Reprinted here are major portions of a talk given by Dr PETER BOTSMAN in Port Macquarie last month. Dr Botsman is executive director of the Evatt Foundation. His talk was occasioned by the NSW government's plan to privatise the Port Macquarie Base Hospital. Dr Botsman has not had the opportunity to check the transcript printed here.
There are only two countries in the world — South Africa and the United States — that you can look at as laboratories for the proposed Port Macquarie experiment. Both South Africa and the US have extraordinary problems with their health care systems.
Last year I was Harkness Fellow in the United States. There I had the good fortune to spend the year with a dozen doctors and medical policy experts who had also won Harkness Fellowships from the UK.
At the end of the year, even the most conservative members of the group, those who had formerly worked as part of Mrs Thatcher's administration — were overwhelmed by the terrible state of the US health system.
The US spends more per capita on health care than any other nation, yet 100 million of its citizens have inadequate health coverage and access to care.
The for-profit nature of US medicine has been a major reason for America's problems.
In the early 1980s in the United States 180 public hospitals were purchased, leased or managed by for-profit hospital chains. In some cases, private for-profit hospitals were found to be neglecting their obligation to care for the poor, and were providing inadequate medical care with no peer review. In other cases, they were praised.
But overall, there are clear lessons to be learnt from the US experience.
The first is that we should avoid allowing a private for-profit hospital to have absolute monopoly on health care provisions in a region.
The second is that many dimensions of health care cannot be guaranteed by a commercial contract.
One of the most important principles of health care is to have a hospital staff and management ethically committed to the maintenance and improvement of community health and equal access for equal need. Studies in the US have shown that if you evaluate health services on the basis of these principles, then free, public care is more effective and cost efficient than private for-profit health care.
The words of Dr Arnold S. Relman, the recently retired editor of the d Journal of Medicine, sum up the dangers of private for-profit hospital monopolies in regions and towns like Port Macquarie. He said:
"The for-profit hospitals avoid services that are not profitable, even though they may be of use to the community. When they are the only hospital in town, they obviously feel constrained by other considerations.
"Hospitals make money out of short term illnesses, preferably elective surgical procedures on otherwise healthy, relatively young people. They like short stays and a lot of diagnostic studies. They don't like patients who need labour intensive care, like burn patients or the chronically ill or elderly patients. That's expensive."
Relman's views are backed up by the respected US Congressman Henry Waxman, chairman of the powerful Energy and Commerce Subcommittee on Health, who challenges the assertion that private for-profit hospitals are more efficient. "They skim the patient population, they skim for the medical problems that are least expensive to treat."
Rashi Fein, author of the definitive history of American medicine, is even blunter. He says that there are many reasons why for-profits would not serve the needs of patients, care deliverers, local communities or the health system as a whole.
In Louisville, Kentucky, a city of 298,000, the giant Humana chain leased the new $80 million city hospital shortly before it opened in May 1983.
There had been plans for a much needed burns unit to be included in the hospital because, as it then stood, Louisville's Children's Hospital had become a de facto burns unit for adults as well as kids.
But Humana scrapped the burns unit to cut costs. This prompted the Children's Hospital to drop adult burns patients, which it said cost it over $400,000 a year. As a not-for-profit hospital, it was sick of carrying the can for others. While the wrangling was going on, a woman was severely burned. She was admitted to the ill-equipped Humana Hospital and died of smoke inhalation. Only then did Humana agree to include a burns unit within its hospital.
A similar incident, in Austin, Texas, occurred when one of the Hospital Corporations of America's 420 private for-profit hospitals suddenly dropped the 34-bed physical rehabilitation unit which had treated 400 severely impaired patients a year. The community was in an uproar but could do nothing about the decision.
You also have to worry about your hospital closing down or going bankrupt. For example, the Maryland Cost Review Panel alleged that the Doctors' Hospital — a 250-bed Institution — had systematically overcharged patients a total of $18 million. When he was told he would have to repay this sum, the owner filed for bankruptcy.
The Doctors' Hospital was then taken over by AMI Inc, the third ofit hospital chain. But even after a special deal was done to enable the company to pay off the hospital's debts, AMI announced that it to would have to sell up, this time to a not-for-profit hospital corporation. The new owners immediately filed for an increase in bed rates.
Two weeks ago Keith Ablow, chief resident in psychiatry at the New England Medical Centre in Boston, wrote in the Washington Post that he had sat in on a hospital meeting in which the chief executive had reminded his staff not to limit the hospital stays of privately insured patients. Patients with the money to pay for treatment merited lengthier "Gold Standard Work-ups", including extensive diagnostic testing.
At the start of last year, a study by Randall Stafford of the University of California reported that one in four babies in the US is now born by Caesarean section, a proportion four times higher than it was 20 years ago.
The report found that a woman's likelihood of having a vaginal
delivery depended on what kind of hospital she entered and on whether she had health insurance. Private for-profit hospitals had the highest rates of surgery and lowest rates of natural delivery.
Many US legislators, administrations and communities seem to be helpless against the proprietary hospitals sector. For example, in the little town of Rome, New York, the community found that after allowing the Hospitals Corporation of America in to run their hospital, they couldn't get rid of them. Rome's mayor and treasurer said their hospital's board of management was apparently hostage to the interests of the private corporation.
Last year in Washington, I predicted that the US would save up to three-quarters of a trillion dollars by the year 2000 and at the same time provide universal, comprehensive health insurance for all citizens if it moved to an Australian-style health system.
My friends at the Economic and Social Research Institute in Washington say that I was being conservative. They estimate that between $1 trillion and $4.3 trillion would be saved over the same period.