Privatise Health in NSW or Perish

With health spending set to consume the entire state budget by 2033, the NSW Government should privatise public hospital services to avoid a financial catastrophe, according to a new report released by The Centre for Independent Studies.

The futile attempts to reform the high cost and low performing public hospital system over the last 30 years are continuing under the Coalition government, say David Gadiel and Jeremy Sammut in How the NSW Coalition Should Govern Health: Strategies for Microeconomic Reform.

‘Health already consumes a third of the state budget and elective waiting times have lengthened in the last decade in NSW compared to other states.’

‘Instead of implementing productivity-boosting measures, the O’Farrell Government is re-birthing the flawed policy of the former Labor Government.’

‘Health Minister Jillian Skinner’s cosmetic revamp of NSW Heath by creating 15 Local Health Districts that are virtually identical to the 15 Local Health Networks the Keneally government established in 2010 will neither improve efficiency nor restore local control over health services as promised before the 2011 election,’ say the report’s authors.

‘NSW Health will continue to micro-manage hospitals to stop Local Health Districts overrunning their budgets and sending the bill to Macquarie Street.’

Gadiel and Sammut argue the Coalition should adopt the approach of the Foundation Trusts in England.

‘They are truly financially accountable and their solvency is not underwritten by the UK Treasury. This creates real incentives for efficiency.’

‘Centralised control by NSW Health of the highly restrictive, statewide terms on which doctors and nurses are employed should also be scrapped to let Local Health Districts flexibly deploy the clinical workforce to meet budget and service targets.’

Privately Financed Projects (PFPs) should also be reintroduced to promote efficiency.

‘A private operator willing to accept full financial and managerial responsibility for a public hospital should also have full control over the hiring and firing of clinical staff.’

David Gadiel is an independent health economist with extensive experience of the NSW health system. Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.

The report, How the NSW Coalition Should Govern Health: Strategies for Microeconomic Reform, is available at https://www.cis.org.au/images/stories/policy-monographs/pm-128.pdf

The authors are available for comment.

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