Health Policy Monitor
Skip Navigation

Are private management models more effective?

Partner Institute: 
Centre de Recerca en Economia i Salut (CRES), Universitat Pompeu Fabra, Barcelona
Survey no: 
Esther Martínez-Garcia
Health Policy Issues: 
Role Private Sector, System Organisation/ Integration
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no no yes no


?New? ways of organizing health provision and institutions are receiving much attention, and are evaluated by different actors. New organizational models have resulted from recent structural changes to solve the need to control for public finance deficits and increase efficiency of public health services by means of increasing autonomy and flexibility of the providers' organizations, through private-type management and more incentives for efficiency.

Purpose of health policy or idea

"New" ways of organizing health provision and institutions (foundations, trusts, hospital consortia, limited responsibility companies, professionals' cooperatives, etc.) are receiving much attention, and are evaluated by different actors. These reforms and evaluations are embodied within the framework of the debate about public-private mix of provision, financing and production of health services, and have been the result of new structural changes to solve the need to control for public finance deficits and increase efficiency.

Those new ways are supposedly intended to increase efficiency on public health services (e.g, reducing the high rigidity and centralization in human resources management that exist in the public centres and to solve the problem of the lack or very soft incentives for efficiency and appropriate use of resources -e.g, the level of pharmaceutical expenditure, the probability of transferring a patient to a hospital for an outpatient visit, etc.). However, it is not clear that the intended outcomes have been achieved; more studies are needed; even though there are some encouraging experiences.

Foundations and other types of "private management" organizations affect basically hospital care (and hence doctors and nurses) but there exist also some experiences for primary care (e.g. health professionals' cooperatives) and integrated care formulas (basically only as regional experiences, see for example the case of Catalonia, reported in 2003).
Public health authorities are also affected, since they have been one of the principal actors for their introduction. Of course, patients as users of the health services provided are also affected, but there is not for them any relevant formal a-priori negative/positive difference (e.g. in terms of health services coverage or accessibility or risk pooling).

Public and private foundations and consortia, and other types of private management organizations are contracted by the public health authority to provide for services. The organizations are in general, free to select manpower and pay different salaries than those in the public-bureaucratic organizations; dismissal is a more credible threat for their workers - basically in private Foundations, not so much in the public ones), and in general have greater flexibility in management.

Lessons from regional experiences

It is worthwhile to differentiate between the national experience and the regional ones. Regional experiences, like the one in Catalonia (also in Andalusia or Galicia, for example), have achieved their goals to a greater extent. For example, in Catalonia, private hospital foundations (and public-private consortia and hospitals, and different types of similar organizations) have been existing for quite a long time, and the public health authorities have taken advantage of them, by means of contracting them, and in terms for example of their experience and their great geographical coverage.

At national level, the Council of Ministers passed a bill in 1996, for the creation of four middle sized hospitals (one in Manacor -Mallorca, Balearic Islands-, one in Alcorcon -nearby Madrid-; the ones of Calahorra -La Rioja-, and Son Llatzer -Mallorca- were approved later on).

Even though they were intended to be private foundations, they are actually public, given the composition of their governing and protectorate boards, and at the same time they have adopted the existing private regulation to escape from public administration and contracting rules. But in fact the supervisory body and the administration body are both under the same hands, hence public and private are in fact confused, and there seems to be a lost of the objectives pretended with their creation. It can even be the case that the lack of differentiation in practice, among the financer (regulator and controller) and the provider (foundation) makes the latter have control over the first one.

Also at the national level, the central government health authority tried to create public hospital foundations (in the Budget Law for 1999). They were thought as a way for changing the status of existing public hospitals without the need to pass a specific bill for each of them (as it happened with the other ones). The changes implied the possibility of new, supposedly more flexible management schemes - e.g. to contract new staff according to general labour legislation, but without becoming real "foundations". With changes remaining optional (e.g. for the health professionals), no adoptions so far have taken place.

Main points

Main objectives

Increase efficiency, autonomy, flexibility in the production/provision  of health services (mainly hospital care, but also some experiences exist in primary care), lower costs.

Type of incentives

Private management of the organizations, lower labour rigidities, administrative flexibility, differentiation between financer and provider.

Groups affected

Public primary and basically, hospital care providers, Private and non-profit primary and basically hospital care providers, Primary and basically hospital care professionals and clients

 Search help

Characteristics of this policy

Degree of Innovation traditional rather innovative innovative
Degree of Controversy consensual highly controversial highly controversial
Structural or Systemic Impact marginal rather fundamental fundamental
Public Visibility very low neutral very high
Transferability strongly system-dependent rather system-neutral system-neutral

Some results concerning regional experiences are encouraging, e.g. those  concerning primary care reform in Catalonia. Accordingly, the main differences between EBA providers (professional cooperatives) and public providers (ICS) are closely related with private centres taking advantage from traditional limitations in public management that remain through the years(high rigidity and centralization in human resources management; limited availability of physicians in the primary health care centre). Differences are also due to lack of or very soft incentives for efficiency and appropriate use of resources  (i.e., the level of pharmaceutical expenditure, the probability of transferring a patient to a hospital for an outpatient visit, etc.).

However, the experience at the national level is not as encouraging, but there is still room for being optimistic about the future of the new organizational models.
Some people and experts, with or without known political preferences, view these forms of private organization as a way of privatising public health services, and are therefore against it. This may reduce the possibilities for success in the future. Also the low capacity to properly evaluate the differences in the quality of the services provided by the new organizations and the old public ones may become a (probably low intensity) stopping mechanism for the reforms.

New evaluations are coming out (e.g. see above Sources of Information), but the experience of the central government initiative with the foundations is limited, both in number and in relation to the time they have being existing.

Finally, with a different political party in power following general elections in Marchh 2004 (the elected government being left-wing; the previous one being right-wing) theree is some uncertainty about the future direction of health management reforms. The same is true for the decentralization of health responsibilities to all the regional governments (affecting those not already having them) in 2002.

Political and economic background

"New" organizational forms and have been introduced within the public health service as a structural change to look for solutions to the need to control for public finance deficits and at the same time increase efficiency. The process towards efficiency has been a long one; the most "recent" general debate and formal approach towards engaging in reforms may be the so called "Informe Abril" of 1991, partially actualized in 1997 in the "Parliament Agreement for the Reform and Modernization of the National Health System" (Acuerdo Parlamentario para la Reforma y Modernización del SNS). That Agreement conducted to legislation that allowed the creation of Foundations (both public and private) as new ways of looking for efficiency in health provision, using among other instruments, the differentiation among financing and provision. These reforms were relatively new in the SNS (the health services not decentralized to regions, managed by the central government). Lately (January 2004), the (central government) High Accounts Court (Tribunal de Cuentas) has published the (not very favourable) result of the audit done to some of those Foundations (years 2000), which has put the issue of private management and hospital foundations at stage again.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no no yes no

Approach of idea

The approach of the idea is described as:

Innovation or pilot project

Influences in policy making and legislation

The reforms concerning the Public Hospital Foundations of the 4 hospitals related in question 3 were passed through a specific bill in 1996; the rest of the national experience (those which are really public foundation hospitals) were adopted (even though not implemented in practice), by a general bill in 1999. All of them were the result of the initiative of the central government, which also had a great majority in the Parliament. Regional experiences differ among them.

Some groups opposed them, sometimes under the umbrella of the "public/private" debate; saying that new organizations are a way of privatizing health services. Others (especially professionals' associations and labour unions) do consider that labour conditions are worst than the traditional ones ("statutory").
However, as already said, the Parliament, basically right-winged, approved the reforms.

Adoption and implementation

Adoption and implementation were done by the central government, through specific legislation that allowed the creation of specific hospital foundations (initially thought to be public); also optional changes of traditional public hospitals to private foundations were considered (which affects for example the "statutory" personnel, changing towards more standard labour contracts and labour conditions). The voluntary way however has not been a success.

Opponents were basically labour unions and some professionals' associations, that did consider that labour conditions of health professionals would be worst than in the traditional "statutory" labour model. Moreover, in 2002 decentralization of health services management towards regional governments (to those that did not have them) took place.

Decentralization implies that now each regional government will organize its health services as it considers best; hence there has not been a continuing process of creating more Foundations following the initial model by the central government. In addition, the problems associated with the not at all clear performance of existing Foundations have somehow "stopped" the process.

It is also worth mentioning that the previous lines refer to the "central government experience"; at the regional level, the performance of the experiences run by the regional health authorities can differ from the "central government" one, and also among them.

Monitoring and evaluation

Evaluation mechanisms for regularly reviewing the implementation of new measures are quite rare in Spain. Concerning the reform under evaluation in this report, there have been no formal-institutional evaluations at the national level, but they are being under evaluation by different actors (health professionals, universities, health associations, etc.) sometimes from the private-public political debate.

A recent announcement of the High Public Account Court (Tribunal de Cuentas) has renewed attention into these new organizational models, and more public attention is paid to them, specially concerning their low level of transparency in their management. An the evaluation done in 2003 by the Public Accounts Court of the Galicia regional government is in the same direction.

At the regional level, some encouraging evaluations exist, e.g. the evaluation done by the Catalan regional health government on the reform of primary and hospital services, sometimes integrated among them, and with larger sense of autonomy. (See previous report, year 2003, "Are private primary care providers more efficient than public ones?" for the results of the evaluation of the Catalan experience).

However, there is also some evidence against the Foundations -e.g. the Galicia experience- in relation to: the lower coverage of the services provided, greater derivations of higher-cost patients, less personnel and lower paid but also lower activity, no real separation of provider and purchaser/financer/controller  (hence no autonomy in management), irregularities in purchases of services to external providers, irregularities in the public management of the resources at the budget level, etc. (see Marciano Sánchez, Manuel Martín (2004).

It is worth mentioning that there is not enough objective evidence to assess the success/failure of those "new" managing and organizational experiences, compared to the more traditional ones, at least at the non-regional level.

Review mechanisms

Mid-term review or evaluation, Final evaluation (external)

Dimensions of evaluation

Structure, Process, Outcome

Expected outcome

There exist some facts that may reduce the intended success of the reform. One of them is the pressure of trade unions for standardizing salaries and working conditions of all health professionals both in the private and the public sector, if they are publicly financed. This may reduce the advantages in workers policies of the new organizational forms.

If they finally become a way of creating relevant differences between clients/patients (depending on weather they come from the public financer or they pay directly or through other types of private payment), this may affect the equity of the system, provided that there is a real reduction of health services to public clients/patients.

It is not clear that the changes which are probably needed to increase efficiency in the production and financing of health services will come exclusively by means of just creating new organizational formulas, if they are not really new ways of understanding that there is the need for differentiating financing from provision.

Impact of this policy

Quality of Health Care Services marginal rather fundamental fundamental
Level of Equity system less equitable neutral system more equitable
Cost Efficiency very low high very high

Organizational and managerial reforms within the public sector toward more flexibility are likely to continue in the future. New ways of increasing efficiency without reducing the quality of the services are essential. The Spanish population does not seem to accept reductions in the services they are already receiving; in fact there exists quite a lot of criticism, demanding  better services (e.g. in terms of reducing waiting lists), that are difficult not to take into account by any government. At the same time budget limits are acting strongly. In this context, new organizing models seem to be a possible way of achieving those two objectives.  And all this is probably beyond the political debate about the appropriate public/private mix in the provision of health care (or the privatization of the health system).


Sources of Information

  1. Guillem López Casasnovas: "Public-private in the Health Care Sector", Civitas, Institute for the Study of Civil Society, London, september 2003. www.
  2.  José Martín, "Nuevas fórmulas de gestión en las organizaciones sanitarias", Documento de Trabajo 14/2003, Fundación Alternativas,
  3. www.
  4. Marciano Sánchez, Manuel Martín: "Nuevas formas de gestión: las fundaciones sanitarias en Galicia", Documento de Trabajo 43/2004, Fundación Alternativas, www.
  5. Federación de Asociaciones para la Defensa de la Sanidad Pública (FADSP),
  6. Labour unions: CCOO,;  UGT

Author/s and/or contributors to this survey

Esther Martínez-Garcia

Suggested citation for this online article

Esther Martínez-Garcia. "Are private management models more effective?". Health Policy Monitor, 04/04. Available at