When I began employment as Executive Director of the Association of Salaried Medical Specialists in 1989, the relationship between the private health system and the public health system was much different from today.
One did not undermine the other. Those who used private hospitals did so more for the greater privacy and more hotel-like services. It was by choice, not necessity.
Some paid for it through private health insurance; others were able to ‘pay as they go’ without. If anything, the latter option was the biggest challenge for private health insurers to overcome.
Private hospitals niche boutique market
Overwhelmingly private hospitals did relatively less complex planned surgery and clinics which could be deferred for a clinically reasonable period of time.
They did not take acute admissions (treatment, often surgery, that could not be deferred or planned in any way). It was, and still is, a niche boutique market.
As such, and while public hospitals were able to do a reasonable volume of planned surgery and outpatient clinics in a timely manner, private hospitals and private health insurance continued to be a matter of choice rather than necessity.
Southern Cross Group is New Zealand’s largest health insurer and also owns private hospitals
In the mid to late 1990s, as funding became more constrained, more patients with private health insurance began to use it. Seemingly this was positive for the insurance companies.
But the more those already privately insured used it for planned surgery and other non-acute treatment, the more the costs to these insurance companies increased.
The consequential outcome was that the companies increased their premiums making, for some, private insurance too expensive.
Exposing the changed public-private relationship
Radio NZ health journalist Ruth Hill outlines today’s relationship between private and public health systems
Has today’s relationship between the private and public health systems changed and, if so, how and why? This question was well covered recently by Radio New Zealand’s very good health reporter Ruth Hill (18 February):
Is private healthcare the answer to public funding woes, or making it worse? | RNZ News
In summary, she reports that:
- Private hospitals say they are reducing the burden on public system by doing 70% of elective surgeries.
- Professor Robin Gauld (previously Otago University and now Bond University in Queensland) says private providers are undermining the public system by poaching staff and diverting resources.
- Government and Health New Zealand (Te Whatu Ora) claim that outsourcing to private hospitals (part-privatisation by another name) is a “pragmatic” way to reduce wait times in public hospitals.
Highlighting the seriousness of today’s environment, Hill quotes a Waikato bowel cancer patient who spent her house deposit on private diagnosis and treatment, but saved herself about seven months’ wait-time in the public system.
Who knows what could have happened in that time? It would be horrible to think I could have had disease progression and it was just public health delays that meant I hadn’t got on top of it sooner.
It’s not a nice position to be in where there is that chance of disease progression, and you’re faced with that choice of spending your savings, or borrowing, or waiting to see what would happen.
Private hospitals now do 70% of elective procedures (about 224,000 a year). From 2016 to 2023 the number of publicly-funded operations in private hospitals doubled. Much, not all, of this huge increase occurred under the previous Labour-led government.
Wellington’s largest private hospital, Wakefield, has opened a new $185m redevelopment; other private hospitals are being redeveloped and new ones planned
Private hospitals try to argue that they are helping public hospitals out as if they are providing a public good. But they follow the money only providing what is sufficiently profitable.
Primarily this is less complex non-acute or non-emergency cases leaving the harder and more demanding, stressful and costly work with public hospitals.
An opposite view
Professor Robin Gauld offers an opposite view to that of private healthcare increases capacity in the public health system
In contrast to the claims over the benefits of private healthcare to the public health system, Professor Robin Gauld argues that not only is there no evidence that private healthcare increases capacity in the public system, it is actually eroding the health system beginning by “poaching staff”.
He is right. The only way private hospitals can increase their hospital specialist workforce to meet this expanding work is for hospital specialists to either reduce their time in public hospitals or leave them completely. The former option is more prevalent at least at this stage.
Gauld states, again in Ruth Hill’s above-mentioned article, that:
The studies that have been done in the past show that where there is increased access to private sector delivery there is actually less access to public sector.
Unless you bring in a volume of specialists and theatre staff to ensure the whole system is able to improve it’s capacity, it’s a zero sum game.
Taxpayers were subsidising private providers, by paying the ongoing cost of upskilling part-time public specialists and providing emergency back-up.
Gauld referred to a 2021 Otago University study (based on 2013-14 data) which found that 2% of private patients had a subsequent admission to a public hospital within seven days, with an average cost of $2,800 and $11.5m overall. He adds that:
If there’s a cardiac event on an operating table, they will routinely be put in an ambulance and sent to the public sector, because they can’t deal with it themselves.
He wryly observed that this was one reason why private hospitals were usually built close to public ones.
I would argue that this is, in fact, the main reason and that by providing clinical back-up when this occurs, public hospitals are, in effect, subsidising private hospitals.
I also argue that the more publicly funded planned (elective; non-acute) services are outsourced to private hospitals, the more specialists working in the public system are disproportionately left with the much harder and stressful acute work.
Those hospital specialists who do acute work need a reasonable amount of non-acute work for balance and skill maintenance. The more the balance is reduced, the greater the pressure on an already fatigued, and in some cases burnt-out, workforce.
Missing salient point
Professor Gauld’s reported criticisms are pertinent but don’t include the critical point (he nevertheless may agree with me as it might have been out of scope for his interview).
Yes, expanding private healthcare is presently harming public hospitals. Private hospitals’ claims of benefits to public hospitals are little more than self-serving.
But, in different circumstances, it need not. An example is the time of my commencement of employment with the Association of Salaried Medical Specialists in my above opening paragraphs.
In today’s environment private healthcare expansion is not the first step in this chain of events. Something happened earlier to trigger this expansion.
The trigger or initial causation was the continuing rundown of public hospitals by successive governments through factors such as relative underfunding, acute demand increasing at a higher rate than population growth, bed-blocking in the wards, and (critically) unaddressed severe workforce shortages.
In an earlier time use of private hospitals (and private health insurance) was a choice, not a necessity. Today it is not a choice. Instead it is a necessity for those who can afford it; tough luck for those who can’t.
Triggering a vicious circle
We now have a vicious circle. The most effective way of increasing private healthcare (including its profitability) is for governments to allow public hospitals (and general practice) to rundown.
But the more this happens, the more this private expansion further contributes to this rundown.
Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Otaihanga Second Opinion
The reality is that as our population is allowed to increase and our public services cannot meet that demand because of government failure, our country will become third world. It is stating in health.
So how do you stop it being a zero sum game?
By stopping running down public hospitals.
Exactly and turning ACC into the full medicare agency it was meant to be in the first place to remove the need for expensive health insurance policies.
https://www.facebook.com/groups/171564126882442/permalink/1427923394579836
Correct Ian and that takes a pro health and infrastructure government. This one isn’t.
How do we stop the zero sum game? By not having an immigration policy to support the real estate economy as the Governments No.1 priority (more renter demand to drive up house prices and rent).
The defunding and understaffing of public services, as we should know, is about destroying unions (particularly in health, currently) to lower wages (replace staff who leave with migrants from countries that don’t have labour unions -the new renters), and to prepare the asset/service for full privatisation. This is what Levy and this Government are doing now.
“How do we stop the zero sum game? ”
Mostly by finding the guts to tax the uber rich.
Exactly right BRIAN then those immigrants don’t follow NZ politics and further denigrate health systems through political ignorance.
If we want to see our future, if we continue with the love affair with neoliberalism, then look at the final stages as displayed by the Trump/Musk presidency. With the curtains pulled back, we see that the “rich” will be well looked after, while the poor will simply die off. And if you are not already in the top 5% or so, then don’t dream that you will be in the “rich” group.
Of course, we could tax the super-rich now to help finance a proper health (and education) system for the benefit of all, but our main party politicians would lose their financial backers??
So public health is run down exacerbated by private health providers deliberately and apparently they even get tax funded pieces of shit
No the fact is both private and public health systems have been underfunded since the 1990s.
With the lack of public investment in public hospital beds and hospital closures has been followed by the private sector doing the same to the tune of a 55% reduction in both private and public health systems.
THAT IS THE BRUTAL FACTS.
Also the blatant under funding of medicines via Pharmac has made the situation 10x worse than it needed to be a long with the failure to upkeep the primarycare sector gp’s etc.
Hard to disagree with anything in the article, though the use of “follow the money” was different from what I have seen before.
However, as you rightly point out, private hospitals are taking the money-generating elective non-acute procedures and leave the difficult acute stuff to the public system. Presumably most of these private procedures are pretty straight-forward and routine, and any likely complications can probably be established in advance.
So why for a routine hip replacement do we need orthopaedic surgeons with a medical degree and then 5 years of advanced surgical training? Isn’t the lack of staff one of the major issues? What if we trained twice as many people in half the time to specialise in and do these routine procedures? Does everyone need to be a orthopaedic surgeon/consultant to perform these ops?
I could be totally wrong but surely there is room for a lower level of surgeon much the same as we have nurse practitioners to reduce the workload on the orthopaedic surgeons who could be used to determine the process of treatment in some sort of triage process.
Rangi Well trained surgeons as opposed to partially trained orthopods are preferable because the unexpected or the unpredicted complication can occur in any medical process, and it’s in the patients’ best interests to cater for this. That being said, your suggestion may well come about.
The proposal for a medical school at Waikato University focusing on producing doctors suitable for treating country people, rather than all people, was similarly discomforting.
The only way we are going to dig ourselves out of this hole is to properly fund Primary care .
Along with being able to access any medicines you need whether Pharmac funded or not.
Concentrating on the Hospital systems failure is not going to solve our health systems faults.
For too long everyone has concentrated on the hospitals and ignored the primary care sector problems .
The real under funding of public health is due to that public health money going to the private sector .90% Of the pos being done in private hospitals are probably funded by the public system which has contracted the private hospital to do the surgery .
Then we have the part time consultant using the public system to recruit patients for his private practice and the private hospital where he is also employed .This then makes the treatment of that person more expensive because the public system is paying that person twice for the same outcome .
The public health system is in fact building the private hospital next door using the money syphoned off when these operations are sent to the private hospital .It is never going to be cheaper to send a patient to the private hospital than having the surgery done in the public hospital .
An example is when my wife dislocated her shoulder she was refered to a consultant at Waikato hospital because she really should have had surgery .The cosultant examined her at the hospital then refered hr to his private practice for steroid treatment but sent her back to waikato for a further consultation and xray using the public health equipment .The results were then sent to his private practice for him to look at instead of being sent to his office at the hospital .In the end she got sick of all the ducking and diving between his two offices she flagged the whole thing and never had an opperation .
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