Copyright scoop
Edited by ‘acute nose for a good story’ Barbara Fountain, it is difficult to beat NZ Doctor for drilling down beyond the headlines in order for a good solid piece of published reporting on what is happening in Aotearoa New Zealand’s primary healthcare system. a health systems blogger her publication has been invaluable for me for not just the information but also the insights it regularly provides. Scoping New Zealand primary healthcare for offshore profits article by one of her journalists Steve Forbes (23 October; paywalled) on offshore private equity investors seeing potential for big profit returns in our primary healthcare system is an example of this quality reporting and utility: Profits, profits and more profits. Private equity is a form of investment where firms raise capital to acquire and manage private companies with the goal of ultimately selling them for a sizeable profit. These investments typically require significant capital commitments over several years which is what attracts them to corporate general practice owners in particular. article covers Consultancy Corporate Value Associates investigations on behalf of overseas private equity investors interested in New Zealand’s primary healthcare This includes contacting former Health New Zealand (Te Whatu Ora) chair and economist Rob Campbell; not the smartest call given his known well-founded and publicly expressed scepticism of for-profit involvement in the public health system. NZ Doctor was an unintended beneficiary! Forbes reports Campbell observing I think there’s no doubt there’s a lot of interest from private equity in the health sector at the Everyone seems to think there’s going to be a lot of Government money going into primary healthcare and I think they sense, whatever the circumstances are, that there’s going to be more money made available. We’re at a point now where the public health system is being threatened by increasing interest from the private sector. In respect of the potential for private equity companies to dominate the country’s primary healthcare sector, Campbell I think it’s very dangerous for us all. We’re at a point now where the public health system is being threatened by increasing interest from the private sector. There’s a point where it eats into the public system and its ability to fulfil its core functions. I think it’s a dangerous development. As the public system weakens, the private-sector players will target the areas where they can get a return. And the Government is aware of this. The private health system needs the public sector to do the heavy lifting…and deal with complex cases and the services it doesn’t want to I think there are ways that the private and public can work together. But it can become negative if private equity is just picking the eyes out of Expanding corporate Previously (26 September) I posted on the expansion of corporate general practice ownership (shareholder ownership, sometimes including private equity investors, looking to profitably on-sell at the right time for these interests): Growing Subsequently (12 October) I posted on the extension of corporate power into Primary Health Organisations (PHOs): Corporates move into PHOs. As I stated in the second PHOs are critical to the provision of primary health services. Their greatest visibility is over managing funding contracts with general practices to ensure subsidised healthcare for enrolled, usually geographically defined, populations. But their functions are much more than this. Less visible but not less important are population health, health provider support, primary-secondary integration, and innovation (including data and digital transformation). reason, and particularly since the abolition of DHBs, they have been the glue that helps hold the primary health system Mapping general practice An earlier NZ Doctor paywalled feature article (29 October) by fellow journalist Fiona Cassie provided further insights into corporate ownership and influence and also how GP-owned practices and PHOs are responding to what they consider to be threatening behaviour: Key changes in corporates and general practice Cassie provides an annual map of general practice ownership. Her latest map, the subject of this article, shows that the corporate “buying spree has slowed to a crawl”. Despite this, “ownership in general practice is shifting faster than it looks.” shift, discussed further below, is the “…rise of ambitious GP-owned groups, quietly expanding, recruiting differently and maybe changing who controls the future of primary care.” Over the past 12 months the “…steady stream of general practices sold into corporate ownership slowed to a virtual halt…” This is despite nearly 25% of GPs intending to retire within the next two The corporates own around 190 general practices but only two practices were bought in the last years. In part, this is because they are preoccupied with overseas private equity developments. The two biggest corporates presently distracted by these developments from further expansion because they are either for sale (Tāmaki Health) or rumoured to be (Green Cross Furthermore, Tend Health (the third biggest which has recently acquired private equity ownership) and Green Cross Health are busy setting up their own This means that they are focussing on the practices they own delivering on services rather than expanding ownership. Cassie notes in a byline that patient enrolment figures have either fallen at many of the corporate networks in the past 12 months or stayed But there is something else in the Fiona Cassie’s map, by drilling down further, has discovered another new development. This involves eight predominantly GP-owned practice groups owning four or more clinics which she describes as discovering “…a healthy buzz of new activity.” Over the past 12 months they bought five new practices and launched two new start-ups leading to a significant growth in their networks and patient numbers. What characterises them is a high percentage of patient-facing owners (working owner GPs) and a focus on serving their local region. Some are also developing successful “grow your own” pipelines to help address GP recruitment difficulties. alongside this new development is an increasing number of iwi and Māori trust-owned general practices. They are now the largest cluster on the NZ Doctor ownership PHOs stepping up decade ago some PHOs found it necessary to purchase general practices because their GP owners could not sell Last year, Fiona Cassie reports, a movement emerged in which these PHOs sold or gifted some of those practices back to new GP owners. At the same time PHO purchases of general practices were minimal. another related interesting change in the wind. In Christchurch Pegasus Health PHO and the business arm of a Ngāi Tahu iwi rūnanaga announced last month that they were moving to purchase vulnerable practices beginning with the Lincoln Medical Centre. What to make of There is a shared serious worry among GP owners of general practices and Primary Health Organisations about the rising and destabilising influence of corporate owners, through both ownership growth and now being able to set up their own PHOs. further increases when relationships with their local populations start to be fragmented and, even more so, when private equity firms become involved. When push turns to shove, the corporates prime responsibility is to their shareholders rather than to the patients enrolled in their practices. In other words, good old-fashioned profiteering maximisation. This is even more so when private equity is added into the mix. For the GPs and nurses working in these same practices, their prime responsibility is the other way around thereby providing a foundation for difficult working circumstances. There is growing anticipation that Tend Health’s recent first-time injection of Sydney-based private equity was in order to give it sufficient capital to enable it to buy out Green Cross Health. If this were to be the outcome, then it would be a move towards a more powerful monopolisation. Expanding corporate power has incentivised strategically focussed larger general practices and PHOs to respond in innovative ways. Part of this thinking recognises the value of their relationship with geographically defined populations. This is a good thing. The more it develops and expands, the less scope for corporate and private equity profiteering. challenge is, nevertheless, that while the previous Labour government allowed corporates to expand by means of a policy vacuum, the current government is ideologically encouraging Hopefully these endeavours from GP-owned practices and PHOs limits the risks enabled by this ideological © Scoop Media
