Does private healthcare deliver good quality care more effectively? Or does it just take the money and run?

This interview, with Andreas Beivers at the prestigous Institute for Health Economics in Munich, is the first of a series on this vexed issue. Contact me if you want to be involved!

Andreas Beivers has contributed to an Accenture report, which compares private, public and not-for-profit hospitals in Germany.

HE: So is the quality of care offered by the private hospitals less high than that in the public sector?

AB: This was certainly the claim made by opponents. This is why the private sector here in Germany pioneered transparency, with groups like Helios publishing their mortality and other results online before the public sector did. I think it is now proved that the results achieved are the same, or slightly better in the larger private hospital groups.

HE: In the UK, the private sector does seem to ‘cherry-pick’. For instance, I talked to a public sector hospital doctor, who said the local private hospital, to whom the NHS outsourced hip operations, refused to take the hard cases. If the patient was over 75, had a heart condition or stairs at home, they would leave the operation to the public sector. This, of course, meant that the private hospital had lower complications and looked better.

AB: In Germany, that would not be allowed. If you have a contract you have to provide the care. Whether you are private, public or not-for-profit, the money you receive per procedure will be exactly the same. Turn away a patient, and you will be closed down.

However, there is a debate about the way the private sector, and for that matter the not-for-profit sector, tends to specialise more. Specialist contracts for, say, diabetes, tend to pay more than general work, and there is a fear that the private sector specialises more to maximise profits. But this is not true of the big groups – Helios, Rhoen and Asklepios - who provide general hospital services. However, you do get private chains where, say, 15 out of 20 of the hospitals only handle psychiatric patients.

HE: Is there concern that the big groups can use their strength in some regions to get better prices?

AB: Yes. This surfaced with Rhoen Klinikum, and led to the passing of a monopoly law, which means that no private hospital chain can have more than a 30% market share in a given region.

HE: Often people say that private hospitals achieve their profits by squeezing employee pay.

AB: Yes. This is a big concern in Germany. In the public healthcare sector, the trade unions ensure that staff get paid the same wherever they are in the country. In the private sector, pay varies. The private sector pays more for big names – professors and specialists - because they know that they will attract more patients.

But for nurses or kitchen staff, pay can be a lot lower than the public sector – up to 25% lower in fact. When you consider that 60% of a hospital’s costs are payroll, that makes quite a difference. The private sector also pioneered outsourcing of specific functions, such as cleaning or food preparation, something which has really only started in Germany in the last five years.

HE: What do you think of that?

AB: It depends on your personal outlook, I suppose. To me it is a nonsense that, in the public sector, a nurse or a doctor in Munich should be paid the same as in the new Laender in the East, where the cost of living is much lower.

HE: So is the private sector more effective?

AB: It is very hard to say. If you look at an indicator like bed occupancy rates, the aggregate figures show little difference between the private and public sectors. But the private sector figure consists of a lot of small, rather inefficient private hospitals, as well as the big hospital groups.

In general, bed occupancy rates in the public sector are around 75%. The figure for Helios, Asklepios and Rhoen is in the range of 85%-90%. So, yes, perhaps they can claim to be more effective.