Public private partnerships (PPPs) haven’t been such a happy experiment. Using private money to build arterial roads just increases their cost because private capital requires much higher returns than government borrowing.
But I’ve long wondered about a different kind of PPP that plays to the respective strengths of public and private sectors, rather than their weaknesses.
The economic textbook says governments must build public goods because private endeavour can capture only a tiny fraction of their total value to society. But Google, Facebook, Twitter and Wikipedia are all privately provided public goods. What’s going on?
These public goods generate far more social than private benefit, but there’s still enough in it for the creators to make their creation worthwhile. Google probably generates more than $1 trillion worth of value, so advertising revenue of a tiny fraction of that still manages to generate a few lousy tens of billions. Meanwhile, the platform of Wikipedia was philanthropically created, which leverages the voluntary contributions of the expert and energetic few for the benefit of all.
It’s lucky these public goods didn’t need government involvement, because building them required the insight, drive and steadfast purpose of some of the finest entrepreneurs alive. That pretty much rules government out of the job description.
But what about all those potential public goods or platforms that languish undeveloped because there just aren’t the incentives for private entrepreneurs to deliver them without government help? A public-private partnership might bring them into existence.
I’d come to that conclusion by 2009 while participating in the Government 2.0 Taskforce, which explored the implications of ”Web 2.0”, or social media for governments. But it wasn’t until last year until I came upon a really compelling example. At the Health 2.0 Conference in San Francisco I listened to Anne Wojcicki, the wife of Google co-founder Sergey Brin and the co-founder and CEO of 23andMe.
23andMe sends customers a kit to swab their saliva to enable 23andMe to genetically profile them. 23andMe customers then use that profile to help manage their health throughout their lives. This kind of genetic information isn’t the godsend that people once thought it might be. Genes express themselves in complex ways. But already the information can be helpful in identifying some disease susceptibilities.
And 23andMe is becoming a powerful platform for research. Customers complete 23andMe questionnaires that identify specific health characteristics to be cross-referenced with their genomic profile and as its database grows, its diagnostic and research power grows. Scientists have used 23andMe’s database to publish in scholarly journals replicating 180 genetic associations with medical conditions that had previously been documented in the medical literature – at a fraction of the cost and time of traditional research.
23andMe and its like will help take us to personalised medicine where medicines are targeted to specific individuals based on what’s optimal for their genetic predisposition. Meanwhile, other countries are getting interested. The UK’s National Health Service has announced a program of full genetic sequencing for 10,000 Britons.
But as futuristic as it all sounds, the private sector on its own is making heavy weather of it. With a bank balance swelled to $50-odd million from its latest capital raising, 23andMe is cutting its prices – from $299 to $99, down from $999 in 2008 – to increase its customer base from about 200,000 to 1 million. But there are 7 billion people alive today.
Public-private partnerships could put us in the express lane to the future. Genetic profiles for patients have an immediate capital value to our health system. They can help target screening and improve safety – for instance by better vigilance against allergies or drug reactions. That’s worth more than $99 a patient right now. But at scale, unit costs would fall well below that.
So Medicare could ”bulk bill” genetic profiling while the health system ”nudged” people to take advantage of free profiling, while allowing those who wished to, to opt out. DIY kits could be bulk-mailed as they were recently as part of our bowel cancer-screening program. And at your next visit your doctor could ask if you wanted to be swabbed right there.
The provider of the profiling could be 23andMe or another company(ies). They’d have to open their database to researchers, with the contents duly anonymised and subject to safeguards to protect customer privacy. But they could also provide value-added services to their customers.
And as Australia’s genomic database grew, so, too, would its power as a diagnostic and research asset. It’s hard to think of a more powerful way to kick-start the personalised medicine revolution just coming into view. And hard to think of a better way to put Australian researchers, Australian companies, and the Australian health system at the forefront of that revolution.