Public-private: unequal competition Israeli public hospitals vs the private health-care system following government reforms

Abstract

Purpose This study aims to map perceptions and changes in public hospitals in response to competition with the private health system, describes solutions adopted by the public hospitals and considers their implications for the business and strategic management of those hospitals. Design/methodology/approach This paper opted for a qualitative study using the open-ended approach of grounded theory, including 40 in-depth interviews with key figures in the health system and administrators at various levels of management. Findings Public hospitals are constantly adopting changes because of state-mandated reforms and growing competition with private hospitals. Notable measures include making hospitals customer-oriented and adopting business-oriented behaviors and competitive and marketing strategies. However, because public hospitals are unable to institute radical changes, they typically introduce hybrid services (private services within public services) and other creative solutions such as business-funded research foundations operating alongside them. Research limitations/implications The main methodological limitation of this study was the difficulty in obtaining data because of the limited cooperation and lack of transparency of Israel’s health-care system. The interviewees expressed concerns that their department or hospital would appear in a negative light, especially as motivated solely by financial considerations. In anticipation of this difficulty, requests for participation were addressed individually and contained extensive detail regarding the study, the ethics committee’s approval, the data gathering and the strict maintenance of anonymity and confidentiality. Originality/value Adopting business-oriented behaviors in public hospitals is somewhat contrary to the principles of public medicine. Their adaptation to the market is partial, and their creative hybrid solutions require state regulation. The absence of controls leads to duplication and waste, causing various problems, including increased social inequality, costs and deficits.