The rise of corporatisation in New Zealand's healthcare system is a pressing issue that demands attention. As private equity corporations increasingly dominate the sector, the implications for access and quality of care are profound. This article delves into the complex landscape of healthcare ownership, highlighting the risks and benefits of corporatisation and the need for informed policy decisions.
The Growing Role of Private Equity
The healthcare sector is witnessing a significant shift towards private equity ownership. An estimated quarter of general practices are now under the control of large corporates, with Tāmaki Health and Green Cross Health being notable examples. Community laboratory testing is also heavily dominated by private services, with one corporate, Awanui, accounting for three-quarters of community testing. Furthermore, approximately one-fifth of dental services are owned by corporates.
The acquisition of health services by private equity corporations is often financed through debt, leading to a short-term focus on profit maximisation. This approach frequently involves cost-cutting measures, such as reduced staffing, increased prices, and the aggregation of market power. As a result, the quality of patient care may suffer, and health professionals may face reduced autonomy and transparency.
Ownership Models and Their Implications
New Zealand's healthcare system employs four main ownership models: public, private for-profit, private non-profit, and iwi/Māori ownership. While the distinctions between these models can be theoretical, they hold significant practical differences. Public hospitals, for instance, have a strong track record of serving families with high health needs, regardless of their financial means.
The key distinction lies between locally-owned private for-profit providers and private equity-owned corporates. The former are deeply embedded in their communities and have long-term relationships, whereas the latter are primarily driven by the goal of returning dividends to shareholders. This difference in focus can lead to varying levels of commitment to the community.
Risks and Benefits of Corporatisation
The acquisition of health services by private equity corporations often involves a rapid revenue growth strategy. This strategy typically includes cost-cutting measures, such as reduced staffing, increased prices, and the avoidance of unprofitable services. The international evidence suggests that private equity ownership can lead to negative outcomes, including cost-cutting, unnecessary profit-generating procedures, worse health outcomes, fewer highly qualified staff, high staff turnover, preference for low-risk patients, service closures, loss of autonomy for health professionals, and reduced transparency and public accountability.
Policy Silence and Its Consequences
New Zealand's policy silence regarding the regulation of corporate ownership in healthcare is a significant gap in policy-making. The country's approach to sensitive land assets ownership is more discriminating, with specific tests for overseas private equity investors. In contrast, the Overseas Investment Office lacks a comprehensive test for healthcare services, allowing international private equity interests to purchase and run local businesses with less scrutiny than buying a residential home.
The lack of policy guidance on healthcare ownership ownership matters for both users and payers of healthcare services. It represents a missed opportunity to address the sustainable and accountable future of the public health system. A wide and informed debate is necessary to explore the implications of corporate ownership and shape a healthcare system that prioritises access and quality for all.
Conclusion
The corporatisation of healthcare in New Zealand is a complex issue with far-reaching consequences. As private equity corporations gain more control, the potential risks to access and quality of care become increasingly apparent. Addressing this issue requires a comprehensive policy approach, informed by evidence and public discourse, to ensure a sustainable and equitable healthcare system for the nation.
