Will Hospital Nationalization Help the Developing World respond to COVID-19? Lessons from Europe

Dominic Montagu, Professor Epidemiology and Biostatistics, School of Medicine, University of California, San Francisco

In Africa and Asia, the private sector provides 40% of all healthcare.  In a few large countries like India, Bangladesh, Nigeria, and Egypt, the number is closer to 80%.  In this context, planning for a huge flood of COVID-19 patients must include applying private resources, and quickly.

A few countries such as India and South Africa are already talking about, or planning for nationalization, recognizing that government facilities are limited and private beds, ICUs, ventilators, and clinicians will all soon be needed.  Depending on what is meant by the term, and how it is done, we believe this may be a good thing.  Lessons from Europe can inform what happens next.

Spain and Italy made headlines when they announced nationalization of private hospitals as part of the effort to respond to COVID-19. In both countries a slight majority of hospitals, 55% and 59% respectively, are private. In both countries the majority of private hospital services are contracted provision of government-supported care. Private fee-paying care is a rarity, and only a side-business for private hospitals. In this context, ’nationalization’ has meant ceding management control to government (which has directed private facilities to hold all elective surgeries and either reserve capacity for COVID-19 cases or take non-COVID cases from better equipped hospitals) coupled with a guideline mandating ‘at-cost’ billing for COVID-19 cases. Because in both countries private hospitals were already well integrated into the national health delivery and financing system, ‘nationalization’ has been a populist and political call-to-arms but has not been difficult or institutionally threatening.

Similar agreements to control hospital billing have been put in place in the Netherlands and Germany; but as those systems were majority private hospitals already (100% and 75% respectively), this has not gotten much attention and not been called ’nationalization’.

In Ireland, the government has, with great fanfare, ’nationalized’ private hospitals for the duration of the epidemic. It has been a mess. The private sector represents only 20% of all hospitals in Ireland, and nearly all are small outpatient facilities, mainly providing specialized care (psychiatric, chronic care, cosmetic surgery, etc.). As such nationalization was a big political move, but didn’t get many inpatient beds. Worse still, the initial regulation was for the facilities only. The government said they would hire all private consultants under locum contracts to care for public sector patients. The private consultants pointed out that they were not licensed or indemnified to care for public sector patients. The government gave that indemnification, but apparently there are still issues. The contingency plans for pre-existing private treatment also seem to have been poorly thought through. Irish hospital nationalization, with little institutionalized contracting experience to build on, has been badly managed on both sides and no one seems happy with the outcome.

In the UK, the private sector is also a minority of the overall health system, and primarily consists of small outpatient facilities providing elective surgeries and serving people who are willing to pay to avoid the long wait-times for non-urgent NHS care. The NHS signed a contract with great fanfare to get control of nearly all that capacity 'at cost'. This will add 8,000 beds to the approximately 160,000 already in the NHS. The NHS already uses the private sector for ‘overflow’ contracts when wait times get long and as a result contracting and licensing systems were already in place, and so the experience has been better managed than in Ireland.

Europe offers two primary models of public-private hospital ownership: in the first, as in Spain, Italy, or Germany, private hospitals are financed by and serve the public good. In the second, as in the UK and Ireland, private hospitals are mostly small and ancillary to the national health. In both models, collaboration has been embraced by the private sector has gone smoothly, where contracting experiences exist. As Laminie Gharbi, president of the Federation of Private Clinics and Hospitals of France (FHP) said recently “Public, private… we unite our forces now to fight the pandemic. Anything else would be irresponsible”.

The lesson from Europe about nationalization is not to become enamored with the rhetoric and alienate the private providers who could be, should be, and want to be partners in the COVID-19 battle. Fair at-cost payments, effective communication, an assumption of good faith, and a willingness to work together will lead to the best outcomes in most cases. Let’s all hope that it will be enough.