30 August 2022, revised 6 February 2025
Health systems around the world can fall anywhere on a spectrum from what was once the totally public system of the UK’s NHS to the essentially fully privatized system of the United States. We in New Zealand fall somewhere in between.
In analyzing the performance of a health system one needs to carefully decide on the metrics to use. These may include, the number doctors per capita, nurses (workforce) and hospital beds per capita, the average life expectancy of the population, the availability of medical equipment and instrumentation, waiting times for medical procedures and healthcare spending as a percentage of GDP. Many agencies perform these types of analyses and we don’t exactly get a top ranking.
Let’s start by looking at the relationship between two of the mentioned metrics, the healthcare spending as a percentage of GDP and average life expectancy of the population (Figure 1).
In terms of this metric the United States of America is a clear standout, and not in a good way. The US spends almost three times what we and the UK spend per capita and have significantly inferior outcomes.
Within the group of countries that spend between $2,000 and $6,000 per capita there is no clear correlation between what is spent and life expectancy. Although average life expectancy is a fairly blunt indicator, no matter how you cut it, the US is a poor performer both economically and in terms of average outcomes. One might conclude therefore that if private is better, the US should not be sitting way out at right field.
The data of Figure 1 in fact argues that privatization is a very bad thing! There is little doubt that the US has the best technology and is highly innovative as far as medical research is concerned. However, for the average Joe Blow this is all pretty irrelevant. The inequities in their system are such that if you have the money you get the best treatment in the world, but if you don’t, you are effectively doomed. In a system where the level of care you get depends on your ability to afford insurance, thirty five million Americans are either un-insured or under-insured. Then if you do managed to be insured you are still left to deal with things like co-pays and deductibles and other forms of artifice that insurance companies have conjured up to ensure the patient gets screwed and share-holders get richer. This is hardly what I called civilized.
A quick look at healthcare spending over time (Figure 2) for a selection of nations shows that in 1970 the US spent roughly what other comparably wealthy countries spent in terms of % GDP; about 5-6%. However, US healthcare costs have burgeoned over time, and have reached a whopping 20% of GDP. These costs have increased linearly over time and the curve shows no signs of bending. If privatization really does make for economic efficiency as the mantra goes, then why has the curve not bent? I could easily argue therefore that privatization does nothing to slow cost escalation, rather it is driver of costs.
Also evident in Figure 2 is that US healthcare costs are diverging from those of the other countries shown i.e. increasing at a faster rate. In NZ our costs have increased from about 5% of GDP in 1970 to about 8% of GDP now. A relatively modest increase over half a century, although we are clearly not bending the curve either.
At the moment in our country about 35% of our population has private health insurance. So by definition we have a two-tier system of haves and have nots. No one can logically argue that we have equity in health. If you have health insurance then presumably you get a prompt and premium service, while those who don’t, get the waiting list.
My question is, in terms of the private-public split, in which direction are we heading? Are we in fact slowly heading down the US road toward a more privatized system?
Figure 3 shows the relative proportions of private and public workforce in terms of percent FTE (Full Time Equivalents) for various health specialties for the current calendar year.
It can be seen from Figure 3 that certain components of our health system are highly privatized. For instance, Sports Medicine, General Practice, Muscoloskeletal Medicine and Urgent Care are highly privatized in terms of workforce.
Recently, I requested via the LGOIMA process all historical workforce data and received data only from June of 2020. It can be assumed therefore that the MoH does not have data going any further back. If this is so, then it is quite remarkable that we have kept such poor records of such a fundamental parameter.
We therefore have a huge data black hole. If you don’t have this sort of baseline data then how can you possibly make good health policy decisions? How can you even reform the system? Moreover, it would be impossible to tell in 10-20 years from now, whether the reforms resulted improvements. So who is held to account?
I have asked the MoH for a business case or other documents to substantiate the validity of the ideology that private results in economic efficiency and better outcomes. Nothing is ever produced.
Focusing on selected medical specialties such as Pathology and Musculoskeletal Medicine, the data (Figure 4a) shows that the percentage privatization of pathology in terms of Full Time Equivalents (FTE) has gone from 16.8% in June of 2020 to 22% up to the present. In other words an increase of 31% in a little under two years. If that rate of privatization continues then all of pathology will be privatized in just a few years. Over the same time period, Muskuloskeletal Medicine has increased 18% (Figure 4b), Radiation Oncology has gone up 23% and Diagnostic Interventional Radiology has increase by 6% in less than two years.
This data makes it very clear that over even a very short time period certain medical specialties have become increasingly privatized.
Workforce data aside, it has been reported that 75% of pathology is in the hands of private companies. Although it is difficult to reconcile this number with the workforce data shown in Figure 4, it is impossible to concluded anything other than the privatization of our health system is on a rampage.
On the basis of the limited amount of data that the MoH was able to make available to me, there appears to be a strong evidentiary case for the increased privatization of our health systems.
How you conduct a proper evidentiary case for reform of such a complex system with such poor data is beyond me.
Since 35% of New Zealanders have private health insurance we clearly already have a class-based healthcare system which is clearly heading down the road to greater privatization. The system is by definition inequitable. The new health reforms are now going to add a race-based element by separating the system into a Maori Health and everyone else.
Workforce data over the period 2020-2023 was requested from the MoH through the OIA process. The earliest records available date back to only 2020 which happens to be the start of the COVID-19 pandemic.
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