Private Patients in N.H.S. Hospitals: Waiting Lists and Subsidies

Abstract

Private practice by National Health Service (N.H.S.) consultants in its hospitals is alleged both to inflate the lists of those (N.H.S. patients) waiting for admission as inpatients and to involve substantial transfers that internalize no externality and that are, moreover, regressive. This paper shows that, on certain assumptions, the short-term effects of removing private practice in N.H.S. hospitals include only minor (positive or negative) effects on waiting lists. In the longer run, if private hospitals can provide sufficient substitute care and of other inputs (such as consultant time in the N.H.S.) do not fall and inpatient referrals do not rise faster than the trend, then substantial reductions may be gained. The paper also shows that the present structure of charges does not cover the full costs of care and that net transfers to private patients may take place, even allowing for the tax price paid by such patients.

Acknowledgment is made to the Department of Health and Social Security for a grant to the Department of Economics and Related Studies and the Institute of Social and Economic Research at the University of York for research in the economics of hospital waiting lists. We are also grateful to members of the Health Economics Research Programme at York for discussion of these and related issues.