An economic analysis of public versus private provision of health services in Ireland

Governments everywhere are under pressure to deliver service to the community in a situation where the expectation of the population is growing and the public finances are static or falling. To address this problem many regimes seek to increase their financial base by encouraging the private sector to become involved in areas of service delivery which had previously been the preserve of the public sector. The advent of the Private Finance Initiative in the United Kingdom in the early 1990s, which morphed into the Public Private Partnership, was one method of selling to the public the idea of private involvement in public service delivery. Many believed this was a positive development. Others thought this was the private sector putting its hand into the public purse with no other motive than to enrich itself. This thesis asks: Does it matter who owns the means of delivery? The most efficient method of delivery is surely the one which costs the taxpayer the least and conveys the best product to the public in terms of quality. Delivery of health services is not simple. Indeed to speak of a ‘health service’ as one homogeneous product is to misunderstand the nature of the service. It is a range of services delivered to a range of people in a range of different settings, some of which are appropriate and some of which are not. Each individual service to each individual patient is a unique transaction. Countries such as the United Kingdom, Sweden and New Zealand have all made efforts to dramatically change the public service delivery of health care. Most have found changes to be problematic and some have returned to the public service model. In this thesis we test the issue of ownership in cases where the comparison can be made and look at the occasions where attempts were made to introduce the private sector into the public delivery of health, and assess whether or not the experiments were for the good or to the detriment of the stakeholders in the Irish context. We look first at the international situation to put the subject in context. Then we lay out our theoretical framework. We contemplate the infusion of private sector involvement in public service delivery. This is followed by our cases of comparison between the public and private sectors. Today Ireland’s spending on health as a percentage of Gross Domestic Product is such that we could expect a world class service. Our findings suggest that a cautious approach should be taken by policy makers but the expectation of the public and the diminishing nature of public finances means that innovative, tailored and sector specific solutions to the many difficulties in the services will need to be crafted. This thesis is a unique examination of the public and private delivery of health care in Ireland and contributes the first analysis of the current situation