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Big tobacco, arms manufacturers and private healthcare

publication date: Jun 16, 2010
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It is depressing how uninformed the debate is about the effectiveness of the private sector. The industry probably ranks close to tobacco and the arms industry in the mind of most European citizens. Even more depressing is the way very few policymakers and opinion formers have any grasp of the cost effectiveness the sector offers in countries like Spain, France, Italy and Germany, where it carries out huge volumes of work paid for by public funds at demonstrably lower prices than the public sector.

Take Mark Pearson, an economist who is head of the health division for the OECD. In his presentation at the European Union of Private Hospitals conference, he said, in passing, that he though the private sector was more expensive than the public sector and that the most effective approach was the not for profits private sector.

I collared him about this afterwards. Turns out this analysis was entirely based on data from the USA, which he did admit “may not be that relevant to Europe.”  Indeed not! Yet Pearson is someone whose opinion and thoughts matter, someone who will be routinely consulted as an expert by national and EU policymakers.

I’m constantly coming across this sort of thing. The other day a Spanish academic who works for the Aragon regional health authority, bang next door to the Alzira project in Valencia, dismissed the approach by saying: “I think the UK has also some pretty rich experience in pursuing efficiency gains through PFI schemes that unexpectedly turn out to be much more expensive than foreseen.”

Yet Alzira and the UK PFI schemes are totally different. For starters, in Spain the operator actually delivers the service, getting an annual per capita fee.

When experts such as these have so little a grasp of what the private sector claims, and what its proofs are, you start to realise just how uninformed the healthcare policy "debate" really is.

The situation is not helped by the way the private sector presents its claims. At a press conference Dr Max Ponseille, president of the French Federation of Private Hospitals said that, on average, the tariffs paid to the French private operators for every DRG was 30% lower than that paid to the public.

This is a fact. But it was interesting to witness how this remark was greeted with blank incredulity by French journalists. They simply could not grasp that it might be possible that the private sector could be cheaper for the state. This partly reflects the fact that for the consumer going private appears to cost more, as separate payments have to be made to the doctor, the anaesthetist and the hospital.

It is also slightly misleading insofar as in France most surgery on individuals with complications is carried out in the public sector, according to Dr Claude Wetzel, president of the European Federation of Salaries Doctors. He said: “French private operators will typically refer anyone with ASA3 (serious complications) to the public sector. The private sector performs a different case mix, typically specialising in one type of surgery. I teach at a university hospital where operations are often 50% slower as we are a teaching hospital.”

The solution?

The private healthcare sector needs to come up with credible, balanced, well-reasoned and documented arguments at regional, national and European levels.

This calls for a comprehensive lobbying programme aimed at policymakers. It also calls for PR and advertising budgets to reach the ordinary citizen.

People are beginning to grasp this. Piotr Gerber, head of EMC, the private hospital chain in Poland, said: “The big issue we face in Poland is the huge distrust the ordinary citizen has towards the private healthcare sector.”

The problem is amplified by the fact that almost no political party is brave enough to argue that the private sector has a role to play in healthcare delivery. Indeed, the parties of the left are happy to constantly portray the private sector as a threat to free and open access to healthcare for all. The industry faces a megaphone braying out negative messages which would cost hundreds of millions of euros a year to combat.

Yet the private hospital sector is a fragmented industry with relatively low levels of profitability and low levels of marketing sophistication.

This is why it may well not benefit at all from the current crisis in healthcare budgets – indeed it makes private operators working in the public sector a soft and uncontroversial target for cuts. Why cut inefficient public sector workers, who will call strikes, when you can cut contracts with the private sector delivering at prices which are 30-40% lower so much more easily?
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