COMPARATIVE ANALYSIS IN PUBLIC-PRIVATE PARTNERSHIPS IN HEALTHCARE IN BAHIA, BRAZIL, AND MICHIGAN, THE UNITED STATES

REGISTRO DOI: 10.70773/revistatopicos/789009469

ABSTRACT
This article offers a comparative analysis of public-private partnerships (PPPs), exploring their definitions and significance in two unique contexts: Bahia, Brazil, and Michigan, United States. Through a comprehensive qualitative study, we identify and compare the distinct institutional models of these regions to determine specific similarities and differences. Furthermore, we examine a real-world example with a detailed case study of the Hospital do Subúrbio in Bahia, and non-profit hospitals in Michigan, analyzing the benefits and limitations of this model. The results indicate that well-managed governments can attract and work notably with private companies to elevate the region's public value, especially in the healthcare system context.
Keywords: Public-private partnerships; Healthcare systems; Public value; Bahia; Michigan.

RESUMO
Neste artigo, apresentamos uma análise comparativa de parcerias público-privadas (PPPs), explorando sua definição e significado em dois contextos: Bahia, Brasil, e Michigan, Estados Unidos. A partir de um estudo qualitativo, identificamos e comparamos distintos modelos institucionais dessas regiões, com o intuito de determinar similaridades e contrastes específicos. Além disso, analisamos exemplos reais de hospitais provenientes de parcerias público-privadas, seus benefícios e limitações. Os resultados indicam que ações governamentais bem administradas podem atrair e trabalhar de forma notável com companhias privadas, elevando o valor público da região, especialmente no contexto do sistema de saúde.
Palavras-chave: Parcerias público-privadas; Sistemas de saúde; Valor público; Bahia; Michigan.

INTRODUCTION

Public-Private Partnerships (PPPs) were implemented as an important strategy of New Public Management (NPM), designed to provide better public services while sharing costs and responsibilities, and using the private sector’s technology and innovation. Peci and Sobral (2007) define PPPs as a "risk-sharing relationship based on a consensual aspiration between the public and private sectors (including the third sector) to achieve a desired public policy outcome" (p.04). This paper addresses how the institutional and legal models of public-private partnerships in the health systems of Bahia, Brazil, and Michigan, United States differ and coincide. Why should governments use public-private partnerships? What are the resulting impacts, and how can one learn from the other’s experience?

This essay employs a comparative case study of Michigan and Bahia, driven largely by our collective knowledge of these local contexts. Beyond that, it allows for a comparison between two distinct economic models. The experience of Bahia, as a state located in a developing nation, whose economy is largely based on agriculture, and that of Michigan, an industrialized nation with a strong automotive industry. This comparison provides an examination of the socioeconomic conditions and institutional environments that shape the impacts of PPPs in various economic contexts.

As Cabral (2023) described, the delivery of private services that were supposed to be provided by the public sector has existed since the time of Jesus Christ (p.99). However, PPPs have transformed the traditional roles of the public and private sectors, as governments funded initiatives through taxes collected from society, while private firms funded their services through direct customer fees (Boyne, 2002, p.98). Today, all types of PPPs, from O&M (operations and maintenance) to DBFO (design, build, finance, operate), demonstrate a collaborative alliance to deliver public services (Hodge; Greve; Boardman, 2010, p.06).

Regardless of how, a central question remains: How do different countries' legal models influence the implementation and impacts of PPPs in the health sector? While there is literature describing, explaining, and classifying the types of PPPs, studies still face a gap in comparative cases that analyze how distinct cultures and environments, such as those found in states in the United States and Brazil, impact the design and effectiveness of PPPs in the health system.

Healthcare Service Challenges in Brazil

Especially in Brazil, citizens highlight a paradox involving most public and private services. Brazilian history with government interventions in economic and social activities is complex and long-dated. As a developing country, Brazil faced economic crises during the 20th century that increased the population’s dependence on public services. Only at the end of that century, the country, under the New Public Management, began to work on legislation to promote private participation, such as the Concessions Law (8987/95), acting in road infrastructure.

While currently, fully public services are cheaper—or even free—they are often said to lack agility, efficiency, and modern technologies. That happens occasionally because of tight budgets, which limit their ability to invest in infrastructure, technology, and qualified personnel. Also, the excessiveness of bureaucracy—created to ensure transparency and control of public spending—ends up delaying the processes.

Private services work differently; usually, they prioritize speed, competence, and modernity. Private services generally face competition, which increases the pressure for efficiency and innovation. While encouraging productivity, sometimes, because of the insatiable search for lowering costs and aggregating profit, companies can choose to stay at a comfortable, mediocre level that maximizes their profit.

The next section will explore the Brazilian legal model for public-private partnerships and examine the example of Bahia’s healthcare system, analyzing the existence of such partnerships.

Public-Private Partnerships in Bahia’s Healthcare System

As a way to keep the qualities of public and private services and lessen the problems and limitations they both present, according to Darrin Grimsey and Mervyn K. Lewis (2004), the partnership between the public and private sectors, when well managed by the government, thrives as it holds the private sector’s expertise and capital, which often achieves cost savings and innovation that governments alone cannot replicate (p.91). In consequence, both the government and the private company benefit when the private sector has incentives to reduce costs and deadlines, companies bring advanced technologies and management models, and governments can build infrastructure without immediate debt. To be fully taken advantage of and reach their full potential, public-private partnerships demand essentially the support of the community, an accountable government, and flexible legislation open to creating a legal system capable of protecting against misuse by both private entities and the public administration.

Economically, it is stipulated that the PPP model aims to solve real problems that both private and public service administrators face. However, outside of the balance of payments view, how can public-private partnerships create public value? To understand it further, this article will focus on analysing the healthcare system’s context in Bahia and Michigan.

Brazilian Federal State Law 11,079 of 2004 established for the first time the regulation of PPPs through rules that made bidding and contracting them possible. Nevertheless, today, only approximately 2% of Hospitals in Bahia operate under a PPP model. In Brazil, PPPs are service provision contracts with an obligation to deliver results, while philanthropic contracts rely on subsidies and donations. The CEBAS certification (Certification of Social Assistance Charities in the field of Education) does not apply to PPP contracts. The public-private partnership in the healthcare system is relatively recent; the first public-private partnership experience in the health sector in Brazil was the Hospital do Subúrbio (HS) in Salvador, Bahia.

Hospital do Subúrbio opened in 2010, and it is a privately run public state general hospital, providing emergency care for adult and pediatric patients. It is located in the Periperi neighborhood of Salvador, in the Subúrbio Ferroviário region. The hospital was strategically built in that region to serve the 286,000 inhabitants who mostly live in poverty conditions and have historically lacked access to quality health services. That information makes clear the pursuit of the partnership to create public value by democratizing access to quality healthcare and originating new job opportunities in impoverished areas. Furthermore, HS was elected the 5th best public hospital in Brazil, according to a ranking made by the World Health Organization. According to Bahia’s Health Department, in 2023, the hospital had a crew of more than 1900 professionals, and in 13 years of operation, it has accomplished more than 1 million health services.

With governance and planning, the private sector not only complements but also enhances the SUS (Unified Health System), offering quality services to vulnerable populations. Unlike other public hospitals in Bahia, HS does not suffer from long lines, small size, excessive demand, slow management due to public bureaucracy, or structural issues. As data from the hospital’s website shows, the hospital rating oscillates between 95% and 98%, with 67% of the patients being from the Subúrbio region. By contractual determination, due to the public-private partnership model, Hospital do Subúrbio (HS) aims to meet quantitative healthcare production targets and qualitative performance targets. Their trimestral results are regularly satisfactory; most of the hospital's goals when it comes to hospital discharges and exam diagnosis results are met. Notably, the satisfactory results of Hospital do Subúrbio present a worthy example of a well-organized and managed PPP project. "PPP projects that are attractive to private investors and at the same time are sources of public value creation appropriated by citizens require capable officers on the government side" (Cabral, 2023, p.105). The HS PPP succeeded because the Bahia state government (through SESAB, the Health Secretariat) worked with competent managers who monitored compliance, avoiding dangers such as cost overruns or service degradation seen in poorly managed PPPs. Guarantee insurance, long-term stability contracts, and transparency—for instance, publicly available performance reports—are vital to attract serious private investors and prove credibility. That is an adversity that developing countries face: how to stand out among other investment opportunities. For that reason, the legal guarantee fund was an essential addition to the PPP Law (11.079/04), which reduces the risk of private investors and also promotes private participation.

The success of HS reinforces that PPPs are a viable and superior alternative in contexts of budgetary constraints and growing demand for public health. It proves that PPPs can bridge efficiency and equity—but only when the public sector has the skills, power, and commitment to master them and leverage the private sector capabilities effectively.

In contrast, the next section will explore the history of public-private partnerships in healthcare in Michigan, United States, and their impact, particularly during the COVID-19 pandemic.

Healthcare Public-Private Partnerships in Michigan

The states of Bahia and Michigan have a number of differences, both located in each of the Americas; the two states are not comparable on a multitude of fronts. However, while the two states have various differences, evaluating and learning from each one in the context of public and private partnerships allows for the growth of each state. "Public-private participation in public services provision has varied over the centuries," appearing in ancient times and across the globe (Cabral, 2023, p.98).

In order to fully understand these case studies, there is a long history surrounding public, private, and PPP hospitals in Michigan. The historical trajectory of healthcare in Michigan reflects broader national trends that have led to the ascendance of private hospitals and the decline of public ones. Transformation in the Michigan hospital system over the years can be attributed to economic changes, legislative reforms, and shifting societal expectations regarding healthcare delivery. Historically, Michigan maintained a robust public healthcare system, with state-run hospitals serving as cornerstones of community health (Health Resources and Service Administration, 2023; University of Michigan Heritage Project; Detroit Medical Center).

However, the latter half of the 20th century marked a pivotal shift as economic pressures mounted. The unique demands of an evolving population, coupled with financial constraints, led to a reevaluation of how healthcare services were provided. Starting in 1946, in order to address hospital shortages following WWII, the government passed the "Hill-Burton Free and Reduced Healthcare Act", in which they required local governments to partner with private entities such as hospital boards, in order to grant funds and loans for hospital construction (Health Resources and Service Administration, 2023). These hospital shortages later resulted in much of Michigan's Healthcare system shifting towards a private and/or non-profit system. Fast forward to the 1980s, public hospitals faced a number of financial troubles that forced them to transition to privatized models. In 2010, the Detroit Medical Center (DMC) partnered with Vanguard Health Systems to become the first large-scale for-profit hospital in the state (DMC).

The PPP hospitals in Michigan fall into one of two categories: non-profit healthcare corporations or for-profit healthcare corporations. While for-profit healthcare is completely privately owned, there are often policies put in place that have government contracts or subsidies issued to the hospital, creating a public-private relationship. Non-profit healthcare corporations receive federal tax exemption status in exchange for community benefits, which often entail free or reduced-cost care for their patients. With the strategy to convert nearly all hospitals in the state of Michigan entering public-private partnerships, the state has witnessed an extreme growth in value and efficiency within the healthcare industry, which has caused public-private hospitals to become the norm within the entire country (Health Resources and Service Administration, 2023).

As Cabral notes in Strategy for Public and Nonprofit Organizations: An Applied Perspective, complex societal problems (such as healthcare) in most cases require a collaborative effort between the public and private sectors, which was most evident in the model for non-profit health care corporations. As discussed, due to underfunding and poor infrastructure, public hospitals were unable to meet the needs of the average American, especially the impoverished. Furthermore, due to public hospitals being entirely tax-funded, they were primarily centered within urban high-population centers, leaving rural, impoverished areas without any nearby hospitals. Non-profit healthcare corporations, however, address both of these faults. Following the Hill-Burton Act in 1946, non-profit hospitals such as Trinity Healthcare, Henry Ford Health System, the Detroit Medical Center, and more were able to expand into more deserving rural areas. The federal tax exemption that all non-profit hospitals receive also allows for enough funds to be set aside for charity care, specifically designated for the impoverished, who otherwise would have been receiving much worse treatment at an underfunded public hospital.

In the fiscal year of 2022 alone, Michigan hospitals invested $4.5 billion in charity care and community impact (Michigan Health and Hospitals Association, 2024). This is an excellent example of private sector efficiency working in tandem with public sector mission-driven goals. As stated by Cabral, "strategic management lenses can help public and nonprofit organizations create public value, but also how private firms can benefit from a careful consideration of government and the third sector" (Cabral, 2024, p. vii). The built-in public-private partnership also carries the benefit of non-profit hospitals being more required to work closely with public health programs such as Medicaid and Medicare, whereas private hospitals have the legal option to opt out. Much like the creation of PPP prisons, to keep up with the demand of increasing convicts that the public sector did not have the resources to sustain, by leveraging the advantages of both the private and public sectors, Michigan was able to address many of the inadequacies of public hospitals, that would have been impossible to navigate without creating a strategy that involved the resources within the private sector.

Strategic partnerships between organizations and government are integral when addressing grand challenges such as climate change or health and well-being (Cabral, 2024, p.8). This was exemplified by the pivotal role that PPP hospitals in Michigan played when addressing the COVID-19 pandemic. At the height of the pandemic, strictly government-funded public hospitals faced countless bureaucratic delays, also known as “red tape”.

Former Gov. Andrew Cuomo spent almost $453 million during the COVID-19 pandemic stockpiling medical equipment such as ventilators that have almost entirely gone unused. State Comptroller Tom DiNapoli found that only three items out of thousands purchased by the former governor’s office were ever sent out to hospitals.
(Golden, 2025).

In this example from New York, public hospitals were completely crippled by the slow government procurement systems and bottlenecks, whereas PPP hospitals had more flexibility and were able to finance their own equipment. Furthermore, throughout the pandemic, public hospitals such as Hurley Medical Center in Michigan were extremely strained, given the influx of severely ill patients to their emergency rooms, while PPP hospitals such as Sparrow Hospital, a non-profit healthcare corporation in Lansing, were able to open an additional overflow unit and otherwise expand their hospital to compensate for the additional patients in critical condition (Hall, 2022). Hurley Medical Center was unable to make any significant adjustments because it relied entirely on government funds, and lacked private sector finances and efficiency. Furthermore, due to staffing shortages, the Hurley Medical Center nurse-to-patient ratio went from the recommended 1:1 to 1:4 (Mclernon, 2020). This illustrates that when being challenged by catastrophic events such as a global pandemic, PPP hospitals were able to efficiently adapt in a way that helped vulnerable populations the most, whereas public entities with no private assistance struggled under limited resources and were forced to rely on repurposing existing spaces and intensifying resource management. Further supporting Cabral’s theory, “businesses and nonprofits can assist governments in creating value for citizens, just as governments can support businesses and nonprofits in pursuing their missions while benefiting targeted populations” (Cabral, 2024, p.53). This comparison underscores the importance of strategic partnerships, especially in times of crisis, which not only enhance operational efficiency but also serve vulnerable populations, proving that public-private partnerships often act as a stronger safety net than if the public sector operated on its own.

One element of PPP that is especially prominent within Michigan hospitals is the rapid advancement in medical technology and treatments. Unlike public hospitals, PPP hospitals don’t face as heavy budget constraints or red tape, therefore allowing them to continually leverage private capital to modernize facilities and secure new cutting-edge equipment, instead of wasting millions of dollars to have medical technology sit unused in a warehouse, as we saw with public hospitals in New York over the COVID-19 pandemic. For example, Henry Ford Health System, a non-profit PPP in collaboration with Michigan State University Health Sciences, has used a 10 million dollar venture fund to start an innovation hub, which is following their new AI-driven diagnostics, which allows broader diagnostic care, especially for those in rural communities. According to Kevin M. Guskiewicz, President of Michigan State University, bringing innovations to market is incredibly complex, requiring deep domain expertise, strategic partnerships, capital, and relentless execution to navigate the path from idea to impact (Henry Ford Health, 2025).

Furthermore, PPP hospitals also have more freedom to collaborate with other entities without bureaucratic restraints. The University of Michigan’s hospital (U-M Health), another large non-profit hospital in the state, has had several partnerships with other private entities that have served to advance their medical treatments, such as their partnership with Holland Hospital in 2023 that allowed Holland Hospital to offer clinical specialties provided by U-M specialists locally, giving access to specialized treatments for patients without the need for them to travel to Ann Arbor (Holland Hospital, 2023). Or U-M Health’s joint clinical partnership with Trinity Health, which combined the cancer and cardiovascular centers of Trinity and U-M (University of Michigan Health, 2025). The leverage afforded to PPP hospitals in terms of strategic partnerships allows them to deliver both breakthroughs and faster patient care. “The hybrid nature of PPPs creates interdependencies among contracting parties, stimulating mutual investments” (Cabral, 2023, p.99), which can be applied to both states, allowing for a rich comparative analysis, as each context has appearances of public-private partnerships in and out of the hospital system.

Furthermore, in the next section, the comparative analysis between the two examples will be presented and discussed.

Comparative Analyses

By focusing on the intricacies of PPP relationships regarding healthcare in Bahia and Michigan, this article made evident that both systems work around the fact that bridging the gap between public goals with private finances and efficiency results in a stronger system for everyone. For example, just as PPP hospitals in Michigan were able to rapidly expand overflow units at the height of the COVID-19 pandemic, Hospital do Subúrbio in Bahia was able to avoid long waits and other bureaucratic delays typical in most other hospitals in Brazil. However, though being discussed in the same model, the reality of public-private partnerships presents a few differences when compared in both states. While in Michigan, United States, there are various examples of skilled and honorable PPP institutions in the healthcare system, in Bahia, the model is not close to its maximum potential. While Michigan began establishing PPP hospitals in 1946, Bahia opened its first in 2010. Furthermore, while only one hospital in Michigan operates entirely off government tax dollars with no private sector assistance, only 2% of hospitals in Bahia operate under a PPP model. It has been 15 years since the opening of Hospital do Subúrbio (2010), the first PPP hospital in Brazil, and there is no PPP project in healthcare being developed outside of the study area as important as it. The lack of new, actual ideas put to work can be alarming; uncreative government management, financial crises, and poor investments are certain examples that might lead to, unfortunately, inferior public options. In contrast, it is learned that Michigan has seen multiple examples of PPP hospitals forming partnerships that advance the field of medical technology and treatment, as well as more accessible health care, which would never have been possible under the bureaucracy that public hospitals need to follow.

CONCLUSION

It is evident how public-private partnerships have the potential to generate public value by delivering efficient, helpful, and worthy healthcare services. Our coursework, which was the basis of this project, has allowed us to conclude that expanding public-private partnerships can be the key to addressing healthcare challenges worldwide. The comparison between the cases of Bahia and Michigan demonstrates that combining a competent government with a reliable private sector can lead to social goods such as the social welfare of a population, which the case studies of Bahia and Michigan’s hospital systems have outlined. Still, regardless of whether it is in Bahia, Brazil, or Michigan, United States, partnership with private actors provides services to the greater community, allowing for numerous social goods such as: bridging the gap between public goals with private finances, and efficiency results in a stronger system. These public-private partnerships support not only the health care system, but also the larger society, allowing it to grow beyond this one industry. The success of PPPs not only improves infrastructure and service quality but also enhances resilience during crises, as evidenced during the COVID-19 pandemic. From our coursework knowledge demonstrated in this article, PPPs, when well managed, have numerous advantages, such as those seen in both case studies. Bahia is still behind when compared to Michigan, due to constant financial crises and late implementation of the subject. A longer history of numerous successful public-private partnerships in Michigan acts as an example for Bahia, as PPPs in its hospital system have become stagnant. It is proving to be a slow process that, in the future, can evolve to effective results, and it needs to be supported. These results should encourage well-managed and established PPPs to expand in Michigan to further the state, as well as encourage Bahia to expand its PPPs, which will hopefully positively influence the rest of Brazil, allowing Bahia to be a positive example of the best version of PPPs.

Thus, based on the data analyzed from both states and the conclusions presented, a comparative table of the similarities and differences between Bahia and Michigan was prepared in order to facilitate readers’ analysis.

Table 1 – Comparative similarities and differences between Bahia and Michigan

Source: Group’s analysis.

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¹ Graduanda em Administração pela Universidade Federal da Bahia. Endereço postal: Escola de Administração da UFBA, Av. Reitor Miguel Calmon, s/n, Vale do Canela, Salvador – BA, CEP 40110-903. E-mail: [clique para visualizar o e-mail]acesse o artigo original para visualizar o e-mail.