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Sun 1 Apr 2007 02:33 PM

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The problem with privatisation

However much you tweak the balance sheets, many essential healthcare services just don't make money.

It's unlike Dubai to be the last on to a bandwagon, but last week's long-awaited announcement that the emirate's public hospitals will be farmed out to private management puts DoHMS in third place behind Saudi Arabia and Abu Dhabi, who have already started down the privatisation path.

As discussed in this slot last month, private care undoubtedly has many benefits for public purse strings. By forcing hospitals to become profitable (which means pricing their services at the going rate) we can expect a more competitive market, less pressure on government funding and, theoretically at least, better care for patients. Which all sounds great on paper. In practice, however, privatisation is a different matter. Namely because, however you tweak the balance sheets, many essential healthcare services just do not make money.

Take ER services, for example. How many private hospitals have a comprehensive emergency department on offer? Answer: not many. And why? Because it's a service that is rarely profitable. Psychiatric services are another financially leaky field of healthcare, closely followed by health screenings and educational programmes. It is the nature of privatisation not to be content with only a market share. If government hospitals are to compete to keep their heads above water, these essential features will be the first to go.

Then there is the issue of medical insurance. As market competition among hospitals heats up, we can expect insurers' frugality to go into overdrive. Higher costs mean higher premiums, so insurers battle to keep prices down by squeezing hospitals for lower costs. Firms become selective over who gets coverage. Patients with chronic conditions are charged sky-high premiums, bringing us back to the unattractive notion that the quality of your healthcare is a reflection of your ability to pay.

The rosy ideal of healthcare (namely that it should be free at the point of delivery, ethically rationed, and funded out of taxation) for many reasons would not translate to the UAE. But before market forces get a stranglehold on public hospitals, it is worth asking whether another approach would.

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