Elasticity estimates from a dynamic model of interrelated demands for private and public acute health care

This paper investigates the private/public mix in acute health care provision in the UK. It uses an interrelated shares model derived from a translog function combined with dynamic adjustment. Using prices for public care constructed from NHS waiting lists, the insurance cost of private care and the retain price index, impact, intermediate and long run elasticities of demand for private and public care are obtained. The role of hospital consultants and of an aging population are also considered.     

The changing public/private mix in dentistry in the UK--a supply-side perspective

This paper examines the factors beyond NHS dentists' remuneration which may explain the variations in the public/private mix in general dental practitioners' workload in the UK. Given that NHS dentistry is subject to a fixed price system, the study focused mainly on non-income supply-side factors. Using data from a postal survey of a national random sample of dentists practising in the NHS in England in 1997, the study found that the strategies adopted by dentists in the management of NHS lists and the evidence that dentists spent significantly more time in private consultations compared with NHS consultations support concerns over equity of access to dental care and the quality of NHS dentistry. Dentists' attitudes to NHS and private dentistry revealed considerable ambiguity towards the NHS. While, on the one hand, the lack of sufficient demand for private dentistry emerged as a strong reason for remaining in the NHS, on the other, there was evidence that equity in access to dental treatment is still seen as an important principle. The implications of these findings in the context of recent discussion of the future of NHS dentistry are considered.     

Creating a strategic management plan for magnetic resonance imaging (MRI) provision

We were commissioned by the West Midlands NHS Regional Specialized Services Group (RSSG) to formulate a strategic plan for the management of Magnetic Resonance Imaging (MRI) within the West Midlands, UK. We needed to establish whether an increase in MRI provision was required, and if so to develop criteria to shape both the nature and location of MRI provision. We found that the UK had relatively low MRI provision per capita by international standards, and that the West Midlands region of the UK had less than the UK average level of MRI provision per capita. Within the region there was a 'mixed economy' of MRI provision involving fixed site scanners owned by the NHS and private companies, and private sector mobile MRI provision. There was little evidence of inappropriate MRI use, but considerable evidence of under-provision. Most MRI scanners in the region were heavily utilized, and average waiting times for MRI frequently exceeded guidelines (of a maximum 13-week wait for non-urgent MRI scans). Projections from NHS Trusts, MRI suppliers, and experts in the MRI field, led us to the conclusion that demand for MRI was likely to grow by between 12.5 and 18.5% per annum. This implies that 8-14 additional MRI scanners might be required within the West Midlands over the next 5 years, to meet existing, and rising demand for MRI. We therefore developed criteria (outlined in the paper) to enhance the productive and allocative efficiency of the deployment of MRI provision, whilst improving the configuration of MRI with reference to geographical equality of access to MRI.     

For-profit hospitals for Europe: the case of Britain and France

The paper first describes the structural characteristics of the for-profit private sector in Britain and in France. In Britain, the recent growth of the for-profit private hospital's sector, although still a small sector, is related to the growth of private insurance. Cost-containment however coupled to rapid increases in premiums is slowing down the momentum. Moreover, the NHS starts charging private hospitals for such services like blood banks. In France the private sector has always been strong, although living in a highly regulated and dependent symbiosis with the public sector. In a second part, speculations are made on the crucial question whether for-profit hospitals are a legitimate alternative for Europe. In the end, an in-between solution is opted for by which the public sector would sub-contract certain functions like data processing, management and others, from the commercial sector.     

Does increased use of private health care reduce the demand for NHS care? A prospective survey of general practice referrals

BACKGROUND: The use of the private sector for health care is increasing, but it is unclear whether this will reduce demand on the NHS. The aim of this study was to examine the relationship between private and NHS outpatient referral rates accounting for their association with deprivation. METHODS: This is a prospective survey of general practitioner referrals to private and NHS consultant-led services between 1 January and 31 December 2001 from 10 general practices in the Trent Focus Collaborative Research Network, United Kingdom. Patient referrals were aggregated to give private and NHS referral rates for each electoral ward in each practice. RESULTS: Of 17,137 referrals, 90.4 percent (15,495) were to the NHS and 9.6 percent (1642) to the private sector. Private referral rates were lower in patients from the most deprived fifth of wards compared with the least deprived fifth (rate ratio 0.25, 95 percent CI 0.15 to 0.41, p < 0.001), whereas NHS referral rates were slightly higher in patients in the most deprived fifth of wards (rate ratio 1.18, 95 percent CI 0.98 to 1.42, p = 0.08) both after age standardisation and adjustment for practice. The NHS referral rate was significantly higher (rate ratio 1.40, 95 percent CI 1.15 to 1.71, p = 0.001) in wards with private referral rates in the top fifth compared with the bottom fifth after adjustment for deprivation and practice. CONCLUSIONS: Increased private health care activity does not reduce the demand for NHS care: NHS and private referral rates were positively associated with each other after adjusting for age, deprivation and practice.     

Demand for private health insurance: how important is the quality gap?

Perceived quality of private and public health care, income and insurance premium are among the determinants of demand for private health insurance (PHI). In the context of a model in which individuals are expected utility maximizers, the non purchasing choice can result in consuming either public health care or private health care with full cost paid out-of-pocket. This paper empirically analyses the effect of the determinants of the demand for PHI on the probability of purchasing PHI by estimating a pseudo-structural model to deal with missing data and endogeneity issues. Our findings support the hypothesis that the demand for PHI is indeed driven by the quality gap between private and public health care. As expected, PHI is a normal good and a rise in the insurance premium reduces the probability of purchasing PHI albeit displaying price elasticities smaller than one in absolute value for different groups of individuals.     

Private healthcare. Let's drink to that

The Commission for Health Improvement will have authority to monitor private hospitals treating NHS patients. The private sector will be subject to the NHS complaints procedure. The issue of medical staffing for private hospitals needs to be addressed. The uneven spread of private facilities across the country undermines the partnership. Arrangements to cut NHS waiting lists will reduce demand for private medical insurance.     

Renewing the model employer. Changing employment relations and "partnership" in the health and private sectors

Drawing from original empirical data this paper compares the changing nature of employment relations in the health and private sectors. A key concern is to assess the extent to which the emergence of partnership-type arrangements between employers and trade unions lays the basis for the "renewal" of the traditional public sector concept of the model employer. Empirically, the paper draws on a survey of trade union representatives from 238 workplaces and a case study of a hospital trust. The data reveal that employment relations in the NHS are more collectivist when compared with the private sector. However, the development of partnership in the NHS is hamstrung by ongoing training and involvement gaps and widespread work intensification.     

Ends versus means: the role of markets in expanding access to contraceptives

Achieving and sustaining universal access to contraceptives are key policy goals of interventions supplying contraceptive commodities. Donor support for contraceptive supplies is substantial and many public and national programmes rely on donated and subsidized supplies of contraceptives. Sustainability of programme benefits is a concern to both national governments and donor agencies. At the same time, market-based provision of contraceptives has become a major source of contraceptives for individuals in a number of countries. While the goals or 'ends' of policy are to increase and sustain universal access to contraceptives, there is debate about the role of markets and their negative impacts on equity and universality. There is also concern that while public programmes supplying free contraceptives may, in the medium-term, achieve high coverage, they may hamper the achievement of long-term sustainability and the development of commercial markets. This paper focuses on the tension between the public health and market paradigms, and uses economic analysis as a framework in order to examine the relative roles or 'means' for subsidized public and commercial private sector supply of contraceptives. The review of the theory and evidence focuses on the trade-offs between public sector and market provision of contraceptives, examining the role for the public sector given the potential for market failures, the impact of public provision on the development of markets, and the role of price in demand. However, because of the potential conflict between these policy objectives, we argue that strategies to deliver contraceptives should be based on the specific characteristics of the context. In particular four variables (contraceptive prevalence rates, HIV prevalence, income level of country, size and geographic spread of private sector development) are important in characterizing this context, and these are highlighted in a matrix of programme priorities. Public choices need to take into account the ways in which they will affect the potential for development of sustainable private sources of supply. Undertaking a 'market assessment' should be a key stage in the analysis of policy options. Such an assessment should address demand factors, health priorities, actual and potential sources of supply and the relationships between public and private supply. Clearly the development of markets for contraceptives is not an end in itself, but may prove an important means of improving the health of women and men.     

Food and nutrition policy issues in remote aboriginal communities: lessons from Arnhem Land.

There is a high incidence of nutrition-related diseases amongst Aborigines living in remote areas. An outline of the corporate food and nutrition policy of the Arnhemland Progress Association is given to demonstrate the potential for positive strategies in remote area stores. The Association is a retailer owned by Aboriginal groups and operates 11 remote community stores. Factors such as price, Aboriginal buying habits, seasonality, consumer demand and most importantly remote area stock management affect the supply of and demand for food items. Further, government policy on sales tax and private sector capital city pricing policies influence retailing in remote areas. The experience of the Arnhemland Progress Association illustrates the extent to which factors affecting supply of and demand for food lie outside the health sector and points to the need for an intersectoral policy on food and nutrition.     

Tackling excessive waiting times for elective surgery: a comparative analysis of policies in 12 OECD countries

This paper compares policies to tackle excessive waiting times for elective surgery in 12 OECD countries. It is found that waiting times may be reduced by acting on the supply of or on the demand for surgery (or both). On the supply side, evidence suggests that both capacity and financial incentives towards productivity can play an important role. On the demand side, inducing a raising of clinical thresholds may reduce waiting times but may also provoke tension between clinicians and policy makers. Preliminary evidence also suggests that an increase in private health insurance coverage may reduce waiting times.     

Is greater patient choice consistent with equity? The case of the English NHS

There are substantial inequities within the current National Health Service (NHS), with people in lower socioeconomic groups (SEGs) using a wide range of services less relative to their needs than people in higher SEGs. These inequities are likely to arise due to factors on both the demand and the supply side of the system. On the demand side, they could arise from differences in patients' beliefs, knowledge, costs, resources and capabilities. On the supply side, professional beliefs and attitudes, and risk selection or cream-skimming by providers may result in inequities. This paper discusses whether these factors are at play within the English NHS and analyses whether current policy to extend patient choice of provider is likely to reduce or increase these inequities. It shows that extending patient choice may leave unchanged inequity due to differences in health beliefs (because choice does not affect these directly), increase inequity due to unequal resources (because patients may have to travel further), and decrease inequity due to unequal capabilities (because the poor will have access to a new and, for them a more effective, source of leverage over health service professionals). On the supply side, there will be little change. The paper then discusses policy options for dealing with factors that contribute to greater inequity on the demand side. It proposes a package of supported choice whereby individuals from lower SEGs would receive assistance in making choices, including an identified key worker to act as patient care adviser and help with transport costs. The paper concludes that policies for extending patient choice can enhance equity--so long as they are properly designed.     

Food and nutrition policy issues in remote Aboriginal communities: lessons from Arnhem Land

Abstract: There is a high incidence of nutrition-related diseases amongst Aborigines living in remote areas. An outline of the corporate food and nutrition policy of the Arnhemland Progress Association is given to demonstrate the potential for positive strategies in remote area stores. The Association is a retailer owned by Aboriginal groups and operates 11 remote community stores. Factors such as price, Aboriginal buying habits, seasonality, consumer demand and most importantly remote area stock management affect the supply of and demand for food items. Further, government policy on sales tax and private sector capital city pricing policies influence retailing in remote areas. The experience of the Arnhemland Progress Association illustrates the extent to which factors affecting supply of and demand for food lie outside the health sector and points to the need for an intersectoral policy on food and nutrition.     

An evaluation of universal vouchers as a demand-side subsidy to change primary care utilization: A retrospective analysis of longitudinal services utilisation and voucher claims data from a survey cohort in Hong Kong

To incentivize private primary care utilization and reduce reliance on public healthcare services, Elderly Healthcare Voucher Scheme has been implemented to provide a voucher entitlement to entire older resident population for subsidising their purchase of unspecified primary healthcare services in the private sector. Our study assessed whether voucher usage is associated with reduced utilization of public healthcare services. We retrieved the public healthcare services utilization and voucher transaction data of a survey cohort of 551 participants, who were age eligible for the scheme since 2009, over the period 2009–2015. Our results showed that voucher usage was not associated with reduced utilization of public healthcare services and has encouraged dual utilization of public and private healthcare. It may be due to a generated supply-induced demand and price inflation. The finding suggests the voucher is specifically designed to address the health systems issues to achieve the effective policy objectives. Defining the specific services to be provided and the prices at which they should be offered based on the needs of specified populations is a fundamental design parameter which needs to be incorporated. The alternatives of whether primary care services should be expanded and provided in the public sector or purchased using supply/demand side instruments should be considered taking the context and goals of the health system into account.     

Motivation and values of hospital consultants in south-east England who work in the national health service and do private practice

In the UK, a small private health care sector has always existed alongside the national health service (NHS). The conventional assumption is that doctors who work as salaried employees of the NHS are guided in their clinical practice by professional values which encourage them to put their patients' interests first. A common suspicion is that doctors undertaking fee-for-service practice in the private sector are motivated by self-interest, with commitment to their patients compromised by consideration for their purse. The great majority of hospital consultants are salaried employees of the NHS, but most also undertake some private practice. This paper uses findings from an interview study of 60 surgeons and physicians engaged in dual practice of this kind to investigate their reasons for working in this way and look at how they reconcile their personal, professional and public sector values and responsibilities with the temptations of the market. The existence of the private sector and their own engagement in it was regarded by almost all respondents as a net benefit, not only to themselves and their private patients, but also to the NHS, so long as they handled it properly. The interviews revealed a complex range of beliefs and assumptions through which these doctors justify their activities and a variety of informal principles for dealing with such conflicts of interest as they acknowledge. Neither their values nor their actions can be adequately explained using generic concepts of professional self-interest or public service values without consideration of what such concepts represented in the specific social, economic, professional and policy context of health care in south-east England at the time of the study.     

Identifying the impact of government targets on waiting times in the NHS

Waiting times for elective surgery are a key issue for the NHS. The principal policy response in the English NHS has been to introduce maximum waiting time targets against which performance is measured and rewarded. The aim of this paper is to identify the effect of government targets on the distribution of waiting times in the NHS. Specifically, we investigate the following questions: How does the probability of admission for any given patient vary during the time that they wait? How is the probability of admission for any given waiting time affected by the targets? Can variations in waiting times be explained by clinical, patient, or provider-level characteristics? What implications may be drawn from our results with respect to providers’ managerial responses to the targets? This paper investigates these questions by applying duration analysis techniques to waiting time data from 2001/2002 and 2002/2003 for three specialties: general surgery, trauma &; orthopaedics and ophthalmology. Estimation of survival functions reveals considerable variations in waiting times between specialties, operative procedures and hospitals. Hazard rates vary over time and peaks in them—high probabilities of admission—coincide with targets and change when targets change. Amongst patient characteristics, whether they are NHS or private and whether they are day or inpatient cases both influence waiting times, but other characteristics such as age, sex and ethnicity do not.     

Public versus private health care in a national health service

This paper studies the interaction between public and private health care provision in a National Health Service (NHS), with free public care and costly private care. The health authority decides whether or not to allow private provision and sets the public sector remuneration. The physicians allocate their time (effort) in the public and (if allowed) in the private sector based on the public wage income and the private sector profits. We show that allowing physician dual practice 'crowds out' public provision, and results in lower overall health care provision. While the health authority can mitigate this effect by offering a higher wage, we find that a ban on dual practice is more efficient if private sector competition is weak and public and private care are sufficiently close substitutes. On the other hand, if private sector competition is sufficiently tough, a mixed system, with physician dual practice, is always preferable to a pure NHS system.     

Priority access to health care: Evidence from an exogenous policy shock

Access to care is an important issue in public health care systems. Unlike private systems, in which price equilibrates supply and demand, public systems often ration medical services through wait times. Access that is given on a first come, first served basis might not yield an allocation of resources that maximizes the health of a population, potentially creating suboptimal heterogeneity in wait times. In this study, we examine an access disparity between two groups of patients—established patients and new patients. We exploit an exogenous policy change—implemented by the U.S. Veterans Health Administration—that removed the disparity and homogenized the wait time. We find strong evidence that without such a policy, established patients have priority access over new patients. We discuss whether this is a suboptimal allocation of resources. We additionally find that established patient priority access is an important determinant of access for new patients; accounting for it increased the explanatory power of our statistical model of new patient wait times by a factor of five. The findings imply that policy and management decisions may be more effective in achieving the optimal distribution of access if access heterogeneity is recognized and accounted for explicitly.     

Waiting times for elective surgery and the decision to buy private health insurance

More than 45% of Australians buy health insurance for private treatment in hospital. This is despite having access to universal and free public hospital treatment. Anecdotal evidence suggests that avoidance of long waits for public treatment is one possible explanation for the high rate of insurance coverage. In this study, we investigate the effect of waiting on individual decisions to buy private health insurance. Individuals are assumed to form an expectation of their own waiting time as a function of their demographics and health status. We model waiting times using administrative data on the population hospitalised for elective procedures in public hospitals and use the parameter estimates to impute the expected waiting time and the probability of a long wait for a representative sample of the population. We find that expected waiting time does not increase the probability of buying insurance but a high probability of experiencing a long wait does. On average, waiting time has no significant impact on insurance. In addition, we find that favourable selection into private insurance, measured by self-assessed health, is no longer significant once waiting time variables are included. This result suggests that a source of favourable selection may be aversion to waiting among healthier people.     

Long-term contracts in the NHS: a solution in search of a problem?

Purchasers and providers in the National Health Service (NHS) are now required to move from annual contracting cycles to longer-term contracts. The benefits are expected to include more efficient investment and improved sharing of financial risk. This paper argues that the economic analysis of longer-term contracts has assumed implicitly that agents operate in the private sector. Once the constraints of the public sector are introduced, the apparent economic benefits of longer-term contracts become doubtful. The paper explores these issues using evidence collected from analysis of the contracts of a sample of Health Authorities and from semi-structured interviews with individuals involved in the contracting process. We conclude that with the property rights and financial structure of the public sector, the move from short- to long-term contracts is unlikely to produce the improvements in performance expected by the government.