By ANDRÉ PICARD
From Tuesday's Globe and Mail
Transforming Canada's vast network of publicly funded, not-for-profit hospitals into investor-owned, profit-driven businesses would add at least $7.2-billion annually to the cost of health-care delivery, a new study suggests.
While that is unlikely to happen -- even in the freewheeling United States, only 13 per cent of hospitals are for-profit facilities -- the mathematical exercise should serve as a stark warning that privatizing health-care delivery could cost consumers dearly, the authors warn.
The new research, published in today's edition of the Canadian Medical Association Journal, follows on the heels of studies showing that death rates are also higher in investor-owned health-care facilities.
"With for-profit care, you end up paying with your money and your life," said P. J. Devereaux, a researcher in the department of clinical biostatistics and epidemiology at Hamilton's McMaster University.
Currently, Canada does not have a single for-profit hospital, but there are a growing number of private surgical facilities, radiology clinics and home-care agencies.
Still, Dr. Devereaux said, the findings should "raise serious concerns because privatization is creeping and insidious and we could easily have investor-owned hospitals if we're not vigilant."
The research is a compilation and analysis of previously collected data from eight large studies, each of which included an average of 324 hospitals, and up to one million patients in total.
Over all, it found that hospital care costs 19 per cent more in for-profit hospitals than in not-for-profit ones. All the hospitals were privately run but got their payments from a variety of sources -- government, insurers and consumers. In Canada, almost all hospitals are private, not-for-profit institutions operated by regional health authorities, community groups and religious organizations. But virtually the entirety of funding for care comes from government under the single-payer system.
In a commentary also published in today's edition of the CMAJ, Steffie Woolhandler, a Harvard Medical School researcher who has written extensively about the Canadian health system, argues that the new study provides more compelling evidence that Canada should retain its approach of publicly funded health-care delivered by not-for-profit institutions. She urged politicians and the public alike to resist the entreaties of private-sector entrepreneurs.
"Some aspects of life are too precious, intimate or corruptible to entrust to the market," Dr. Woolhandler writes. "The for-profit barbarians are at the gates."
Proponents of for-profit health care argue that the profit motive, and the discipline the free market imposes, optimizes care and minimizes costs.
"That dogma has no clothes," Dr. Woolhandler said. Rather, she said, research has shown that for-profit care is consistently more expensive due to higher administrative costs, executive bonuses and profit-taking, and outcomes are worse because corners are cut.
Dr. Devereaux said earlier research conducted by his team demonstrates clearly that for-profit hospitals do not provide better care. An analysis of 38 million patient records in the U.S. showed that those treated in for-profit hospitals had a mortality rate that was 8 per cent higher than those treated in not-for-profit hospitals.
Dr. Devereaux calculated that at least 2,200 more Canadians would die needlessly each year if the country's hospitals were privatized.
Another study done by the McMaster team found that patients treated in investor-owned dialysis facilities had an 8-per-cent higher death rate than those treated in not-for-profit clinics. That research suggested that if Canada were to privatize its dialysis clinics, an additional 150 patients would die each year.
"Investor-owned, for-profit facilities are the cigarettes of the health-care system," Dr. Devereaux said. "They may seem cool at first but no matter how you look at them, they're bad for you and they cost way too much."
According to the researcher, the "likely explanation" for the higher costs and poorer outcomes in for-profit facilities is the "necessity to generate revenues to satisfy investors."
Citing the research of others, Dr. Devereaux said that, in for-profit hospitals, administrative costs are about 6-per-cent higher, executive bonuses are 20-per-cent greater, and less money is spent on nursing.
If anything, the new study underestimates the higher cost of services in for-profit facilities, Dr. Devereaux said. That is because the analysis could not capture "upcoding" -- the practice of giving patients more pessimistic diagnoses to maximize the fees being charged, i.e. treating a patient for "suspected angina" instead of "chest pains."
The analysis does not account for fraud, he said, such as billing for services not provided and performing unnecessary surgery. Such practices have spawned a number of lawsuits in the U.S., almost all of them against for-profit facilities.
The new research is a meta-analysis, a compilation of eight large studies. The knock against this kind of research, no matter how well it is done, is that there could be confounding factors -- in this case reasons that costs are higher in for-profit facilities other than the quest for profits. For example, for-profit facilities might have more complex cases, provide superior care, or have higher overhead because their facilities or health professionals are superior.
From Tuesday's Globe and Mail
Transforming Canada's vast network of publicly funded, not-for-profit hospitals into investor-owned, profit-driven businesses would add at least $7.2-billion annually to the cost of health-care delivery, a new study suggests.
While that is unlikely to happen -- even in the freewheeling United States, only 13 per cent of hospitals are for-profit facilities -- the mathematical exercise should serve as a stark warning that privatizing health-care delivery could cost consumers dearly, the authors warn.
The new research, published in today's edition of the Canadian Medical Association Journal, follows on the heels of studies showing that death rates are also higher in investor-owned health-care facilities.
"With for-profit care, you end up paying with your money and your life," said P. J. Devereaux, a researcher in the department of clinical biostatistics and epidemiology at Hamilton's McMaster University.
Currently, Canada does not have a single for-profit hospital, but there are a growing number of private surgical facilities, radiology clinics and home-care agencies.
Still, Dr. Devereaux said, the findings should "raise serious concerns because privatization is creeping and insidious and we could easily have investor-owned hospitals if we're not vigilant."
The research is a compilation and analysis of previously collected data from eight large studies, each of which included an average of 324 hospitals, and up to one million patients in total.
Over all, it found that hospital care costs 19 per cent more in for-profit hospitals than in not-for-profit ones. All the hospitals were privately run but got their payments from a variety of sources -- government, insurers and consumers. In Canada, almost all hospitals are private, not-for-profit institutions operated by regional health authorities, community groups and religious organizations. But virtually the entirety of funding for care comes from government under the single-payer system.
In a commentary also published in today's edition of the CMAJ, Steffie Woolhandler, a Harvard Medical School researcher who has written extensively about the Canadian health system, argues that the new study provides more compelling evidence that Canada should retain its approach of publicly funded health-care delivered by not-for-profit institutions. She urged politicians and the public alike to resist the entreaties of private-sector entrepreneurs.
"Some aspects of life are too precious, intimate or corruptible to entrust to the market," Dr. Woolhandler writes. "The for-profit barbarians are at the gates."
Proponents of for-profit health care argue that the profit motive, and the discipline the free market imposes, optimizes care and minimizes costs.
"That dogma has no clothes," Dr. Woolhandler said. Rather, she said, research has shown that for-profit care is consistently more expensive due to higher administrative costs, executive bonuses and profit-taking, and outcomes are worse because corners are cut.
Dr. Devereaux said earlier research conducted by his team demonstrates clearly that for-profit hospitals do not provide better care. An analysis of 38 million patient records in the U.S. showed that those treated in for-profit hospitals had a mortality rate that was 8 per cent higher than those treated in not-for-profit hospitals.
Dr. Devereaux calculated that at least 2,200 more Canadians would die needlessly each year if the country's hospitals were privatized.
Another study done by the McMaster team found that patients treated in investor-owned dialysis facilities had an 8-per-cent higher death rate than those treated in not-for-profit clinics. That research suggested that if Canada were to privatize its dialysis clinics, an additional 150 patients would die each year.
"Investor-owned, for-profit facilities are the cigarettes of the health-care system," Dr. Devereaux said. "They may seem cool at first but no matter how you look at them, they're bad for you and they cost way too much."
According to the researcher, the "likely explanation" for the higher costs and poorer outcomes in for-profit facilities is the "necessity to generate revenues to satisfy investors."
Citing the research of others, Dr. Devereaux said that, in for-profit hospitals, administrative costs are about 6-per-cent higher, executive bonuses are 20-per-cent greater, and less money is spent on nursing.
If anything, the new study underestimates the higher cost of services in for-profit facilities, Dr. Devereaux said. That is because the analysis could not capture "upcoding" -- the practice of giving patients more pessimistic diagnoses to maximize the fees being charged, i.e. treating a patient for "suspected angina" instead of "chest pains."
The analysis does not account for fraud, he said, such as billing for services not provided and performing unnecessary surgery. Such practices have spawned a number of lawsuits in the U.S., almost all of them against for-profit facilities.
The new research is a meta-analysis, a compilation of eight large studies. The knock against this kind of research, no matter how well it is done, is that there could be confounding factors -- in this case reasons that costs are higher in for-profit facilities other than the quest for profits. For example, for-profit facilities might have more complex cases, provide superior care, or have higher overhead because their facilities or health professionals are superior.
