Three Schemes for Promoting Private Participation in Health Technologies
(*) This article is based on original research by Dr. Paloma Alonso.
In Latin America and the Caribbean, it is estimated that a woman with cancer has only a 50% chance of being correctly diagnosed. This is the reality in a region that lacks technology for early detection of common types of cancer such as breast cancer, or radiotherapy for dealing with cancer as soon as a positive diagnosis is received. Having mammography tools would reduce deaths from this malignancy by 20% and slightly more than half of cases ‒52%‒ require radiation treatment as an essential condition for attempting a cure.
Thus, high technology equipment clearly plays an essential role in early diagnosis of these diseases and their treatment. Similarly, the development and implementation of these technologies require a strategic alliance with the private sector given its high level of specialization, innovation, and efficiency.
In view of the above, there are various Public-Private Partnerships (PPP) for adopting technologies in the region’s health systems. We will discuss three such schemes that we think could best coordinate needs in the health sector and increase access to and quality of services in Latin America and the Caribbean below.
- Technological Partner PPP
This scheme considers contracting the private sector to provide a comprehensive long-term equipment service. The contractor or “technological partner” assumes the risks of financing, availability, staffing, maintenance, and updating of the equipment. Payments are made periodically, always subject to compliance with the agreed equipment and service quality and availability indicators. This scheme does not consider the provision of medical services such as diagnostic examinations and treatments.
This alternative is recommended in contexts with limited technological knowledge or limited means to meet highly complex equipment needs (e.g., innovations in urban areas in high complexity hospitals). Under this scheme, external providers can contribute their knowledge and experience to support the definition of the needs to be contracted. This type of scheme allows for flexibility in the relationship between the technological partner and the contracting entity, facilitating the search for tailored solutions and procurement processes during the term of the contract and contributing to budgetary stability.
- Service Concession PPP
The service concession PPP covers the provision and overall management of technology and related medical services, including staffing (either partially or fully). The contracting entity makes payments for the availability and quality of the services provided.
This approach is typically used in contexts where it is difficult to supply equipment and there is a shortage of trained personnel to provide a service (e.g., rural and geographically remote areas or equipment that requires professionals not available in the country). This scheme makes it easier to incorporate personnel/staffing policies with rigorous selection procedures, performance incentives, and working hours suited to the demand in addition to greater flexibility in the purchase and acquisition of goods and services.
- Innovative Public Procurement (IPP)
Under the Innovative Public Procurement scheme, the contracting entity issues an invitation to bid on a technological solution to meet previously identified needs. This makes it possible to satisfy an unmet need with an innovative solution while at the same time enabling companies to develop the required technology and services and introduce them on the market for the first time.
This scheme is used in contexts where there is no clarity regarding the technological solution required to meet the identified need and/or there is a desire to encourage innovation (as in the case of ultra-sequencing platforms procurement). This procurement model has a high impact and entails joint development between public and private administration. In this way, joint patents can be filed and knowledge can be transferred. IPP can be used both in Technological Partner PPPs and in Service Concession PPPs.
The proper development of these schemes has the potential to provide important benefits in terms of the cost-effectiveness of investments and in access to quality of health services. To the extent that governments in Latin America and the Caribbean become more familiar with these schemes and their advantages, they will be able to leverage the significant benefits of technology in the health sector in order to better diagnose and treat the diseases that afflict our region.■
Download and read our report "Public-Private Partnerships + Healthcare" for free - click here.
At the IDB Invest Sustainability Week in Panama, June 24-28, we will reflect on the development opportunities offered by health sector apps and their impact for improving the conditions of care to meet needs in Latin America and the Caribbean.
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