Are Italian healthcare organizations paying too much for their public–private partnerships?

Abstract

Italy's health service—the Servizio Sanitario Nazionale (SSN)—has developed Europe's second largest market for healthcare public–private partnerships. This article describes the origins of private finance for SSN infrastructure, examines the programme's scale and key characteristics, and provides a capital budgeting analysis of rates of return on 14 privately financed schemes. Excess returns are being made by the investors in these projects, and there is potential for SSN procurers to achieve significantly better value for money for the Italian people than has been the case to date.

Notes

*It should be noted that our analysis is based on projections—the rate of return expected to be earned by the private sector participants, not the returns actually received, which may vary according to performance and the degree to which risks have been well-managed. As yet, insufficient data is available on the returns actually achieved over the length of contracts to estimate whether the rate of return bid is likely to be matched by the final outturn.

*In SSN PPPs, demand risk is retained by the private sector, so no conventional market risk is transferred. However, some degree of risk is presented by poilitical uncertainties and the potential for contractual difficulty.