Importance of Public-Private Partnerships in Health Sector

Public-Private Partnerships in Cambodia’s health sector could be an effective solution to inaccessibility and insufficient medical service and equipment in the Kingdom’s public hospitals
Khmer Soviet Friendship Hospital, Phnom Penh, July 6, 2023. Kiripost/Prak Chan Thul
Khmer Soviet Friendship Hospital, Phnom Penh, July 6, 2023. Kiripost/Prak Chan Thul

A critical limitation of Cambodia’s public health system - inaccessibility or insufficiency of vital medical services and equipment - was thrown into sharp relief for me six months ago when a close relative experienced this limitation firsthand.

This relative realized there was a lump in her breast, so she went to Soviet Hospital to have an ultrasound. The doctor there told her she likely had breast cancer, but would need a mammogram to confirm. The problem: there is no mammogram machine available at Khmer Soviet Friendship Hospital.

So she went to Calmette Hospital, hoping to be able to calm her fears, or to receive a diagnosis. Instead, she was told that the only mammogram machine in the hospital was under maintenance.

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Knowing how serious the illness could be and understanding the immediate treatment that she might need, she decided to travel to a hospital in Bangkok. She was diagnosed with stage 3 of breast cancer and quickly began chemotherapy. Her doctor stressed that she should not wait but to do all necessary scans so that the treatment could begin right away.

Imagine how frustrated you would be hearing that you may have cancer but must delay your diagnosis because of the unavailability of medical equipment. How much more dangerous and serious could her cancer have become if she’d had no choice but to wait to receive imaging from a local health facility?

Public hospitals in Cambodia have an important role to play. People - particularly those with lower incomes - rely on these hospitals for treatment and access to essential health services. But in some critical ways, particularly when it comes to medical equipment, these services are incomplete.

Gaps in medical equipment access

The 2021 Asia Development Bank’s health assessments found that Cambodia’s public hospitals currently face inadequate and outdated laboratory equipment for diagnosis and clinical management. Of 24 provincial and 92 district referral hospitals, 81 are in urgent need of medical equipment upgrading and 62 require renovation of laboratory rooms.

The report also found that equipment in public health settings for infection prevention and control, including autoclaves, washing machines, and waste management systems, required replacement.

A brief on Cambodia’s health sector from late 2021 by GIZ found that public hospitals are still constrained by inadequate resources. Insufficient supplies of medicines, equipment and facilities were cited as a challenge and it is not only a problem for provincial hospitals, but all 8 national hospitals in Phnom Penh also encounter these same issues.

Because of insufficient medical equipment, even these larger hospitals are limited in their ability to provide the health checks and medical services that patients need. As a result of these limitations, traveling overseas for health care, especially to neighboring countries such as Thailand and Vietnam, is common for some of the country’s wealthier and middle-class residents. The inaccessibility of necessary medical equipment has been cited as one of the main concerns for Cambodian people when it comes to receiving medical treatment locally.

Evaluators have also found that public hospitals have limited diagnostic capacity. This dynamic contributes to the high numbers of Cambodians who travel for medical treatment. Cambodians who can afford to may also choose to go to private hospitals for general health care services, believing that private facilities provides better care and equipment.

However, private hospitals services and treatment are only an option for those that can afford the cost.

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Serious consequences

Inadequate medical equipment in Cambodian public hospitals leads to two major negative consequences, one for patients, and the other for the country’s economy.

First, for low income Cambodians, the country’s own local public healthcare system is the only choice they have. When it comes to certain health conditions, if the appropriate medical treatment isn’t available in public hospitals, they may be forced to spend money they simply don’t have for that service in the private hospitals, leading to financial distress. A 2019 study conducted to explore health financing in Cambodia indicated that one-third of the 5000 households surveyed, in both rural and urban settings, had health-care-related debts. The other option is to forego treatment altogether, leading to medical distress.

Second, a lack of trust in local healthcare equipment and facilities leads to Cambodians spending their money on health services outside the country. According to the World Health Organization, at least 150,000 Cambodians go abroad for health treatment and spend about $600 million yearly. This is the cost spent on the treatment, not to mention other costs associated with this type of travel.

While Cambodia has made use of public private partnerships as a way to jumpstart infrastructure development, PPPs in social sectors remain underutilized. To improve the accessibility and affordability of medical services for Cambodians, partnerships and collaboration between public hospitals and the private sector could be an effective solution the country should explore.

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Public-Private Partnerships (PPPs) for a better access to health care services

Although the government understands the importance of quality health care, their resources are limited. With the given circumstance, the government, and the ministry of health (MOH) should consider attracting and establishing public private partnerships in the health care sector, allowing local and foreign investors to take part and determine where best to put their resources.

Investors from the private sector, for instance, might be incentivized to invest in diagnostic medical equipment - imaging machines, such as X-Rays, MRI or CT scan - for public hospitals. The role for Cambodian authorities in such a partnership would be to work with these private investors to create a system that allows investors to make a profit whilst making sure these health services remain affordable compared to private healthcare and traveling abroad for care.

While there are a number of types of PPPs that can serve as models for healthcare collaborations, according to a working paper from 2014 from the Asian Development Bank, one kind of PPP project that is of interest to the private sector is called the build-operate-transfer model.

A project that follows this model is one in which a private entity receives a concession from the government to finance, design, own, and operate a facility stated in the concession contract. For this model to work, the government actors would need to provide some guarantee that during the period in which the project is functioning as a partnership between the private and the public sectors, the investor receives revenues that make up for capital costs and earn a reasonable return.

In a model such as this one, the Cambodia government could consider providing fiscal and policy incentives, such as reduction of tax rates or the removal of legal processes and document requirements for the private sector.

Models for health collaborations between the public and the private sectors have been piloted in other ASEAN states and elsewhere around the world, but one case study in particular might offer useful lessons for Cambodia in showing how a collaboration between the public and private sectors might lead to better access to diagnostic tools for low-income patients.

Lessons learned from PPPs elsewhere

In India’s Jharkhand state, low-income people were struggling to be able to access specialty diagnostic tools. In the public health sector, these tools simply weren't available, and in the private sector, these residents were being priced out.

The state’s overall demand for specialists outpaced the supply to that kind of healthcare by 95 percent.

In 2014, the state government turned to a PPP to try to address this gap. The goal of the PPP was to set up diagnostic centers focused around radiology and pathology. The project attracted $12 million in investment from the private sector, and generates $400,000 annually which is to be used to subsidize free or reduced cost access to these services for low-income patients.

These diagnostic centers use a “hub and spoke” model to deliver services to the state’s population. Patients who are below the poverty line are able to access free radiology and pathology services from smaller district and village hospitals—the spokes—while those who need more advanced care get referred to large district hospitals and three state-run medical colleges—the hubs.

The PPP makes use of the build, operate and transfer mode, where two leading pathology service providers received 10-year contracts after which they would transfer the diagnostic facilities back to the state government.

This PPP even led to a second collaboration between the state and private health providers, this time around the need for dialysis facilities.

Cambodia’s way forward

Currently, the Cambodian Government, in collaboration with development partners, is implementing its Fourth Health Strategic Plan 2021–2030. This plan mentions private sector engagement as one of the activities to be carried out. However, there is no specific information on how collaboration with the private sector will be carried out, or which specific areas of the health sector would be targeted.

It should be noted that, while collaboration between the public and private sectors should be a long term goal, Cambodia’s regulatory framework that guides its PPP process will need to undergo some reforms before the country is able to court investors in collaborative projects involving social sectors, including healthcare.

To welcome private investment in a sector as technically complex as healthcare, Cambodia will need to develop clearer policies and a more robust structural framework. For example, at the moment the PPP regulatory environment lacks clear guidelines on the procurement process and eligibility for private investors. Competitiveness and transparency will need to be key to successfully attracting the best, most capable private investors. Therefore, all policies around private sector partner selection must uphold these two principles.

The government must also establish policies and institutions to monitor and evaluate the implementation and progress of PPPs. This is a particularly critical component of health sector PPPs, as projects in this sector require greater levels of technical expertise and government support to ensure services are actually benefiting the populations they are intended to reach.

While PPPs may be a long-term goal in this sector, there are steps Cambodia can take in the short term that would bring this goal closer, and ensure better health services for Cambodian patients now. First, Cambodia needs clear, accessible data on the medical services provided by each hospital.

Simply put, publicly available data and information on which hospitals care which diagnostic tools would help patients to decide where are able to get treatment. Data transparency in healthcare helps improve patient engagement, and can improve the outcomes of their treatment, as well as enabling evidence-based decisions in medicine which leads to foster trust among the patients and healthcare practitioners. And second, clear data is a huge step in helping private investors to envision areas of potential investment and potentially fill gaps in medical equipment and diagnostic capacity.

The availability of modern medical supplies is significant in improving health care quality and treatment as up-to-date equipment helps patients to gain a clear and accurate diagnosis. Investment from the private sector could be a path forward for Cambodia’s public hospitals to bring access to high quality diagnostic tools to low-income patients. I hope for a future Cambodia where no more patients face the frightening choice of having to delay, or forgo a diagnosis.

Heng Molika is a Junior Research Fellow at Future Forum Cambodia

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