This is a follow-up to “The PPProblem with PPPs,” where we identified several key issues with Public–Private Partnerships in healthcare: 

  • Cost is prioritised over good design 

  • Hospitals must adapt over time, but design often doesn’t 

  • Financial decisions override clinical outcomes 

  • The bidding process is inefficient and fragmented 

So, what’s the solution? 

Surprisingly, there is one overarching fix that could address all of these issues: 
Shift the focus from building hospitals to delivering healthcare. 
That means determining the total cost of treatment—holistically—and then assessing how design decisions influence that cost. Only then can we identify the most cost-effective ways to deliver care, not just infrastructure. 

The Core Problem: Fragmented Funding 

These inefficiencies stem largely from fragmented funding models. In a typical PPP, the contract covers the capital cost of building and maintaining a hospital over 20–30 years. However, the operational costs—like staffing, equipment, and clinical services—are funded separately. 

This siloed approach discourages integrated, long-term thinking. Design decisions are made in isolation from operational realities, leading to facilities that may be cheap to build but expensive (and inflexible) to run. 

A New Approach: Integrated, Outcome-Based Contracts 

Instead of contracting to build a hospital, imagine a PPP structured to deliver a defined volume of healthcare services over time. Here's how it could work: 

  • A "privatish" provider is established—government-funded but privately operated. 

  • The PPP contract is based not on physical infrastructure, but on care outcomes aligned with a long-term Health Service Plan. 

  • This plan would project required services over the next 10 years and be reviewed every 5 years to incorporate changes in population needs, technology, and treatment models. 

  • The government’s role would be similar to that of a private health insurer: funding outcomes, not inputs. 

The Benefits 

This model brings together the best of both worlds: 

  • Private sector efficiency and innovation in service delivery 

  • Public sector accountability and alignment with broader health objectives 

  • Design decisions informed by long-term operating costs, not just upfront capital budgets 

  • Reduced duplication between public and private systems 

Most importantly, it redefines the PPP not as a tool for building hospitals, but as a model for delivering better care—efficiently, flexibly, and sustainably. 

 

Author: Stanton Kroenert  
Date: 09/09/2025