Implementing the Optimal Healthcare Funding Mix: The Role of Governance

The mix between public and private funding is important as it impacts healthcare access, quality, and costs. While some countries opt for predominantly public (e.g., Scandinavian countries) or private (e.g., United States pre-Affordable Care Act) systems, a mixed system such as one in Canada and the United Kingdom typically offers better services due to increased access (e.g., a public baseline ensures access to essential services while private options cater to those seeking additional coverage), better cost control, innovation incentives by private insurers, choice and flexibility, and risk distribution. [1,2] 

The mix between public and private healthcare funding should be tailored based on each jurisdiction’s population health needs, cost-effectiveness of health interventions, and health outcomes. While the evidence on the health impact of private services is mixed, a recent review published in The Lancet suggests that privatization of the healthcare system is worsening health outcomes through selective intake of patients and reductions in staff numbers. [3] However, these findings should not be considered in isolation, and with some jurisdictions transitioning their system to have the public sector focus on regulation while the private sector on delivery, it is important to consider optimal mix structures. As highlighted by the World Health Organization and various researchers, the key aspect setting jurisdictions apart on the successful involvement of the private sector in health provision is governance. [1,2] 

“The extent to which a government can work with the private sector for public purposes depends on how well the private sector is integrated into the institutional arrangements to set and implement national health policy priorities.” (Clarke et al. 2023) 

Holding the private sector accountable to patient outcomes is critical to ensure a continuous focus on health rather than profits alone. Well-designed policies that mandate private hospitals to reinvest some of their earnings in improving health access and quality care is an example of how the public sector can steer private players in serving national health priorities while fuelling their economies. Managing the transition from existing systems will also require collaboration to avoid certain unintended consequences (e.g., providers charging twice for the same service or individuals seeking services from both public and private health services).  

The Path Forward  

The quest for an optimal mix of public and private health insurance is an ongoing journey that often considers cost-effectiveness of health interventions among many other aspects. While access to basic services continues to be an issue in some countries, it is important to consider the next frontier of care – personalized medicine (an old concept not yet widely implemented). Some suggest that personalized medicine can reduce healthcare costs by improving treatment accuracy and limiting hospital stays due to adverse reactions. This means that the definition of medically necessary or basic services could differ based on each person’s unique health profile. [4] While the optimal balance between public and private funding may be elusive, especially when it comes to personalized medicine, striving for a system that combines the strengths of both approaches could lead to better value-based care and sustainability in healthcare financing.  

W&W is working with key partners to support the design and implementation of governance practices, cost-effectiveness data, strategies for personalized medicine, collaborative models, and optimal health funding.  

Sources: 

1. Clarke, D., et al. (2023). The governance behaviours: A proposed approach for the alignment of the public and private sectors for better health outcomes. BMJ Global Health, 8(Suppl. 5), e012528. https://doi.org/10.1136/bmjgh-2023-012528 

2. World Health Organization. (2020). Private sector landscape in mixed health systems. World Health Organization. https://www.who.int/publications/i/item/9789240018303 

3. Goodair, B., & Reeves, A. (2024). The effect of health-care privatization on the quality of care. The Lancet Public Health, 9(3), e199–e206. https://doi.org/10.1016/S2468-2667(24)00011-1 

4. Sutherland, J. M. (2024). A call for bigger thinking and meaningful improvements in health and well-being: Time to move on from small-scale changes. Healthcare Policy, 19(3), 6–20. https://doi.org/10.12927/hcpol.2024.27316