Posted by http://www.mja.com.au/public/issues/apr5/brooks/brooks.html on April 18, 1999 at 22:22:10:
Privatisation of teaching hospitals Training and research may be poorly served by privatisation and commercial
management of hospitals
Peter M Brooks
MJA 1999; 170: 321-322
Introduction
Australia's major academic health centres not only provide excellent
healthcare, but are also involved in one of the most important aspects of the
healthcare system -- the training of our future health professionals.1 Most
teaching hospitals are also involved in basic and clinical research, and many
have major research institutes on their campuses. This symbiosis of
healthcare, research and training has served us well, but is now under
considerable threat from the fiscal constraints within the healthcare system
(particularly in Victoria, where, despite the increase in throughput and
reduction in waiting lists as a consequence of casemix funding, there has
been a decline in funding to hospitals in real terms).2 For NIH awards to
medical schools see figure.
Recently, the Victorian State government has moved to amalgamate and
privatise several public health institutions, including one of Australia's most
prestigious teaching hospitals, the Austin and Repatriation Medical Centre.
Whatever contractual arrangements are finally determined for these
privatisations, they must preserve the high standards and broad range of
teaching, research and healthcare that the institutions currently provide, or
else the saving of public money will eventually be to the detriment of the
health of the community.
Private money
As economic rationalism has gripped the world over the past decade,
governments of all persuasions have moved to privatise public utilities.3 In
healthcare, governments have seen this as a way to inject much-needed
capital into the system in order to keep pace with community expectations.
The private sector has responded with willingness to invest in many aspects
of the healthcare system. Some private hospitals have established research
foundations which provide for research (primarily clinical) within their
institutions or within universities or public hospitals. With private hospital
collocation projects that have been developed in most states, including New
South Wales and Victoria (and are being introduced in Queensland), the
collocating private partners have provided funds for research and for
academic/research/service positions.
It is important to continue developing relationships between the private and
public healthcare sectors in Australia, but both economic outcomes and the
impact on the delivery of service, research and education need to be
carefully monitored and evaluated. The "build-own-operate" projects which
have been developed in Western Australia (Joondalup) and New South
Wales (Port Macquarie) have already raised concerns as to whether the
developments have led to real savings to the public sector.4 Similar concerns
have been raised in Britain in relation to the Private Finance Initiative
Program introduced in 1992, under which a National Health Service Trust
enters into a contract with a private sector consortium that will design, build,
own and manage a hospital and the Trust provides clinical services.
Evaluation of these arrangements suggests that they lead to inefficient and
inequitable allocation of scarce National Health Service resources.5 These
arrangements also affect rational healthcare planning at a "macro" level and
will make strategic planning more difficult, because commercial
considerations (and commercial confidentiality) will intervene.6
Other risks of "privatisation" are that teaching and research may not be as
well supported and that the privatised facility will concentrate on the
high-return services at the expense of looking after the elderly and
chronically ill.
Public costs
Healthcare reforms in the United States with the emergence of health
maintenance organisations and managed care have led to significant
problems for American academic centres.7 As pointed out by Blumenthal et
al,8 academic health centres have a social mission to provide an integrated
healthcare system for the community. Exposing these institutions to market
forces has a significant impact on the stability of the three pillars of academic
health centres -- training, research and patient care. There are now data
available to suggest that medical schools in communities with a high level of
managed care receive less National Institutes of Health funding than those in
communities with low levels of managed care.9 Similarly, young clinical
researchers in hospitals serving communities with a high level of managed
care published fewer scientific articles and perceived greater levels of
departmental conflict and decreased cooperation.10
In Australia, our internationally recognised high standards of health
professional training are maintained to a large extent by the undergraduate,
graduate and postgraduate training within our major teaching hospitals.
Providing young health professionals with the necessary clinical environment
for learning significantly increases the institutional costs because of the extra
time expended in routine clinical tasks, the requirements of supervision and
the use of more diagnostic and therapeutic services by trainee health
professionals. In the competitive market place of the United States,
academic medical institutions have found it very difficult to maintain all their
activities, as the healthcare purchasers tend to favour the lower-cost
suppliers of services. Increasingly, American academics have to spend more
time in direct clinical care and less in teaching and research.11
In Victoria, the "teaching, training and research" component of casemix
definitions does provide additional funding to the teaching hospitals.12
Although this formula will be used in the contracts developed with the private
sector organisations, it will be important to make sure that they actually
deliver on their commitment to teaching and research.13 Private hospitals
have a responsibility to their shareholders and have naturally concentrated
their activities on those healthcare "products" that are profitable. This has
seen a concentration in the private sector of diagnostic facilities and
provision of elective surgical procedures such as total joint replacement.
These private units provide excellent healthcare services, but do not
contribute as much to research or teaching as their public counterparts.
Basic research may be more adversely affected by a transition to privatised
healthcare. Competitive healthcare markets fail to support significant
amounts of basic research because the economic benefits of such work are
uncertain, often long term and can rarely be fully realised by those who pay
for them.14 Experience in the United States demonstrates that basic research
is more likely to produce knowledge that has practical benefits when
potential users are participating in the research or interacting with the
investigators conducting the research.15 The Australian medical research
community (albeit underfunded) has produced significant advances in our
understanding of disease flowing from its basic research activities. Around
the country, the most successful institutes have fostered a close association
between clinicians and basic researchers.
Private enterprise (particularly pharmaceutical companies) provides
significant funds to public Australian research institutes, although this funding
needs to be encouraged and increased.16 Whether privately funded institutes
would succeed in raising more research funding is yet to be seen, but little or
no basic research is conducted at Australian private hospitals.
As Blake points out "economics should discipline, but not control, academic
medicine and medical practice".17 Few people working within teaching
hospitals or medical research institutes could fail to realise the importance of
fiscal responsibility in the light of the economic rationalisation that has gone
on within the Australian healthcare system over the past two decades. It is a
little surprising that the academic institutions, health professionals and the
general public have not been more vocal in their questioning of the Austin
and Repatriation Medical Centre privatisation decision. I believe that our
community is interested in the excellence of medical care, in training the
medical workforce of the future and in seeing the continuing development of
advances in healthcare through research. These values, however, do have to
be voiced, and this should be done through persistent and persuasive
academic leadership.17
The process currently in train in Victoria must be seen as an experiment.
Like all clinical trials, it should be closely monitored, and terminated if it
seems to be doing harm. If it continues, it must be evaluated to make sure
that the result is a positive one -- for all parties.
References
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Authors'
details
Faculty of Health Sciences, University of Queensland, Brisbane, QLD.
Peter M Brooks, MD, FAFPHM, FRACP, Executive Dean.