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Private vs. Public Sector

By Jordan Harmon Moderator | 06 Nov, 2013

In a recent article published last Friday, Joshua Holland writes about how the private sector is driving up healthcare costs because of three main aspects:
1. Competition- which he says drives up costs as apposed to government regulation in other countries, which lowers costs
2. Viewing Healthcare as a Commodity- setting prices is left up to the providers and the market, which he says leads to higher costs
3. Private companies drive up costs and trap consumers in jobs they don't prefer because of the risk of loosing health insurance

Although Josh makes some very good points, his article eludes to the fact that governmental healthcare is the solution. In many countries where the federal government controls the healthcare system, there are problems with patient access, receiving the latest medical technologies, and challenges with the medical education system that we don't have in the United States.

So, what are your thoughts? Will a governmental system work better than the private sector? Read Josh's article and let me know your thoughts.

Attached resource:



Elizabeth Glaser Replied at 3:15 PM, 6 Nov 2013

It maybe true that in other systems there are problems with patient access, medical technology, and the medical education system, however most of the citizens of these countries have consistently better health outcomes and lower per capita costs for care.
If governmental healthcare is so bad then why are their outcomes consistently better than ours?

A/Prof. Terry HANNAN Replied at 3:27 PM, 6 Nov 2013

Elizabeth, I am not sure they are better. There is increasing evidence that our current measures-non clinic data such as Case-Mix, DRGs and Activity Based Funding-are NOT good measures of health care. In fact there is evidence that they may be inflationary to health care because of their costing models. Clinical data are the best measuring tools and this is generated through clinical decsion making.
See LDS Utah for early DRG work and J. Wennberg for more recent evidence. See W. Tierney for clinical data and resource utilisation. Terry

Ann Stanton Replied at 1:13 AM, 7 Nov 2013

Hello all,

I am excited to contribute to this discussion. I am a PhD in Nursing student and, for myself, it seems that the answer to a healthy health care system is balance. The U.S. can undoubtedly draw on the strengths of those systems.

In regards to the article, one common positive aspect is that citizens covered under National Health System and National Health Insurance plans do not generally experience medical bankruptcy. Still, these nations experience their own issues.

Taiwan's system, although all citizens are covered and it uses very efficient "smartcard" technology, has had to borrow money to remain sustainable. The Japanese have compulsory insurance offered via various routes but if providers profit, their fee schedule is reduced upon the next negotiation. As a result, many Japanese hospitals experience significant operating deficits. On a positive note, the frequent and aggressive fee negotiations between Japanese providers and the government have actually spurred changes in the way medical technologies are made, resulting in cheaper MRI and CT equipment from which the entire world has benefited.

One great strength of the U.S. system is that it has inspired innovation and efficiency to a greater extent than nations with public systems. The U.K. has issues with this because the NHS simply pays what it is billed based on the schedule and, although it offers incentives for GPs to keep patients healthy, it has done little to encourage changes that decrease costs.

The Japanese have the longest life expectancy and lowest infant mortality rates and spend only 8% of GDP on health care. Still, lifestyle factors that operate independently of the health care system must be considered. Insured Americans are just as healthy as Canadians based on many indicators. However, the gaps in such indicators between insured Americans/all Canadians and their impoverished American counterparts appear significant.

Like you said Terry, comparable outcome data make all the difference. Since we know that there are multiple non-medical health determinants, it is important to compare outcome data that are affected by changes in the health system alone if that is what we are seeking to modify.
Quality data in the U.S. appears misleading to some extent due to the uninsured and underinsured seeking care much later in the disease process. Plus, the U.S. citizens are screened at higher rates for cancers, resulting in higher cancer diagnosis rates. This is significant in regards to screenings for cancers that would likely not affect mortality, such as that of the prostate. As we know, inappropriate screening can lead to inappropriate treatment that is more risky than the disease process itself. In regards to this discussion, this trend makes outcome data difficult to compare across nations.

Based on this and much more (see resources below), to me it seems that implementing health coverage for all Americans regardless of ability to pay will certainly not negatively impact outcomes. However, this is surely not a sustainable option if further price controls are not set on providers. If this is done in combination with incentives for encouraging prevention/health promotion, care coordination, patient outcomes, and system efficiency, providers will adjust and the system as a whole will move towards a healthier balance.

Let me know your thoughts.

Thank you,

Docteur & Berenson (2009). How does the quality of U.S. health care compare internationally? Urban Institute, Robert Wood Johnson Foundation.

Organisation for Economic Co-operation and Development. (2013). List of OECD member countries: Ratification of the convention on the OECD . Retrieved from

Physicians for a National Health Program. (2013). Health care systems: Four basic models. Retrieved from

Public Broadcasting Station. (Producer). (2008, April 15). Frontline: Sick Around the World [Web Video].

Rodwin. (2008) Chapter 6. Comparative analysis of health systems among wealthy nations. In Kovner and Knickman. Health Care Delivery in the United States. 9th Edition. pp.152-187

Sanmartin et al. (2006). Comparing Health and Health careā€¦Health Affairs, 25(4), 1133-1142.Starfield, B. (2000). Is US health really the best in the world? JAMA, 284(4), 483-485.

The Commonwealth Fund. (2010). International profiles of health care systems. 1417, Retrieved from Report/2010/Jun/1417_Squires_Intl_Profiles_622.pdf

Elizabeth Glaser Replied at 1:54 AM, 7 Nov 2013

Yes, I am aware of case mix, DRGs, Wennberg and the Dartmouth atlas, and
now bundling "episodes" of care. However, do you disagree with the methods
used in the IOM report: U.S. Health in International Perspective: Shorter
Lives, Poorer Health ?


A/Prof. Terry HANNAN Replied at 5:41 PM, 7 Nov 2013

Hi Elizabeth, I need to go and find this document. Also there are several studies demonstrating the improved measures of care using "clinical data" linked to CPOE and CDM over the measures adopted through these "bundling of episodes". One very early study was from GW Uni in DC back in the 1990s. Also Tierney studies in Regenstrief and Pestotnik in LDS Utah. I hope this helps. Terry
1. Tierney WM, Miller ME, Overhage JM, McDonald CJ. Physician inpatient order writing on microcomputer workstations. Effects on resource utilization. JAMA. 1993;269(3):379-83. Epub 1993/01/20.
2. Pestotnik SL, Classen DC, Evans RS, Burke JP. Implementing antibiotic practice guidelines through computer-assisted decision support: clinical and financial outcomes. Ann Intern Med. 1996;124(10):884-90. Epub 1996/05/15.
3. Tierney WM, Miller ME, McDonald CJ. The effect on test ordering of informing physicians of the charges for outpatient diagnostic tests. N Engl J Med. 1990;322(21):1499-504. Epub 1990/05/24.

Elizabeth Glaser Replied at 9:13 PM, 7 Nov 2013

Dear Terry,
We may be talking at cross purposes here, you are discussing the cause and I am speaking about outcomes. However, the IOM report is really worth your time to read to understand how poorly we are doing in comparison to other upper income countries, many with some form of nationalized health services.

U.S. Health in International Perspective: Shorter Lives, Poorer Health
Released: January 9, 2013
Here is a brief summary :
"The United States is among the wealthiest nations in the world, but it is far from the healthiest. For many years, Americans have been dying at younger ages than people in almost all other high-income countries. This health disadvantage prevails even though the U.S. spends far more per person on health care than any other nation. To gain a better understanding of this problem, the NIH asked the National Research Council and the IOM to investigate potential reasons for the U.S. health disadvantage and to assess its larger implications.

No single factor can fully explain the U.S. health disadvantage. It likely has multiple causes and involves some combination of inadequate health care, unhealthy behaviors, adverse economic and social conditions, and environmental factors, as well as public policies and social values that shape those conditions. Without action to reverse current trends, the health of Americans will probably continue to fall behind that of people in other high-income countries. The tragedy is not that the U.S. is losing a contest with other countries, but that Americans are dying and suffering from illness and injury at rates that are demonstrably unnecessary."

Attached resource:

A/Prof. Terry HANNAN Replied at 9:43 PM, 7 Nov 2013

Elizabeth, this is an enjoyable interaction. No I do not think we are talking at cross purposes. Your last paragraph says it all. I have a "belief" [hard to exactly substantiate at the moment in numbers] that the "other high-income countries are not doing all that well either. This is for all the reasons the USA-population is where it is at in terms of overall health. From my readings and direct day-to-day clinical experiences that we are not "measuring health care correctly" nor are we using the correct HIT to capture the data appropriately to measure then provide feedback corrective activities to improves care and health in general. For Australia (and I think elsewhere) there are political expediencies in using the current "bundling measures" that you allude to as measures of care delivery. This is essence they do not measure the "coal face" of clinical and preventative care. I stand to be corrected on these views which are based on working in e-health since the mid-1980s and may have developed "tunnel vision" :)! All in all please keep ths discussions going. I am learning. Thanks for the IOM link. Terry

Elizabeth Glaser Replied at 2:28 AM, 8 Nov 2013

I think that bundling misses the mark because it is primarily tied in to costs for typical kinds of care which may be inefficient and ineffective. If bundles were designed around use of recommended clinical pathways and cost-effective care then we might be able to change the whole picture. This would also give us a better sense of who is following current clinical recommendations and the cumulative cost of using those recommendations throughout the episode of care. From what I know of the research on bundling, clinical pathways have not been incorporated into the current work. If you know of such studies, I would be interested to hear about them.

Re outcomes and costs in the US vs other countries, I think we may have to agree to disagree.
( Health outcomes in some low and middle income countries are rapidly improving, too, albeit from external funding assistance)

A/Prof. Terry HANNAN Replied at 2:37 AM, 8 Nov 2013

Elizabeth, to undesand the complexity of what we are dealing with (you already know this) I am interested in the inner aspects of clinical recommendations and wonder about your thoughts on the Pestotnik article> Terry

This Community is Archived.

While this community is no longer active, we invite you to review and recommend past posts and resources. Membership for this community is closed, but we hope you'll join us in one of the many other communities on GHDonline.

Moderators of Costs of Care and GHDonline staff