This section discusses the reported findings and provides the basis for answering the research questions, namely the reason for the adoption of institutional PPPs as complementary provision forms, and the governance and management features they need to be effective. We follow the sequence of Table 1.
Two possibly conflicting goals led to the establishment of all the JPFEs. The first is a strategic goal, namely, the rationalization of the public hospital network and the subsequent dismissal of a small general hospital. The second, however, is the policy goal of maintaining the local political consensus through the conversion of an existing hospital into a different type of healthcare facility that can still be regarded as part of the public realm and that serves the local population. A major issue in the establishment phase was therefore the transformation of the health care generalist orientation and the definition of a portfolio of highly specialised services. To implement the new policy and develop the entrepreneurial model, the public sector opened up to collaboration with private parties. Indeed, in all cases, private partners were involved not only in financing the investments for infrastructural renovation, but also in carrying out niche activities, because they are supposed to hold stronger managerial competences.
Two consequences flow from the above arguments. First, the underlying reason for the creation of institutional PPPs was the need to find a politically viable solution to the introduction of cost-cutting health care policies (and the consequences deriving from their implementation, e.g., the dismissal of small local general hospitals), rather than the result of rational planning to enhance forms of public-service provisions. Second, institutional PPPs were not conceived as alternatives, but rather as complement to the traditional public-service provisions for a defined set of services and goals. Indeed, two empirical considerations support these arguments. First, each JPFE budget is part of the general LHA budget. The public authority thus monitors JPFE expenditure and ultimately guarantees any financial risks taken over by the company. Second, JPFE's missions were designed to lessen the pressure on the LHA budgets through the development of profitable market segments that would increase the demand for both SSN inbound patient mobility and private out-of-pocket patients.
All cases achieved the real (hidden) institutional aim, namely the dismissal of a small hospital without major complaints from the local public.
All JPFEs were set up as stock companies, suggesting the will of public partners to operate in a more flexible legal framework than that of the traditional public-sector regulation. In all cases, private partners are entrepreneurs with different degrees of specialisation and organisational development in distinct branches of healthcare. What is intriguing is the extent to which JPFEs were granted autonomy by the constituent partners. Indeed, public parties held two contradictory expectations, namely the development of a dynamic and entrepreneurial initiative and the need to maintain the direct control over the service delivery. Concurrently, private partners wanted to retain responsibility for the entrepreneurial and managerial functions despite their minority shareholding.
In this potentially conflicting scenario, the degree of capitalisation of the JPFEs played a pivotal role in determining the effective degree of autonomy of the PPPs. Only in Case A were the assets transferred to the new society by the public party as a form of capitalisation, while the private partner contributed significant financial resources to balance the level of investment and, consequently, of shares. In doing so, the organisation was granted autonomy to develop infrastructural activities, one of the major drivers of strategic change in the health care sector. Both infrastructural transformation and services' portfolio reorganisation plans were enabled by the high degree of capitalisation. The relevant financial exposition of both investors constituted a strong incentive for the JPFE management, which was asked to guarantee an adequate rate of return on the investments. However, the return on investment for the private partner was squeezed by the public shareholding, even though the latter originated exclusively from the allocation of physical resources. This structure made the financial constraints brought in by the private investor more difficult.
In contrast, in the remaining cases, LHAs owned the facilities and rented them to the PPPs, thus partially undermining JPFEs' strategic autonomy and weakening management commitment to results. Furthermore, this strategy brought the public partner back in the organisational internal decision process due to mandatory approval needed to perform any investment activity.
Generally speaking, a chief reason for the lack of allocation of public capital resources (e.g., buildings and facilities) to the PPP is that the amount of capital transferred depends upon the value of the single assets, which may not reflect the amount needed for the agreed division of shares. While private partners may achieve balance in equity shares only by increasing the financial contribution, this action can lead to an overcapitalisation of the company compared with the estimated turnover in service activities. However, despite these limitations, results have shown that whenever physical assets were transferred to the newly established company, they acted as a strong organisational incentive to achieve PPPs' strategic goals by partially increasing managerial autonomy.
Bureaucratic and Administrative Procedures
Public tender procedures have been adopted in all cases for the selection of the private party. The stringent criteria set for the evaluation of offers, however, limited the number of firms participating in the selection process, and often led to the submission of a single offer. The lack of private-sector initiative unveiled the difficulty in finding private entrepreneurs willing to cooperate with PAs in service-delivery functions (and not only in financial or building activities). This issue is common to many institutional PPPs throughout Europe and is generally due to both market factors (lack of private-sector entrepreneurs focusing on core health services) and procedure limitations (difficulty in establishing a negotiation based on trust).
From an administrative point of view, despite the common legal framework of the stock company, two JPFEs continued to use public procurement procedures in the fulfilment of ordinary purchasing activities, while the other two adopted private procedures. The driver behind this latter choice can be traced back to the internal organisational culture and, specifically, to the degree of autonomy given to the managers appointed by the private partner. Only in Case A has a proper public-private integrated purchasing approach been developed, through the adoption of a voluntary code regulating private buying procedures and guaranteeing transparency and publicity in the procurement process. This arrangement constitutes a good example of the virtuous coexistence of the two cultures.
A final issue concerns the relationship with the workforce, with specific regard to the contractual relations. Civil servants operating in the previous facilities and continuing their work in the new company kept the public-sector contracts even though they would have been required by law to shift to the private discipline. The co-existence of personnel with different contractual profiles for the same job positions, although justified by the novelty of the experience and the need to maintain political consensus, may lead in the long term to treatment inequalities and internal resistance from part of the workforce. This findings shows the "provisional" nature given to the JPFE and the difficulty in formalizing the collaboration through a stabilised institutional form.
Relationship with the Purchasing Authority
In all cases, the public partner (i.e., LHA) was both the owner of the company (51% shareholding) and the purchasing authority (almost 100% of revenues in all cases). This indeed reflects two possible ways in which the public sector can exert control over the PPP, namely through ownership or purchasing powers. Acting as the purchaser is potentially easier when the hospital has a clear and focused mission and provides a limited set of services, as in the case of the JPFEs, where initial service agreements were signed, specifying service targets and revenues. Conversely, whenever the mission is broad and largely indefinite, as in the case of general hospitals, it is rather difficult to develop the purchasing function. However, in all cases analyzed, the public authority preferred to act through the property function, steering and latently influencing the decision-making processes at the PPP board level rather than through the more politically visible inter-institutional purchaser function.
Final Reflections on the Initial Performance
Case A has registered an annual 18% increase in the number of discharges in the 2004-2008 period thanks to the implementation of a strong network with the cardiology and cardio-surgery acute departments within the area. The high levels of achieved specialisation achieved led to an increase in the mix of patients coming outside the sphere of competence of the Local Health Authority (currently 50% of the users). The significant expansion of activities and revenues was agreed by the board, where the public partner acted as shareholder, without previously modifying the service contract agreed to. Thus, the LHA purchasing function was not properly activated, because the adjustments on the service agreement were rather made as an ex post bureaucratic duty. Conversely, Case B has only partially achieved the activity targets, and failed the pre-established targets of infrastructural renovation. Financial indicators show a precarious economic situation, with substantial losses in the 2007-2008 biennium (-471,000 €). Despite the intense debate raised at the board level, no action was taken by the purchasing authority, which did not adjust the contract goals and revenues for the subsequent years.
In a similar way, the remaining two JPFEs report a breakeven over the whole period. However, they failed to develop the new expected service areas. The LHAs in their purchaser role were not able to exert pressure on the organisation, being rather satisfied as shareholders to break even. The weakness of the purchasing function may also explain the lack of infrastructural investments undertaken by the public partners owning the facilities, being a signal of an unclear target planning.