Can you ever really rely on a public payor?

“If you build it, they will come”: This appears to be the mantra of some of the firms vying for business from public payors, but is it always a sensible approach?

On paper, the argument makes sense; public provider capacity can be limited, waiting times high (and over statutory targets), and capital hard to come by for large-ticket items like machinery. What right-minded public payor wouldn’t take a cheaper option to at least supplement over-subscribed services if it proved to be at least as effective?

In practice, many choose not to. Sometimes the public payor isn’t interested, either because of the governing party’s political persuasion, and/or its fear of a critical electorate reluctant to accept the encroachment of private providers in what it thinks requires public provenance. Sometimes the public payor sends those patients elsewhere – including abroad. And sometimes, change just takes time.

Take UK-based Proton Partners, which we write about this week. While the company has a “symbiotic relationship”, it says, with NHS Wales and is largely reliant on private pay patients, it has publicly stated the NHS has fallen well short of its proton beam treatment targets – the implication being it stands ready and willing to take them.

Meanwhile, in Poland, many operators whose business model was predicated on public purse payments are feeling the pinch. Public healthcare reform is in full swing, and private hospitals not on the list of the Polish government’s network of approved providers have suffered. Coronary specialist American Heart of Poland found itself left off the list. In 2017 it shut centres in Gdańsk, Myszków and Starachowice.

And in Spain, PPP specialist Ribera Salud has increasingly been targeting expansion aboard, especially CEE but also Colombia, to fend off the loss of its public contracts as a left-wing government cracked down on outsourcing to private providers and Ribera’s so-called Alzira model.

Of course, there are certain systems where private providers are so entrenched with public payors that to un-entwine them would be impossible – take UK dentistry or elderly care provision, for example – though even in those cases, tariffs can be cut even if a withdrawal of funding appears impossible.

But the only real defence against the public purse strings being pulled would seem to be diversification; there is no legislating for the whims of the legislators.

We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.