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industry updates

SustainableModelsformHealth The Indian government and private players need to work together using the “Public Private Partnership” (PPP) model in order to provide healthcare services to India’s geographically and culturally diverse masses.

The implementation and delivery of mHealth requires multidisciplinary collaboration, establishing joint ventures involving government and local or foreign partners to participate with each other and to take equity stakes in the delivery of mHealth services. Any mHealth PPP strategy must identify appropriate partners, specify appropriate technology and find viable financing solutions. Partnerships among governments, businesses and non-governmental organisations will require the creation of national associations, committees and task forces, with a multidisciplinary composition. Information technology experts, health professionals, consultants, industry and other key players must be brought in to assist in developing effective and sustainable mHealth programmes.

Need for PPP in mHealth The public sector encourages the private sector financing and provision in delivery of healthcare services especially in rural areas. There are many leverage points that a PPP model offers which is crucial for providing efficient and cost effective healthcare services to all sections of society. Initial capital expenditure (CAPEX) required for the healthcare facilities and operational expenditure (OPEX) required to run them is very high. Private players alone cannot invest so much of money into the system, so it is important that the government provides them with the initial funds. However, private players can provide the management skills and operational efficiency required to make the most of invested funds. Further, expertise of private players in running healthcare institutions is very important for providing healthcare services to India’s huge population. Over 80 per cent of the health expenditure in India is from the private sector while government’s contribu-

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november / 2011 www.ehealthonline.org

tion is only around 20 percent. Looking at the average of 73 percent in OECD countries, the government needs to spend more, and PPPs could be the way to achieve it. It has been seen that usually, healthcare projects have a long gestation period and low rate of return in comparison to other industries. To compensate for the extra risk these projects have, private players need a partner to lower the cost of financing and provide long term security by underwriting the project risks. And, private players alone do not have the bandwidth to cover length and breadth of the country (especially rural areas), so the government needs to tie up with private players and provide healthcare services to people living in remote areas.

Existing PPPs in India The Indian government is working along with non-governmental organisations, private players and others to make healthcare services available using mHealth and other mediums. Some of the examples of existing PPPs in India are given below: An initiative of an NGO6 –OTTET and State Orissa Government in India The Orissa Trust of Technical Education and Training (OTTET) is rolling out telemedicine centres in villages across the state—the ninth largest in India. The project is being executed through a public-private partnership involving the Orissa state government and Sanjay Gandhi Post-Graduate Institute of Medical Sciences (SGPGI), Lucknow. It aims to establish telemedicine centres


industry updates

Advantages and Disadvantages of Public Private Partnership (PPP) PPPs provide several benefits but at the same time they also have some inherent risk involved in the structure. Advantages • PPPs provide a solution for shortages of initial capital and non-recurring finances • Integrates multiple stakeholders for a single cause • PPPs introduce private sector disciplines to mHealth investment • Build and maintains mHealth for higher quality and longer life • Non-core, highly skilled services handled by those most capable, usually excluding clinical and medical skills • Risks transferred to the party best capable of mitigating it

Disadvantages • Cost of capital to a PPP operator can be higher for governments and non-government organisations (NGOs) • HPOs can take on a significant, fixed commitment for PPP fees, increasing annual revenue expenditure over the longer-term • Potential oligopoly of operators that needs direct management by the HPO, especially complex sub-contracting relationships • Some operators may not find PPP appealing and therefore they withdraw from the PPP model • Operational transaction costs are reduced through-life flexibility • Lack of integration between mHealth and new clinical and healthcare models • Risks not measured realistically, transferred or shared as envisaged

in 51,000 villages covering the whole of Orissa. As partner to the project, the government is providing broadband connectivity, services of doctors, and also providing subsidies for Capex. Private players on the other hand are bringing in Capex for medical kits, and communication equipment and also managing the Opex. Telemedicine initiative by Narayana Hrudayalaya in Karnataka Stakeholders are Government of Karnataka, Narayana Hrudayalaya hospital in Bangalore and Indian Space Research Organization (ISRO). It is an experimental tele-medicine project called ‘Karnataka Integrated Tele-medicine and Telehealth Project’ (KITTH). With connections by satellite, this project functions in the Coronary Care Units of selected district hospitals that are linked with Narayana Hrudayalaya hospital. Satellite linking is provided by ISRO using its GRAMSAT (rural satellite) programme, and space technology that it has developed for healthcare and education. Apart from ISRO’s telemedicine network association, Asia Heart Foundation and Narayana Hrudayalaya have initiated telemedicine activities with the help of high speed telephone connectivity or Integrated Services Digital Network (ISDN) connectivity to connect remote intensive care units to provide critical care to cardiac patients admitted in government district level or subdivisional hospitals in the remote areas of West Bengal, Assam, Bihar, Jharkhand and tribal belts of Karnataka.

Factors for successful PPP A Public Private Partnership model has two major stakeholders--government and private players. For the government, it is important that accountability and proper audit systems are implemented from the initial stage as public funds are deployed for the project; hence the government is accountable to the public to use the capital efficiently. On the other hand, the private player is accountable to its shareholders so profitability is important, they need to have some kind of material or other tangible benefit coming out of the partnership otherwise they would not be enticed to maintain the relationship for a longer period. Hence for a PPP model to be successful it is required that the government should adopt a liberal policy which identifies and respects the profitability requirement of the private partner. In a similar vein, the private partner should also remain accountable and follow full auditing process in order to justify the use of public funds. For a PPP model to be successful there is a need to provide mHealth services to the lower strata of the society and at the same time have a structure that it can be brought out of the pilot phase and rolled out on a large scale. There are certain things which should be highlighted while implementing a PPP model such as getting alignment on deliverables, provide clarity on scope and services, modifying mechanisms as per need, develop trust on projects, maintain cash flow and financial drivers during the project, clearly define Capex and Opex for the project and target realistic timeframes.

november / 2011 www.ehealthonline.org

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eHEALTH-Nov-2011-[30-31]-Sustainable Models form Health  

exiStiNg PPPs iN iNdia industry updates The Indian government is working along with non-gov- ernmental organisations, private players and ot...

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