Background report for Economic Policy Council on Public-private Mix in Provision of Hospital Care across European countries
Siciliani, Luigi (2019-01-23)
Talouspolitiikan arviointineuvosto
23.01.2019
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe20231030141815
https://urn.fi/URN:NBN:fi-fe20231030141815
Kuvaus
nonPeerReviewed
Tiivistelmä
Objectives
This report reviews the economics and related literature on differences in hospital behaviour between public and private (profit and non-profit) providers across European countries. The report first reviews the theoretical literature highlighting possible mechanisms which induce public and private hospitals to provide different levels of quality and to contain costs. It then reviews the empirical literature published from 2000 onwards on differences in provider behaviour in relation to quality of care, costs/efficiency/productivity, and if available on patient casemix (cream skimming, selection) and possible spillover effects across sectors (from private to public and viceversa). The focus is on environments where public and private providers compete to treat publicly-funded patients.
Key findings
The review of the theoretical literature suggests that whether private hospitals provide higher or lower quality than public hospitals is a priori ambiguous. Different mechanisms have been identified that work in opposite directions. These mechanisms relate to the payment system, the demand responsiveness to quality, the degree of altruism or intrinsic motivation of the providers and its heterogeneity.
There is a limited number of studies on quality by ownership type in European countries. They are mostly for England with one study from France. Some studies suggest that there are no quality differences between public and private hospitals. Other studies suggest that quality is higher for private hospitals, though the latter are mostly in institutional settings where hospital payment differs between public and private providers.
The economic theory has more clear-cut predictions on differences in efficiency by ownership type. It suggests that private providers should have stronger incentives to contain costs and behave more efficiently than public hospitals if the latter have restrictions on use of financial surpluses or have soft budgets constraints. The empirical literature however does not seem to support this prediction. Several studies from Germany and Italy, and one from Switzerland suggest that private hospitals are as efficient or less efficient than public hospitals, with only one study from England suggesting the opposite. There is also some direct and indirect evidence that private hospitals have a lighter casemix of patients.
Conclusions
The existing limited evidence across European countries does not provide support for systematic differences in quality and efficiency across ownership type. This appears even more the case when public and private hospitals do not differ in reimbursement rule and are both paid with a DRG system.
This report reviews the economics and related literature on differences in hospital behaviour between public and private (profit and non-profit) providers across European countries. The report first reviews the theoretical literature highlighting possible mechanisms which induce public and private hospitals to provide different levels of quality and to contain costs. It then reviews the empirical literature published from 2000 onwards on differences in provider behaviour in relation to quality of care, costs/efficiency/productivity, and if available on patient casemix (cream skimming, selection) and possible spillover effects across sectors (from private to public and viceversa). The focus is on environments where public and private providers compete to treat publicly-funded patients.
Key findings
The review of the theoretical literature suggests that whether private hospitals provide higher or lower quality than public hospitals is a priori ambiguous. Different mechanisms have been identified that work in opposite directions. These mechanisms relate to the payment system, the demand responsiveness to quality, the degree of altruism or intrinsic motivation of the providers and its heterogeneity.
There is a limited number of studies on quality by ownership type in European countries. They are mostly for England with one study from France. Some studies suggest that there are no quality differences between public and private hospitals. Other studies suggest that quality is higher for private hospitals, though the latter are mostly in institutional settings where hospital payment differs between public and private providers.
The economic theory has more clear-cut predictions on differences in efficiency by ownership type. It suggests that private providers should have stronger incentives to contain costs and behave more efficiently than public hospitals if the latter have restrictions on use of financial surpluses or have soft budgets constraints. The empirical literature however does not seem to support this prediction. Several studies from Germany and Italy, and one from Switzerland suggest that private hospitals are as efficient or less efficient than public hospitals, with only one study from England suggesting the opposite. There is also some direct and indirect evidence that private hospitals have a lighter casemix of patients.
Conclusions
The existing limited evidence across European countries does not provide support for systematic differences in quality and efficiency across ownership type. This appears even more the case when public and private hospitals do not differ in reimbursement rule and are both paid with a DRG system.