Analysis of public private partnership model and traditional procurement method on a healthcare investment project in determining public service procurement method

Until 1980s, infrastructure investments, supporting economic development and increasing social welfare, have been realized through public resources on a worldwide scale. After the 1980s period, governments were seeking new financial methods for financing infrastructure investments due to high investment costs, demand increase, insufficient public resources. Conducting the infrastructure investments, it appears that the role of the state has decreased while the role of the private sector has increased, in financing of infrastructure investments. To elaborate, the use of Public Private Partnership (PPP) model in the financing of infrastructure investments has become widespread in order to increase the efficiency and quality of public services and to increase economic development in a short period of time. The demand for healthcare investments, which is among social infrastructure investments, has also increased in parallel with the increase and aging of the population over the years. While developing countries do not have sufficient capacity to finance and manage many and large volume projects; developed countries are struggling with rising social spending due to the aging population. Due to the countries' budget constraints and the obligation to provide sustainable healthcare services, private sector has participated in financing healthcare infrastructure investments. However, a service should not be financed by a method that is not in favor of public interest, due to only limited financial resources. For this reason, the public sector should use the "Value for Money Analysis" mechanism to determine which procurement method to use for getting maximum benefit with available resources. In this study, determining the risks in the process of public procurement decision making, sharing of risks, conducting the Value for Money analysis of the investment and the factors affecting these processes were examined. In this context, Value for Money analysis has been done via World Bank Public-Private Infrastructure Advisory Facility-PPIAF module for one of the city hospital projects in Turkey and the studies in the literature have been tested on this project in a micro context. The outcome has also been evaluated in terms of the private sector whether they would like to participate in healthcare project tender under the public side's VfM analysis conditions and the firm's financial data. The most important constraint of the analysis is that the data of the sample project are not open to the public due to the firm's trade secrets for this reason, some assumptions have been done. In conclusion, some suggestions have been made on how to improve the process applied in the PPP projects.