Privatizing health care: Caveat emptor

Abstract

Many Western European countries are moving toward privatization of their health care systems. The United States' health care system, since it is almost entirely privatized, is therefore worthy of study. Doing so raises several questions. How is privatization being managed in the US? How could its management be improved? What management lessons must be kept in mind if it is to be used effectively? What potential pitfalls should European countries consider as they move toward greater privatization? With operating costs, European countries must avoid the mistakes that have led to dramatic increases in annual health care costs in the US, simultaneous with reductions in access and quality. Doing so requires designing systems that promote hospital behavior consistent with a country's health objectives. With capital costs, an approach must be designed that allows policy‐makers to work closely with both managers and physicians in order to make strategically sound choices about access and quality. Such an approach will require physicians to incorporate their clinical judgments into community standards of care, and to adopt a regional (rather than an institutional or personal) perspective in the determination of any incremental capital expenditures. By making regulation proactive and strategic, rather than punitive, health policymakers in Western Europe can achieve the best privatization has to offer without feeling the sting of its unintended consequences. In so doing they can help to move their health systems toward achieving the multiple and illusive goals of access, quality and reasonable cost.