Privatization 101

What is the effect of privatization on wait times?

Private health care does not reduce wait times. A study of five Organisation for Economic Co-operation and Development (OECD) nations found that public-sector wait times are longer in Britain and New Zealand, where both privately financed systems and publicly funded systems are in place, than in countries offering only publicly funded services (Tuohy et al., 2004). An analysis of the health system in Australia showed that the more services were performed in the private sector, the longer the wait times were in the public sector (Duckett, 2005a; Duckett, 2005b).

What is the impact of privatization on access to health care?

There is unequal access to care in for-profit health systems, and it is the underprivileged who experience the greatest disadvantage. Studies from the United States, France and Sweden have all shown that the existence of fees discourages people from getting the care they need (Canadian Health Services Research Foundation, 2001; Dhalla, 2007; Rachlis, 2007). Australia’s experience with both private and public health systems has shown that those who can afford to pay gain access to care more quickly than those who cannot (Duckett, 2005a).

How does privatization affect the quality of care?

In comparisons of for-profit health care and non-profit health care, for-profit health care was found to be characterized by lower staffing levels, poorer health outcomes and higher patient mortality rates (Devereaux et al., 2002; McGregor et al., 2005, 2006; Rachlis, 2007). In long-term care facilities, the number of hours of care for residents is lower and the number of admissions to hospital is higher in for-profit facilities than in non-profit facilities (McGregor et al., 2005, 2006). Studies of hospital care demonstrate a 2 per cent higher adult death rate and a 10 per cent higher newborn mortality rate in for-profit facilities than in non-profit facilities (Devereaux et al., 2002).

What are the costs of a private health-care system?

Privatization does not reduce costs. Whereas Canada spends 10 per cent of its gross domestic product (GDP) on publicly funded health care, the United States spends 15 per cent of GDP – more than any nation – for private health care that leaves millions uninsured or underinsured (National Coalition on Health Care, 2008; OECD, 2008). In Australia, where the use of private insurance has increased, health-care costs have not declined. In fact, as Dhalla (2007) states, referencing the OECD (2005), in that country “total health expenditures have risen [at a] faster [rate] than in most other economically advanced countries.” Private systems demand profits and incur greater administrative costs – money that in the public system could be spent on patient care (Rachlis, 2007; Devereaux et al., 2004).

References

Canadian Health Services Research Foundation. (2001). Myth: User fees would stop waste and ensure better use of the healthcare system. Ottawa: Author. Retrieved September 16, 2008, from www.chsrf.ca/mythbusters/html/myth4_e.php

Devereaux, P.J., Choi, P.T., Lacchetti, C., Weaver, B., Schunemann, H.J., Haines, T., et al. (2002). A systematic review and meta-analysis of studies comparing mortality rates of private for-profit and private not-for profit hospitals. Canadian Medical Association Journal, 166(11), 1399-1406.

Devereaux, P.J., Heels-Ansdell, D., Lacchetti, C., Haines, T., Burns, K.E.A., Cook, D.J., et al. (2004). Payments for care at private for-profit and private not-for-profit hospitals: A systematic review and meta-analysis. Canadian Medical Association Journal, 170(12), 1817-1824.

Dhalla, I. (2007). Private health insurance: An international overview and consideration for Canada. Healthcare Quarterly, 10(4), 89-95.

Duckett, S.J. (2005a). Living in the parallel universe in Australia: Public Medicare and private hospitals. Canadian Medical Association Journal, 173, 745-747.

Duckett, S.J. (2005b). Private care and public waiting. Australian Health Review, 29(1), 87-93.

McGregor, M.J., Cohen, M., McGrail, K., Broemeling, A.M., Adler, R.N., Schulzer, M., Ronald, L., Cvitkovich, Y., & Beck, M. (2005). Staffing levels in not-for-profit and for-profit long-term care facilities: Does type of ownership matter? Canadian Medical Association Journal, 172(5), 645-649.

McGregor, M.J., Tate, R.B., McGrail, K., Ronald, L.A., Broemeling, A.M. & Cohen, M. (2006). Care outcomes in long-term care facilities in British Columbia, Canada: Does ownership matter? Medical Care, 44(10), 929-935.

National Coalition on Health Care. (2008). Health insurance costs. Washington, DC: Author. Retrieved September 9, 2008, from www.nchc.org/facts/cost.shtml

Organisation for Economic Co-operation and Development. (2005). OECD Health Data 2005: Statistics and indicators for 30 countries. Paris: Author.

Organisation for Economic Co-operation Development. (2008). OECD Health Data 2008. Frequently requested data. Paris: Author.

Rachlis, M. (2007). Privatized health care won’t deliver. Toronto: Wellesley Institute.

Tuohy, C., Flood, C.M., & Stabile, M. (2004). How does private finance affect public health care systems? Marshalling the evidence from OECD nations. Journal of Health Politics, Policy and Law, 29(3), 359-396.