Revolution and evolution in the field of healthcare

In the new PricewaterhouseCoopers report "Build and Develop: the Revolution and Evolution of PPP in Healthcare" (Build and Beyond: The (r)evolution of healthcare PPPs) notes that public-private partnerships (PPPs) represent a new model of financing and management of the healthcare industry worldwide, and can create an international market for private companies and investors with a potential of many trillions of dollars, as well as reduce the burden on taxpayers and improve quality health systems.

The PwC report provides evidence of increasing interest in PPPs working in the field of healthcare from international investors and the market's readiness for rapid growth over the next few years. Competition for private capital has forced the Governments of Europe, Asia, Africa and South-East Asia to create special departments on PPP issues, entrust them with the development of policy recommendations on PPP, improve procurement procedures and conclude contracts for the provision of services.

The full version of the report (44 pages pdf, 1 MB) can be downloaded on the PwC website.

David Levy, MD, Head of PwC's international practice for providing consulting services to healthcare industry enterprises, noted:

"State financing of innovation activities in the private sector is a mutually beneficial situation for the state, private business and patients. PPPs create opportunities to increase the availability and quality of medical care, reduce healthcare costs and distribute responsibility for the work of healthcare systems among different groups of participants who previously did not have sufficient motivation to work together to achieve a common goal ...".

The PPP scheme is especially attractive for government agencies dealing with medical care for categories of citizens who need expensive medical services or have not received the necessary medical care (for example, under Medicaid – the American state program of medical assistance to the poor), citizens living in places not fully covered by primary health care, patients with such diseases like AIDS or cancer.

Alina Lavrentieva, Candidate of Economics, Partner, Head of Practice for providing consulting services to pharmaceutical and healthcare enterprises, said:

"PPPs are transforming the prevailing perception that private healthcare exists for the rich, and public healthcare exists for the poor. PPPs do not create or exacerbate health inequalities. On the contrary, they can make medical care accessible to all segments of the population. The key to the success of PPPs on the way from the creation of infrastructure to the provision of medical services on a long-term basis will be the conclusion of contracts in which the objectives of activities aimed at ensuring high quality and effectiveness of health protection measures will be clearly formulated. Success will also depend on the creation of a national health policy that will allow local governments to work effectively, and on the level of representatives of the private sector who will be involved in joint activities."

After analyzing trends in healthcare spending, as well as projected expenditures by country, PwC experts came to the following conclusions:

• By 2020, the expenditures of the OECD and BRIC countries (Brazil, Russia, India and China) on the creation of health infrastructure may grow to $397 billion per year. Today, their amount is $263 billion a year. However, the bulk of the costs in which the private sector will participate will not be related to infrastructure and is expected to amount to more than 7.5 trillion dollars per year. In 2010, the amount of these expenses was $5 trillion.
• In the period from 2010 to 2020, the total cost of healthcare infrastructure in the OECD and BRIC countries will amount to 3.6 trillion dollars, and their non-infrastructure healthcare costs will amount to 68.1 trillion dollars.
• In the United States, health care costs account for about half of all OECD countries' expenditures, but the growth of these costs will reach the highest rates not in the United States, but in other countries. According to PwC forecasts, the countries in which the largest growth in healthcare spending is expected between 2010 and 2020 will be China (an increase of 166 percent) and India (by 140 percent).
• In the OECD countries, healthcare spending as a percentage of GDP will increase to 14.4 percent by 2020. In 2010, it was 9.9 percent. In the BRIC countries, healthcare spending as a percentage of GDP is expected to increase to 6.2 percent in 2020, compared with 5.4 percent in 2010, as the economies of these countries are developing and they are working to improve their health systems. The growth in actual spending will amount to 117 percent over the decade. China will top the list of countries with the largest growth in spending.

Dr. Levy noted:

"In no country in the world is healthcare fully funded by the state. Each country strives for an optimal combination of public and private sources of financing and has different reasons for using the PPP model, whether it is risk sharing, capacity and access expansion, efficiency improvement or accelerated innovation. PwC's experience shows that PPPs in the field of healthcare are an example of a successful economic model that is used in the space from New York to New Delhi, from Spain to Singapore and from Montreal to Munich."

Portal "Eternal youth" http://vechnayamolodost.ru14.03.2011