Hospital concessions in Chile: where we are and where we are heading.

Abstract

Public-private partnerships began under President Ricardo Lagos, driven by the need to provide roads and other hard facilities. Over time, they expanded into social concessions such as prisons and hospitals. During the Bachelet administration, the construction of two mid-sized hospitals of Santiago was tendered with private finance initiative. During the government of Sebastián Piñera, three more hospitals were tendered. This article critically examines the grounds on which social concessions have been introduced in different parts of the world. I argue that the there are two main rationales underlying the position of those favorable to concession arrangements: pragmatic reasons and ideological-utopian reasons. I refute the arguments related to closing the infrastructure gap, effect on public debt, transfer of risk to the private sector, greater efficiency of the private sector, freeing-up of public funds and quality of health care. Review of the international literature does not yield evidence in favor of hospital concessions consistent with the principles and drivers that promote them. Quite the contrary, when the “Value for Money” methodology has been used, concessions have proven to decrease the overall capacity of the health system and to negatively affect quality of health care. I also note that there is a potential impact on intergenerational equity with projects that span for long periods, as is the case of hospital concessions. I conclude that, since there is no evidence base grounded on sound technical principles in favor of this policy, the real underlying reasons to promote private financing of public health infrastructure are ideological, and functional to market interests but not to collective preferences.