Federal and state governments have introduced private participation in more than 50 public hospitals [15 BOO, 4 conversions sold to private operators, 4 transactions of private management of public hospitals, 3 build-own-leaseback arrangements and 30 colocations of private wing located within or beside a public hospital.
One example is the Mildura Hospital Contract, awarded in 1999. The government selected a private operator to design, build, own, and operate a new, 153-bed hospital under a 15-year contract. The private provider receives from the government annual payments based on the forecast mix of clinical patients (with funding capped at a specified number of patients) plus a small block grant to cover such costs as teaching.
Mildura's results have been impressive. Capital costs for the new hospital came in 20 percent below those for public sector comparators, and the hospital provides clinical services at lower cost than government-operated hospitals. Moreover, all performance targets have been met, patient volumes increased by 30 percent in the first year.
The Bahia State Government entered into contracts with private firms for the management of 12 new public hospitals, constructed and financed by the government. The government's aim is to increase efficiency, improve quality, and transfer operational risk.
The private operators recruit the staff and manage the facilities (including all medical services) under annual funding contracts that can be extended for five years. The operators must treat all public patients who come to the hospitals.
The government pays for the medical services based on a target volume of patients. The operators must achieve 80 percent of the target to receive payment but are not reimbursed for volumes above the target.
Nevertheless, they have routinely exceeded the target by 30 percent.
Taylor and Blair 2002. World Bank Report.
World Development Report 1993. World...