Abstract
This article addresses the relationship between Public-Private Partnerships (PPP) and the sustainability of public spending in smart hospitals. Smart (technological) hospitals represent long-termed investments where public and private players interact with banking institutions and eventually patients, to satisfy a core welfare need. Characteristics of smart hospitals are critically examined, together with private actors’ involvement and flexible forms of remuneration. Technology-driven smart hospitals are so complicated that they may require sophisticated PPP. Public players lack innovative skills, whereas private actors seek additional compensation for their non-routine efforts and higher risk. PPP represents a feasible framework, especially if linked to Project Financing (PF) investment patterns. Whereas the social impact of healthcare investments seems evident, their financial coverage raises growing concern in a capital rationing context where shrinking public resources must cope with the growing needs of chronic elder patients. Results-Based Financing (RBF) is a pay-by-result methodology that softens traditional PPP criticalities as availability payment sustainability or risk transfer compensation. Waste of public money can consequently be reduced, and private bankability improved. In this study, we examine why and how advanced Information Technology (IT) solutions implemented in “Smart Hospitals” should produce a positive social impact by increasing at the same time health sustainability and quality of care. Patient-centered smart hospitals realized through PPP schemes, reshape traditional healthcare supply chains with savings and efficiency gains that improve timeliness and execution of care.
Highlights
Healthcare investments represent a central social infrastructure with growing sustainability issues, due to the aging population, and public budgetary pressures
- funding opportunities with Private Partnerships (PPP) and Project Financing (PF) schemes; global infrastructure reports suggest that, in the wake of the fiscal crisis, healthcare PPP are a growing area as governments switch attention to social welfare projects [19]; PF schemes have a levered financial structure where debt service is backed by cash-flow based expectations; the financial return for interested investors has to be consistent with a peculiar risk-return pattern;
This study considers the controversy in an innovative way, introducing payment that may not be deserved in the presence of poor private performance; the innovation of linking it to Results-Based Financing (RBF)
Summary
Healthcare investments represent a central social infrastructure with growing sustainability issues, due to the aging population, and public budgetary pressures. Hospitals are investing heavily in ICT capabilities, to become “smart”, achieving better clinical outcomes, resilience in supply chain and enhancement of patient experience These changes impact both the design, construction, and operation of hospitals, being so consistent with a PPP/PF investment pattern. The paper focuses on the relationship between PPP and the sustainability of public spending in smart hospitals to determine if public and private interactions best fit risky high-tech investment patterns, ensuring social benefits. RBF can be usefully combined with smart hospitals, linking public payments to effective private performance, and so ensure the sustainability of availability payments. This approach is coherent with “Health System Performance Projects” undertaken by Central Bank and OECD with the aim of [5]:.
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