Who maintains the plant under each model?

In the 2021 PATH and CHAI brief, the supplier maintains production equipment under bulk supply agreements and leasing (preventive maintenance), while under direct purchase the facility or government is responsible, in-house or through a contract.

Can a hospital with a PSA plant sell cylinders to other facilities?

The 2021 PATH and CHAI brief describes such a hub-and-spoke arrangement, and PATH and CHAI note that registration with local health authorities may be necessary when cylinders are distributed outside the facility.

What business models exist for hospital oxygen plants?

Q: What business models exist for supplying hospital oxygen, such as direct purchase of a PSA plant, leasing, filling stations or bulk supply contracts?

A 2021 PATH and CHAI brief groups oxygen business models into four types: bulk supply agreements, cash-and-carry filling stations, direct purchase of equipment such as PSA plants, and equipment leasing; Global Fund guidance (2024) adds public-private partnerships, cost-recovery and oxygen-as-a-service models as options to explore.

What business models exist for supplying hospital oxygen, such as direct purchase of a PSA plant, leasing, filling stations or bulk supply contracts?

The four models in the PATH and CHAI brief

The brief on respiratory care business models published by PATH and the Clinton Health Access Initiative in October 2021 (read here in its French edition) describes who owns the equipment, who maintains it and how oxygen is paid for under each model:

Model	How it works	Points the brief raises
Bulk supply agreement (liquid oxygen or cylinders)	The supplier provides the oxygen and manages the whole supply chain, often under long-term contracts with defined order and payment terms and minimum volumes; production equipment usually belongs to the supplier	Generally suited to large buyers with constant demand; central agreements negotiated by a national or subnational government for several facilities are one way to secure supply; lack of credit or late payment can interrupt supply
Cash-and-carry filling station (liquid oxygen or PSA)	Generally a private business that fills the cylinders customers bring to a central depot; customers usually handle transport	The default choice when there is no other option or for irregular needs; minimal initial costs, but high prices, stock-out risks and costly transport
Direct purchase of equipment (PSA plants or concentrators)	The facility or government buys the equipment by tender and owns it; the supplier installs it, and maintenance is done in-house or contracted out	Needs qualified staff at the facility or a separate maintenance contract; equipment that is not regularly maintained quickly breaks down
Equipment leasing (liquid oxygen or PSA)	The supplier or a third-party financier owns the equipment and the facility pays on a fixed schedule; preventive maintenance is the supplier's responsibility	Often includes a low-price purchase option at the end; needs a well-capitalised supplier; late payments or breaches can lead to the equipment being withdrawn

Selling cylinders from a hospital plant

Among the brief's examples, a social enterprise installed a PSA generator at a referral facility, which it supplies by pipeline and cylinders, and sells cylinders to nearby facilities with tiered pricing, so that the hospital acts as the hub of a hub-and-spoke model. PATH and CHAI note elsewhere (July 2021) that registration with local health authorities may be necessary if cylinders are distributed outside the facility. A Global Fund briefing note (23 August 2023) compares this centralised, hub-and-spoke approach, in which one large plant fills high-pressure cylinders for distribution, with a decentralised one based on many small plants at the points of use; it says one model need not be chosen for a whole country and that there is no one correct approach. See centralised vs decentralised oxygen supply.

Operating models for PSA plants

Global Fund sustainability guidance for PSA plants (22 August 2024) says innovative operational models such as public-private partnerships, cost-recovery models and oxygen-as-a-service models should be explored where possible, in line with the budgeting guidelines of the funding organisation, and asks for long-term financial planning over the plant's life cycle, which it puts at 10 years on average. PATH's analysis of PSA plant failures (November 2023) recommends that ministries of health evaluate alternative ownership models and service-contracting mechanisms, such as equipment leasing programmes and subscription models. How a public-private partnership for PSA plants can be structured is on what a PPP for oxygen plants is, and funding sources on who funds PSA oxygen plants.