The importance of private sector participation in the Brazilian public healthcare system

A recent decree issued by the Brazilian Ministry of Economy to evaluate distinct private public partnership (PPP) models in healthcare and put into operations around 4,000 unfinished primary care units has sparked lots of criticism among politicians, academics, healthcare professionals and the civil society. Many accused the Federal Government of intentions to “privatize” the Public Healthcare System (SUS). In light of this outcry President Bolsonaro decided to cancel the decree after only 24 hours of its issue.

With this very sad situation we lost a good opportunity to discuss a relevant way to increase the public healthcare system capacity, improve the quality of treatment provided to the population and free public resources to be used for other necessary projects. In my opinion, the accusations were started from interest groups and the opposition for political purposes, rather than from an ideological purpose. However, lack of knowledge of this important investment vehicle was the reason for this “theory” to spread over the social media and even by the mainstream media.

First, it is important to say that PPPs are not a way to privatize public services. The difference between traditional privatization or procurement and a PPP arrangement is that, in the latter case, responsibilities are typically divided between public and private entities, depending on which can best manage them.

We recently issue a white paper about the importance of PPP in emerging health markets, in collaboration with the IFC (you can find the article here: https://www.ifc.org/wps/wcm/connect/5c761f35-a19e-4107-adb1-0b74a71c1b2e/EIU+Briefing+Paper_PPPs_FINAL.pdf?MOD=AJPERES&CVID=n3gnBOB).

In this paper, we point to  several PPP models, their applicability for healthcare systems and main considerations to be evaluated when considering a PPP in public healthcare systems.

Actually, PPP in public healthcare systems is a common investment modality; it has been used for many decades and in several countries, many of them with universal public healthcare coverage such as the Brazilian SUS.

In the UK, there is one version of PPP in the NHS called private finance initiative, initiated in the 1980s, whereby a private party takes care of the upfront funding and is paid over time by the government to develop, operate and maintain infrastructure under a certain level of service quality. This allows governments to leverage private funding to achieve faster infrastructure development, and also requires adhering to strict rules surrounding public debt levels.

Currently, there are more than 130 healthcare PPP projects worth around ￡12 billion in UK.

Since the UK PFI model emerged, PPP models have made up an increasing share of all partnerships between the public and private sectors globally. Different types of PPPs typically span infrastructure and equipment, services, or a combination of the two in an integrated model. They also include both public and private sector inputs such as land, expertise, and funding.

Countries such as Australia, India, Lesotho, Mexico, Moldova, Nigeria, Romania, and the Phillipines have already implemented PPP projects in healthcare with advisory from the World Bank, in various areas from primary care to imaging, diagnostics, and tertiary services.

Brazil has already developed several PPP initiatives in healthcare. The city of Belo Horizonte signed a PPP agreement in 2016 to remodel 77 primary care centers and build a new laboratory and sterilization center across the municipality to provide quality services to one million low- and middle-income residents. The winning consortium, APS BH, is expected to invest US$ 115 million for new construction works, general infrastructure, providing low complexity medical equipment, as well as operating non-clinical services, such as cleaning, surveillance, laundry, sanitation, and maintenance.

Similarly, the State of Bahia has decided to partner with the private sector to provide people with critical imaging and telemedicine services, including radiology, mammography, resonance, tomography and hemodynamics through the State healthcare system. The AFP consortium, who was awarded the concession and is composed of Aliar, Phillips, and FIDI, built, operated and maintained imaging units in 12 hospitals at the State of Bahia, and will build and operate a new diagnostic center, where specialist medical staff will provide rapid diagnostic information to doctors back at the hospitals. AFP is expected to invest over US$ 40 million in new medical equipment and infrastructure. The Government of Bahia has also engaged in a PPP arrangement with a Brazilian regional healthcare company, Promedica, and the French company, Dalkia, specialized in facilities management and non-medical services to equip, maintain and operate Hospital do Suburbio. This hospital is a 298-bed hospital in one of the most underserved districts of Salvador. Hospital do Suburbio received several international awards, including one from the UN for improvement in public services.

We need to seriously discuss the participation of the private sector in public healthcare services if we intend to improve the quality of life of low and middle income population in Brazil, especially now, when we face challenges of a pandemic that is draining important and scarce resources from the public healthcare national budget.

Originally written as article for the Brazilian Swedish Chamber of Commerce (Swedcham) quarterly magazine Nordic Light, December 2020 issue.