This is the third in the train on the triple crises of market failure in the private health and hospital sector. The post on Crisis 1 detailed the unprecedented financial and liquidity problems facing the private health sectors and services. The normal private hospital (and clinic) service and business model is completely disrupted, and uncertainties as to the duration of the pandemic are adding to the global credit crunch. As detailed previously, the impacts on smaller providers have been particularly acute, with larger operators having more fiscal space and capital to weather the storm. Nonetheless, mass lay-off of staff and partial and total suspension of services have been apparent in hospitals of all sizes where government intervention has not been apparent or insufficient.
I want to focus on the two resulting crises still unfolding. The focus here concerns a crisis in service provision and pricing that is also precipitating emerging crisis of health governance and state-firm relations (covered in the fourth of these posts in coming days). The latter crisis revolves around both the short-term efforts to involve the private sector in the pandemic response at the same time as escalating debate about the failure of the market model in this pandemic, and, significantly, regarding its legitimacy and validity as a part of national health systems in the future. Although this all presently a chaotic space, it is increasingly clear that the public-private partnership model and the private sector are being challenged in terms of their place in health systems and population coverage. The failures apparent in the crisis of liquidity and service provision are generating a great deal of unease amongst multilateral institutions and state authorities, as well as amplifying familiar civil society and academic criticisms of the selective and market-based system of delivering health, all as we ostensibly head toward UHC.
It is too early to be definite about what will be the long-term policy consequences of COVID for private health and hospitals, but the triple crises all signal potentially major changes in the future orientation of national health systems and health policy and financing after the pandemic recedes. It is very much the case that here is presently a great deal of urgent positioning and framing of public-private model being offered by institutions and commentators, and the fourth contribution to this threat concludes with some reflections on what this all means for global health governance and health systems.
Crisis 2: Service provision and pricing
Here I will be giving focus only to the multiple instances of bad practice by the private hospital sector and tensions with national pandemic responses and needs. This is perhaps a skewed and somewhat biased limitation as there are clearly national systems which are heavily reliant on private tertiary care that are experiencing continuity and cooperation by the private hospitals during the pandemic, albeit with these success stories still being dependent on regulatory and financial intervention by states. For example, many European countries have successfully integrated private hospitals into their pandemic response. But there are too many instances of service market failure to ignore, and these are after all deeply problematic in terms of public health responses to a viral crisis where peoples’ health is at stake in terms of access to hospital treatment. There is evidence of the private sector operating in tension with public health goals and national pandemic responses to varying degrees.
This is playing out in terms of withdrawal of services and refusal to admit COVID presentations, the filtering of patients based on the ability to pay, gouging on price, and brinksmanship on price per patient to be paid by governments dependent on access to private hospital beds. Evasion of emergency pandemic regulations by firms and gaming new requirements on pricing and bed availability are also transpiring, with this requiring government authorities to intervene and sequestrate beds, threaten providers with legal sanction, or cap prices being charged. That fact that all such interventions are being widely required in many LMICs testifies to the difficulties of suddenly integrating private providers into national systems and planning to meet the pandemic, especially in instances where private care has only been loosely regulated to date. The unpalatable realities of having a parallel and often preponderant system of tertiary care have suddenly become exposed.
Alongside this, most LMIC governments and many mixed systems need the private sector to function and stay afloat during the pandemic. The maths and logic of this dependence are simple. If private providers represent between 40-80% of total national in-patient services and bed capacity, and these capacities are evidently essential for care of most acute cases of COVID when the public hospital system is full, then the private sector is clearly vital to pandemic response. However, in some national contexts the private sector has made clear it has its own agenda for operations during the pandemic and that its involvement in many national COVID responses is conditional and subject to price and business models.
For the larger operators there is wriggle room to operate and charge as they want in the absence of state intervention, or for negotiating with governments on price for their services where additional capacity is seen as imperative. Their assets and capacities give them negotiating space and leverage.
Private sector positions are making national pandemic responses difficult to coordinate in some countries, this adding to the uncertainties in such responses created by the widespread ‘informational black-hole’ regarding true private sector capacities and resources detailed in the first of these posts. Taken together, their immediate practices in the pandemic are combining with longer-term separation from the public system to create huge problems for public health. The public-private partnership model is being exposed as access to private hospital and other sector capacities has proven challenging and more costly than if provided publicly. We should expect such friction and additional costs from the for-profit providers as public health is not what they are about.
This has all crystallised around the crisis in services provision in many LMICs:
Failure to admit and withholding beds
There have been a number of examples where private hospitals and care facilities have refused to admit and treat COVID patients. Even when commitments to preserve proportions of private hospital bed capacity have been secured, firms have gamed the system, and have done so even in the presence of state or judicial insistence that they should not do so. India has been particularly plagued by private hospitals refusing treatment as the public hospital systems in many states have been overrun. Patients have died, sometimes outside hospital doors, after failing to gain admission to multiple hospitals in Delhi, Bengal, Karnataka, Punjab, and many other states. The examples are too numerous to cite, but the refusal to admit patients in India has led to legal action and threats of suspension of hospital licenses in many Indian states. Legal sanction has in some instances been ignored, with refusal to admit and treat COVID patients still very much being reported across India in mid-July. There appear to be a form of patient pass the parcel occuring in cities, with hospitals holding beds and redirecting frantic patients, often circulating many hospitals on taxis or on foot. media images are replete with the less well off lying outside hospitals, to exhausted and sick to continue their search for admission.
India is not alone in experiencing this distasteful and unethical practice of refusing admission and treatment, although the weak and fragmented regulatory landscape of Indian private health has meant it seems to be more systemic and systematic a private sector response in that country. It sadly appears commonplace across multiple LMICs. Initial research has found examples of refusals in Bangladesh, Oman, Iran, Brazil, the Philippines, Egypt, South Africa, and Pakistan. But LMICs are not alone here, and we have found examples of private hospitals not admitting COVID patients in Japan, the UK, and in the USA (in New York State, for example, refusal to treat was mainly by means of patient dumping by hospitals back into nursing homes). This certainly seems to have been a common practice by the big private hospitals in NY state during the height of the outbreak there in March and April, with high standards of admission criteria being used to refuse COVID patients, meaning many empty beds and capacity unused, with those needing treatment consequently dying at home. This is clearly not good healthcare nor good public health, but a business model in practice.
The reasons for the withdrawal of private hospital service capacity involve a cascading series of drivers. The first and most publicly stated is perhaps the most understandable, this relating to the real fear of infection of staff and cross-infection of other patients. Staff in hospitals in California and India have refused to treat COVID patients for these reasons, often stemming from the often complete absence of PPE that has plagued health and care systems of many countries since the pandemic began. The real fears of workforce and patient infection surely combine with resulting in government enforced hospital closures for deep cleaning, providing an obvious motivation for keeping COVID patients out in many countries, particularly in smaller clinics and hospitals that are unable to separate infected patients from other admissions. Added to this, there are national systems in which there have been huge general attrition of the health workforce from COVID, as is the case in Iran, and refusal to admit more infected patients could naturally reflect efforts to protect staff and preserve workforce capacities. In India, many health professionals have deliberately staid away from clinics and hospitals therefore forcing their temporary shutdown, as they did in the aged care homes of France, Italy and Spain.
Second, non-admission of COVID cases is also being determined by the inability of some patients to pay up-front deposits (see below on this), or from being generally unable to pay the rates for treatment being demanded. Pricing and payment for treatment are acting both to deter patient presentation, and towards hospitals refusing admission. The triaging of patients according to income and ability to pay seems particularly rampant in India (or at least it has been much reported on at least in that country), but there are a large number of cited cases of lack of insurance and money deterring patient presentations in the USA and Brazil, leaving many to die of COVID at home. Refusal to treat can also be codified into standard operating procedures and schedules of admission conditions, raising the medical bar for admission. The end result is much the same. The infected return home, and unlike systems such as China that accepted COVID cases for care quickly and routinely, many more are dying than should be the case.
In India, for example, there is present focus the national press and social media on some private provides patient shopping and creating a black market for hospital beds, offering priority admissions to those with money to pay up-front deposits or higher rates for treatment. Though this is clearly an extreme example of the complete marketisation of COVID treatment, the black market bed phenomenon indicates that private hospitals are exercising more routine forms of financial selection of patients, particularly those being directed to them from overflowing public hospitals. No patient with means would seek treatment in an Indian public hospital as a first point of call. To combat patient refusal and withholding of beds many Indian states have sought to reserve percentages of bed capacity in private hospitals for COVID patients from the general population. There are multiple reports of evasion and gaming by providers. Larger hospitals appear to be holding back beds for those who can pay.
Third, apparent delays in insurers and governments reimbursing private hospitals in many national systems is colliding with uncertainties of the cost of individual patient COVID treatment, as well as the additional costs of treatment of all patients arising from infection control, PPE, oxygen, and so on. Hospitals are naturally reluctant to take patients who cannot afford co-payment for add-ons not covered in insurance schedules, or to treat patients that might incur high costs to the provider with settlement being uncertain. In India and Kenya there are examples of insurers and insurance bodies capping the amount they are prepared pay for patients being treated in private hospitals and pushing back on the many add-ons being billed.. Added to this, there also seems to be an unwillingness to imperil other services being offered by hospitals because of possible cross-infection, leading to yet further losses from electives and routine procedures having to be cancelled. Beds are being hidden and patients refused.
This is all a brutal storm of marketised arrangements collapsing around patients.
Finally, while private hospitals may have beds, this does not mean that all private hospitals and clinics infrastructure, staff specialisations, training or service model to equip them to deal an acute case of respiratory virus. Smaller hospitals, or those very specialised in what they offer (such as plastic surgery), are simply not going to have service models, or workforce or physical infrastructure that would be able to manage acute cases. However, larger hospitals in the private sector mostly have ICU capacity, generally make a great deal of money from this type of admission, and there is no real excuse here for refusing COVID treatment when beds are empty. Nonetheless, the withholding of beds is routine and ingrained in the business models of private providers, and this has become acute and more visible in the pandemic.
 See for example: https://www.livemint.com/news/india/bengaluru-pvt-hospitals-will-face-criminal-case-for-refusing-covid-19-patients-minister-11593951406500.html; https://www.devdiscourse.com/article/law-order/1118613-strict-action-against-private-hospitals-for-refusing-to-treat-covid-19-patients-ktaka-minister; https://www.business-standard.com/article/pti-stories/punjab-govt-mulls-action-against-pvt-hospitals-refusing-to-treat-covid-19-patients-120040601578_1.html
 https://www.mirror.co.uk/news/uk-news/private-hospital-nurses-ppe-concerns-21871427; https://www.nydailynews.com/coronavirus/ny-california-hospital-reinstates-nurses-who-refused-coronavirus-care-20200423-qkbtqsp53fd5lkrd5t3itwctza-story.html