The increased involvement of the private for-profit sector in our health service will not be good for patients' health or pockets, writes Dr John Barton
The apparent "need" to extend involvement of the private for-profit sector in our health service results from successive governments' failure properly to fund our health service. And recently, vested interest groups have highlighted the value of involving the for-profit sector through treatment of public patients in private facilities, the creation of jobs in the health sector, the development of relationships with well-respected North American medical universities, and the value to the Government of the tax incentives for private hospitals.
But they have not informed us of the predominantly negative research on the private for-profit sector.
Governments have turned to the private sector to introduce competition, innovation and reduction in healthcare costs. But such expectations in the for-profit sector have, by and large, not materialised: costs have not been controlled, quality has not improved, healthcare fraud has been predominantly perpetrated by for-profit institutions in the US, and the profit motive, including satisfying investors' needs, appears more important than the needs of the community.
The US has also seen the dark side of the private for-profit hospital chains. They have been found guilty of fraudulent activities against government-funded healthcare for the old (Medicare) and the poor and have paid large settlements to the US government for these illegal activities. The largest for-profit hospital corporation has recently paid $2.1 billion to the government.
Much of the research showing negative findings on quality of care, mortality and costs in private for-profit medicine has emanated from Harvard University, while other US research has mollified this criticism. More recently though, the Harvard researchers have been backed up by collaborating Canadian and US researchers at McMaster University, the Canadian Institute for Advanced Research, the University of Toronto, and the University and Veterans' Affairs Medical Centre at Buffalo, New York.
They have shown that mortality at US for-profit hospitals and dialysis centres is higher than at private not-for-profit facilities and most recently have shown that treatment at private for-profit hospitals in the US costs 19 per cent more than at private not-for-profit hospitals. Costs are greater as they spend more on administration, ancillary services and bonuses to successful executives.
They have estimated that conversion of half of Canada's not-for-profit hospitals to for-profit hospitals would result in an increase in hospital costs of $3.6 billion.
Other researchers have shown that private for-profit hospitals and rehabilitation facilities are more costly than non-profits and avoid money-losing programmes, such as elderly and emergency care. Investor-owned nursing homes and hospices provide less nursing care and care to the dying than not-for-profit facilities. In addition, cost control in systems of healthcare with large private sector involvement is substantially less than in publicly funded systems. This should worry governments, given the inexorable rise in healthcare costs.
Physician-owned independent health facilities in the US lead to higher costs and increased referrals by the physician investors. The government has introduced regulation of this sector and has put a moratorium on physician-owned ambulatory facilities until June 2005, but US non-profit hospital organisations want a permanent moratorium.
Government here, on the other hand, by allowing physician ownership of clinics, hospitals or equipment, has decided that this is in the interest of patients and taxpayers.
Administrative costs at US for-profit Health Maintenance Organisations (HMOs) - the equivalent of our own health insurance companies - are 19 per cent versus 13 per cent in not-for-profit plans, 3 per cent in the US Medicare programme and 1 per cent in Canadian Medicare.
For-profit HMOs also "risk select", seeking more profitable patients, similar to the current marketing strategy of Vivas Health, as its CEO, Oliver Tattan, acknowledged in a recent Sunday Times interview. For-profit HMOs seek out healthy elderly individuals as members, and it is estimated that the policy has cost state Medicare $2 billion more than if the elderly individuals had not switched to a HMO.
What effect has this research had on debate in other jurisdictions?
Canada has considered expanding the role of the for-profit sector in its health service but after several years of debate has committed itself to increased funding of its publicly funded system rather than have greater private for-profit involvement.
And the French private for-profit sector has had to consolidate after the government introduced a cap on funding of the private hospital sector in 1996. The French government is now introducing a prospective payment system for the private sector that will squeeze profit margins further.
The presence of well-equipped private for-profit hospitals and the expanding private insurance market providing retrospective fee-for-service medicine, in a pseudo-competitive market, will ensure lucrative monetary rewards for doctors and an increasingly costly health service.
The Harvard researchers are opposed in principle to investor-owned care, because it introduces a new value system that severs the communal roots and Samaritan traditions of hospitals, makes doctors and nurses the instruments of investors, and views patients as commodities.
They believe that the for-profit healthcare mission is primarily financial rather than patient-centred and believe that healthcare is too precious, intimate and corruptible to entrust to the market.
I am not entirely sanguine about our health service and I share the concerns of the Harvard doctors.Government should be investing significantly more in our primary care and public hospital system, by increasing the percentage of GDP spent on healthcare. I am uncertain that the current direction towards private for-profit healthcare is the correct one. In fact, having reviewed the evidence, I am fairly certain that it is not.
Dr John Barton is vice-chairperson of the Health Services Action Group and consultant physician/cardiologist at Portiuncula Hospital in Ballinasloe. He is writing in a personal capacity.