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Private hospitals in public health systems.

The mixed health care system of the U.S. has raised many questions of the proper relationship between private and public health care. This paper is concerned with the same problem, but from a European perspective, where the situation involves not public activity in a predominantly private system, but quite the reverse, that is, the introduction of private hospitals in a totally or predominantly public health care system. For our purposes here, private hospital" will refer to a hospital owned by private investors and operated for profit, whose patients are not totally or primarily funded by public moneys.

Among the countries in Europe that have seen a rise in the private health care sector, Denmark and England are prominent. Denmark has operated a public free-for-all system of health care since the mid-1960s, thereby securing a high level of primary and hospital care to all citizens. There are waiting lists for certain treatments, including hip replacements and cardiac surgery, and purely cosmetic surgery is not covered by the public system. The "objective" results of the system in terms of neonatal mortality, healing rates for specific diseases or similar measurements are very high and not declining. But the "subjective" satisfaction of the users is at a low point, mainly due to the fact that no single doctor is your' doctor during a hospital stay. It is not unusual to be attended and/or treated by ten different physicians during a two-week stay. The waiting lists and dissatisfaction have led to the establishment of two private hospitals. The same development is seen in Norway and Sweden. Typically, the private hospitals are explicitly profit-seeking enterprises established close to major cities.

Many Danes see this development as highly undesirable. The sentiment is shared by some political parties, particularly the Social Democratic Party Denmark's largest) and those to its left, who have called for a prohibition of private hospitals by the Danish Parliament. They are chiefly concerned that such hospitals will be an intrusion into a health care system that has been managed in a quasi-socialist way. They fear, moreover, that private hospitals may obstruct progress toward further socialization.

The arguments offered against private hospitals fall in two main groups: those concerned with the inequality that private hospitals create, allowing the rich to secure better health care more quickly; and those concerned with the effects that private hospitals have on the public health care system and society as a whole.

Both are important, but the arguments concerned with inequality touch the basic rationale for a public health care system. The reasons for creating comprehensive free-for-all health care systems of the type seen in many European countries are diverse, but two of the major ones are evident in the original proposal for the British National Health Service. The first is a belief that society should provide health care for all citizens, the second a belief that access to health care and the quality of care received should be equal for all.1 Though initially grounded in solidarity between classes, these have evolved into a belief in a broad light to health care." Will growth of private hospitals in a public health system create such gross inequalities that, considered as a question of distributive justice, this should be prevented? Are the consequences of introducing private hospitals so damaging to the public health care system as to be a reason to prohibit them? Private-System Inequities

The introduction of private hospitals must necessarily cause some new inequalities, or at least perceived inequalities. In a market economic system, where one of two comparable goods is priced to zero the other good can only be sold if it is perceived to contain some important advantage. The inequalities introduced can be of several types: inequality of amenities, relative inequality of access, absolute inequality of access, and inequality of quality.

Inequality of amenities is almost certain to occur. Private hospitals, as business companies, must cater to their customers in ways hitherto unseen in the public sector. They must provide more luxurious accommodations, better food, and perhaps more service-minded personnel. These are only extensions of the inequalities in housing conditions, food, and general conveniences found in society at large. But it may well be that in the treatment of disease such inequalities will be less acceptable to society than they are outside the health care setting. An old Danish saying claims that "disease is the master of everyone," expressing the idea that disease treats all persons as equals; the rich are not exempt. For some, this fundamental equality should extend even to health care, making differences in amenities more inappropriate in this area than in society as a whole.

Relative inequality of access will occur if private hospitals can offer faster service in some areas. This kind of inequality is very likely, since private hospitals target their services to areas where there are waiting lists in the public system. Such waiting lists are probably inevitable in a zero-price public systeM,2 and it has been argued that they are a necessary and convenient rationing tool.

With the introduction of private hospitals, everyone, except those few who die while still on the waiting list, will receive the necessary high-quality treatment, but those who have money can get their treatment faster. The situation could therefore be viewed as a single system with two independent rationing criteria, time versus money. Some have claimed that those who can afford it have a duty to use the private system so that waiting lists are shortened. 3This argument seems compelling if the private system is not excessively expensive and the waiting list can be shortened substantially. Yet such a duty can only be supported if one accepts an ethical system in which duties of beneficence are considered valid substantive moral principles. And it can at most be a prima facie duty, only operative if there are not other overriding reasons to limit the establishment or operation of private hospitals.

Absolute inequality of access will occur if private hospitals offer important health care services not found in the public system. It would not be a serious problem of inequality if liposuction, face-lifts, or laparoscopic appendectomy were only carried out in the private hospitals since these procedures do not meet important health needs. The procedures may meet other needs, such as a need for beauty," but these are not health needs. However, if a major new technique or intervention-magnetic resonance imaging (MRI) or arthroscopy, for example-was available only at private hospitals, this would clearly be a serious inequality, since the poor would be excluded on the basis of ability to pay.

Inequality of quality will occur if private hospitals offer better care leading to better health results. If better quality of care does not give better results, then the inequality produced is probably not so great as to warrant serious attention; it is essentially only an inequality of amenities. If, however, quality of care truly differs in the public and private sectors, this would be a major inequality. like absolute inequality of access, it would suggest that money can buy health. Inequality of quality could occur-even if the private hospitals were not initially better than the public-if the introduction of private hospitals led to a deterioration of quality in the public sector.

It is, of course, difficult to define what the outcome(s) of a given series of health care interventions amount to, and it may be exceedingly difficult to measure such results. Nonetheless, the results of interest in the comparison of quality between private and exit and voice options as the major possibilities for expressing discontent and opposition in a given organization Either one walks out (exit), or stays and tries to change the system through voicing complaints (voice). The absence of possibilities of exit in a given organization can prevent the effective use of voice, because people fear retaliation of some sort if they make their opinions known." In a monolithic public health system there are few or no possibilities of exit, and doctors are generally perceived as so powerful that voice is often suppressed. British commentators have noted that "if there were no private sector, it would be necessary to invent one."12 In this view, the private sector will act as a measuring device, gauging opinion of the public health care system. The more people that choose exit, the less is the faith in the public system. This would justify some inequalities between the two systems, but the extent of permissible inequalities would depend on a complicated societal cost-benefit analysis. The societal value of a private sector will disappear if access to it becomes so expensive that only a few can buy exit from the public sector, thereby invalidating the private sectors function as a measuring device.

Other ways of exit, however, can be accommodated within a public system. It could be made possible for patients to choose between different primary care providers, different hospitals, and different modes of treatment, all within the public system, for example. The private system is therefore necessary only if the public system does not develop possibilities of exit.

Finally, if private hospitals complicated long-term planning in the public sector, thereby causing waste of public resources, this could be a reason to limit their operation. Studies show that while private hospitals can create problems in public planning, such problems are not inevitable.13 Difficulties are caused mainly by lack of cooperation between the two sectors leading to overproduction and redundancy of certain services or to unnecessary "double investments" in expensive equipment. The magnitude of the problems grows with the size of the private sector, but also depends on the controlling legislation. A lower allocation of resources to the public system would presumably lead to a decline in quality. Using the exit/ voice framework it can be shown that the introduction of private hospitals should lower the incentive to allocate resources to a collective health care system. If the socioeconomically more advantaged groups, who are normally the most exigent critics of the public health care system, are provided with a way of exit, they will be less concerned to advocate for resources to the public system. The idea receives some empirical support from the developments in England, where the growth in private hospitals and a public budget freeze coincide. The causal connection between these two events, however, is not clear. Are Private Hospitals Parasitic?

Every private company uses and depends on certain services that are normally delivered by the public, such as mail delivery or water supplies. This is far more efficient than were each company to take care of its own needs, and a collective solution is therefore in the interest of society. Private hospitals need such routine services, but they have a further need of some special services. Some of these services are so special that it is possible to see private hospitals as parasitic on the public system, in the sense that they unjustly use public resources without giving anything in return. This could happen primarily if they use personnel educated and trained at public expense, use blood drawn from a pool of volunteer, unpaid donors, or dump patients on the system. Private hospitals can probably attract medical personnel by offering higher wages and better benefits, but there are also negative aspects to working in the private sector. There will be less opportunity to do research, since all the money for research would have to be found outside the hospital. And the patient population and equipment available may not permit practitioners to keep up their skills and reputations. The use of personnel by the private sector could become a problem in two major ways. If all the best nurses and doctors went to the private sector, causing a "braindrain," it would diminish the quality of care in the public sector. A large scale "brain-drain" is unlikely to take place, and the American experience suggests that the best personnel will still be working in those hospitals that are affiliated with universities, and which therefore offer the greatest research opportunities. A second problem would occur if there was a shortage of some type of personnel. Then a drain into the private sector could cause serious problems in the public sector, again leading to differences in quality and results. Still, as long as a shortage of qualified personnel in the public sector is avoided it is not wrong for private hospitals to employ physicians educated at public expense.

The use of blood by private hospitals poses greater problems. People donate blood for various reasons, but in systems where the donors are unpaid volunteers, their main reason seems to be the wish to be able to help those who need this gift of life.1114 If private hospitals are allowed to use this gift in their profit-seeking enterprise, they may be said to benefit unjustly from a gift given for another purpose. It has been argued that this is acceptable as long as the hospital does not charge for the specific blood transfusion. This argument seems rather odd, however. Private hospitals cannot operate without. access to blood, which is an insufficient but necessary part of the unnecessary but sufficient complex that leads to profit. But it is also possible to argue that the blood was given with the intention of helping someone, and that it cannot matter whether this someone is at a public or a private hospital. This argument seems valid if the donor knew that the blood might be used in a private hospital when he or she donated it

Patient dumping will inevitably occur as long as private hospitals do not have all the specialized departments-such as intensive care units-needed in a "fully equipped" hospital. Patients.may at some stage exceed the capabilities of the private hospital and have to be transferred to a public hospital with the necessary facilities in order to be treated. The public system in such situations acts as an unpaid backup for private hospitals. Similiar, but more grotesque situations could arise when patients could no longer pay for their stay at the private hospital. Both scenarios would in some way benefit the patients, but each shows how private hospitals would be truly parasitic on the public system.

Indeed, private hospitals are necessarily parasitic on the public system as long as they comprise only a small part of the total population of hospitals. Some of the ways in which they exploit the public system are generally accepted (the use of personnel), some can be made acceptable by minor changes in the public system (for instance, by informing all donors that the blood may be used at private hospitals, and giving them an opportunity to reject this use of their blood), whereas some (such as dumping

ping patients on the public system) are clearly unacceptable. A solution to the problem of patient dumping should therefore be sought before it threatens the viability of both sectors.

In Europe, the discussion of the appropriate relationship between public and private health care has often been chaotic and confusing, with each side more interested in affirming its own stance on the issue than in addressing the problems. The issue is now so thoroughly entrenched in ideology that there may be little hope for any real public discussion. Nevertheless, it is a problem so important to the further development of what could be called "the national health system model" of health care that it would be a shame to see it decided without prior public and scholarly discussion.

Clearly, , many ethical, equitable, and social pros and cons surround the question of private hospitals in public health systems. But on the political level there are only two possible solutions: either to prohibit private hospitals as such (or close those that already exist), or to allow them to operate within certain predetermined limits. The choice is more open in those countries that do not yet have any private hospitals; there the state would not infringe on any property rights by prohibiting private hospitals, whereas the closing of already existing institutions would border on expropriation.

Which of the policy options a government ought to follow is not clear. justice considerations alone give no clear answer. But they do show that absolute inequality of access and inequality of quality is unjust or unethical under Rawls's theory of justice, Hare's version of utilitarianism, or a communitarian vision of respect for persons. Since these three approaches converge on this point, it would not be unreasonable that they should inform regulatory legislation. Nonetheless, such analysis does not settle the question of the general permissibility of private hospitals.

The analysis of the consequences of the introduction of private hospitals sheds only a little more light It is not certain that introduction or growth of private hospitals will create any of the bad secondary effects we have discussed. This is an empirical question and cannot be solved theoretically. However, the benefits that society or individual citizens can gain from the existence of private hospitals alongside a well-functioning public system seem limited. I therefore believe that any government contemplating legislation on the matter of private hospitals should do this with caution, and in such a way that the development of private hospitals is controlled.
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Author:Holm, Soren
Publication:The Hastings Center Report
Date:Sep 1, 1989
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