The federal government’s Covid-19 deal with the private hospital sector is an opportunity to make long overdue changes to the role of private hospitals within Australia’s health system.
This agreement delivers two direct outcomes: it increases the capacity of our health system to cope with demand arising from the epidemic; and it ensures the ongoing provision of services in private hospitals once this demand has reduced.
While clearly important, these short-term outcomes come at a huge cost. The federal government has promised $1.3bn to secure the deal, and health minister Greg Hunt has promised that more will be available if needed.
Unfortunately, this money is unlikely to achieve all the benefits promised.
Despite their best intentions, governments don’t have the data or expertise needed to negotiate effectively with the private hospital sector or the capacity to deliver on Hunt’s promise to “fully integrate” private hospitals within the public hospital system.
Australia has 657 private hospitals and the government has no systematic way of engaging with them at a national level.
Only a handful of these hospitals are “full service” facilities able to take on the patient load of a large public hospital. Around half provide day surgery only and most of the others offer a narrow range of services in one specific area, such as sports medicine or cosmetic surgery. These hospitals have very limited experience with infectious diseases and are unlikely to be equipped to treat long-stay or highly complex medical cases.
Of course, they can play a useful role in providing accommodation for quarantine and isolation cases and undertaking minor procedures. But it will be difficult for governments to quickly assess their capabilities to complement the public system’s efforts and direct resources, workforce and patients accordingly.
This means that outcomes from this agreement are likely to be patchy. The best results will occur where partnerships already exist and public and private hospitals are accustomed to working cooperatively together, such as co-located public and private hospitals.
The worst examples could result in governments paying a high premium for low value services, or, more concerningly, putting health professionals and patients at risk. This issue arose last week when the federal government’s plan to move patients from the Artania cruise ship to a number of private hospitals in Perth was vetoed by WA medical and nursing groups on the basis that these hospitals did not have facilities to treat them safely.
This situation is the result of decades of policy neglect of the private hospital sector by successive governments.
Since the 1980s, this sector has radically transformed from a cottage industry of small stand-alone facilities, often owned and run by individual clinicians, to a large, corporatised and sophisticated global market.
This dramatic change has occurred with little policy oversight or public debate. Governments have largely left private hospitals to pursue their own agenda rather than attempting to integrate them into the broader health system. As a result, they have focused on providing routine services which deliver maximum profits, and in general have ignored more complex health challenges, such as providing emergency care and closing the gap between the health of Aboriginal and Torres Strait Islanders and non-Indigenous Australians.
Most of our private hospitals are now operated on a “for profit” basis and many are owned by companies based outside of Australia. Healthscope, Australia’s second largest provider of private hospitals, is owned by Canadian private equity firm Brookfield. The third largest private hospital provider, Healthe Care, is part of the Luye Medical Group, owned by Chinese billionaire Liu Dian Bo. Their primary accountability is to their shareholders and not the Australian public.
The negative impacts of this “hands off” approach have been apparent in the difficulties experienced in mobilising private hospitals to support Australia’s response to the Covid-19 pandemic.
Some private hospitals ignored desperate calls from doctors to stop elective surgery and continued to operate rather than prepare for an influx of patients from public facilities. Vital PPE and other equipment has been tied up in the private sector with no clear mechanism to transfer it to public services where it was desperately needed. Even those hospitals doing their best to contribute to the national Covid-19 effort have encountered communication and logistical difficulties due to a lack of an existing framework for public-private sector integration.
This must lead governments, policy makers and the community to question the value of the billions of tax payer dollars invested into the private hospital sector via direct and indirect subsidies.
This investment has delivered decades of growth and profitability to private hospital owners and shareholders. But it clearly has not resulted in a private hospital sector best placed to meet our needs in a major health crisis.
In the short-term the government has no option but to buy whatever support private hospitals are prepared to offer and underwrite their ongoing viability.
However, once the immediate crisis is over, private hospitals should not be allowed to return to “business as usual”.
By seeking to incorporate private hospitals as “an extension of the public hospital system” Hunt has admitted that this model offers the best opportunity to make use of resources across both sectors. But maximising the value of our health system resources should be important every day, not just in the middle of a health crisis.
Despite the many challenges involved in implementing this historic agreement, one positive is the opportunity it provides to try new ways of working across the public and private health systems. We should take full advantage of this opportunity to reduce the current fragmentation of the Australian health system and rethink the way in which we fund and deliver private hospital services in the future.
• Jennifer Doggett is a health policy analyst and editor at Croakey
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