NCPA - National Center for Policy Analysis

Sweden Turns to The Market For Health Care

August 31, 2001

Stockholm, where a quarter of Swedes live, has turned to market competition to provide health care more efficiently than its government-run system. Over the past few years, the Health Services Council in Stockholm has created an "internal market" -- a system of private health care providers within the larger public-financed system -- by contracting health services to private companies.

For decades, Stockholm relied on a municipal health service monopoly characterized by long waiting lists, chronic overspending and flagging quality. Since the experiment began, virtually every sector of Stockholm's health system has undergone some form of privatization:

  • Initially, the experiment included 150 private providers licensed to compete for contracts in the non-medical services, technical services, ambulatory services, small hospital, home care and nursing home sectors.
  • In 1998 the Council began the gradual privatization of all primary care services.
  • In 1999 St. Göran's, one of Sweden's largest hospitals, was sold to the private company Capio AB.

By the end of the experiment's first five years, all but one of the original 150 private contractors had survived and were flourishing. Likewise, by the end of the first year of its privatization, St. Göran's had shown significant improvements over its performance as a public facility.

A government study comparing the costs of services in six medical specialties between physicians in 40 private practices and 20 public hospital outpatient clinics found the costs for some treatments were lower in the private hospital.

In addition, private nursing home costs have fallen 30 percent, and the costs of care among private specialists have been cut by 40 percent.

At St. Göran's, costs for lab and X-ray services, for example, have fallen by 50 percent, and overall costs are down 30 percent. For many types of treatment, private sector doctors have reduced costs 15 percent below the public sector cost.

Source: A. Wess Mitchell (Russell and Phoebe Perry Policy Intern), "Sweden Edges Toward Free-Market Medicine," NCPA Brief Analysis No. 369 August 31, 2001, National Center For Policy Analysis.

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http://www.ncpa.org/pub/ba369/

 

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