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Building the collaboration between the public and private health system

Paul Pierotti
PA Consulting Group
Irish Medical News
30 June 2008

There are currently around 2,500 inpatient and day beds in Irish public hospitals designated for private patients. This represents around 17% of the total bed stock with 26% of all public hospital patients being private. 

The Co-Location Project seeks to deliver a key commitment of the 2007 Programme for Government where new private hospitals will be built next to existing public hospitals. The adjoining hospitals will share certain facilities and staff. The private hospital will also be referred many of the private patients who currently would be admitted to and then remain in the private beds in the public hospitals.

Co-Location seeks to deliver around 800 additional public beds to the health system. This is because each new bed in a private hospital will result in a private bed in the public hospital being re-designated to a public bed. Private beds in public hospitals receive a Government subsidy and so this re-designation should reduce the public money spend on private healthcare.

There are also potential operational benefits from co-locating the public and private hospital.  For example, the private hospital and staff can offer a contingency in the event of the public hospital reaching full capacity. Similarly, the sharing of select utility and core medical services should result in a lower unit cost for both hospitals.

However, Co-Location also introduces a new form of public private partnership to the Irish health system. It explicitly links the adjoining public and private hospital and therefore requires them to be fully cognisant of their neighbour when defining strategy and policy, structuring service delivery and treating patients. For example, public hospitals currently move private patients internally to private beds and one test will be whether this transfer happens as easily to the adjoining private hospital.

Establishing such a collaborative relationship between an existing public and new private body is not easy. It will require:

  • Appropriate and aligned incentives across both hospitals and the staff that work within them

  • Significant improvements in work practices both in the public hospital and across the wider health system.

Appropriate and aligned incentive across both hospitals and the the staff that work within them

The adjoined public and private hospital will only have the collaborative relationship that is required if it is their interest to do so. The private hospital receives income for each private patient and so should be actively seeking to transfer them in from the public hospital. Care must be taken, however, to ensure that they are not incentivised simply to cherry pick the simpler cases that have relatively less benefit to the public hospital.

Public hospital funding also needs to be reconsidered to ensure that there is no incentive for them to hold onto the private patient. In particular, private patients generally have a lower average length of stay than public patients in the same public hospital. This is due to a variety of reasons, including the profile of private patients. Transferring these private patients over to the adjoining private hospital means that the public hospital will see more public patients. However, it may also mean that the total number of patients seen by the public hospital reduces. The funding of public hospitals therefore needs to change to ensure they are not penalised for this reduction in total patient throughput.

As stated previously, Co-location seeks to remove an existing Government subsidy on private beds in public hospitals. It therefore also naturally follows that the total cost of private healthcare will increase and this will be passed onto insurance premiums. Many believe that there is not a strong relationship between insurance cost and uptake. This may have been the case over the last 15 years, as Ireland has seen record growth; however, this may not continue as our economy slows down. Currently over 50% of the population have private health insurance; even a small reduction would significantly impact the benefits of Co-Location.

The incentives must also be correct for the professionals in particular those working within and across the adjoining hospitals. This is one of the biggest challenges in the existing Consultant Contract talks and also applies for all other resources. In particular, the personal incentives for professionals working in these adjoining hospitals must be consistent with the HSE Transformation Programme’s objective of shifting the delivery of care for many services from hospitals to the community.

Significant improvements in work practices both in the public hospital and across the wider health system

The operational benefits of the co-located hospitals also require changes in work practice.  This includes:

  • Referral management procedures that direct the appropriate elective private  patients directly to the private hospital

  • Formal discharge planning which enables a quick transfer from the public to private hospital.

There is currently limited formal management of the referral process from primary care to hospitals. For example, 20% of all acute public demand in the South East is currently serviced by hospitals outside of that network and part of this is simply due historic referral patterns.

Co-Location hospitals will be most effective if they stop elective private patients entering the public hospital. This will require significantly improved referral management, where primary care professionals refer patients to the most appropriate hospital based on both their acute need and status. That is, patients from the same clinic with the same conditions may be referred to any of a public hospital, co-location hospital, or private hospital, depending on their personal status.

Co-Location also requires an efficient and effective transfer process from the public to co-location hospital.  However, formal bed management is not standard in Irish hospitals, with only two in five patients having a discharge plan and one in eight an expected discharge date. This means that the full value of co-location would not currently be realised, as private patients would unnecessarily remain in the public hospital due to poor process management. Strong discharge planning must be implemented in public hospitals as a priority.

Achieving the objectives from Co-Location therefore requires more than just creating the new hospitals; it is also essential that the incentives and processes are developed to make sure the system works effectively in practice.

Contact the sourcing and procurement team

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