THE PPP REGIME
Fifteen years have passed since Portugal first tried out the public-private partnership model for its new hospitals and, in contrast to similar models applied in other sectors, the signs of success are easy to spot.
In November 2018, the clinical benchmarking company IASIST announced the winners of its "Top 5 - The Excellence of Portuguese Hospitals" awards. There were 10 different categories divided by size of the hospital and different clinical practices, based on the evaluation of over 8 million clinical cases of patients discharged from Portuguese hospitals in 2017. The results yielded causes for celebration amongst privately managed state institutions. Out of the four PPP hospitals across the country, Cascais and Braga were considered the best in their size category, while Loures and Vila Franca de Xira were well placed in the top three of their own categories. Cascais went on to win another two awards in the excellence in respiratory clinical care and cardiovascular clinical care.
These are promising results for a model that has seen so much criticism over the years. First devised for the health sector in 2002, under legal decree 185/2002, the PPP model was designed to promote the construction of new hospitals (avoiding budget and temporal slips), pass on the massive investments to the private sector (mitigating investment risk for the states), and gain efficiencies and savings in patient care for the state.
Portugal has had extremely bad experiences with this model in the past, which was used extensively to promote the construction of the country's modern highways and roads. Across the board, the design of these initial agreements was proven flawed and highly detrimental to the state. Wary of facing similar issues and yet in need of private investment to improve its healthcare network, the government devised a different strategy for this particular sector. Instead of a key-in-hand contract, the hospital PPP would be divided in two different PPP contracts, one for the construction and maintenance of the building, and another for the actual management of the clinical service. This was designed to limit the tendency by private companies to submit unsustainably large and expensive projects with the intention of winning the public bidding and then recover the investment from the profits and cost reduction in the clinical management part of the contract (with potentially damaging consequences for the quality of the service). This has made the projects more manageable and sustainable.
The model is not without costs for the national coffers. After all, private management companies charge fees for their services, and the capital fronted by the private players for the development of the projects by the private players also comes at a premium for the state. In 2017, the government funneled EUR447.5 million into PPP hospitals. In 2018, the estimate predicts an increase to EUR471 million. This shows significant growth from the EUR401 million these projects cost the national budget in 2013. These figures have prompted some parliament members, mainly from the Left Block party, to claim the PPP model has not succeeded, and that management should be brought back to the public sector, where patient care, not profit, is the driving variable in a hospital's management. However, according to studies on these facilities' efficiency, the constant increase year-on-year in investment by the state is not pegged to flaws in management of the clinical care services or the building's management, but the considerable increase in these hospitals. In fact, PPP hospitals, in whichever category or size, have proven to have a considerably lower cost per patient than their counterparts working under public management, when compared with hospitals of similar type and size. According to a 2016 study by the Lisbon Catholic University, PPP hospitals, on average, save the national coffers 20% per patient, which amounts to around EUR70 million per year (compared public cost for the four hospitals). Further, these hospitals have raised the bar in terms of the quality of treatment for patients in Portugal, with the Cascais Hospital being the only in the country, and one of three in Europe, qualified as Level 7 by HIMSS Analytics, making it one of the most technologically advanced in the continent.
Today, there are 1,618 beds, 35 operating rooms, and 169 consultation offices operating under the PPP regime. Estimates indicate the private sector has invested up to EUR460 million in new hospitals and equipment in Portugal, a figure that will rise when the fifth hospital contracted under the PPP regime, the Lisbon Oriental Hospital, starts operating in 2023. There are currently no other planned hospitals under this regime.
THE PPP REGIME
TABLE OF CONTENTS
Focus: Community of Portuguese Language Speaking Countries
Making an Impact
Established in 1996, the Community of Portuguese Language Speaking Countries (CPLP) is a mechanism geared at linking and sharing the experience of Lusophone countries. Besides Portugal, this includes Brazil, Portugal, Cape Verde, Angola, Mozambique, Guinea-Bissau, and São Tomé and Príncipe.
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Don’t Mind the Disruption
Having won the 2017 Eurovision Song Contest, Lisbon hosted the 2018 event. The relevance? Well, the contest began back in 1956 as a showcase not only of song, but of then-nascent live television broadcast technology. Today, Portugal is on the cutting edge of new technological developments.
read articleInterview
João Pedro Soeiro de Matos Fernandes , Minister , Environment and Energy Transition
The Ministry for the Environment and Energy Transition is focusing on decarbonizing the economy, valuing the territory and its habitats, and striving for a more circular use of the country's resources.
read articleInterview
António Braz Costa , General Manager, Portuguese Technological Centre for the Textile & Clothing Industries (CITEVE)
CITEVE has transformed the industry by promoting value addition, adopting the latest technologies, and ensuring the highest standards of environmental sustainability.
read articleFocus: New airport
Right Time to Seize Missed Opportunities
Portugal has seen its air traffic figures increase by as much as 80% in the last five years. As a result, its transportation infrastructure, and Lisbon's airport in particular, cannot cope with the rising numbers. A new airport project that will turn a military base into a commercial airport is now under discussion to bring much-needed relief to air traffic.
read articleInterview
Germano de Sousa , President, Grupo Germano de Sousa
Grupo Germano de Sousa's success can best be summed up by its understanding that science and medicine only really progress when technological development is combined with a deeper respect for human values and professional ethics.
read articleInterview
Isabel Capeloa Gil , Rector, Universidade Católica
Having pioneered the introduction of multiple subject areas to Portugal's tertiary education scene, Universidade Católica is aspiring to establish the country's first private medical school and introduce cutting-edge digital transformation.
read articleInterview
Carlos Guillén Gestoso , President, Escola Universitária de Ciências Empresariais, Saúde, Tecnologias e Engenharia & President, Atlantica University
Atlantica University differentiates through its company-university model and an MBA program in partnership with the University of California, Berkley, among other initiatives, to produce practical theoreticians.
read articleFocus: Public teaching staff
An Age-old Problem
Over a decade of austerity measures combined with an ageing population have seen the average age of the Portuguese public teaching staff progressively climb to one of the highest in the OECD. With frozen salaries, an extended retirement age, and precarious working conditions, today the sector faces one of its biggest challenge yet.
read articleInterview
Pedro Queiroz , General Manager, Federation of the Portuguese Agri-Food Industry (FIPA)
Portugal's economic recovery has seen its F&B sector emerge with annual turnovers of EUR16 billion, thanks to FIPA's undeterred focus on stable policies, excellent nutrition standards, and sustainability.
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