UAE Report





Building the right enabling environment for Public-Private Partnerships in the UAE Healthcare Sector

Lessons from early experimentation

The UAE has a federal system of government and one of the main advantages of this arrangement is that it can promote public policy innovation and the diffusion of effective solutions to the rest of the country. This policy experimentation has been exceptionally diverse in the area of public healthcare. Since 2001, the public healthcare sector has been administered through three main zones: a southern zone encompassing the Emirate of Abu Dhabi, a central zone located in the Emirate of Dubai, and a third zone including the Northern Emirates.2 These three zones differ broadly in the way they are managed, as well as in matters of policy making and spending (Figures 1& 2). A coordinating body, the National Health Council3 (NHC) established in 2008, acts as a liaison among the different federal and local government health entities across the country, and includes representatives from the private sector.

     

Recently, there has been some experimentation with public-private partnerships (PPPs) within the three healthcare zones. Abu Dhabi began early and has moved farther in this direction than the others. By 2011, it had outsourced the management of 6 of its 12 hospitals to private sector operators. In Dubai, partnerships have been achieved at the hospital department level, along with agreements with some private hospitals to see patients from the public system when necessary. In the northern zone, there have been tentative steps in this direction.

TCO Management Consulting wondered whether the diversity of the enabling environment in each of the three zones had an impact on early PPP experimentation, and sought to identify lessons that may be applied across the UAE. Their findings suggest that having the right enabling environment in place can significantly facilitate the transfer of knowledge from the private to the public sector through PPPs. This knowledge can in turn lead to higher service delivery standards, reliable healthcare measurement and improved accountability. In addition, a trend towards broader private sector engagement can facilitate a much needed transition towards segregating service delivery from policy and regulation across the UAE.

PPP experimentation in the UAE

Private sector involvement in public healthcare can take on many PPP forms, yet most can be categorised under one of four typologies: management contracts, lease contracts, concessions and Build- Operate-Transfer agreements, with the transfer of control and risk to the private partner prominent in the latter models. PPPs in healthcare do not have a long history in the UAE, and have so far been limited to management contracts – for example outsourcing the executive team of a government hospital. A management outsourcing arrangement is one of the simplest forms of PPPs. The private partner is typically paid a management fee that will include the cost of its services and a profit margin. The fee may be fixed, variable or both. While revenues are retained by the public partner, bonuses may be paid to the private partner as a tool to induce higher performance levels.

HAAD (Health Authority - Abu Dhabi) in the southern zone first ventured into PPPs in 2006 by signing a 10-year affiliation agreement with Johns Hopkins International to outsource the management of Tawam Hospital in Al Ain. Other hospitals quickly followed over the next two years, until 90% of Abu Dhabi’s hospital capacity was under the management of four different internationally-recognised medical centres. This approach was driven by a long-term leadership vision to upgrade medical quality that included universal compulsory insurance, a separation between the regulator and service provider, and a belief that healthcare providers should be independent and predominantly private. The pressure to raise quality standards that comes from having an independent regulator has recently supported this move toward accountability and private sector knowledge transfer.

In addition to raising the standards of healthcare management in public hospitals, the value of these contracts with private operators has also consisted in driving the establishment of a baseline for measuring the performance of facilities. SEHA (Abu Dhabi Health Services Company) incorporated key metrics into its standardised contract with operators, and the fees paid to them include a component that is tied to achieving the targets.

In the central zone, Dubai has taken different approaches to partnering with private operators, choosing to outsource hospital departments and other component services, or to sign targeted patient- or doctor-sharing agreements with private facilities. In 2006, the management of the Trauma Center at Rashid Hospital – one of the busiest emergency departments in the Gulf – was outsourced to InterHealth Canada and, in 2010 The Dubai Gynecology and Fertility Centre signed an agreement with the City Hospital that enables specialists from the Centre to use the resources of the City Hospital to conduct surgeries. And even though DHA (Dubai Health Authority) chose not to give up management control of the hospitals, it nevertheless recognised the centrality of performance measurement in improving quality. The health policy and strategy sector of DHA, separated from service delivery by an internal division, encourages this measurement approach.

Within the northern zone, the management of Al Qassimi Hospital in Sharjah was briefly outsourced to a private operator between 2006 and 2008 under a hospital improvement project with an explicit goal to achieve accreditation for the hospital. However, the agreement came to a premature end before that goal could be achieved.

Despite localised efforts such as this in Sharjah, there has not been a successful coordinated attempt to drive reform across the northern zone. The announcement of the Federal Health Authority (FHA) in 2009 as an independent, public authority in charge of developing and managing public healthcare services in the Northern Emirates was a recent initiative aimed at such reform, but the organisation has still not been implemented. One of the explicit objectives of the FHA was to encourage cooperation and participation with the private sector in health.

Interestingly, the amount of experimentation with PPPs in a healthcare zone is roughly correlated with a very important quality indicator: Joint Commission International (JCI) accreditation. JCI accreditation is considered a de-facto international standard for measuring quality and patient safety, and in both the SEHA and DHA systems, 95% of the public hospital beds are in hospitals which have achieved this accreditation (Figure 3). A team was formed in April 2011 to examine and study the preparation of hospitals in the northern

     


Enabling PPPs to succeed

The early experiences with PPPs across the UAE demonstrate that having the right enabling environment in place makes PPPs more likely to happen and to succeed, and can contribute to the achievement of quality improvements. Research by TCO Management Consulting, shows that there are three components that form the foundation of such an enabling environment which are still lagging in some parts of the UAE to varying extents: a strategic healthcare reform agenda, clear governance roles and a performance measurement culture. In the absence of any one of these, PPPs may still be possible, but they are bound to be more costly and to bring fewer benefits.

Our research indicates clearly that the single most important element of this enabling environment is to have in place a strategic reform agenda that includes the private sector. Unless there is a clear policy emanating from the top and capable individuals in leadership roles that are authorised to make decisions regarding the level of engagement, little of long-term value will be accomplished with the private sector. The major changes that have occurred in Abu Dhabi in such a short period of time could not have been accomplished without such a clear vision for the healthcare sector and strong leadership. It is sometimes argued that the availability of funds is what has driven the reform in Abu Dhabi, but that is only part of the story. The existence of financial resources may make some decisions easier, but it does not remove the need for a clear strategy and the willingness to enforce change.

International experience shows that the second component of the enabling environment is clear governance of the sector. Here again, policy experimentation at the Emirate level has led to the development of governance models that could be replicated throughout the UAE. Whenever a regulator also manages the services that it regulates, there is a potential conflict of interest. To address this issue, the government of Abu Dhabi implemented in 2007 a separation of roles between regulator and service provider through the creation of two distinct organisations, SEHA and HAAD, out of the General Authority of Health Services. This separation of roles has institutionalised accountability because one of the central purposes of the regulator is the independent enforcement of quality standards. Without a clear and distinct regulator, performance within medical establishments will suffer because of a lack of incentive to measure and improve key performance indicators (KPIs). Once separated, the medical establishments will be required to measure and improve performance.

In Dubai, DHA has attained a level of functional separation within the same organisation by creating an internal division of roles. Federal Law No. 13 of 2009 establishing FHA was intended to separate these functions in the Northern Emirates, but until now FHA has not been operationally established.

The final element of the enabling environment – performance measurement – follows naturally from the previous two. The strategic reform agenda allows the government to set the goals and policy direction, proper governance ensures that the right structural incentives are in place for achieving that vision, and performance measurement permits the government to know where it stands and to hold individuals and organisations accountable for achieving the vision.

KPIs demonstrate the performance of the medical system or establishment in question. They should be a part of every public healthcare system regardless of whether the government decides to involve the private sector in service delivery. But when a private partner is involved, remuneration and bonuses can be directly linked to the KPIs, therefore providing the partner with a strong incentive to maintain and improve its performance. Establishing a KPI measurement system helps the government better manage the performance of its private partner in a number of areas during the contract cycle.

Again, Emirate level experiences demonstrate the value of performance measurement and its usefulness in extracting maximum value from the private sector. According to SEHA’s leadership, performance measurement was one of the key factors behind the success of their PPP projects. When SEHA embarked on outsourcing several of its hospitals, there was no comprehensive system in place to measure KPIs. The first task of the new operators was to measure the performance baseline, and this data was used for assessing and improving performance. SEHA has since gone on to measure performance in all of its hospitals, and can compare the relative performance of each.

Dubai also came to see the importance of performance measurement to accountability and initiated a comprehensive performance management program starting about two years ago. Although DHA has so far decided not to outsource the management of any of its hospitals, it will now be in a much better position to judge the performance of the operators if it ever decides to do so. In the northern zone, the most recent comprehensive statistical report was published in 2008.

Recommendations

After reviewing the current structure of the UAE healthcare sector and learning from local experiences with PPPs in healthcare, we are able to come to a number of policy recommendations for senior public healthcare managers who may be considering how best to create an enabling environment that would foster partnerships with the private sector:

Develop a healthcare reform agenda that includes the private sector

In reforming healthcare, the private sector can be made a valuable partner if it is engaged as part of an overall strategic reform agenda. The reform agenda should address all components of the public healthcare system, including payers, providers and patients. It should present a vision of how to incentivise quality improvements for the benefit of the public. The private sector can provide the vital components to support any such agenda, including new technologies, international experience, better management practices and insurance. To be successful, the reforms must be nurtured by and have the strong support of leadership who should champion the difficult changes that are in the long-term interests of the population.

Establish clear governance roles that will drive partnerships with the private sector

Independent regulation of the healthcare sector leads to a renewed focus on a number of areas which help to drive partnerships with the private sector, like service quality, efficiency, cost savings and performance measurement. Institutionalising a separation between healthcare regulation and service provision should be one of the priorities of the strategic reform agenda. Transferring responsibility for managing healthcare facilities to an independent healthcare authority allows the regulator to build capacity and to take on a greater role as promulgator of healthcare standards. If setting up a new organisation is too costly in the short-run then at a minimum there should be an internal separation of functions between the regulator and service delivery. Independent and effective regulation will break the current reform inertia as well as will protect the government’s interest by holding the new service provider formally accountable for quality.

Define a quality baseline as a way to measure performance and incentivise the private partners

Customers are ultimately concerned with the quality of the care they receive from their public healthcare provider. The key to improving quality is accountability, and accountability requires reliable information. Public healthcare providers should establish clear and measurable outcome indicators, define the current performance baseline and then set firm and realistic targets for achieving the desired outcomes. These indicators should also be aggregated at a national level. For PPPs specifically, local authorities should establish a contract management unit that monitors the performance of the private partners and updates the indicators on a yearly basis. The unit should not only measure the outcomes but also set up a transparent review process to analyse cost and activities data and continuously improve visibility on hospital efficiency and management.

The Authors

Daniel Whitehead is a Managing Consultant with TCO based in Dubai. Ahmad Ghannoum is a Principal Consultant with TCO and Wissam Batran is a Consultant Analyst with TCO. This article was originally published online by TCO in January 2012 and is republished here with permission from TCO.

References

1 TCO analysis, UAE National Bureau of Statistics, Dubai Statistics Center, HAAD Health Statistics 2010, DHA Annual Statistical Book 2010, MoH Annual Statistical Book 2008, HAAD website, DHA website, MoH website

2 Including all public healthcare facilities in the Emirates of Sharjah, Fujairah, Ajman, Umm al Quwain, Ras Al Khaima and a small number of facilities in Dubai.

3 The National Health Council is chaired by the Minister of Health and represented by MoH, HAAD, DHA, Dubai Health Care City (DHCC), the medical services divisions of the Interior Ministry and the Armed Forces and private health entities

 Date of upload: 20th Jun 2012

 

                                  
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