Private hospitals will ‘cream off’ easiest work under Nat scheme

Investigative journalist Nicky Hager says National’s health policies have gone publicly unnoticed, but involve a shift back to 1990s free-market reforms.

THE NATIONAL Party plans a major shift towards private healthcare if elected to government. It plans to revive a version of its controversial 1990s free-market health reforms, which health experts say would undermine the public health system and lead to poorer-quality healthcare.

The existence of the plans has been raised by the Association of Salaried Medical Specialists, which represents senior public hospital doctors. Executive director Ian Powell said the association supported some of National’s health policies but had serious concerns about “shifting funding to the private sector and destabilising public hospitals”.

He said National was planning changes akin to the commercial structures imposed on public health in the 1990s, “a pseudo market biased towards the private sector”. This would “cream off the easier public hospital work for private hospitals and severely destabilise the capacity of public hospitals to function effectively and efficiently”.

If the plans proceeded, “patients will inevitably get poorer service – in both quality and accessibility – due to increased problems with staffing, fragmentation of services and running down of the public system”. The plans first appeared in a National Party health discussion paper last year. Four weeks ago a note on the National Party website revealed that the paper would be the basis for the party’s “strategic direction”. The slogan for the reforms is “smarter use of the private sector”.

Auckland University associate professor Toni Ashton, who specialises in health economics, said that shifting more resources into the private sector would inevitably undermine the public sector, because the less risky cases would be treated privately and the complex cases publicly.

“This matters because the public system relies on some low-cost cases for training and for research and for making sure that their capacity is full, filling in the gaps with elective surgery.”

Ashton said: “It’s the same workforce, the doctors and nurses and anaesthetists, [so] if you purchase more from the private sector you undermine [staffing in] the public sector . . . Public hospitals are the provider of last resort and if you undermine them the whole system becomes shaky.”

Professor Peter Crampton, dean at the Otago Medical School in Wellington, said National’s 1993 reforms included some major policy successes, for example, establishing Pharmac.

But “the application of market principles to health [led to] artificial competition, loss of trust, fragmentation and a whole bunch of other issues and we abandoned a lot of that for the right reasons”.

He said the National Party had “a pro- private sector disposition and they’ll bring it quite strongly to bear if they get elected. Ironically, contracting out may drive up costs and doesn’t necessarily generate the quality advantages people frequently claim for it.”

The health discussion paper said the district health board (DHB) “funding and planning arms” would be merged into four “shared services networks” based on geographical regions, allowing “impartiality in selecting alternative providers”. Powell said this was like the four regional purchasing bodies established by National in the 1990s to buy services from competing public hospitals and private providers.

Powell said DHBs used private hospitals when their capacity was inadequate but any increase “will ultimately impair the quality of patient care in the DHB facilities, through loss of the skilled and experienced staff and the strain on those remaining, dealing with only acute and emergency patients.” He said yesterday this would be going back to 90s structures and systems without being open about it. Private hospitals “cherry picked” the easiest work and when there were complications, patients were rushed to the nearest public hospital.

Crampton said that in this way, “the public system underwrites private elective surgery, which is a cost the public system bears and it represents a subsidy for the private system”.

National health spokesman Tony Ryall declined to comment.