Successful Public Sector/Private Partnerships

First Published: 2006-03-17

Creating Successful Public Sector/Private Sector Partnerships
A Presentation to the 2006 Business Outlook
By
Darron B. Cash
Monday January 23, 2006

Let me begin by thanking The Counsellors for my first invitation to be a part of this distinguished gathering. I sincerely hope that what I say today does not ensure that it is my last. However, as an old friend and political mentor was fond of saying, "You knew who you were getting when you invited me."

When I started in public accounting almost 20 years ago we joked that every audit begins with two big lies; the clients tell the auditors "we're happy to see you," and the auditors tell the clients "we're here to help you." In this era of Sarbanes-Oxley, FATF, and increased sensitivity to corporate governance, everyone is a lot more careful about what they say and how it might be interpreted.

Today, as we sit with our auditors to plan the engagement, the partner invariably asks the CEO and me "what is it that keeps you up at night?" Their attempt, of course, is to look at the big picture and focus on the issues that matter most. Rhetorically, I would like to pose that question to you. As you consider the outlook for The Bahamas, not only from the perspective of your business or industry, but as you consider the bigger picture of our Bahamas as a developing nation, what is it that keeps you up at night?

Now that you have pondered this question, I have a few thoughts to share. Firstly, if you find that you have been kept awake far too many nights please call Doctors Hospital's Sessional's Clinic at 302-4684. We might be able to help.

As I considered the theme of creating successful public/private partnerships, I reflected on the underlying principles of partnership in a business context. Consider my four critical requirements for success; there must be:

1. A shared vision
2. Shared goals
3. A true commitment to partnership-I call this "the marriage clause" and;
4. A mutual commitment to action

I'll first say a few words about each of these and then provide some specific examples to elucidate.

Shared Vision

A great working relationship begins with a shared vision. In this case, a shared vision of what The Bahamas can become. It is inspirational in nature, but I submit to you that the vision must be framed in terms that go beyond mere generalities about orderly development and an excellent climate for business. You know the kind of things that politicians typically babble on about. Of course, I frame it that way to be intentionally irreverent and for the intended stimulating effect. But think for a moment of Lynden Pindling's vision for an independent Bahamas, and of John F. Kennedy's challenge to his nation to land a man on the moon and return him safely to earth.

Recently, one segment of our community commemorated the achievement of "majority rule," and I will tell you that my vision for the Bahamas focuses in large measure on performance of the majority. That vision is for a Bahamas in which the substantial majority of our people is prepared to embrace the challenges and opportunities of a global community. Achieving this vision is not the government's exclusive domain. This leads to the second critical success factor.

Shared goals

There must be shared goals that help define and measure progress towards that national vision. Without a small number of cohesive, mobilizing national goals, it becomes very easy for a sense of aimlessness to set in. If you think of it, what are the current noble pursuits that bring our people together and supersede racial, ethnic and political barriers? It is most unfortunate for a developing nation to wander aimlessly from year to year with the most exciting goal being the general elections of 2007.

What keeps me up at night is a pervasive sense of sadness that on issues that are pivotal to long-term national success, successive governments have missed valuable opportunities to affect change where we need them most, in areas like education, immigration, and healthcare.

True commitment to partnership-is the third requirement, and it begs the question, should partners be seen and not heard? My wife often reminds me that one of the reasons she let me marry her was because I was completely comfortable with her speaking her mind. That's why I call this the marriage clause. All Bahamian governments must decide if they want sycophancy or true engagement from their partners. I believe that as a developing nation the best ideas and prospect for long-term success will emerge from a crucible of active debate that embraces all segments of our community.

Today, far too many of our best minds still withdraw from the national dialogue, for fear of how politicians might interpret or misinterpret their comments. Nowhere is this more prevalent than within the ranks of business leaders. Self censorship, an unwillingness to engage, or fear of victimization-call it whatever you want-will continue to stifle our development unless we change. Silent partnership is not real partnership.

A commitment to action The fourth critical success factor is a mutual and sustained commitment to action. Successful business people understand that after all the committees, analyses, and presentations…EXECUTION is what counts. There always comes a time when you simply have to stop talking and start getting things done.

Let me now encapsulate these points by highlighting several examples.

When we consider the shared vision of which I spoke, I think you will agree that while we are likely to have different focuses, in general, we want our nation to be ready for future challenges. Moreover, we want this for coming generations, not just our own. Regrettably, we have been excessively timid in confronting the issues that underpin our ability to excel, and I again adduce for consideration education, healthcare and immigration.

Education

When it comes to education, you know the facts. The national average for students completing BGCSEs is D+, and by any objective standard the majority of our students are underperforming. That fact alone is a sad indictment. But what is more disconcerting is that successive governments are quick to make convenient excuses as to why those of us who are outraged at these uninspiring results should not feel the way we do. Their unacceptable responses never come close to acknowledging the fact that we have a very real national problem that requires a radical change in how we prepare our students for an increasingly competitive future. This reality of an underperforming educational system hangs over our heads like the Sword of Damocles and we know that the day of reckoning will soon arrive. But what happens? Little! We tinker at the edges.

Those of us in business understand that in getting our organizations to respond to a crisis the leaders must come clean and say "colleagues we have a crisis on our hands. We need to change."

I don't mind saying it, as a father and as a businessman the depressing state of our educational system keeps me up at night. Our organization employs almost 400 people and we have a direct stake in the educational system. How can we be confident about confronting the challenges of a new era when the MAJORITY of our graduating students aren't prepared?

Let me be clear about this. Greater leadership from the level of government is essential to our success. Here is why. A story is told of an elephant and an ant that were walking together 'and on their journey they approached a bridge. And as they crossed and they reached mid span the bridge began to creak and moan, and when they got to the other side the ant looked up to the elephant and said, boy, we sure shook that thing didn't we.'

Make no mistake about it; the government is the elephant, and as the image suggests, there is a need for bold leadership. I submit to you, however, that there has been a failure of political leadership across the last two administrations when it comes to education reform. Until only very recently, the response from the business community has been too limited and parochial. But again, as we look to the future, government's commitment and engagement is the unknown quantity.

Education reform, therefore, is an excellent opportunity for immediate partnership; healthcare is another.

Healthcare

Imagine for a moment that you are a contestant on Jeopardy and Alex Trebec framed the question as follows:

"You are a national leader at a time of rising healthcare costs, there is a shortage of skilled workers, including nurse;, insurance companies are consolidating and the industry is in flux; the ranks of the uninsured are growing while demand for care increases and there is acknowledged waste and inefficiency in the public healthcare facilities. There is no easy solution but one overarching theme has become apparent"

If your answer to the question is "What is National Health Insurance" you would be wrong. I believe the real solution is broad-based healthcare reform. When the answer is national health insurance, it seems to me that the elephant has started with a single solution and the colonies of ants otherwise known as stakeholders must be stomped into submission. That is the wrong approach.

Healthcare is an essential service and it is time for the government to embrace change and lead the process of making it happen. In its report HealthCast 2020: Creating a Sustainable Future, PricewaterhouseCoopers looks at solutions and responses from around the world to the globalization and industry-wide conversion of healthcare. It also looks at best practices and policy lessons to be learned from experiences in 27 countries. I highly recommend the report to you.

Let me quote directly from the document because they say it far more eloquently than I can.

"There is growing evidence that the current health systems of nations around the world will be unsustainable if unchanged over the next 15 years. Globally, healthcare is threatened by a confluence of powerful trends-increasing demand, rising costs, uneven quality, and misaligned incentives. If ignored, they will overwhelm health systems, creating massive financial burdens for individual countries and devastating health problems for the individuals who live in them.

It is time to look outward. The attitude that all healthcare should be local is dangerously provincial and, in extreme cases, xenophobic. The days when healthcare sectors operate in silos must end. New solutions are emerging from beyond traditional boundaries and innovative business models are being formed as health becomes globalized."

In a world where economies are globally interdependent and the productivity of nations relies on the health of its citizens, the sustainability of the world's health systems is a national competitive issue and a global imperative. Moreover, there is a moral obligation to create a global sustainable health system. The stakes could not be higher."

They conclude with this. "The idea of sustainability is subject to many interpretations…One comprehensive definition describes sustainability as '…an economic state where demands placed upon the environment by people and commerce can be met without reducing the capacity to provide for future generations.' This definition applies in profound ways to healthcare. At the current rate of consumption and the current level of thinking, the healthcare organizations of today will be unable to meet demand in the future. Our health systems will be unsustainable." I say Amen to that.

The report identified seven key features of sustainable systems, whether they are governmental or private organizations.

They are:
1. A quest for common ground
2. A digital backbone
3. Incentive realignment
4. Quality and safety standardization
5. Strategic resource deployment
6. A climate of innovation, and
7. Adaptable delivery roles and structures

Nowhere in the document did I find the establishment of national health insurance as the starting point for addressing the myriad of healthcare challenges. I submit to you that we have put the cart before the horse.

In concluding its study, PWC highlights the fact that across those 27 nations transferable lessons are emerging, and across all sectors of the industry, healthcare leaders are exploring many of the same solutions:

1. Collaboration-Payers, hospitals, physicians and community service organizations are working together to foster standardization and adoption of technology and process changes.
2. Consumerism-Providers are reorganizing themselves in a patient-centric continuum through care management approaches.
3. Technology assessment and dissemination-Payers, providers and community organizations are coming together to establish infrastructure and communications standards.
4. Transparency-New payment and reporting methods are emphasizing safety, performance and accountability for health organizations across all industry sectors. Payers, providers and governments are involved.
5. Manpower management-New models of developing, recruiting and retaining manpower are developing to address the root cause of gaps in service and impending future needs.

It is time for new thinking and new leadership. One clear theme in the success stories profiled is the level of dialogue and collaboration. When it comes to addressing the healthcare challenges here at home, there has been far too little dialogue.

If there was meaningful engagement with Doctors Hospital, we would have made the following points about the best ways to increase access to care while lowering the overall costs:

* Eliminate work permit fees on nurses and other scarce specialties
* Eliminate real property taxes for certain sized facilities
* Eliminate duties and taxes on all medical equipment
* For business license purposes, recognize Doctors Hospital as a hospital, in fact, the time has come to provide tax exempt status to various categories of healthcare providers-whether for profit or not.

In the United States federal laws provide tax exempt status for not-for-profit hospitals that provide charity care and benefits to the community. The Healthcare Financial Management Association identified 10 major attributes of tax-exempt organizations. There include:

1. A mission to provide community benefits
2. Provision of charity care-in terms of free or discounted care
3. Reduction of the healthcare burden on government-by providing services the government would otherwise have to provide; and
4. Provision of public education-to enhance public health. Including sponsorship of educational activities
5. Use of financial surpluses-to further the hospital's purposes
6. Accountability-Must be able to account for the contributions to the community
7. Goodwill-As measured by a commitment to the mission and resulting community support and perception of value
8. They provide essential healthcare services-particularly when it is the sole provider of such services that are essential to a community
9. They provide unprofitable healthcare services-these unprofitable services lose money not because of inefficient operations, but because of high costs combined with low volumes or inadequate payment
10. Serving other unmet human needs-not directly tied to health but which contribute to the overall public good

I believe these attributes are clearly evident in The Bahamas and they make a few major providers worthy candidates for tax exempt status.

A bold proposition indeed, but it is time for a paradigm shift. I'll also take this moment to suggest that there are certain issues that political leaders should not outsource to consultants and committees. Healthcare and education reform are two of them. Consider this. In June last year U.S. Secretary for Health and Human Services, Michael Leavitt announced development plans for a national health information network and the creation of a healthcare IT standards commission. The Secretary also announced that he would chair a new commission, known as the American Health Information Community, whose primary task would be facilitating development of healthcare IT interconnectivity standards. Equally important was this particular mandate: because the commission is set to expire in five years, it must select a private-sector organization as its successor.

Now, I don't mention this to suggest that we should rush to mimic what the US has done, but to underscore several points.

* Firstly, while some of us are just beginning to come to terms with an institution-centric electronic medical record, many nations with vast geographies are recognizing the need to put medical records in reach across organizations and across vast geographic distances with an electronic health record or HER.
* Secondly, the US government recognizes the need for direct engagement at the highest levels, as indicated by the secretary's personal leadership of the task.
* Thirdly, there is an inherent recognition of the value of private/public partnership, with leadership of the initiative shifting to the private sector within a specified period of time. There are many lessons we can learn from this experience as we prepare for the future. Consider the Electronic Health Record.

Government Leadership

If we take the Prime Minister at face value when he suggests that he has at least another six years in his present job, then it is not difficult to envision him or his minister of health taking a leading role in the development of an electronic health record in The Bahamas. In fact one can envision that if the Christie administration is successful in is efforts to establish an anchor project on each island, then as the population becomes more mobile the development of an EHR that can move with them becomes more essential.

Conclusion

Friends and colleagues, it has been a privilege to be with you today. I close with this call to action:

* First. Let's make a commitment to become full partners, and more directly engaged in national debates. Where necessary, let's start them. When the Immigration Sub-Committee of the Financial Services Consultative Forum released its report suggesting the need for liberalized immigration policies, everyone-including the politicians-ran for cover. That should not be. As a developing nation that clearly does not have all the human resources needed for sustainable development, we need to embrace the opportunity for dialogue.
a. Once again, the collective WE have buried our heads in the sand as if the problems will go away. This too is an opportunity for joint leadership and partnership.
* Second. Raise your business performance and customer service standards. Make your own organizations "global-ready" by vigorously pursuing excellence.
* Third. Lead by example. Make your company the standard by which all others are judged, and they will follow.
* Fourth, Register. To vote, if you are inclined to do so, but more importantly, register your opinion with the political directorate.

Finally, on those nights when you can't sleep, keep dreaming about the best that the Bahamas can be. We are a nation of tremendous promise. In his second inaugural address US President Ronald Reagan outlined a number of bold and far-reaching initiatives, and when he finished, he said to his audience, in effect, I know these are grand and lofty goals, but America is far too great a nation to limit itself to small dreams. I feel the same way about our nation. We must have a bold vision of what our Bahamas can be, and we must inspire each successive generation to keep reaching further. I am confident that by working together in true public/private partnerships our great promise can be fulfilled.

Thank you for listening, and God bless you.

Reprinted with the kind permission of Mr. Cash.

The views expressed are those of the author, and not necessarily those of the Nassau Institute (which has no corporate view), or its Advisers or Directors.

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