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 Home News General
Public Private Partnerships in health not the answer16 November 2004Using private companies to build and run government-funded health facilities will not necessarily save money or produce improved services, new research has found. In fact, the exact opposite may be the case with plenty of examples of new facilities being built and run by the private sector turning into financial disasters. The research, commissioned by the HSU, was undertaken by two economics consultants Paul Fitzgerald and Graham Larcombe and published in the Evatt Foundation's book, The State of the States 2004. The two examined the costs and benefits of Public Private Partnerships (PPPs) which involve government's allowing the private sector to build and run new infrastructure projects such as tollways, schools or hospitals. The NSW Government is looking at using PPPs in health with the redevelopment of the Mater Hospital in Newcastle and a redevelopment of health services at Long Bay Jail in Sydney the first two projects identified. The research authors found the use of PPPs in health had not been a success either in Australia or the UK. One local example was the La Trobe Valley Hospital which had to be surrended back to the Victorian Government in 2001 following the acceptance by the operating consortium that their claims to be able to run a regional hospital less expensively proved false. The researchers found that in the UK there had been a myriad of problems with PPPs in health with new hospitals constructed badly, equipment failures, leaking sewage, unusable rooms and no air conditioning. Assertions put forward to support the use of PPPs such as improved services, tax benefits and extra funding for governments to spend in other areas were all questioned by the authors. "The uncritical adoption of public-private partnerships without an assessment of relative cost, risk management and impact on service quality can lead to increased costs with little short or long term advantage to the initiating government, health services, consumers and their communities," they wrote. HSU national secretary Craig Thomson has welcomed the research saying that there was a great danger of governments using PPPs without knowing the pitfalls. "This is further evidence that the case has not been made out that PPPs will provide the answer to the problem of rebuilding and expanding our health facilities," he said. "In fact it is pretty clear that it can cost the government substantially more to have the private sector build a new facility rather than fund it themselves. "You only have to looked back at the bungled privatisation of the Port Macquarie Hospital in NSW. The state's Auditor General in 1996 said the contract the government entered into was the equivalent of "paying for the hospital twice and then giving it away. "There are also serious ramifications for service delivery if people providing services in a hospital setting are trying to make a profit. "We have seen in the United Kingdom serious problems with private sector companies trying to cut corners in cleaning and hygiene with disastrous results. "This research shows there needs to be a hard-headed assessment of other options of funding new projects including tapping the billions of Australia's superannuation funds, pooled development funds or savings bonds." Download File: |
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© 2003 Health Services Union (HSU) |
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