Private Investment in Hospitals: A Comparison of Three Healthcare Systems and Possible Implications for Real Estate Strategies

Abstract

Objectives:

This article explores lessons to be learned from three different healthcare systems and the possible implications for the management of healthcare real estate, in particular in connection to the Dutch system. It discusses similarities and differences among the different systems, in search of possible consequences on cost, financing, and design innovation.

Background:

To keep healthcare affordable in the future, the Dutch government is currently in the process of changing legislation to move from a centrally directed system to a so-called regulated market system. The deregulation of real estate investment that accompanies the new healthcare delivery system offers healthcare organizations new opportunities, but also more responsibility and greater risk in return on investment. Consequently, healthcare organizations must find new methods of financing. Private investment is one of the options.

Methods:

Three healthcare systems were analyzed on the basis of a literature review and document analysis, then schematized to show similarities and dissimilarities with regard to private investment in hospitals. Observations are based on a selection of recently published articles on private-sector financing and its implications for healthcare real estate decision making in the Netherlands, the United Kingdom, and Germany.

Results:

The strengths and weaknesses of three healthcare systems with differing proportions of private and public investment in hospitals were explored. Research revealed a gap between intended effects and actual effects with regard to quality and cost. Costly private finance does not necessarily lead to “value for money.” Transferring real estate decisions to private investors decreases the influence of the healthcare organization on future costs and quality.

Conclusions:

The three healthcare systems show substantial differences between public and private responsibilities. Less governmental involvement affords both opportunities and risks for hospitals. Private investment may lead to innovation, improved efficiency, and cost reduction, provided that the costs and benefits of decisions are not separated between different stakeholders. A missing link between infrastructure provision and healthcare delivery may impede design innovation and optimal adaptation to work processes and could lead to an inefficient allocation of risks and benefits.