The
Prime Minister of PNG publicly decries the state of PNG hospitals, and
regularly approaches his near neighbor Australia for help to improve
them. The poor state of PNG hospitals is a consequence of a long slow
deterioration of infrastructure, and weakening governance and
management. Initially hospitals were made delegated functions when
decentralization was first implemented, and were then re-centralized,
followed by a well-intentioned, but insufficiently thought through move
to place them under independent Boards reporting directly to the Health
Minister. Port Moresby General Hospital, the leading tertiary referral
hospital in PNG, arguably is not of a standard that the government, the
medical and nursing fraternity nor the general public find acceptable.
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| Port Moresby General Hospital, the leading tertiary referral
hospital in PNG, arguably is not of a standard that the government, the
medical and nursing fraternity nor the general public find acceptable. |
The highly motivated Board have recently appointed an expatriate
hospital manager to try and turn the trajectory for the hospital. Will
this be enough? Or is more radical surgery worth considering? Let us at
least pose the question, so that it can be debated publicly. Can PNG do
what Lesotho did to turn its tertiary referral hospital around –
radically, decisively and very much for the better?
What did Lesotho do?
Lesotho, a small mountain kingdom, surrounded by the Republic of
South Africa was confronted with decaying and low quality publicly run
hospitals. The flagship hospital of the health system was the Queen
Elizabeth II (QEII), the country’s 100-year-old only national referral
hospital, located in the capital Maseru. A legacy of British Colonial
rule, QEII was crumbling, consuming increasing amounts of the government
budget, and delivering poor and deteriorating services.
Rather than repeat the failed investments of the past, the Minister
of Finance, Tim Thahane, decided to experiment with a radical new idea.
What would happen, he asked, if we offered the private sector the same
amount of money we spend today on this run down public hospital? What
could they offer us? Could we get better quality and better services for
the people of Lesotho, at the same price?
The answer has been a resounding yes.
Enter the Public Private Integrated Partnership
A Public Private Integrated Partnership (PPIP) is an innovative PPP
in which the government enters into a long-term contract with a private
operator to build, design, operate and deliver a full range of clinical
services to a population. This model harnesses private capital and
management expertise, while retaining public ownership and oversight of
health services. Experience in other countries, particularly in
Valencia, Spain, has shown that the model can have a significant impact
on the quality and efficiency of health care.
[1]
But can this work in a low-income country? Lesotho’s example is instructive.
Given that it had to make a major infrastructure investment on QEII,
the PPIP solution met all of the government’s key policy goals by:
- Making capital expenditures affordable in the near term
- Providing Government budget stability through defined and predictable health expenditures
- Transferring risk to the private sector for construction delays or cost overruns for a large and complex building project
- Transferring significant operational risk for the delivery of
complex health care services, while capturing the efficiencies of
private sector management
- Providing an economic engine for growth for locally owned businesses.
Working with the International Finance Corporation (IFC) as
transaction advisors, the government issued an open international tender
which posed a challenge to all bidders: for the same level of
expenditure as QEII, how much more could the private sector deliver in
quality, breadth, and volume of health care services?
After a formal and transparent bid process, the Tsepong Consortium
was awarded an 18-year contract to build a 425-bed hospital linked to
three primary clinics, offer a full range of secondary and tertiary care
(some of which had previously been referred to South Africa); integrate
hospital services with primary care for Maseru; and make a major
commitment to enhancing the limited human resources capacities of the
country. As in all PPIPs, the government retains ownership of the
assets, and the facilities must provide services to the population
originally served by the public facilities, at no additional cost to
patients.
Tsepong is jointly owned by Lesotho doctors, who also provide
specialist services to the hospital; doctors and specialists from South
Africa, a local firm for Basotho women, members of the local chamber of
commerce, and Netcare Limited, a South African hospital management firm,
and a South African private health care provider.
The new arrangement represents a major shift in role for the Ministry
of Health from a provider to a purchaser of care, with responsibility
for improving value for money and quality of services provided to the
people of Lesotho. To assist the Ministry of Health in this unfamiliar
role, an Independent Monitor has been appointed to measure compliance
with the detailed performance indicators specified in the contract and
to assess associated penalties for not achieving performance levels.
Indicators cover a full range of clinical service quality, equipment,
drug supply management, information technology, and staff certification
and training. For example, 85% of patients with a provisional diagnosis
of myocardial infarction must receive aspirin within 30 minutes of
evaluation; and the fully automated medical record system must be up and
operational at least 99% of the time. In addition, after an initial
stand-up period, the hospital is required to obtain accreditation by the
Council for Health Service Accreditation of South Africa.
And what about the money?
The PPIP structure provides for co-financing of capital expenditures
for construction, refurbishment and equipping the hospital and
associated clinics; and also provides for an ongoing payment from the
government to the Consortium for service delivery at the facilities.
Both repayments are contained in a single unitary payment. This payment
did not begin until after the hospital was opened and started seeing
patients. This was 3 years after the contract was signed. All upfront
expenses were covered by the Consortium.
Under the contract Tsepong provides almost 30% more hospital
admissions and 87% more outpatient visits for an estimated 7% increase
in operating costs over Queen II. If service volumes exceed contracted
amounts, additional fees are paid to Tsepong, but the government must
approve these increases. Under this payment structure, the government is
basically contracting for a fixed volume of patients (inpatients and
outpatients). This volume based payment structure, has not been without
its problems, and the cost of the additional public activity has been a
source of some tension between the government and the operator.
This is not the only payment structure option for a PPIP and it is
worth looking at how other countries have dealt with payment structures
differently. In the Turks and Caicos for example, the operator is paid
on a capitation basis, similar to the Alzira model in Spain. This model
has some advantages as it incorporates a broader healthcare picture
which includes primary care, rather than the traditional “let’s build a
big Hospital” approach.
The way it is now
The clinics and hospital were completed on time and on schedule.
After one year of operation in the new Queen Mamohato Memorial Hospital,
maternal mortality has decreased by 50% despite treating much more
complex cases. Overall patient mortality decreased from 12% to 7% and
there has been a large increase in patient satisfaction. A range of
clinical capabilities have been established for the first time in
Lesotho, such as neonatal intensive care, thus saving lives and reducing
expensive referrals to South Africa. A fully electronic medical record
and reporting system has been implemented to allow detailed performance
monitoring on a large set of quality and service indicators.
A key objective of the government was to increase human resources
capacity in the country. There has been extensive training of physicians
and nurses. Previous shortages of doctors and nurses have been
addressed through international recruitment and the return of Basutho
professionals to the country.
The tangible increase in quality, service and facilities has come at a
price. In the first year, the hospital surpassed its negotiated
volumes. The PPIP represents an island of excellence in a sea of
mediocrity. In the longer run, the strengthening of other parts of the
health system (including district hospitals and outlying health
facilities) remains a priority, so that patients will not need to travel
to the capital to get quality care. But, given the previous state of
affairs, this is a good problem to have.
Lessons for Papua New Guinea
This approach could be an option worth considering in PNG. However,
it represents a significant change in mindset for PNG and the generally
accepted view of how the health system operates. PNG has a tradition and
comfort level with government-owned and operated hospitals. To follow
Lesotho would mean that the government would need to make a paradigm
shift from “provider” to “steward” of the health system. This would
require both new skills, and a new way of understanding the government
role in ensuring health services are provided – but not necessarily
providing them.
We expect that such a transition from a publicly owned and run
hospital to a PPIP such as in Lesotho would be challenging. Doubtless,
opposition politicians will accuse the government of privatizing the
health care system, even though all facilities remain in public
ownership. Most likely, trade unions would object. Initially, doctors
with entrenched interests in the old ways may resist the change. But
experience suggests that they quickly become converts once they
experience the greatly improved working conditions and clinical
opportunities.
These problems can be overcome but they require strong and bold political and technical leadership.
The fundamental driver of change is an unequivocal recognition that
the current system is broken and that further investment will not fix
it. Something new is needed. Public hospitals in Papua New Guinea are an
extreme example of the inability of the post-independence period to
maintain the standards that should be enjoyed by the population. Despite
the best efforts of many and funding from government and donors alike,
hospitals continue to under perform. If you keep doing as you have
always done, you will get what you have always had… a new solution is
needed.
The experience of Lesotho needs at least to be on the table and in
the public debate. We believe that it is possible to change the
discourse on hospitals in PNG – but is there the political will and
courage to accept the radical surgery to do so?
Information about the Lesotho PPIP is taken from: The Global
Health Group, University of California San Francisco; and PWC, 2013,
“Health system innovation in Lesotho: design and early operations of the
Maseru public-private integrated partnership.” Healthcare
public-private partnerships series, No. 1. Available here.
