Privatization of Health Care Services

1. Privatization of Health Care
Dr. Ghada Elmasuri

2. Introduction
 The health care system is defined as “the organizational
arrangements and processes through which a society makes
choices concerning the production, consumption, and distribution
of health care services.
“Santerre and Neun, 1996”
 Because health care resources are limited, each society has to
make decisions in terms of the distribution, consumption, and
production of these services through evolving system for
financing and payment for health care services.

3. Privatization
 Privatization is the transfer of decision making authority,
delivery, or financing from a public to a private entity.
Suleiman 1990
 Such shifts may occur by directly contracting out services to
the private sector or may result indirectly from other
arrangements, including partnerships with private sector.
Kettl 1993; Dilger et al., 1997

4. Privatization
 Privatization approaches are based on the premise that the
private sector can deliver services more effectively and
efficiently than the public sector.
Sclar 2000
 Under the title “increasing efficiency and competitiveness” the
privatization is seen as the most powerful tool.

5. Privatization
“Privatization of financing is not the same as privatization of
delivery”
 Privatization of financing is achieved by shifting the burden of
funding away from public health care towards patients and/or
their private insurance companies.
 Privatizing the delivery of health care implies greater reliance
on individuals and institutions outside government for the
production and provision of health services.

6. Privatization
I. Public providers:
1. State: Ministry of Health, National Boards.
2.Public, but not state: regional and local government, public
corporations
II. Private providers:
1. Not-for-profit (mission-driven):community-based,
religious, charitable, NGOs.
2. For-profit (return-driven): small businesses, large
corporations.
Saltman 2003

7. Privatization
Privatization of health care financing can be achieved in two ways:
By shifting the care outside
traditional settings.
By containing public health
care costs “as partial or total
insurance”
Actively
Passively

8. Many health services are provided by private institutions or
individuals, but covered by pubic insurance plans.
“Most of Canada’s health system is regulated by and accountable to
government (mainly provincial/territorial), even though
governments deliver relatively few services directly”
Source: The Public and Private Financing of Canada’s Health System, Ottawa:
National Forum on Health, 1995, p. 2.

9. Modalities of Privatization
The privatization of health care includes:
1. Privatizing the costs of health care by shifting the
burden of payment to individuals.
2. Privatizing the delivery of health services by expanding
opportunities for private, for profit health service
providers.

10. Modalities of Privatization
3. Privatizing the delivery of health care services by
shifting care from public institutions to community-
based organizations and private households
4. Privatizing care work from public sector health care
workers to unpaid caregivers
5. Privatizing management practices within the health
system, by adopting the management strategies of
private sector businesses.

11. Reasons for Privatization
I. Internal reasons
1. Dissatisfaction with poorly managed public services
2. Privatization as a part of the general social processes
3. Re-introduction of private practice

12. Reasons for Privatization
II. External reasons
1. Patient rights; to choice, diversity & quality health care
2. As an option for competition & market oriented’ health care
3. Quality, competition, ‘better overall performance’ of
providers

13. Challenges of Privatization
1. Challenges to equity, especially when introducing significant
personal expenditures in replacing the public ones.
2. Challenges to transparency if private providers are favored
only based on their ‘effective’ use of financial resources,
but not on outcomes.
3. Development of a parallel health care system available to
those with a better ability to pay and directed mainly to
offering and providing services.

14. Challenges of Privatization
4. The public sector has other values besides efficiency that a
private sector organization may not have, including
effectiveness, responsiveness, and trust.
5. There may be significant transaction costs associated with
contracting out services.
6. For some public–private partnerships, shared arrangements
may be difficult to operate in practice.

15. Conclusions
The privatization of health care refers to several different
policy directions which limit the role of the public sector and
define health care as a private responsibility.
However privatization poses several challenges: to effective
use of public financial resources, to equity and to the
existence of a universally accessible health care.

16. Recommendations
 Health care should not be treated as any other commodity.
Privatization as a process requires clear health policy goals
that can be measurable (Transparency and accountability).
 Privatization of health care provision poses a threat to equity
and accessibility of health care services thus the core of
health service should remain publicly financed, regardless of
how and under which ownership the provision is organized.
 Privatized services, provision, insurance or facilities need to
be regulated, monitored and evaluated under the same terms
as their public equivalents.

17. References
 Suleiman EN, Waterbury J. Introduction: analyzing privatization in industrial
and developing countries. In: Suleiman EN, Waterbury J, eds. The Political
Economy of Public Sector Reform and Privatization. Boulder, Colo: West-view
Press; 1990:4.
 Saltman RB. Melting public-private boundaries in European health systems. Eur J
Public Health 2003;13:24–9.
 Lewis R, Smith J, Harrison A. From quasimarket to market in the National Health
Service in England: what does this mean for the purchasing of health services?.
J Health Serv Res Policy 2009;14:44–51.
 Kettl DF. Sharing Power: Public Governance and Private Markets. Washington,
DC: The Brookings Institution; 1993.
 Dilger R, Moffett R, Struyk L. Privatization of municipal services in America’s
largest cities. Public Adm Rev. 1997;57:21–26.
 Sclar ED. You Don’t Always Get What You Pay For. Ithaca, NY: Cornell
University Press; 2000.