Public-Private Partnerships (PPPs) have become an essential tool for governments worldwide to develop and modernise healthcare infrastructure. By leveraging private sector investment, expertise, and efficiency, PPPs help bridge funding gaps, improve healthcare accessibility, and ensure the long-term sustainability of medical facilities.
Ukraine faces significant challenges in healthcare infrastructure, including outdated hospital buildings, lack of modern diagnostic centres, and insufficient number of specialised medical facilities. Given budgetary constraints and competing priorities, PPPs offer a potential solution to accelerate the modernisation of Ukraine’s healthcare system.
This article aims to explore different PPP models used in healthcare worldwide, identify key factors influencing their selection, and assess the most suitable approach for Ukraine. Given the complexities of integrating private-sector management into medical services, we propose focusing on infrastructure-only PPP models as the most practical solution for Ukraine.
PPP Models in Healthcare
Countries worldwide have adopted various PPP models to improve healthcare infrastructure and service delivery. These models can be broadly categorised as follows:
- Infrastructure-Only PPPs (DBFOM – Design, Build, Finance, Operate, Maintain)
Under this model, the private sector is responsible for designing, financing, and constructing healthcare facilities, as well as maintaining them over a long-term contract period. However, the public sector retains control over medical service provision.
UK’s Private Finance Initiative (PFI) should be viewed as an example of the said model. The UK has used PFI extensively to build hospitals, with private companies financing construction and being repaid over time through public sector payments. While PFI delivered modern facilities, high long-term costs led to a re-evaluation of the model.
- Service-Based PPPs (Full-Service PPPs)
In this model, private partners not only build infrastructure but also provide medical services. This approach requires strong regulatory oversight to ensure service quality and affordability. An example of this mode is the Alzira Model used in Spain.
- The private sector builds and operates hospitals, providing medical services under a contract with the government.
- While the model reduced costs and improved efficiency, concerns arose regarding service quality and accessibility, leading to a partial rollback.
- Hybrid Models (Shared Responsibility in Infrastructure & Services)
Some countries adopt a hybrid approach, where private entities manage hospital infrastructure while public healthcare professionals provide medical services. Canada’s Alternative Financing and Procurement (AFP) model used in Ontario involves private-sector participation in hospital construction and maintenance, but the public sector retains control over service provision. This model ensures high-quality infrastructure while preventing excessive privatisation of medical care.
Each model has its own strengths and weaknesses, but success depends on how well it aligns with the country’s legal, financial, and healthcare systems.
The choice of a PPP model for healthcare depends on several critical factors, which we aim to summarise below:
Firstly, regulatory environment: a well-defined legal framework is essential for private-sector participation. Countries with clear PPP laws tend to attract more investment.
Secondly, funding mechanisms: some models rely on direct public funding, while others involve user fees or international financing. Availability of funding influences model selection.
Thirdly, risk allocation: the public and private sectors must clearly define responsibilities to balance financial, operational, and service delivery risks.
Fourthly, healthcare system maturity: countries with well-developed public healthcare systems may integrate service-based PPPs, while others may focus on infrastructure-first models.
Lastly, however, not the least important though, public perception and political will. If private-sector involvement in healthcare is politically sensitive, governments may opt for infrastructure-only PPPs to mitigate public resistance.
Given these considerations, Ukraine must choose a PPP model that aligns with its regulatory, financial, and healthcare landscape.
The Best-Suited PPP Model for Ukraine
Ukraine’s healthcare sector faces structural challenges that make infrastructure-only PPPs the most viable option. Integrating private-sector medical service provision into PPP projects would be complex due to several factors. One of the most important aspects is that the current legislation lacks clear mechanisms for integrating private healthcare services into PPPs. On the other hand, full-service PPPs could face resistance from the public and medical community. Additionally, managing both infrastructure and medical services would require advanced funding models, which are currently underdeveloped.
By focusing on PPPs for hospital construction, renovation, and maintenance while keeping medical service provision under public control, Ukraine can shoot many targets with the same bullet.
TARGET A: acceleration of infrastructure modernisation. New hospitals, clinics, and diagnostic centres can be built faster and with better quality.
TARGET B: leveraging of international funding. Organisations like the World Bank and EBRD could support projects with long-term financing and/or donor finance.
TARGET C: ensuring public oversight by the government retaining control over medical service standards and affordability.
TARGET D: reducing budgetary strain. PPPs allow private investors to share financial risks while ensuring long-term facility maintenance.
Potential Pilot Projects for Ukraine
Ukraine has recently announced a pilot healthcare PPP in the city of Zhytomyr where it is proposed to implement an infrastructure-only model to create a brand-new hospital designed to replace an outdated facility. This is a huge move towards potentially multiple projects across the country, where PPP can facilitate transformation of Ukraine’s medical services system primarily through (A) modernisation of regional hospitals by upgrading aging facilities to meet modern healthcare standards, (B) establishing of specialised medical and diagnostic centres (developing high-tech oncology, cardiology, and rehabilitation centres).
Successful implementation of these projects would provide a strong foundation for scaling up PPPs in Ukraine’s healthcare sector.
By Roman Stepanenko, Partner, Asters
