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This edition of Healthcare Review – OnlineTM addresses an area of increasing importance in health care delivery in New Zealand, that of the participation of the private and public sectors in health care delivery.
A number of recent events have focussed attention on the roles of the private and public sectors in health care.
The new public hospital surgery booking system, shortly to be introduced, is expected to remove considerable numbers of patients from current waiting lists, and is likely to increase demand for private provision of services. This approach has invited significant criticism including the suggestion that the proposed booking system announces an intention by the Government to dismantle the public hospital system.
A recent event that has been viewed by specialists as pressure for privatisation of public hospitals is the announcement by the Minister of Health, Bill English, that bulk funding will be the likely form of reimbursement for GPs. In addition the recently debated Public Health Agencies Bill is seen by some parties as an attempt to force the privatisation of public hospitals.
This edition brings together the opinions of some key figures in the private and public health sectors in New Zealand. In particular, the articles address issues around the relationships between the public and private funding, purchasing and delivery systems.
Dr David Rankin, Chief Executive Officer, Auckland Adventist Hospital, discusses the role of the private sector in health care, focussing on secondary care and the role of the private sector in the provision of surgical services.
In Dr Rankin’s view, despite some growth in day-stay and out-patient surgery in private hospital, the private sector has been disappointed with the direct outcome of the health reforms; a level playing field has not been created. Delays in identification by public providers of core competencies and services suited for contracting, and restriction of purchases from the private sector to tenders for limited volume contracts, have limited opportunity and innovation in private provider contracting.
Dr Rankin reviews some key issues raised when private hospitals are being criticised including patient selection, cream-skimming and risk aversion. In a summary of the future role of the private sector, Dr Rankin points to the development of managed care as possibly one of the greatest opportunities for private providers.
Dr Lesley McTurk, General Manager Healthcare Delivery, Southern Cross Healthcare, reviews the challenges facing providers of public and private hospital care, and the New Zealand health insurance industry.
A key issue raised relates to the delineation of the boundaries around publicly-funded care. Dr McTurk notes that the new surgery booking system will assist in defining what will and what will not be provided by the public sector, a definition which is unclear and changeable under the current system.
In response to the need for improved care co-ordination and efficiency, Dr McTurk presents an alternative paradigm for a future health system which integrates public and private funding and provision of health care.
The role of the booking system in enhancing clarity around public sector entitlement is also recognised by Professor Claudia Scott, Professor of Public Policy, Victoria University of Wellington. Professor Scott provides an overview paper which focusses on the need to clarify the roles and responsibilities of the private and public sectors in the ‘reformed’ New Zealand health care system, in particular, the relationship between private and public hospitals.
The potentially problematic nature of the current specialisation in acute hospital treatment in public hospitals and elective surgery in private hospitals is highlighted. In Professor Scott’s view, a parallel private hospital system can only develop through an expensive parallel system of acute care, unless access to public hospitals is made available for privately funded patients.
Professor Scott points to reasons behind a lower than expected growth in private participation following the 1993 health reforms and highlights the lack of competition between public and private hospitals.
Like Dr Rankin, Professor Scott points to the possible role of integrated care plans in reducing the transaction costs between purchasers and improving prospects of a more seamless set of health care services.
The benefits of a level playing field for public patients is the subject for discussion by Dr Leo Mercer, Chief Executive Officer, Capital Coast Health. As a senior trauma surgeon, Dr Mercer was one of a group of people who helped turn the publicly owned Thomason Hospital in El Paso into one of the US’s Top 100 Hospitals and one of its Top 10 Most Computer-Advanced Healthcare Organisations.
Dr Mercer points out the sometimes artificial division of public health from private health, highlighting the use of public funds for privately provided services.
Dr Mercer believes that a level playing field can be maintained while continuing this form of ‘privatisation’ or ‘contracting out’ of services to the private sector but, in order to do so, private hospitals must bear the true cost of their work, and public hospital revenues should reflect the fact that ‘cream-skimming’ of simple and inexpensive operations effectively increases the unit cost of high-tech high-risk work.
Dr Mercer also highlights the need for innovation and competition to enhance the financial sustainability of hospitals, noting that the negative effects of holding public hospitals back becomes an argument for privatisation.
Taken overall, these papers present a number of recurring themes that should be of concern to policy makers and planners. In particular, there appears to be a discrepancy between Government-signalled policy of "more private involvement in the public health sector", and the practical reality as evidenced by progress in this area since the introduction of the health reforms.
Some of the potential benefits of moving down this path are presented, and while not denying that there are attendant dangers, it has to be asked why greater advances have not been made. The material would suggest a number of factors are involved:
- Lack of clear policy direction in this area; the roles of public and private sectors.
- Poorly defined boundaries to the entitlements for publicly funded care.
- Failure to achieve a level playing field; funding, quality, standards.
- Over politicisation of the public / private debate.
- Public resistance based on poor comprehension of the issues and their implications.
- Limited development of competition between the sectors.
Further debate around these issues is required, and must be encouraged if greater involvement between public and private sectors is to be achieved. However, if real progress is to be made, clear central policy appears critical to the removal of barriers currently limiting development.
