What is Public-Private Mix in Healthcare?

Introduction
Greater Private Involvement
The Spectrum of Public-Private Healthcare Investment
Pros of Private Healthcare
Cons of Private Healthcare
Cons of Public Healthcare
Pros of Public Healthcare
Some Possible Compromises
Conclusion
References

Even as medical technology becomes more sophisticated and expensive, healthcare providers have been battling the need to keep costs within affordable limits, while still pushing consumption of goods and services to as high levels as reasonably justifiable. This is driven by market considerations, such as profitability and user-driven changes in the use of healthcare technology, as well as a sincere concern for better patient outcomes.

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Greater Private Involvement

Over the last half-century, many countries have shifted from mainly public healthcare systems to a mix of private and public. Deregulation, free trade, reduced budgetary allotments for health and social welfare, and austerity measures are some steps that are becoming prominent in many economic strategies worldwide. This has led to a wave of healthcare privatization, pushing many services out of reach of the deprived.

Healthcare consumers have higher expectations from their healthcare providers, medical guidelines have become more detailed and demanding, and economic models have shifted worldwide to a more profit-driven framework. Many researchers in this field point to the growing inequality of regulatory and institutional frameworks in healthcare, which is exacerbated by the underlying conditions of each country.

The Spectrum of Public-Private Healthcare Investment

Different forms of private investment and ownership of healthcare are recognized. One form is private investment in health expenditure. In other words, private institutions play a greater role in financing health via private insurance or private payments/copayments.

The second variety relates to private contractors working within a public healthcare system or private entities offering services paid for by private insurance. For instance, in Spain, with a national healthcare system, specialist care is usually contracted out to private providers, mostly non-profits.

The third form occurs when a business culture takes over a public healthcare system. The public healthcare sector now manages healthcare “enterprises” like any other business, seeking to obtain the highest efficiency and the greatest profit from the marketing and rendering of healthcare services. In fact, managed competition in healthcare has become a given in many countries.

Many public hospitals, foundations, or trusts have now become subject to organizational criteria shared with businesses. Hospitals took on new roles, while workers at different levels had varying responsibilities and legal characteristics. Secondly, group medical practices have become more common. These provide paid services to the public sector. These are unquestionably for-profit entities, with the physicians in practice being paid from the profits.

Privately funded initiatives such as hospitals and laboratories have become more common. While the private sector pays for these, they also get some funds yearly from the public sector for several decades. And finally, independent governments sold services within a defined area en masse to the private sector based on the ability to pay. Moreover, sometimes public hospitals offer a private wing as well.

Pros of Private Healthcare

Private healthcare is unquestionably associated with increased efficiency of care and resource utilization. Expensive infrastructure and tools are much more likely to be used at full stretch rather than allowed to rust away. However, this is accompanied by a higher proportion of unnecessary indications for using these facilities, and the consumers are almost sure to be younger and richer. Thus, the apparent increase in efficiency is accounted for by the selective marketing of services to fitter and wealthier patients rather than increasing the true reach of the services to cover more people who really need them.

Waiting times get shorter with public-private partnerships in healthcare, but this is often because those with highly paid private insurance bypass waiting lists. Again, the ability to pay rather than the need for the service determines who will get priority in consultations and procedures and who gets the best care, in terms of the experience and skill of the surgical operator, for instance. This fosters and perpetuates inequity in the healthcare field.

Finally, competition for patients is considered a strong motivation for improving patient care. The profit motive adds a strong adulterant to this driver, however. Meanwhile, increased public funding, a stronger network of facilities, and more services would help provide better public healthcare, argue many scientists, without privatization.

Cons of Private Healthcare

Private healthcare services are dependent on the ability to pay for them. In fact, when almost everywhere, countries that have public healthcare systems paid for by the public, that is, with universal health coverage, healthcare is accessed more equally by all segments of society, compared to those where the major chunk of healthcare expenditure is from private insurance.

In fact, in the USA, one in five citizens with above-average income still had one or more healthcare services beyond their access due to the cost, while this was doubled in the case of people with low-income levels. Compared to this, the UK reports inaccessible healthcare due to cost barriers in only 4% of the population. Regarding emergency care, one in three people in the USA and over one in five in Switzerland had similar problems, but less than 1 in 15 in the Netherlands or the UK.

In Israel, for instance, the universal single-payer healthcare model rapidly transformed into a privatized model, eliminating the government’s and employers’ commitment to making all healthcare services accessible to all residents. This cost has progressively shifted to private insurance or out-of-pocket payments, with the wealthiest 20% of households spending almost four times as much on healthcare as the poorest 20% in 2008.

About two-thirds of private payments went on copays, dental and oral treatment, private insurance or private healthcare providers, and other drugs or therapies not covered by the universal bundle. The rest comprised insurance policies offered by non-profits or commercial insurance companies.

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Cons of Public Healthcare

A universal free public healthcare system would be ideal, but it is not possible without much more spending than is available for most governments. Moreover, the lack of competition and accountability as to the efficiency of use of public resources in public facilities opens the door to the privatization of healthcare.

Pros of Public Healthcare

Public healthcare systems are usually more respectful to patients and provide care for the poorest, most complex, and least rewarding cases, as well as long-term follow-up. Investment failures by successive governments are usually a catalyst for deterioration in services and quality of care. While funding is being ramped up, it should be possible to ease the demand by opening up a day-care clinic sector for less demanding procedures and services, keeping such patients out of hospitals.

Innovation and cost-effectiveness in public hospitals must be incentivized so that this sector takes up its rightful place in healthcare. Accountability is key to appropriate auditing of funds and services to increase transparency while discouraging litigation through independent assessment and improvement.

Some Possible Compromises

Many Scandinavian countries offer universal, affordable, and comprehensive healthcare services predicated on paying high taxes in return for unmatched social security from birth to death. In fact, European healthcare models have a higher level of social welfare spending, including preventive and geriatric care, allowing for greater equity in healthcare.

Tiered health insurance systems with a private-public mix are also in place in Australia, for instance. Many different services make up primary healthcare offered by different providers. As Derek Burleton wrote, “When “provincial governments try to contain costs and deal with deficits” it will “put pressure on the private sector to pick up the slack.” “

Conclusion

The values of healthcare systems determine, more than anything else, what the private-public mix will be. “For those advocating for a public system (both funding and delivery), the essential value is universality and equality of access.” For others, “the essential value is freedom of choice: the ability to choose providers and services and pay for those services if they so choose.”

References:

• Filc, D. et al. (2020). From Public Vs. Private to Public/Private Mix in Healthcare: Lessons from The Israeli and The Spanish Cases. Israel Journal of Public Health Research. https://doi.org/10.1186/s13584-020-00391-4
• Born, K. et al. (2011). Public and Private Payment for Health Care in Canada. https://healthydebate.ca/2011/07/topic/cost-of-care/publicprivate/
• Wagstaff, A. (2013). What Exactly Is the Public-Private Mix in Health Care? https://blogs.worldbank.org/developmenttalk/what-exactly-public-private-mix-health-care
• Chernichovsky, D. (2000). The Public-Private Mix in the Modern Health Care System – Concepts, Issues, and Policy Options Revisited. https://www.nber.org/papers/w7881
• Public Private Debate. https://www.health.gov.bc.ca/library/publications/year/2007/conversation_on_health/PartII/PartII_PublicPrivateDebate.pdf

Further Reading

• All Healthcare Content
• Role of Real-Time Data in Healthcare
• Healthcare Systems Around the World
• What is the Role of Regulatory Bodies in Healthcare?
• How is the ‘omics’ Revolution Changing Healthcare?

Written by

Dr. Liji Thomas

Dr. Liji Thomas is an OB-GYN, who graduated from the Government Medical College, University of Calicut, Kerala, in 2001. Liji practiced as a full-time consultant in obstetrics/gynecology in a private hospital for a few years following her graduation. She has counseled hundreds of patients facing issues from pregnancy-related problems and infertility, and has been in charge of over 2,000 deliveries, striving always to achieve a normal delivery rather than operative.