Exploring Challenges and Opportunities of PPPs in Health Care

A public–private partnership (PPP) is a long-term contract between a private entity and a government entity, for providing a public asset or service. It has emerged as a strategic approach in health care, enabling governments to deliver quality medical services efficiently by leveraging private sector expertise, financial resources, and technological advancements. The public partner is typically responsible for project development and planning, providing access to land and utilities, ensuring regulatory compliance, and conducting contract monitoring. On the other hand, the private partner is typically responsible for design, construction, and infrastructure development, bringing in investment and operational expertise, and driving innovation to enhance service efficiency and quality.

PPPs help address challenges facing health care systems, such as inadequate infrastructure, workforce shortages, financial constraints, and service delivery gaps, by bridging critical gaps in infrastructure, service delivery, and management.

Different countries have tailored PPP models to address their unique health care needs. The impact of PPPs is particularly significant in addressing the challenges faced by low- and middle-income countries, where health care access and quality are constrained by financial and human resource limitations. For instance, India has demonstrated significant progress in PPP-based health care service delivery, particularly in areas like super specialty hospital development, dialysis services, diagnostic networks, telemedicine initiatives, and medical institutes. Meanwhile, Uzbekistan is actively exploring PPP models to strengthen its health care infrastructure and service provision, with growing emphasis on leveraging private sector participation in tertiary care, diagnostics, and hospital management. The following case studies highlight key lessons from health care PPPs in India and Uzbekistan, showcasing successful models and practical insights for effective implementation

Upgradation of district hospitals to medical college and hospitals, Uttar Pradesh, India

Uttar Pradesh, the most populus state of India, faced a critical shortage of medical professionals and tertiary care facilities, particularly in underserved districts. Of the 39 districts lacking medical colleges, 23 were established with state funding. To further bridge the gap, the government launched the "One District, One Medical College" initiative that involves the upgrading of district hospitals to 16 new medical colleges under a PPP model. Of these facilities, four medical colleges are being developed under state incentive schemes, while the development of three medical colleges (based on Design-Build-Finance-Operate and Transfer PPP Model) is supported through Viability Gap Funding.

Figure 1: Project Structure Using the Design-Build-Finance-Operate and Transfer Model

Source: Compiled by the Author Team based on NITI Aayog, Government of India. Public Private Partnership in Medical Education Concession Agreement - Guiding Principles. Guidelines for Financial Support to Public Private Partnerships in Infrastructure Viability Gap Funding Scheme, Project Tender Documents. 
DH = District Hospital, NMC = National Medical Commission, VGF = Viability Gap Funding.

Over the next 5 years, the project is expected to

• improve access to medical education, addressing the shortage of trained professionals; 

• expand tertiary care services in underserved regions;
• enhance healthcare infrastructure by adding 6,700 beds;
• enhance workforce availability by adding 1,600 doctors and more than 10,000 clinical workforce; and
• provide affordable care by providing free inpatient department beds for underserved patients, free essential medicines for government-supported patients, and free outpatient department-related diagnostics; and ensured affordable rates for other patients.

NephroPlus Dialysis Project in Uzbekistan

Uzbekistan faced a severe shortage of dialysis centers, leading to high patient mortality and limited access to treatment, especially in remote areas. Existing facilities were overburdened and patients often had to travel long distances for care. To address this, dialysis services are being implemented through a PPP model across three regions in Uzbekistan (Karakalpakstan, Khorezm, and Tashkent), ensuring high-quality care, advanced technology, and cost-effective treatment for patients with renal diseases. The project follows a Build-Operate-Transfer model with a concession period of 10 years.

From 2021 to 2025, the project achieved the following:

• provided over 300,000 treatments across three regions;

• reduced patient mortality by 40% since May 2021;

• trained and recruited more than 300 clinical nurses and doctors through the NephroPlus Academy;

• enabled a total savings of $9.8 million for the government; and

• reduced by 15% country-level Hepatitis C patient count.

A well-designed health PPP must align with the core pillars of a strong healthcare system: efficiency, quality, equity, and affordability. While private sector participation improves efficiency, reduces costs, and enhances service quality, maintaining equity and affordability remains a challenge.

A key observation from past PPP projects is that quality improvements often lead to increased patient demand, sometimes overwhelming the system. This, in turn, increases the overall cost of service provision. While efficiency gains can help offset costs, achieving a sustainable balance remains complex.

This raises a crucial question: Who bears the cost? If governments increase funding, health care becomes more affordable for patients but adds fiscal strain. Conversely, if budgets are constrained, out-of-pocket payments rise, affecting affordability.

Striking the right long-term balance between cost, quality, and affordability is essential for the success and sustainability of health PPPs. Governments must design models that deliver high-quality care without imposing excessive financial burdens on either the state or the patients.

Figure 2: Balancing Cost, Quality, and Affordability in Health PPPs

Source: Asian Development Bank. SECURE Webinar 20: Public Private Partnerships (PPP) in Health Care: Exploring Challenges and Opportunities in Asia and the Pacific.

Key lessons and key takeaways can guide future PPP initiatives in the health care sector.

1. Effective stakeholder collaboration ensures project success.
   A comprehensive engagement strategy involving local communities, government agencies, and financiers is crucial for the successful acceptance and smooth execution of a PPP project. Further, as learned from the establishment of medical colleges in Uttar Pradesh, India, it is essential to balance public interest with the project's attractiveness. This requires careful and continuous stakeholder engagement to ensure all parties' needs are addressed.
2. Financial sustainability requires strategic planning.
   For projects with low viability, PPPs can be structured using blended financing, combining support from central, state, or regional governments (such as Viability Gap Funding, capital grants, or revenue support) with private sector contributions (equity, debt, or efficiencies). This approach incorporates risk-sharing and performance-linked incentives, ensuring balanced financial responsibility. While PPPs often enhance service quality and efficiency, they can increase financial burden if financial models are not carefully structured.
3. Transparent and balanced risk-sharing frameworks foster trust.
   Transparent policies with well-defined risk-sharing mechanisms are essential for fostering trust and accountability between partners. A well-balanced PPP structure ensures that public interests are safeguarded, while remaining attractive for private sector participation. This creates a mutually beneficial relationship. Additionally, fiscal space and risk-sharing strategies must be carefully crafted to maintain the financial viability of the project without overburdening public resources, ensuring sustainability and success in the long run.
4. Addressing workforce shortages is key to long-term viability.
   Workforce shortages remain a major challenge, necessitating parallel investments in capacity building through training programs, incentives for health care professionals, and collaborations with medical institutions. As observed in Uzbekistan, where NephroPlus trained more than 300 nurses, a mix of in-house and external capacity-building initiatives ensures a sustainable supply of skilled health care professionals. Further, as learned from the statewide diagnostic network case study from India, the implementation of a hub-and-spoke model is an innovative approach to address workforce shortages, while ensuring efficient service delivery.

Public–private partnerships can be utilized across the health sector for hospital infrastructure development, medical equipment procurement, health care service delivery, integration of digital health solutions, and deployment of tele-radiology, radiology/pathology networks, and mobile medical units. The success of health care PPPs depends on a holistic approach that integrates financial viability, regulatory efficiency, workforce development, and strong governance mechanisms. These lessons provide a framework for designing future PPP projects that enhance health care service delivery, while ensuring long-term sustainability and public welfare.

Note: This work arises from SECURE Webinar 20: Public Private Partnerships (PPP) in Health Care: Exploring Challenges and Opportunities in Asia and the Pacific. The team acknowledges contributions of all panelists and Ernst & Young India and Uzbekistan team: Satyam S. Sundaram, Abhishek Kapoor, Saloni Chawla, Deepika Verma, Kanchan Dua, Dilshod Hamraev, and Timur Pulatov.

Asian Development Bank. Strengthening Integrated Primary Health Care Management of Noncommunicable Diseases.