Private health — it works for Sweden

Commentary, Healthcare & Welfare, David Gratzer

Ontario Premier Mike Harris is a lonely man.

Private hospitals? Contracting out of health services? Last week, Mr. Harris flirted with the unthinkable: “If we’re going to have a universal system, we should not be afraid to say, ‘Can the private sector run this hospital better? Can they provide this service better? If they can, why should we fear that?’ ”

The reaction was sharp. It’s Americanization. It’s a violation of the Canada Health Act. It’s irrational.

In fact, not a single expert had kind words for the Premier. Reaction ranged from indignation to blunt accusation.

The criticism has been so strong that Roy Romanow came to Mr. Harris’s defence. Romanow, the former Saskatchewan premier who is heading the federal commission reviewing medicare, explained that Mr. Harris’s ideas would be considered in his survey. Though, for the record, Romanow plans to consider much of everything.

But if no one is willing to publicly endorse his ideas, Mr. Harris can take heart in the quiet approval of Johan Hjertqvist.

In truth, Mr. Hjertqvist hasn’t exactly endorsed Mr. Harris’s comments. He probably doesn’t even know who Mike Harris is. But as a member of Stockholm’s regional health board, Mr. Hjertqvist knows a thing or two about contracting out.

Faced with long waiting lists for care, Stockholm decided to experiment with public funding for private services in the early 1990s. And so, the largest health council in the most socialist of Western European nations began contracting out.

Costs for lab and X-ray services fell by nearly 50%. The health board didn’t stop with diagnostic tests: It privatized home care, ambulance service, nursing homes and hospitals. St. George’s Hospital in Stockholm is run by a company — a move that reduced costs by 30%.

How effective have these reforms been? Compare waiting times between Stockholm and other areas of Sweden. Heart surgery patients, for example, wait two weeks in the capital — and 15 to 25 weeks elsewhere. Hip replacements typically take three to 10 weeks in Stockholm, but about a year in other parts of the country.

Last fall, Mr. Hjertqvist gave a series of lectures in Canada, organized by the Montreal Economic Institute and the Frontier Centre for Public Policy. I asked him about the Canadian reluctance to consider private delivery. “It sounds a lot like the 1980s,” he told me — a reference to rigid Swedish thinking in that decade. Since then, Stockholm has become a laboratory of public-private experimentation. (Hjertqvist’s speech in Winnipeg can be found at

In terms of privatization, Sweden isn’t alone. Consider developments in Britain’s National Health Service (on which Canada’s medicare was modelled). For years, the NHS relied on private clinics and private hospitals when waiting lists grew too long in the public system. Tens of thousands of NHS patients have been treated by private providers, even for complicated surgeries such as heart bypasses.

But public-private partnerships have greatly increased in the last decade. For a Canadian, the list is surprising. The new wing of the NHS’ University College Hospital is being built entirely by the private sector, then leased back to the government. Similar arrangements have been made for the Norfolk and Norwich Hospitals. The NHS is in the planning stages of new fast-track surgery centres — to be built and run entirely by the private sector.

Most of the dialysis in Britain is run by Baxter Healthcare, a private company. Pathology labs, too, are contracted out. And many communities are looking to private providers. The County Council of Berkshire just signed a contract with BUPA to operate the majority of residential homes in the district.

All this is happening under Tony Blair’s Labour government. Are the Blairites dismayed by the increased role of private medicine within the public system? Actually, the opposite is true. The Independent Healthcare Association — the umbrella group for private providers in Britain — recently signed a concordat with Mr. Blair’s government. The Financial Times called the concordat one of the most important documents in the 50-year history of the National Health Service. Titled For the Benefit of Patients, it enables NHS-funded patients who need intensive care or elective surgery to receive them in independent sector hospitals.

The agreement begins with the historic words: “There should be no organizational or ideological barriers to the delivery of high quality healthcare free at the point of delivery to those who need it.” It goes on to announce a “commitment toward planning the use of private and voluntary health care providers, not only at times of pressure but also on a more proactive longer term basis where this offers demonstrable value for money and high standards for patients.”

Why is a Labour government keen on public-private partnerships? For one thing, it makes fiscal sense. The Adam Smith Institute estimates that contracting out reduces costs by about 20%.

Across Europe, many countries are looking to the private sector. In Germany, for example, the government is pushing to privatize 90% of public hospitals.

If privatization is so common on the other side of the Atlantic, why the fuss? Unfortunately in Canada, health care policy is dominated by a small group of health economists and policy analysts. They believe in more money and more government management.

For much of the past few years, Ontario has followed that blueprint. Health spending shot up nearly 20% in just two years (the Tories campaigned on a 20% increase over five years). The Ministry of Health has launched a seemingly endless list of expensive, feel-good initiatives. The government has announced — then re-announced, and then announced again its unwavering commitment to primary care reform. It has pushed “team-based” family medicine harder than any other province, going so far as to launch a voluntary program. And yet, the emergency rooms continue to overcrowd; waiting lists grow; public angst continues.

This week, Mike Harris signalled the private sector may help solve the growing problems with our medicare. It’s a small step — but an important one. Call it the Swedenization of Canadian health care.

David Gratzer, a Toronto physician, is the author of Code Blue: Reviving Canada’s Health Care System.