent entities by the level of the public-private partnership development, the Sverdlovsk Region took 7th place out of 85 constituent entities of the Russian Federation and 2nd place in the Ural Federal District. It is appropriate to examine the regional experience in implementing PPP projects in healthcare. The “design-build-operate-deliver” model was most fully implemented in the Nuclear Medicine Centre of the Sverdlovsk Region.

The problem of cancer incidence and mortality is multifaceted, as it involves not only medical and demographic but also socio-economic aspects. Premature mortality of the working age population results in reduced labour potential and threatens national economic security. In the Russian Federation, the economic losses due to premature mortality caused by cancer and its consequences, including treatment, annually account for more than 1.0% of gross domestic product (GDP). This problem requires the creation of effective mechanisms for preventing cancer and reducing economic losses from it (Zayukov et al., 2020).

The Nuclear Centre in the Sverdlovsk region was created due to the necessity to improve methods for cancer diagnosis. In the region, the issue of effectively combating cancer is very acute: malignant tumours are ranked second in the structure of mortality. The national and regional cancer control programs set the task to increase the identification of malignant tumours at the early stages to 58%, as well as to increase the proportion of treated patients with malignant tumours registered for five years or more to 58.2% in 2024. To fundamentally change the oncological situation, following the guidelines of the national project “Healthcare”, at the end of 2012, the Government of the Sverdlovsk Region and “PET-Technology” LLC signed an agreement on the establishment of a diagnostic medical centre and the subsequent provision of services under the compulsory health insurance.

Currently, the Nuclear Medicine Centre “PET-Technology” in the Sverdlovsk region is the largest investment project in the field of healthcare in the Russian Federation (see https://www.pet-net.ru/centres/ekaterinburg). The Nuclear Medicine Centre, located in a detached building on the territory of the Sverdlovsk Regional Oncology Centre, is conducting research using positron emission tomography. In 2019, the second high-tech scanner for diagnosing tumours started working there. The new PET/CT scanner can examine almost the whole body. This diagnostics allows identifying tumour foci, their prevalence, and stage of the disease and helps doctors determine the correct treatment tactics. The new PET/CT scanner is capable to examine 97% of the patients free of charge (via compulsory health insurance), as well as 3% of residents from other regions and 52 countries (https://www.obltv.ru/news/science/v-uralskom-tsentre-yadernoy-meditsiny-zapustili-novyy-pet-skaner).

The Government of the Sverdlovsk Region, Federal State Autonomous Educational Institution of Higher Education «Ural Federal University named after the first President of Russia B. N. Yeltsin», Joint Stock Company “Rusatom Healthcare” and Limited Liability Company “Med Invest Group” signed an agreement for implementing a joint investment project. The project "Creation of the Nuclear Medicine Centre for the diagnosis and treatment of cancer" in the Sverdlovsk region of July 10, 2018, relies on the principles of the public-private partnership. The subject-matter of the agreement is the intention of the parties to cooperate in creating and operating the Cyclotron Centre for Nuclear Medicine. Additionally, the parties agreed to produce radiopharmaceuticals, conduct research, organize educational activities, and provide medical services for radionuclide diagnostics on the basis of the centre (https://minzdrav.midural.ru/news/show/id/3701/news_category/74).

The implementation of the project on the creation of a nuclear medicine cluster using integration, interdisciplinary approaches resulted in the introduction of various organizational, informational, and medical innovations (see https://www.uralonco.ru/tsentr-yadernyy-meditsina-vyl-pozvolit/):

• Creation of a building for radionuclide therapy, a radiochemical laboratory, a radiosurgery centre, and expansion of the use of positron emission tomography (PET);

• Creation of the Cyclotron centre on the basis of the Ural Federal University aimed at the production of radiopharmaceuticals for the diagnosis of cancer and cardiovascular diseases;

• Development of new methods for the selective delivery of anticancer drugs using tissue penetrants (“Tizol”, “Silavatit”) and carbon-coated metal nanoparticles necessary for treating malignant tumours (in cooperation with the Ural Branch of the Russian Academy of Sciences);

• Development of a program/an engineering implementation of the model that determines tumour margins based on the type of brain glioma in a Magnetic Resonance Imaging (MRI). At all stages of the algorithm, this unique model takes into account additional signs indicating the existence of internal heterogeneity of the brain glioma while identifying tumour margins (Centre for Scientific Research "Avantrend") and others.

Assessment of the effectiveness of PPP in regional healthcare

Examination of the cases of successful implementation of the public-private partnership projects in Russia and abroad allows formulating the author's hypothesis concerning the healthcare sector. According to this hypothesis, in the context of the increasing cost of medical care, the expansion of the use of PPP is an effective tool for mutually beneficial cooperation between the regional healthcare and the socio-economic systems. The private sector investments in infrastructure and medical equipment have a positive effect. On the one hand, they result in improving the regional medical and demographic indicators. On the other hand, due to the preservation of the working age population and increase in the number of jobs in newly created social infrastructure facilities, the contribution to gross regional product (GRP) increases as well.

In this regard, it is advisable to determine the benefits of using the public-private partnership for all process participants.

• The benefits for the private sector are the improvement of the reputation as a result of participation in regional, national, and international projects; state guarantees; reduced risks of the investment (taking into account tax benefits, budget subsidies, subventions, etc.) in the real production sector of the economy during the construction and renovation of social facilities, etc.

• The benefits for the healthcare system are the improvement of material and technical equipment; improvement of medical service; increased treatment effectiveness due to modern diagnostic equipment; increasing public satisfaction with the level of medical and non-medical services in healthcare facilities, etc.

• The benefits for the regional socio-economic system are the achievement of the multiplier effect by reducing the mortality of the working age population and increasing the contribution to GRP.

• The authors proposed the following algorithm for assessing the effectiveness of the regional PPP projects:

• Assessment of public satisfaction with medical services.

• Assessment of public satisfaction with non-medical services.

• Change in the dynamics of the diagnostics.

• Change in the dynamics of the incidence rate of the population.

• Change in the dynamics of the mortality rate of the working age population, etc.

• Assessment of the economic effect.

The implementation of the public-private partnership in regional healthcare was assessed in the example of the Nuclear Medicine Centre. Considering the social significance of oncological diseases, the research focused on assessing how the changes in diagnostics influence the incidence and mortality of the working age population, as well as on examining the regional economic effects or losses.

The studies on the implementation of PPP in the oncology service of the Sverdlovsk Region showed positive dynamics. Due to the improvement of diagnosis, the number of patients with detected cancer who have lived for more than five years increased in comparison with the average Russian indicators.

Table 3 presents the results of the oncological service of the Sverdlovsk region in the period 2017-2019.

The analysis shows a 3.4% increase in the incidence of malignant tumours in the period 2017-2019 that is caused by an improvement in diagnosis and an earlier detection of cancer, among other things.

At the same time, the number of patients with suspected MT sent in the Sverdlovsk Regional Oncology Centre increased by 19.7%. The use of nuclear medicine technologies and introduction of innovations in the oncology service resulted in a 3% reduction in the mortality of the working age population.

The economic effect from the reduction in mortality of the working age population is calculated as the difference between possible and actual damage. The possible damage is calculated as GRP per 1 worker (in roubles) in the current year multiplied by the number of patients who died in the previous year. The actual damage is calculated as GRP per 1 worker (in roubles) in the current year multiplied by the number of patients who died in the current year.

A 2.4% increase in the number of deaths in 2018 compared to 2017 led to a negative value (-43.5 million roubles), as the actual damage exceeded the possible. A 5% decrease in the number of deaths in 2019 compared to 2018 contributed to an economic effect of 100.9 million roubles. The total economic effect for the period from 2017 to 2019 amounted to 57.4 million roubles.

The further decline in the working age population's mortality will contribute to an increase in the economic effect at the regional level. The calculations demonstrate that each percentage reduction in working age mortality will increase the regional economic effect by at least 20.0 million roubles. The positive experience of implementing the public-private partnership in the Sverdlovsk Regional Oncology Centre demonstrates the usefulness and applicability of this mechanism in the provision of high-tech medical care to residents of the region.