Today we are talking to Prof. Veronica Vecchi,
member of PPPHealth4All. Veronica is Professor at
Bocconi University School of Management (Sda Bocconi)
- 3rd top business school in Europe according to the
FT ranking, where Veronica teaches Business
Government Relations and is director of the Executive
MBA at Sda Bocconi India Center, the off shore campus
of Bocconi in Mumbai. She has published numerous
publications and articles on PPPs in the healthcare
What is in your view the specifics of healthcare PPPs compared to other PPPs?
We can approach public private partnerships in two ways. PPP have been used so far mainly to design, finance, build and operate large hospitals in many countries with contested results, especially because of a lack of affordability due to weak financial, project management, and strategic skills in the public sector and the choice to include many non-core services in the transaction. The latter resulted in quite large contracts with a limited risks transfer, which, instead, is the essential feature of a PPP project. In the last 15 years I’ve been involved in structuring and renegotiating many PPP projects in Italy and I’ve worked closely with many scholars within the academic 3P network; this has allowed me to combine theory with practice and to develop a new approach to PPP in health, which I called PPP light, whose features are well described in my recent paper (PPP in Health Care—Trending Toward a Light Model: Evidence From Italy, published by Public Works management and policy).
The essence of the light model is the fact that a PPP contract in health must be designed by looking at the main goal to be achieved, thus avoiding to include peripherals that may increase the contract complexity and information asymmetry, which can undermine a correct risk allocation, because of the ramified web of subcontracts. Therefore, when the need is to build a new hospital, my suggestion is to include in the contract only essential activities such as design, building, maintenance and energy management, which are services strictly related to the need of a new/renewed hospital building. A PPP light can be applied also to the installment and operation of medical equipment or to small parts of hospitals, such as high intensity care units.
From a second and wider perspective, public – private collaborations can be seen also in the medical device field, with the development of value based contracts, or for the delivery of innovative services, based on digital transformation and internet of things. When PPP is applied to services, rather than cement, there is a greater opportunity to link the payment to the economic operator to the achievement of certain results, not only in terms of efficiency but also in terms of effectiveness.
What are the lessons learnt and impact on COVID-19 for healthcare PPPs?
In my perspective we need a twist in the way in which PPP is used in health. One of the lessons we can take from Covid-19 pandemic is the opportunity to move healthcare procurement towards a more strategic approach, where public-private collaboration can play a significant role to develop more resilient healthcare systems. Indeed, during the emergency, “hastily-generated” partnerships have bloomed. They are not only fundamental to ensure resilience in outbreaks; they can also pave the way for the creation of collaboration and trust to move public procurement towards a more strategic approach and to develop partnerships on a larger scale. Policy-makers should reflect on which areas of procurement would be less affected during the outbreak if previous partnerships existed with market suppliers, by comparing flexibility, rapidity and business continuity offered by contractual agreements based on different levels of collaboration. This issue has been developed in a paper published by the American Review of Public Administration (Medical Supply Acquisition in Italy and the United States in the Era of COVID-19: The Case for Strategic Procurement and Public–Private Partnerships) and in a short note published by the World Economic Forum.
What has to be done to improve PPPs in the healthcare sector?
To get the most from public-private collaborations we need not only new management competence to move procurement from a compliance-based perspective into a risk-management perspective, but also a new strategic approach to procurement – when the public sector behaves as a sophisticated buyer and where procurement is used also to achieve policy goals, such as business resilience, innovation and the creation of national/European production.
A new set of skills is required not only in the public sector but also in the private sector, to generate a common playing field fundamental to develop trust and therefore to co-create more sustainable, balanced and innovative partnerships. In this landscape, I think that women could play a salient role, therefore it is welcome any attempt to develop networks of women who can contribute to the development of this renewed approach to PPPs in health.
What could be your added-value to PPPHealth4All ecosystem?
I believe that the role of women is crucial for more sustainability
in healthcare procurement and PPP and wish to contribute to the
establishment of an international women network in this field to
exchange experiences and disseminate good practices. With reference to the latter, best practices should be applied with great attention to the contexts’ specifics to avoid mistakes already done, especially when many countries imported the anglosaxon PPP model.
Thanks a lot! We wishing you a lot of success in your work! Interview by Natalia Korchakova-Heeb, founder of PPPHealth4All
The list of articles published by
Prof. Veronica Vecchi:
Vecchi V., Hellowell (2018), Public Private Partnership in the healthcare sector, Palgrave Pivot
Colla P., Hellowell M., Vecchi V., Gatti S., (2015), Determinants
of the price of equity in hospital private finance initiative projects,
Hellowell, M., & Vecchi, V. (2015). The Non-Incremental Road to Disaster? A Comparative Policy Analysis of Agency Problems in the Commissioning of Infrastructure Projects in the UK and Italy Journal of Comparative Policy Analysis: Research and Practice, 1-14
Vecchi V., Hellowell M., Gatti S., (2013), Does the private sector
receive an excessive rate of return from investments in health care
infrastructure? Evidence from the UK. Health Policy, 110 (2-3): 243 –
Hellowell M., Vecchi V., (2013), Better deal from investors in public
infrastructure projects: insights from capital budgeting. Public
Management Review, 15(1): 109-129