1. Perspective Gabriel Chahine
Jad Bitar
Dr. Nikhil Idnani
Harnessing the Power
of Public–Private
Partnerships in
Healthcare
Imperatives for GCC
Governments

2. Contact Information
Abu Dhabi Doha
Richard Shediac George Atalla
Senior Partner Partner
+971-2-699-2400 +974-44026-777
richard.shediac@booz.com george.atalla@booz.com
Beirut Dubai
Gabriel Chahine Dr. Karim Sabbagh
Partner Senior Partner
+961-1-985-655 +971-4-390-0260
gabriel.chahine@booz.com karim.sabbagh@booz.com
Fadi Majdalani Dr. Nikhil Idnani
Partner Senior Associate
+961-1-985-655 +971-4-390-0260
fadi.majdalani@booz.com nikhil.idnani@booz.com
Jad Bitar
Principal
+961-1-985-655
jad.bitar@booz.com
Dr. Samer Abi Chaker and James Saliba also contributed to this Perspective.
Booz & Company

3. EXECUTIVE The Gulf Cooperation Council (GCC)1 countries will face
a significant challenge in managing future healthcare costs.
SUMMARY
Healthcare spending is accelerating, in part because of the
rising incidence of chronic diseases. Thanks to systemic
transformation, strategic planning, and population screening
programs, governments understand that the current model, in
which the state shoulders most of the direct financial burden
and other social costs, is unsustainable over the long term.
Governments need a different approach that invites the pri-
vate sector to play a role as a means of taming costs, improv-
ing quality of service, and providing access to expertise.
The GCC should use the public– GCC governments will need to
private partnership (PPP) remove institutional hurdles to the
mechanism, which has been deployment of PPPs and create an
successfully applied globally, to enabling regulatory, operational, and
increase private-sector participation. financial environment. This requires
Governments can shape PPPs the correct legal and institutional
depending upon the different framework for PPP governance and
capabilities and appetites for risk oversight, followed by a structured
of the public and private partners. process for identifying and executing
PPPs come in many varieties and a pipeline of PPP healthcare projects.
they can be customized for each The careful and rigorous introduc-
country’s circumstances. Health tion of PPPs into healthcare can
systems in the GCC provide a range provide citizens with three mutually
of opportunities for private-sector supporting healthcare improvements:
players, including care provision, greater accessibility, higher qual-
financing, healthcare supplies, and ity care, and an affordable price for
health education. patients and governments.
Booz & Company 1

4. KEY HIGHLIGHTS
FUTURE capacity gaps and provide recom-
mendations for developers, investors,
• GCC countries can use PPPs
DEMANDS ON and healthcare providers. Qatar has
as a means of managing GCC HEALTHCARE developed its National Health Strategy
2011–2016 around a comprehensive
rising healthcare costs, as
program of reforms that are aligned
a mechanism to enhance
with the Qatar National Vision 2030,
the capabilities of the
the country’s long-range national
healthcare system, and as
social and economic development
part of a program of systemic
program. The Dubai Health Authority
transformation of the sector.
GCC healthcare systems have (DHA) is implementing a 2011-2013
• PPPs need to be structured significant accomplishments, includ- health sector strategy to establish a
so that they are customized ing widespread provision, rising world-class integrated system that
to the specific requirements professional standards and regula- promotes the emirate as a destination
of the particular GCC member tion, generous funding, and grow- for healthcare services.
state and its healthcare ing levels of investment. Among the
system. Wholesale adoption most important advances have been Major expansions in care provision
of PPP models from abroad is population screening programs and are occurring across the GCC. These
inappropriate. long-range strategic planning efforts state-funded investments will meet cur-
that are putting these countries at the rent and future demand for inpatient
• Services that are the furthest forefront of the healthcare industry, and outpatient services, will reinforce
from patient contact and with along with impressively rapid system- trust in local healthcare provision, and
the greatest commercial value wide transformation programs. These reduce outbound medical tourism. As
are well suited for PPPs. Those forward-looking initiatives will be part of its healthcare transformation
services with mostly social value, most effective if the region can find a program, Saudi Arabia is building
such as health education for the new way to pay for its future health- healthcare services hubs, so-called
population, should be retained in care needs and build its health sys- medical cities, as well as hospitals and
the public sector. tems’ capabilities. The current model, primary healthcare centers. In October
in which the state absorbs most of the 2012, Saudi Arabia inaugurated 420
cost, is unsustainable in terms of both health projects and laid the founda-
financing and healthcare delivery. tions for another 127 health facilities
at a cost of SAR 12 billion (US$3.2
As part of their national development billion). GCC countries have also
programs, governments are currently begun to introduce mandatory health
engaged in major efforts to improve insurance to meet the growing cost of
accessibility and quality of care. These healthcare provision. A compulsory
healthcare changes and investments insurance scheme already operates in
have the ambitious goal of putting the Abu Dhabi as of 2006 and there is
GCC on the top rung of the healthcare mandatory private insurance in Saudi
industry for care provision and quality. Arabia. Qatar began introducing a
Central to the upgrading of healthcare private health insurance plan in 2012,
in the region is the formulation of to be fully implemented by 2014.
long-term strategic plans, an exercise
that only governments can undertake. Despite these increased resources and
For example, Saudi Arabia’s Ministry insurance schemes, GCC healthcare
of Health has developed a 10-year systems are still struggling with capac-
strategy that takes an integrated, ity gaps and inconsistent quality of
comprehensive approach to care provi- care. There is a shortage of healthcare
sion, a transformation that is instilling professionals and limited availability
coherence into a previously fragmented of competent specialized services. For
system. Similarly, the Health Authority example, the quality of so-called qua-
- Abu Dhabi (HAAD) has developed a ternary services, the most specialized
10-year master plan to identify future level of care, is diminished because
2 Booz & Company

5. of suboptimal distribution. There are health services and there is limited ernments to spend more on healthcare
sometimes too many hospitals in a differentiation among providers. services. Expenditure is currently
small area offering qua­ ernary services,
t Finally, increasing healthcare spend- below international benchmarks when
which prevents each of them from ing cannot cope with the region’s compared with developed countries
accumulating the necessary volume of elevated rate of non-communicable on a per capita basis. However, this
cases that would build its competency diseases. The GCC’s incidence of car- will change and the fiscal burden
and quality of care. For example, Abu diovascular disease, diabetes, cancer, on governments will increase. The
Dhabi island has three cardiac surgery and mental and respiratory ailments state in the GCC already foots a very
centers, even though the volume of are among the highest in the world. high proportion of healthcare costs
adult cardiac surgery cases is only 500 Of the world’s 10 worst countries for by global standards (see Exhibit 1).
to 700 per year, requiring just one diabetes, five are in the GCC (Oman Increased expenditure will further
competent program. is the exception).2 This chronic strain public budgets, rendering the
disease profile is already consuming public-dominated model unsustain-
Overall quality of care is also lower considerable resources, a pattern that able. Some governments are already
than it should be. There are few cen- will worsen over time. taking a more stringent approach,
ters of excellence in the GCC that are with federal ministries in the United
on par with leading international pro- These ongoing healthcare challenges, Arab Emirates (UAE) practicing
viders. By contrast, developed coun- and in particular the aging of the cur- aggregate fiscal discipline and zero-
tries on average have higher quality rent young generation, will force gov- based budgeting.
Exhibit 1
GCC Governments Pay More of Healthcare Costs than Most Countries
HEALTHCARE SPENDING 2010, PERCENTAGE OF PUBLIC VERSUS PRIVATE
100%
15%
21% 22% 23% 25%
30% 36%
38%
49% 51% 51%
63%
85%
79% 78% 77% 75%
70% 64%
62%
51% 49% 49%
37%
Kuwait Oman Qatar UAE Bahrain Saudi European Western Eastern African Americas Southeast
Arabia Region Pacific Mediterranean Region Asia
Private
Public
Source: World Health Organization, Global Health Observatory Data Repository; Booz & Company analysis
Booz & Company 3

6. Governments will logically seek The result would be lower quality of Given the complexity of the GCC’s
more private-sector participation, care and excess capacity. As the CEO healthcare challenge, and how it
but this must be introduced in a of a private hospital group in the differs among the six countries, it is
manner that uses regulation to GCC told us, “The public sector is important to recognize that there is
prevent private players from cherry- competing with the private sector (rather no silver bullet. Instead, the careful
picking profitable patients and than cooperating with it) for scarce and targeted use of partnerships
services. Without proper regulation, resources such as talent.” To avoid between public and private
private companies will also compete such difficulties, governments can take stakeholders can begin to address
with each other and the government a regulated, multidimensional, multi- the core issues of accessibility,
for manpower in a market with stakeholder approach that will ensure quality, and affordability.
a limited supply of skilled labor, the private sector brings complementary
thereby escalating costs. capabilities to the table.
“The public sector is competing with
the private sector for scarce resources
such as talent.”
4 Booz & Company

7. OPPOSITES The most effective method for
combining the complementary
by leveraging its expertise in such
fields as clinical, administrative,
ATTRACT: capabilities of public- and private- or support services. Moreover,
PUBLIC–PRIVATE sector players is public–private
partnerships (PPP). Both sides bring
the private sector can call on
financial resources to inject capital
PARTNERSHIPS different strengths to the table, into profitable opportunities, and
strengths that can drive positive mobilize entrepreneurship to spur
change in healthcare systems. innovation. As the CEO of a GCC
Governments can forecast and medical supplies company told us,
identify healthcare gaps from the “A PPP is a win-win situation for
perspectives of accessibility and both parties involved.”
quality. This stems from their
unique positions as the licensors Numerous roles are available for
of the health sector, and because private-sector players in the health-
of their knowledge of health needs care space. They can act as providers
derived from strategic planning. of care, payors for care, suppliers
More important, governments have of products, or they can operate
the power to regulate the market, academic institutions. Private-sector
introduce incentives, and sometimes participants can be international play-
simply enforce reform. ers or locally based firms. They can be
independently owned; or they can be
From its side, the private sector tied to private equity funds or invest-
can improve the efficiency and ment companies.
effectiveness of health operations
“A PPP is a win-win situation for both
parties involved.”
Booz & Company 5

8. The nature of collaboration between can manage existing services or build underlying risk or can structure the PPP
private players and the public sector new infrastructure; they can simply run to transfer that risk to the private com-
can range from service delivery to full facilities, or can own them outright for pany. Another option is full or partial
ownership of healthcare assets decades during which the state leases or privatization of the numerous healthcare
(see Exhibit 2). Private companies buys them; governments can retain the facilities owned by GCC governments.
Exhibit 2
Ownership and Risk Distribution Determine the PPP Structure
SELECT EXAMPLES OF HEALTHCARE PPP MODELS
Role
Privatized
Management Concession/Build Private Finance
PPP Model Turnkey Lease
Contract Operate Transfer Initiative
Private sector
1 Design designs the public
infrastructure asset
Private sector invests
2 Finance funds for
construction
Private sector is
3 Build responsible for
building the asset
Private sector
4 Manage provides oversight/
strategic direction
Private sector
5 Operate operates the asset to
deliver the service
Private sector
6 Transfer transfers the asset to
the public sector
Private sector manages Private contractor Private sector operates Private sector builds, Private sector assumes
the public asset without selected through a infrastructure, receives operates, and owns the all risk (including
assuming operational bidding process to revenues from the asset; eventually financial) for the asset
Description risks design and build asset public sector through a transfers it to the public until its eventual transfer
for a fixed fee lease fee sector to the public sector
Extent of Private-Sector Participation
Source: Booz & Company
6 Booz & Company

9. Valencia’s Alzira Model of Healthcare PPPs
An innovative healthcare PPP is the Alzira model used in the Spanish region
of Valencia. The regional government sought to control spiraling healthcare
costs by awarding a private company a contract to build and operate an
integrated health zone. The public sector funds, regulates, and monitors the
health services inside the zone. The private sector builds, owns, and operates
the facilities. The government pays an annual fee to the private provider and
ultimately assumes ownership of the assets after a 20-year concession.
The Alzira model’s strengths are a clear objective specified up front, well
defined roles and responsibilities, commensurate sharing of risk and reward,
and continuous performance management.
• Objective: the private sector will manage costs better than the public sector.
• Roles and responsibilities: the government grants the private company
access to a captive population through a long-term concession, reimburses
the private provider for care provision. The private partner provides services
in line with the government’s cost objectives and its clinical performance
criteria.
• Risk and reward sharing: The government transfers the cost risk by making
the private sector responsible for all costs. However, the government
ensures a volume of demand for the private partner through a concession.
This takes the form of a monopoly over care provision to a geographically
defined population.
• Continuous performance management: The PPP has defined key
performance indicators (KPIs) of financial and clinical success.
One Alzira example is the Manises integrated health zone around Valencia.
Managed by Sanitas, a subsidiary of the U.K. health insurer Bupa, Manises
provides acute and primary care to roughly 150,000 people in over a dozen
municipalities. The charge is €600 ($785) per capita, 25 percent less than
the cost of providing care in the region directly from the Sistema Nacional
de Salud (SNS, the state-run health system). Patients do not pay at the point
of delivery. The SNS bears the cost of care. Patients can also choose their
healthcare provider, although they must pay to switch. This places the onus
on Sanitas to perform.
The result is that Manises has successfully introduced Sanitas’ private
management principles into the delivery of public care through health
information technology and standardized care pathways.
Booz & Company 7

10. On the lighter end of the spectrum At the other end of the spectrum, the because of concerns over value for
in terms of what PPPs encom- private partner takes on the financing, money and long-term fiscal liabilities.
pass are management contracts. building, operating, and ownership of
For example, the DHA has out- the facility, gradually selling it to the The arguments over PFI in the U.K.,
sourced the management of the government over the long term. This and the restructuring of the scheme in
Rashid Hospital Trauma Center PPP model allows the government to December 2012, serve as a cautionary
to InterHealth Canada. The DHA avoid the large up-front capital costs tale for GCC governments seeking to
remains responsible for capital and involved in healthcare investment. The elaborate models for healthcare PPPs.
operating costs associated with best-known example is the U.K.’s pri- What the GCC should not do is copy
running the facility. Typical man- vate finance initiative (PFI), which has approaches wholesale such as the
agement arrangements involve the signed more than 100 PPP agreements Alzira model (see “Valencia’s Alzira
private partner receiving a fixed for the National Health Service (NHS) Model of Healthcare PPPs,” page 7),
annual fee in return for running the since the early 1990s worth over £11 no matter how successful it has been.
facility through key leadership staff billion ($18 billion)—an approach that Instead, GCC governments should
and establishing its model of care. has been controversial in some cases take an approach that customizes PPPs
8 Booz & Company

11. according to their particular economic increasing private sector participa- public sector were to undertake the
circumstances.3 Governments should tion in healthcare provision. venture alone. Value for money there-
be careful to ensure that their interests fore ensures accountability. It provides
are protected. As the director of a GCC A particular concern for the health- reassurance to the public payor, in this
government institution told us, “PPPs care sector is value for money. In case the government, that its money is
have to be a marriage of equals.” terms of healthcare PPPs, value for being spent wisely, and allows patients
money relates to a quantitative mea- to know that they are being treated
GCC governments should also sure that compares the net present fairly and consistently.4 A healthcare
consider the privatization of public value cost of a PPP to the best and PPP should clearly indicate that value
healthcare facilities, such as hospi- most realistic public-sector alternative, for money is an objective from the
tals. This transfers the entire asset, the so-called public-sector comparator. beginning and define KPIs that will
and all of the associated responsibili- PPPs should always strive to deliver measure value for money during the
ties, to the private sector thereby better value for money than if the lifetime of the project.
“PPPs have to be a marriage of equals.”
Booz & Company 9

12. WHERE TO PLAY: Determining what activities can and
should be opened to the private sector
appropriate it becomes for a PPP. By
contrast, services that have largely
OPPORTUNITIES involves examining market dynamics. social value are best kept in the public
FOR THE PRIVATE A healthcare sector model indicates
that the public sector is responsible for
sector. For example, as the main policy
setters, governments should provide
SECTOR regulation, licensing, and monitoring. preventive care and basic health
The private sector can provide services education (see Exhibit 4).
with commercial value such as cardiac
surgeries and medical equipment In terms of healthcare subsectors,
manufacturing (see Exhibit 3). Another opportunities lie in provision, payment,
consideration is the relationship to supplies, and education spaces in
the patient. The further the service individual GCC countries rather than
is from the point of delivery, and the across the whole GCC (see Exhibit 5).
greater its commercial value, the more
Exhibit 3
The Government is the Sole Regulator and Licensor; Other Services Can Be Open to
the Private Sector
BOOZ & COMPANY HEALTHCARE SECTOR MODEL
Regulator
L i c ens i n g
Suppliers
Research
Development
and
g
Providers
in
Lo
t ur
Supplies
g is
fac
Sourcing P
t ic s
l
u
r
Man
Bui ita
Ca ision
p
ld
ov
Hos
re
Patient
g
O ro nt
B a c ce
Highe
rainin
O ffi
e
ffi c
F
k
M id dle
dT
r Ed
O ffi c e
ze
Reg
uc
rin g
a li
on Pa y o r s
at
e
ci
ula
i
Sp
it o
tio
C o n tin uin g
on
ns
Mas n
s E d u c a ti o
M
E d uc ators
Potentially within Private-Sector Scope
Out of Private-Sector Scope
Source: Booz & Company
10 Booz & Company

13. Exhibit 4
Public Sector Focuses on Social Value, Private Sector Provides Commercial Services
EXAMPLES OF PUBLIC/PRIVATE DIVISION OF SERVICES
Commercial
Private Sector Public or Private Sector
Value
Medical equipment manufacturing Adult cardiac surgery services
Value
Public or Private Sector Public Sector
Educators of healthcare professionals Preventative health screening
Social
Value
Non-Patient Service Patient
Facing Facing
Source: Booz & Company
Exhibit 5
Opportunities Exist in GCC Countries Across Four Major Areas
PPP POTENTIAL IN GCC HEALTHCARE
Providers Payors Suppliers Educators
General pharmaceutical/vaccine Higher education of health
Rural care systems Case/disease management manufacturing professionals
Patient transportation systems/ Diagnostic services (e.g.,
emergency medical services Third-party administration laboratory/radiology) Continuous medical education
Source: Booz & Company
Booz & Company 11

14. Providers ensure financial and clinical feasi- imports most pharmaceuticals and vac-
Healthcare providers have an bility.” Providing such guaranteed cines. This is costly, limits the develop-
opportunity to develop robust rural amounts of demand for healthcare ment of local capabilities, and puts the
care systems. Some governments services to private firms is also in the country at the mercy of global supply
regard improved rural healthcare as government’s interest. One of the patterns in the event of an emergency
a strategic priority given the growing factors impeding the development of such as an epidemic. The private sector
young population in the countryside quality care is the haphazard nature can manufacture generic pharmaceuti-
and issues of social inclusion. There of coverage, which prevents existing cals and vaccines locally, partnering with
are also openings to provide robust facilities from developing their skills. its public-sector client to identify the
patient transportation systems or areas of highest need.
emergency medical services to sup- An important payor opportunity
port the aim of having integrated sys- stems from the introduction of Another opportunity is carving out
tems. The private sector can improve mandatory health insurance schemes. diagnostic services for GCC health-
the efficiency and effectiveness of These programs will need private care systems. This would allow the
existing services in terms of safety companies that can offer services for private sector to leverage its capabili-
and equipment. Although some coun- front, middle, and back office func- ties to reduce test turnaround times,
tries already have these assets, such tions. In the front office, the private such as the provision of centralized
as the Saudi Red Crescent Authority, sector can supply actuarial services, laboratory and radiology services to
these public or charitable providers’ design benefit packages, and deter- hospitals. Private suppliers can also
capabilities are not always strong mine premium and reimbursement improve services in medical procure-
across the whole value chain (which rates. In the middle office, oppor- ment and facilities management.
encompasses call reception, dispatch- tunities exist for providing disease
ing, transportation of the patient, and management services to the public Educators
administration of care). payor. For example, the HAAD is Educators have an important role
seeking private partners to set up and to play as the GCC needs a large
Other provision opportunities exist in run the disease management aspect of number of healthcare profession-
areas demanding considerable capital the Weqaya (“Protection”) cardiovas- als. GCC countries have to meet the
investment. These include more cular screening program. As one of demand for provision of care and
specialized care facilities and centers HAAD’s goals is to drive innovation, have more nationals enter healthcare
of excellence, which will address the authority plans to reimburse the as part of their national education
the regional shortage. Similarly, private providers on a “pay for per- and skills goals. There are shortages
given the GCC-wide push for more formance” basis that links revenues of doctors as well as nurses and allied
knowledge-based economic activities, to KPIs. Finally, private firms can staff, such as technicians. The lack of
there might be occasion for PPPs in sell the public sector such back-office such support staff means that doctors
healthcare research and development administrative services as claims are distracted from clinical work and
and the development of electronic management, processing, and adjudi- forced to spend time on administra-
healthcare platforms. cation. Daman in the UAE provides tive tasks. One existing PPP venture
third-party administrative services to is the Weill Cornell Medical College
Payors the Abu Dhabi government’s health in Qatar set up by Cornell University
Private companies looking at payor insurance scheme. and the Qatar Foundation. To meet
opportunities will require a minimum its need for medical professionals,
volume for the projects to be clini- Suppliers Saudi Arabia plans to have 27 medi-
cally and financially viable. As the The private sector’s expertise allows cal schools training doctors within
vice president of a healthcare private for the supply of reliable and low-cost just a few years, an increase from the
equity firm in the GCC told us, “Any healthcare necessities to the public 21 operating today.
opportunity needs a certain volume to sector. For example, Saudi Arabia
12 Booz & Company

15. LAYING THE tion of PPPs. This includes the capabili-
ties to govern PPPs, whether in terms
its future requirements. This informs
private-sector providers and helps
FOUNDATIONS of oversight or technical expertise. them to avoid poor decisions. For
FOR PPPs Important enabling factors also need
to be introduced. For example, Saudi
example, some private players wishing
to establish healthcare businesses,
Arabia’s health sector regulations limit whether alone or with the public
the ownership of outpatient clinics to sector, often secure land and initiate
Saudi doctors. Similarly, the UAE has construction without first discover-
not yet enacted a PPP law. ing whether the healthcare regulator
These opportunities notwithstanding, even needs their services. To avoid
PPPs’ potential is limited by challenges GCC governments also need more such misunderstandings, the DHA
in the institutional setup, the enabling robust processes to identify and adver- now conducts industry soundings
environment, and the process for devel- tise PPP opportunities (see Exhibit 6). when looking into PPP feasibility and
oping opportunities. GCC countries This requires a holistic understanding is mandated to provide assistance to
often lack the institutional framework of healthcare needs, which clarifies potential investors and to collaborate
to govern the development and promo- how the public sector wishes to meet with stakeholders.
Exhibit 6
PPPs Require Supporting Institutions, an Enabling Environment, and Clear Opportunities
FOUNDATIONS NEEDED FOR PPPs
Description
1 The institutional setup for attracting and retaining PPPs should be established through cross-sectoral bodies such as:
Set Up the - PPP management offices
Institutional - Investment promotion entities
Framework
Governments should create an environment that is conducive to the initiation and execution of PPPs through three main areas:
2 - Legal and Regulatory
Create a PPP
Enabling - Operational
Environment - Financial
A structured process should be followed for planning and executing PPPs in the healthcare sector that includes activities at the:
3 Develop the
- System level
Opportunity - Opportunity level
Pipeline
Source: Booz & Company
Booz & Company 13

16. Set Up the Institutional Framework ment for PPPs in healthcare. These are of interest that arise when the public
Governments can address these prob- the legal and regulatory, the opera- sector regulates itself as a provider
lems through capabilities that ensure tional, and the financial. Governments and eliminates unhealthy competition
optimal governance of PPPs. In addi- should adopt the necessary laws and between the public and private sectors.
tion to the existing healthcare regula- regulations to attract private inves-
tor, governments need highly trained tors through PPPs. Some of the legal In terms of financial enabling, gov-
cross-sectoral PPP management offices aspects of PPPs, such as the eventual ernments have multiple approaches
and investment promotion entities reversion of assets to the public sector available to offer incentives to pri-
that can initiate, execute, and super- at the end of a project, are complex vate players. Much depends on how
vise PPPs. Kuwait has established the and represent uncharted territory in the two sides wish to allocate risk.
Partnerships Technical Bureau (PTB) the GCC. In this regard, Dubai is Governments can provide direct guar-
as the main body responsible for drafting a PPP law that will specifi- antees that allow the private sector to
implementing PPP projects. The PTB cally cover the healthcare sector. raise financing for projects. Similarly,
aims to use private-sector skills and governments can pledge minimum
expertise to maximize value for money Operationally, GCC healthcare entities volumes of usage or revenues, guaran-
and service quality. will need to decide where to place their tees to mitigate any damage to profits
efforts to clear the way for private should the anticipated level of demand
Such PPP management offices can entrants. Over the long term this not materialize. Governments may even
also ensure that private players deliver means a separation between setting choose to make low interest rate loans
on the agreed terms. They can act as policies and delivering services. By available. Saudi Arabia, for example,
a sounding board for private-sector concentrating their efforts on policies, is offering up to SAR 200 million ($53
partners encountering implementa- standards, and regulations, govern- million) of subsidized loans for private
tion problems. The management ments can limit their role in service investors in healthcare. Alternatively,
office can also ensure that the public delivery to areas of social rather than governments may wish to explicitly
entities involved in the PPP deliver the commercial value. This division is transfer risk to the shoulders of the
correct support to the private play- neither neat nor achievable overnight. private sector to ensure that the public
ers. Investment promotion entities are Governments will need, for example, purse does not accumulate long-term
essential to attract private investors to to remain responsible for handling fiscal liabilities.
GCC markets. With this aim in mind, emergency preparedness and medical
Saudi Arabia has established the Saudi catastrophes, such as epidemics. Develop the Opportunity Pipeline
Arabian General Investment Authority Governments will need a structured
as a gateway for investors seeking to This change in the role of governments process to plan and implement health-
enter the country. is important as it lays the groundwork care PPPs. This requires five phases,
for healthcare PPPs. It allows govern- the first two of which are system-level,
Create a PPP Enabling Environment ments to hand commercial value ser- with the last three at the operational
Governments need to focus on three vices and facilities to the private sector. level (see Exhibit 7).
areas to create a favorable environ- As important, it avoids the conflict
14 Booz & Company

17. The first phase is in essence a system- The process then moves to the opera- The PPP can then move into the
level capacity plan that identifies tional level. The third phase develops fourth and fifth phases of the
current and future opportunities to a PPP framework. This defines at process. These involve drawing up
fill gaps in healthcare coverage. The the beginning the objectives of the the implementation plan and then
second system-level phase carves out public–private collaboration and how actually executing it. As PPPs are
a subset of these opportunities for the achievement of these goals is moni- multiyear projects, the government’s
private sector based on the healthcare tored. The framework also chooses monitoring and oversight
sector model. Communication with the governance model, which includes capabilities, as well as the necessary
the private sector is an important part delineating the partners’ roles and regulatory and legal measures, play
of this process, as it allows private responsibilities and the performance a vital role in this final phase.
entrants to learn of the opportunities management mechanisms. This phase
and, as important, to understand the is critical because it specifies what is
process for realizing them. expected from each partner.
Exhibit 7
The PPP Pipeline Proceeds from the System to the Opportunity Level
HEALTHCARE PPP PLANNING AND IMPLEMENTATION PROCESS
1 2 3 4 5
Assess Healthcare Draw Boundaries for Develop PPP Draw Up the Implement PPP
System to Identify Gaps Private-Sector Participation Opportunity Framework Implementation Plan Opportunities
- Understand healthcare - Identify sub-set of - Develop a PPP framework - Select partner for each - Execute the implementation
market dynamics opportunities for the private that defines each side’s opportunity plan
- Assess healthcare demand sector roles and responsibilities in - Finalize operating model - Monitor performance,
and supply to identify gaps - Communicate opportuni- terms of: for the PPP opportunity mitigate risks
- Articulate gaps as ties, establish process for - Objectives - Develop KPIs and
opportunities entry of private-sector - Governance model implementation plan
players
System Level
Operational Level
Source: Booz & Company
Booz & Company 15

18. CONCLUSION PPPs can help the GCC to alleviate
the growing burden of healthcare
however, fall to governments alone.
The private sector should not wait
spending. By determining the for governments to do all the foun-
role of the public sector and dation work for PPPs. Instead, the
PPP-appropriate opportunities, private sector can be proactive, con-
governments can clear away ducting its own analyses, such as fea-
institutional obstacles, build their sibility studies, and sharing market
own capabilities, and encourage intelligence with the public sector. By
private-sector participation. feeding into the PPP process in this
manner, the private sector can assist
The task of making PPPs deliver governments and so create opportu-
healthcare that is accessible, high nities for PPPs through a cooperative
quality, and affordable does not, relationship based on trust.
16 Booz & Company

19. Endnotes
1
The Gulf Cooperation Council consists of Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
2
International Diabetes Federation. IDF Diabetes Atlas, 5th edn.
Brussels, Belgium: International Diabetes Federation, 2011
(http://www.idf.org/diabetesatlas).
3
George Atalla, Karim Aly, and Mirian Itani, “Partnerships for
Transformation: Using Public–Private Partnerships in the GCC,”
Booz & Company, 2012.
4
Peter C Smith, “Measuring Value for Money in Healthcare: Con-
cepts and Tools,” Center for Health Economics, University of York,
September 2009 (http://www.fgcasal.org/aeets/Documentos/
Measuringvalueformoney_CRE2009.pdf).
About the Authors
Gabriel Chahine is a partner
with Booz & Company in Beirut.
He leads the firm’s media,
consumer and retail, and health
practices in the Middle East. He
specializes in strategy-based
transformations, strategic plan-
ning, and marketing.
Jad Bitar is a principal with
Booz & Company in Beirut.
He focuses on healthcare
providers and public health
organizations, specializing in
strategic planning, transforma-
tion, operational excellence,
and e-health.
Dr. Nikhil Idnani is a senior
associate with Booz & Company
in Dubai. He specializes in
strategic planning, operating
model design and performance
management for healthcare
providers and regulators.
Booz & Company 17

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