National are, true to prediction, privatising health provision. Also true to prediction they are doing so in a way that gives all the wins to the private sector and keeps all the financial risk for the taxpayer. Private providers may look low cost, but that’s only because they transfer huge amounts of cost to the public sector in terms of both management and back-stop services.

To give an example of a well known issue with private providers, every hip operation has a low very chance of complications leading to the patient spending time in an ICU.

When we cost public provision of a hip op we cost in a part of the cost of public ICU services. When we cost private provision we don’t, but we have to pay for the public ICU costs on top of the private hip op charge. That’s the first issue with the private provider efficiency – they rely on expensive back stop services being provided by the public sector. So we screw the costing model so that the private provider can make a profit off every hip op that goes well, and the public system ensures them against additional costs for the unavoidable not-so-good outcomes. Privatise the profit, socialise the loss!

The second is that there is additional cost in transferring a patient with complications from a private provider to a public ICU – we’re not only screwing the cost model to the benefit of private providers, but we’re actually incurring extra costs to do so.

Third problem? No matter who actually does the surgery “bureaucrats” are required to manage the provision, the eligibility, the bookings, the payments, etc. If one region uses eight small private providers then while each provider might look cheap and light on management there’s going be a team somewhere in the public system making sure that all the patients are allocated and treated, that the contracts are negotiated and the bills are paid and so on. Again, more inefficient that a single large provider responsible for both allocation and provision, again designed to make the private sector look lean and efficient, and the public sector bloated with bureaucrats.

Why, when so many other countries have proved that private healthcare provision is neither cheaper nor more effective thanpublic provision, when our largely private primary health provision is failing to meet demand, and when it is obvious that the private sector would only involve itself in healthcare so it could turn tax dollars into a tidy profit, is National pushing on with privatisation?

Part of the answer is ideological blindness, but part is also the make up of National and its closest friends. The links between National and the private healthcare lobby go back decades. In recent times the fundraising, personal and lobbying ties between National and the Private Hospitals Association are well documented in The Hollow Men, and a quick glance through the list of current National MPs shows just how entwined they remain, from Michael Woodhouse (ex-President of the NZ Private Surgical Hospitals Association), to Jonathan Coleman (a consultant in the medical sector) the list of Nats with personal interests in the profiteering of the private healthcare sector is deep and long.

Between ideology purity and self interest it looks like we’re on a long journey to inefficient expensive and ineffective privatised healthcare courtesy of Tony Ryall, John Key, and friends.

[This borrows from a comment I made on this thread at The Standard. Marty G has some great analysis on just how much of the current National spin about healthcare costs is … just spin]