Is quality of patient care too important to further experiment with this ownership model more generally in Australia?
Criticism of private equity in healthcare usually boils down to “they cherry-pick and cut” and associated risks of that strategy.
But looking at the ongoing Healthscope sale, the story is more mixed.
Based on public information, I compared each Healthscope private hospital’s buyer interest against local population need, nearby public capacity, and alternative private supply to see where private equity was carrying a genuine community service obligation.
Of course there are always caveats, data gaps and methodological assumptions that can be queried and changed.
However, it was pretty clear that most Healthscope metropolitan hospitals had alternatives and the issue was more commercial, not community.
But two stood out – Darwin and Hobart.
Here, private equity ownership has effectively carried a community service obligation, saving government expenditure.
However, what was missing were: early warning signs not being seen or heeded; any community service obligations probably not agreed, signed or funded in contract payments; and the risks to continuity of care not being properly reflected in alternative back-up arrangements.
In short, metropolitan sites are contestable, but community service obligation sites need protection.
The lesson?
Maybe the ownership policy issue isn’t so much about the role of private equity in owning hospitals per se – although there are some strong thoughts about this and legislation in NSW preventing this now for public hospitals, plus some evidence from overseas including from the Lown Institute and local results from patient satisfaction surveys by the Australian Health Services Alliance.
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Perhaps what should concern us is private equity (or any owner) holding thin-market hospitals without binding obligations and associated funding agreements. And without risk protection mechanisms such as regular reporting on performance, financials and other early warning signs – like many other large procurement contracts have in healthcare and elsewhere.
Can the risks ever be properly managed involving private equity, which, despite criticisms, has shown it can assume a critical provider role, up to a point at least, and given thin-market constraints possibly outside its control in selected areas?
Or is quality of patient care too important to further experiment with this ownership model more generally in Australia?
Andrew Gibbs is an independent health policy advisor and data analyst. He was formerly with HealthShare NSW, and NSW Health.
This article was first published on LinkedIn. Read the original article here.