Skip to main content

Myth #5: Health Care Is Rightly Left to the Private Sector, for the Sake of Efficiency

  • Chapter
  • First Online:
The Myths of Health Care

Abstract

The Henry Mintzberg’s myth #5 has been inspired by “conventional wisdom” according to which ownership of health care providers plays an important role in the efficiency in producing services. Moreover, Henry Mintzberg argues that health care is rightly controlled by the public sector, for the sake of equality (Mintzeberg 2012). Based on these two apparently contrasting arguments one can conclude that in the system where most of provision is public, there should be some trade-offs between equality and efficiency.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Institutional subscriptions

References

  • Amatucci F (2002) Il Project Finance nelle Aziende Pubbliche. Egea, Milano

    Google Scholar 

  • Amatucci F, Biondi Y (2002) Project Finance nel Settore Sanitario Italiano: Esperienze e Modalità di Applicazione. In: Anessi Pessina E, Cantù E (eds) L’aziendalizzazione della Sanità in Italia, Rapporto OASI 2001. Egea, Milano, pp 371–391

    Google Scholar 

  • Amatucci F, Vecchi V (eds) (2009) Le Operazioni di Project Finance: stato dell’arte e indicazioni per il futuro. Egea, Milano

    Google Scholar 

  • Andon P (2012) Accounting-related research in PPPs/PFIs: present contributions and future opportunities. Account Auditing Accountability J 25(5):876–924

    Article  Google Scholar 

  • Ball R, Heafey M, King D (2000) Private finance initiative—a good deal for the public purse or a drain on future generations? Policy Politics 29(1):95–108

    Article  Google Scholar 

  • Barbetta GP, Turati G, Zago AM (2007) Behavioral differences between public and private not-for-profit hospitals in the Italian National Health Service. Health Econ 16(1):75–96. doi:10.1002/hec.1143

    Article  Google Scholar 

  • Broadbent J, Laughlin R (2003) Public private partnerships: an introduction. Account Auditing Accountability J 16(3):332–341

    Article  Google Scholar 

  • Broadbent J, Gill J, Laughlin R (2003) Evaluating the private finance initiative in the National Health Service in the UK. Account Auditing Accountability J 16(3):422–445

    Article  Google Scholar 

  • Broadbent J, Gill J, Laughlin R (2008) Identifying and controlling risk: the problem of uncertainty in the private finance initiative in the UK’s National Health Service. Critical Perspect Accounting 19:40–78

    Article  Google Scholar 

  • Buisson A (2013) From PF1 to PF2: the reform of the public private partnership, Norton Rose Fulbright LLP model in the UK, www.nortonrosefulbright.com

  • Burger P, Tyson J, Karpowicz I, Coelho M (2009) The effects of the financial crisis on public-private partnerships. International Monetary Fund, WP/ 09/144, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1442246. Accessed 15 Jan 2013

  • Burgess JF, Wilson PW (1996) Hospital ownership and technical inefficiency. Manage Sci 42(1):110–123. doi:10.1287/mnsc.42.1.110

    Article  Google Scholar 

  • Chivaka R (2007) Strategic cost management: context and philosophy—part 1, Accountancy SA, June

    Google Scholar 

  • Cori R, Giorgiantoni C, Paradisi I (2010) Risk allocation and incentives for private contractors: an analysis of Italian project financing contracts. Bank of Italy Occasional Paper, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1825983. Accessed 20 Feb 2013

  • Czypionka T, Kraus M, Mayer S, Röhrling G (2014) Efficiency, ownership, and financing of hospitals: the case of Austria. Health Care Manag Sci 17(4):331–347. doi:10.1007/s10729-013-9256-9

    Article  Google Scholar 

  • Dallocchio M, Lecci F, Morelli M (2016) L’Istituto Europeo di Oncologia: evidenze empiriche. In: Dallocchio M et al (eds) Valore e misurazione delle performance. EGEA, Milano, pp 111–153

    Google Scholar 

  • Demirag I, Khadaroo I (2008) Accountability and value for money in private finance initiative contracts. Financ Accountability Manage 24(4):455–478

    Article  Google Scholar 

  • Demirag I, Khadaroo I (2011) Accountability and value for money: a theoretical framework for the relationship in public–private partnerships. J Manage Gov 15(2):271–296

    Article  Google Scholar 

  • Demirag I, Dubnick M, Khadaroo I (2005) A framework for examining accountability and value for money (VFM) in the UK’s private finance initiative (PFI). In: Demirag I (ed) Corporate social responsibility, accountability and governance: global perspectives. Greenleaf Publishing, Sheffield

    Google Scholar 

  • Demirag I, Khadaroo I, Stapleton P, Stevenson C (2011) Risks and the financing of PPP: perspectives from the financiers. Br Accounting Rev 43(4):294–310

    Article  Google Scholar 

  • Donaldson C, Gerard K (1993) Market failure in health care. In: Donaldson C, Gerard K (eds) Economics of health care financing: the visible hand. MacMillan, Basingstoke

    Chapter  Google Scholar 

  • Drummond MF (2013) Twenty years of using economic evaluations for drug reimbursement decisions. What has been achieved? J Health Polit Policy Law 38(6):1081–1102

    Article  Google Scholar 

  • Dunnigan M, Pollock A (2003) Downsizing of acute inpatient beds associated with private finance initiative: Scotland’s case study. Br Med J 326(7395):905

    Article  Google Scholar 

  • Economic Commission for Europe (ECE) (2002) A review of public-private partnerships for infrastructure development in Europe. Working party on international legal and commercial practice fiftieth session 11–13 March 2002

    Google Scholar 

  • Edwards P, Shaoul J (2003) Partnerships: for better, for worse? Account Auditing Accountability J 16(3):397–421

    Article  Google Scholar 

  • Eggleston K, Shen YC, Lau J, Schmid CH, Chan J (2008) Hospital ownership and quality of care: what explains the different results in the literature? Health Econ 17(12):1345–1362. doi:10.1002/hec.1333

    Article  Google Scholar 

  • English L, Guthrie J (2003) Driving privately financed projects in Australia: what makes them tick? Account Auditing Accountability J 16(3):493–511

    Article  Google Scholar 

  • English L, Skellern M (2005) Public–private partnerships and public sector management reform: a comparative perspective. Int J Public Policy 1(1):1–21

    Article  Google Scholar 

  • English L, Guthrie J, Broadbent J, Laughlin R (2010) Performance audit of the operational stage of long-term partnerships for the private sector provision of public services. Australian Accounting Rev 20(1):64–75

    Article  Google Scholar 

  • European PPP Expertise Centre (EPEC) (2011) The guide to guidance how to prepare, procure and deliver PPP projects, www.eib.org/epec/g2g/index.htm. Accessed 20 June 2012

  • Finlombarda (2005) Finlombarda survey of project finance in healthcare sector. IV Report http://www.finlombarda.it/. Accessed 20 June 2012

  • Finlombarda (2012) Finlombarda survey of project finance in health care sector. X Report. Maggioli, Rimini

    Google Scholar 

  • Flinders M (2005) The politics of public-private partnerships. Br J Polit Int Relat 7(2):215–239

    Article  Google Scholar 

  • Folland S, Rocco L (2014) The economics of social capital and health a conceptual and empirical roadmap. World Scientific, Washington, DC

    Book  Google Scholar 

  • Francesconi A, Lecci F (2014) Innovazioni nei sistemi di controllo e governo dei costi: le risposte delle aziende sanitarie alla crisi economica. In: CERGAS Bocconi (eds) L’aziendalizzazione della sanità in Italia. Rapporto OASI 2014, EGEA, Milan, pp 555–580

    Google Scholar 

  • Froud J (2003) The private finance initiative: risk, uncertainty and the state. Acc Organ Soc 28(6):567–589

    Article  Google Scholar 

  • Gaffney D, Pollock AM (1999) Pump priming the PFI: why are privately financed hospital schemes being subsidised? Public Money Manage 17(3):11–16

    Google Scholar 

  • Gaffney D, Pollock A, Price D, Shaoul J (1999) NHS capital expenditure and the private finance initiative—expansion or contraction? Br Med J 319:48–51

    Article  Google Scholar 

  • Greve C, Graeme H (eds) (2013) Rethinking public-private partnerships. Routledge, London

    Google Scholar 

  • Grimsey D, Lewis MK (2004) Public private partnerships. The worldwide revolution in infrastructure provision and project finance. Edward Elgar, Cheltenham, UK

    Google Scholar 

  • Grimshaw D, Vincent S, Willmott H (2002) Going privately: partnership and outsourcing in UK public services. Public Adm 80(3):475–502

    Article  Google Scholar 

  • Hellowell M, Vecchi V (2012) An evaluation of the projected returns to investors on 10 PFI projects commissioned by the National Health Service. Financ Accountability Manage 28(1):77–100

    Article  Google Scholar 

  • Herr A, Schmitz H, Augurzky B (2011) Profit efficiency and ownership of German hospitals. Health Econ 20(6):660–674. doi:10.1002/hec.1622

    Article  Google Scholar 

  • Hood C (1991) A public management for all seasons? Public Adm 69:3–19

    Article  Google Scholar 

  • Jackson A, Lapsley I (2003) The diffusion of accounting practices in the new “managerial” public sector. Int J Public Sector Manag 16(5):359–372

    Article  Google Scholar 

  • Kakabadse NK, Kakabadse AP, Summers N (2007) Effectiveness of private finance initiatives (PFI): study of private financing for the provision of capital assets for schools. Public Adm Dev 27(1):49–61

    Article  Google Scholar 

  • Kaplan R, Porter M (2011) How to solve the cost crisis in health care. Harvard Business Rev 89(9):6–52, 54, 56–61 passim

    Google Scholar 

  • Khadaroo I (2008) The actual evaluation of school PFI bids for value for money in the UK public sector. Criti Perspect Account 19(8):1321–1345

    Article  Google Scholar 

  • Kouzmin A, Leivesley R, Kakabadse N (1997) From managerialism and economic rationalism: towards reinventing economic ideology and administrative diversity. Admin Theory Praxis 19(1):19–43

    Google Scholar 

  • Lane JE (2000) New public management. Routledge, London

    Google Scholar 

  • Lecci F, Longo F (2015) Humanitas research hospital. In: Minoja M (ed) Bene comune e comportamenti responsabili. EGEA, Milano, pp 175–195

    Google Scholar 

  • Lega F (2009) Strategic, organisational and managerial issues related to innovation, entrepreneurship and intrapreneurship in the hospital context: remarks from the Italian experience. J Manage Mark Healthc 2(1):77–93

    Google Scholar 

  • Lord BR (1996) Strategic management accounting: the emperor’s new clothes? Manage Account Res 7(3):347–366

    Article  Google Scholar 

  • MacDonald M (2002) Review of large public procurement in the UK. www.hmtreasury.gov.uk/mediastore/otherfiles/greenbook_mott.pdf. Accessed 15 June 2008

  • Martiniello L, Zaino A (2009) Analisi delle tecniche di valutazione per la scelta del modello di realizzazione dell’intervento: il metodo del Public Sector Comparator e l’analisi del valore. Settembre, Unità Tecnica Finanza di Progetto. http://www.utfp.it/doc_eco.htm. Accessed 20 Oct 2012

  • Mason A, Drummond MF, Ramsey S, Campbell J, Raisch D (2010) Comparison of anticancer drug coverage decisions in the United States and the United Kingdom: does the evidence support the rhetoric? J Clin Oncol 28(20):3234–3238

    Article  Google Scholar 

  • Milcent C (2005) Hospital ownership, reimbursement systems and mortality rates. Health Econ 4(11):1151–1168

    Article  Google Scholar 

  • Mintzeberg H (2012) Managing the myths of health care. World Hosp Health Serv 48(3):4–7

    Google Scholar 

  • Morelli M, Lecci F (2014) Management control systems (MCS) change and the impact of top management characteristics. The case of healthcare organisations. J Manag Control 24(3):267–298

    Article  Google Scholar 

  • Osborne S (ed) (2000) Public-private partnerships: theory and practice in international perspective. Routledge, London

    Google Scholar 

  • Palmer S, Torgerson DJ (1999) Definitions of efficiency. BMJ 318(7191):1136

    Article  Google Scholar 

  • Parker D, Hartley K (2003) Transaction costs, relational contracting and public-private partnerships: a case study of UK defence. J Purchasing Supply Manag 9(3):97–108

    Article  Google Scholar 

  • Pollitt C, van Thiel S, Homburg V (eds) (2007) New public management in Europe: adaptations and alternatives. Palgrave MacMillan, Basingstoke

    Google Scholar 

  • Pollock AM, Shaoul J, Rowland D, Player S (2001) Public services and the private sector: a response to the IPPR. A Catalyst Working Paper, London

    Google Scholar 

  • Puig-Junoy J (1998) Technical efficiency in the clinical management of critically ill patients. Health Econ 7:263–277

    Article  Google Scholar 

  • Reinhardt UE (2003) Costs of healthcare administration in the United States and Canada. N Engl J Med 349(25):2461–2464

    Article  Google Scholar 

  • Roehrich JK, Lewis MA, George G (2014) Are public–private partnerships a healthy option? A systematic literature review. Soc Sci Med 113:110–119

    Article  Google Scholar 

  • Shen YC, Eggleston K, Lau J, Schmid CH (2007) Hospital ownership and financial performance: what explains the different findings in the empirical literature? Inquiry 44(1):41–68. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/17583261

  • Sherman D (1984) Data envelopment analysis as a new managerial audit methodology—test and evaluation. Audit J Pract Theory 4:35–53

    Google Scholar 

  • Sloan FA (2000) Not-for-profit ownership and hospital behavior. In: Culyer AJ, Newhouse JP (eds) Handbook of health economics, vol 1B. Elsevier, Amsterdam, pp 1141–1174

    Google Scholar 

  • Spackman M (2002) Public-private partnership: lessons from the British approach. Econ Syst 26:283–301

    Article  Google Scholar 

  • Sullivan SD, Watkins J, Sweet B, Ramsey SD (2009) Health technology assessment in health-care decisions in the United States. Value in Health 12(Suppl 2):S39–S44

    Article  Google Scholar 

  • Tiemann O, Schreyogg J (2009) Effects of ownership on hospital efficiency in Germany. BuR Bus Res 2(2):115–145

    Article  Google Scholar 

  • Tiemann O, Schreyogg J (2012) Changes in hospital efficiency after privatization. Health Care Manag Sci 15(4):310–326

    Article  Google Scholar 

  • Tiemann O, Schreyogg J, Busse R (2012) Hospital ownership and efficiency: a review of studies with particular focus on Germany. Health Policy 104(2):163–171. doi:10.1016/j.healthpol.2011.11.010

    Article  Google Scholar 

  • Torbica A, Ciani O (2016) Myth #6 If left to the private sector it would be more efficient. Public vs. private provision of healthcare services. In: Adinolfi P, Borgonovi E (eds) What is right and what is wrong in healthcare management? Commenting on Henry Mintzberg’s myths. Springer, Berlin

    Google Scholar 

  • Torbica A, Tarricone R, Drummond MF (2016) The impact of culture, values and institutional context on the methods and use of economic evaluation. Value Health 19(3):A292

    Article  Google Scholar 

  • Vannozzi D, Fedeli G (2011) La distinta base applicata all’azienda. Mecosan 20(77):105–129

    Google Scholar 

  • Villalonga B (2000) Privatization and efficiency: differentiating ownership effects from political, organizational, and dynamic effects. J Econ Behav Organ 42(1):43–74. doi:10.1016/S0167-2681(00)00074-3

    Article  Google Scholar 

  • Vitaliano DF, Toren M (1996) Hospital cost and efficiency in a regime of stringent regulation. Eastern Econ J 22(2):161–175

    Google Scholar 

  • Wilson GW, Jadlow JM (1982) Competition, profit incentives, and technical efficiency in the provision of nuclear medicine services. Bell J Econ 13(2):472–482

    Article  Google Scholar 

  • Woolhandler S, Campbell T, Himmelstein DU (2003) Costs of healthcare administration in the United States and Canada. N Engl J Med 349:768–775

    Article  Google Scholar 

  • Yescombe ER (2007) Public-private partnerships. Principles of policy and finance. Butterworth-Heinemann, Oxford, UK

    Google Scholar 

  • Zuckerman S, Hadley J, Iezzoni L (1994) Measuring hospital efficiency with frontier cost functions. J Health Econ 13:255–280

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Oriana Ciani .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2018 Springer International Publishing AG

About this chapter

Cite this chapter

Ciani, O. et al. (2018). Myth #5: Health Care Is Rightly Left to the Private Sector, for the Sake of Efficiency. In: Adinolfi, P., Borgonovi, E. (eds) The Myths of Health Care. Springer, Cham. https://doi.org/10.1007/978-3-319-53600-2_8

Download citation

Publish with us

Policies and ethics