The importance of adopting Public-Private Partnership (PPP) and Strategic Purchasing (SP) has been discussed in Bangladesh's health sector for many years. Although both approaches seek to improve access, efficiency, and quality of healthcare services, they differ fundamentally in their operational design and objectives.
Under a PPP arrangement, the government delegates responsibility to a private entity for managing all or part of a public healthcare facility or service. SP, in contrast, involves the government purchasing specific health services from private providers on behalf of citizens while retaining stewardship, financing, and regulatory oversight.
Over the years, several initiatives have been undertaken to introduce PPP in Bangladesh's health sector. For example, there was an attempt to operate small public hospitals (10-20-bed facilities) through PPP arrangements; however, the initiative was never implemented. To date, one of the few notable examples of PPP is the provision of dialysis services at the National Institute of Kidney Diseases and Urology (NIKDU) and Chittagong Medical College Hospital through a partnership with Sandor Dialysis Services Bangladesh. While this initiative expanded access to dialysis services, it has also generated debate regarding contracting mechanisms, implementation arrangements, and value for money.
Similarly, Bangladesh has limited experience with SP in the health sector. During Covid, the government contracted private providers to deliver selected health services. However, the initiative faced significant operational and governance challenges and failed to achieve its intended objectives. These experiences demonstrate that private sector engagement alone does not guarantee success; rather, success depends on selecting the right intervention, designing appropriate contracts, and establishing strong monitoring and accountability mechanisms.
Against this backdrop, the current government's renewed interest in expanding private sector participation in healthcare presents an opportunity to adopt a more strategic and evidence-based approach. The key question is not whether PPP or SP should be adopted, but where each approach is most appropriate.
Where does PPP fit best?
PPP is most suitable where the government owns infrastructure but faces persistent challenges in service delivery, management efficiency, or human resource deployment. One potential area is the operation of rural health facilities, including Family Welfare Centres (FWCs) and union sub-centres, particularly in remote char, haor, coastal, and hill-tract areas where many facilities remain non-functional due to staffing shortages and management constraints. Contracting competent private providers to manage these facilities could significantly improve service availability and utilisation.
PPP is also well-suited for ancillary and diagnostic services within public hospitals. Diagnostic laboratories, imaging services, medicine dispensing, ambulance services, and dialysis units require specialised management, equipment maintenance, and operational efficiency that private providers may be better positioned to deliver under well-designed contractual arrangements.
Another promising area is infrastructure development. Bangladesh faces significant gaps in specialised services, particularly cancer care, rehabilitation services, and long-term care facilities. PPP can mobilise private investment and technical expertise, especially through foreign direct investment (FDI) to establish and operate such facilities while maintaining public oversight and ensuring affordability.
Where does Strategic Purchasing fit best?
Strategic Purchasing (SP) is most appropriate when public-sector capacity is insufficient to meet demand and private providers already possess the necessary infrastructure and expertise.
Maternal healthcare, especially delivery care, should be the top priority for SP in Bangladesh because it is a life-saving and time-sensitive service that directly reduces maternal and newborn deaths. It also imposes significant financial burdens on families, making it an ideal service for public financing to improve access to institutional delivery, equity, and financial protection.
Cancer care is perhaps the most compelling example. Public hospitals currently lack adequate capacity to meet the growing demand for oncology services. Building new public cancer hospitals and developing specialised human resources require substantial investments and can take many years to materialise. In the meantime, the government can purchase cancer services from accredited private hospitals. Dialysis services are also a strong candidate. Demand for dialysis continues to increase rapidly, while public facilities remain inadequate in many districts. SP can enable patients to receive services from qualified private providers without incurring catastrophic out-of-pocket expenditures.
Many private hospitals possess intensive care units, emergency departments, and trauma care facilities that are often more accessible than public alternatives. SP here can help ensure timely access to life-saving care, particularly during emergencies and disasters. It may also be effectively applied to a range of other health services, including primary healthcare in urban settings, especially large metropolitan areas such as Dhaka and Chattogram, general hospitalised care, and specialised interventions such as cardiac stent placement and other high-cost procedures.
The common feature across these services is that the private sector already has substantial excess capacity, while the public sector faces significant shortages. In such situations, purchasing services is often faster, more cost-effective, and less risky than building and operating new public facilities. If Bangladesh intends to scale up private-sector engagement in healthcare, it should begin with interventions that are relatively simple, politically feasible, and capable of generating quick, measurable results.
For PPP, the most logical starting point is diagnostic services in public hospitals. Diagnostic services are relatively easy to define, measure, monitor, and contract. The contracted private entity will assume full responsibility for providing diagnostic services, including pathology and imaging, within government health facilities, using its own equipment and personnel. The government’s role will be limited to providing the necessary laboratory and service space. Service prices will be determined through a negotiated agreement between the government and the private provider, while patients will continue to pay the existing user fees. For SP, the government should begin with high-priority services where public sector capacity is clearly inadequate. Delivery care, cancer care, dialysis services, and emergency care meet these criteria.
Bangladesh should start small, learn from implementation, strengthen regulatory and monitoring systems, and gradually expand to other services. Attempting large-scale PPP or SP reforms without adequate institutional capacity could repeat the shortcomings of previous initiatives. The ultimate objective should not be to privatise healthcare, but to strategically leverage private sector capacity to achieve public health goals. When carefully designed and properly regulated, both instruments can improve healthcare access, quality, efficiency, and financial protection.
Dr Syed Abdul Hamid is professor in the Institute of Health Economics at the University of Dhaka.
Views expressed in this article are the author's own.
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