No. 08: Private Care and Public Waiting

August 2008

Background

One of the major justifications used for expanding private funding for health care is that expanded private sector activity reduces public waiting times.  Australia has chosen a number of strategies to promote private health insurance under the pretext that this will “take the load off the public system.”  However, England has shown that regions with higher levels of private insurance have longer waiting lists.

Objectives

To examine the interaction between the level of private activity and waiting times for public health care in Australia, testing the hypothesis that an increased proportion of care being provided by the private sector is associated with reduced public sector waiting times.

Methods

Using data from the Australian Institute of Health and Welfare publication on Australian Hospital Statistics, waiting times in 2001-02 were analyzed for 15 procedures, such as cataract surgery, cholecystectomy, joint replacement and coronary artery by-pass.  This was linked to separations (discharge, deaths, transfers) from all hospitals by DRG to calculate the public patient separation rate from public hospitals, as a proportion of total separations in a DRG, and all public separations, including public separations from private hospitals.  Separate analyses were performed in the two largest States and for the three most frequently performed procedures, together accounting for 50% of procedures in the data set, to verify that the rates were not skewed by smaller States or procedures with aberrant observations.

Results

Data from six States and 15 procedures provided observations of the interaction between waiting times for procedures and the extent of public activity.  Larger proportions of patients being separated from public hospitals were associated with shorter waiting times, the reverse trend from the hypothesis that increased private sector activity is associated with reduced waiting times for public care.  Multivariate analysis confirms these findings.  Between 31 and 44% of the variation between States and procedures in waiting times was explained by the model.  Waiting times declined with increasing proportions of public activity.  For example, with a 1% increase in public patient proportion, there was an associated reduction of 46 days in median waiting time.

Limitations

One limitation of this study is that the waiting time data are reported on the basis of indicator procedures, whilst the activity data is on the basis of DRGs and the mapping process between the two may have introduced errors.  Moreover, the analysis is of aggregate data at the State and Territorial level by procedure, which may expose the study to the “ecological fallacy” that aggregations disguise considerable within-group variation.  Finer aggregation of the data, such as intra-State, regional data and more detailed procedural groupings were not performed.

Conclusion

As with similar work done in England, this paper does not confirm the rhetoric of private insurance in reducing public waiting times.  The notion is not borne out that there is a “trickle down” benefit coming from more private activity offering favorable advantages to public sector.

Relevance

Policy makers should be cautious about assuming that additional support for the private sector will take pressure off the public sector and reduce waiting times for patients.

Private Care and Public Waiting. Duckett, S.J. Australian Health Review. 29(1):87-93, 2005.

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