OREANDA-NEWS. March 21, 2011. Spending on healthcare among the OECD and BRIC nations will grow by 50 percent between 2010 and 2020, amounting to a cumulative total of more than USD 71 trillion, according to estimates from PwC's Health Research Institute.  Health spending is rising faster than GDP, magnifying gaps in national and local budget deficits and spurring governments to look to the private sector for ways to get a better value for taxpayers’ money, reported the press-centre of PwC.

In a new report Build and Beyond: The (r)evolution of healthcare PPPs, PwC suggests that public and private sector partnerships are emerging as a model for financing and managing healthcare delivery globally and could create a multi-trillion global market for private companies and investors, relieve the burden on taxpayers and offer better quality health systems.

PwC’s report provides evidence that international interest in health PPPs is increasing, and the market is positioned for rapid growth over the next ten years. Already, competition for private capital has prompted governments in Europe, Asia, Africa and southeast Asia to establish PPP agencies, charged with developing PPP policy recommendations, streamlining procurement and contracting for services. 

David Levy, MD, global health leader, PwC, said:
“The public finance of private innovation and efficiency is a win-win-win for governments, private industry and patients. Public-private partnerships offer the opportunity to increase access and quality of care, bend the cost curve on health spending and create accountability for health systems among groups that previously haven’t had appropriate incentives to work together with a common purpose.”

The arrangement is especially attractive to public authorities responsible for the provision of care to groups of people with especially costly or unmet medical needs such as the Medicaid population in the United States, people living in areas with a shortage of primary medical care and patients with specific diseases such as HIV-AIDS or cancer.

Alina Lavrentieva, Ph.D, partner, leader of pharmaceutical industry practice, PwC in Russia, said:

“PPPs are challenging the notion that private healthcare is for the rich, and public healthcare is for the poor. Rather than creating or exacerbating inequities in care, PPPs can equalise care to all populations. The keys to the success of PPPs as they move beyond building infrastructure to long-term delivery of clinical services will be in contracts that clearly establish performance goals around quality and health outcomes, the creation of national health policies that enable local authorities to act, and the calibre of the private sector participants who get involved.”

Based on an in-depth country-by-country analysis of health spending trends and projections, PwC has determined the following:

By 2020, spending on health infrastructure among the OECD countries and BRIC nations of Brazil, Russia, India and China will increase to USD 397 billion annually, up from USD 263 billion today.   However, the larger market for health PPPs will be in non-infrastructure spending, estimated to be more than USD 7.5 trillion annually, up from USD 5 trillion in 2010.

Between 2010 and 2020, the OECD and BRIC nations will spend cumulatively USD 3.6 trillion on health infrastructure and USD 68.1 trillion on non-infrastructure health spending.

Health spending in the United States accounts for approximately half of all health spending among OECD nations, but the biggest growth will be outside of the U.S. According to PwC projections, the countries that are expected to have the highest health spending growth between 2010 and 2020 are China, where health spending is expected to increase by 166 percent, and India, which will see a 140 percent increase.

Among OECD countries, health spending as a percent of GDP will increase to 14.4 percent by 2020, up from 9.9 percent in 2010. Among BRIC nations, health spending as a percent of GDP is expected to increase to 6.2 percent in 2020, up from 5.4 percent in 2010 as their economies grow and they build out their health systems.  In actual spending, this amounts to a 117 percent increase in spending over the decade, with China leading the way in spending increases.

PwC’s Dr. Levy added:
“There is no country in the world where healthcare is financed entirely by government. Each territory is looking for the appropriate balance of public and private resources and has different motivation for looking at PPP solutions whether it is to share risk, expand capacity and access, increase efficiency, or accelerate innovation. PwC’s experience is that health PPPs are a model with an equally compelling business case from New York to New Delhi, from Spain to Singapore and from Montreal to Munich.”