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Hospitals rely on private sector funding more and more

The Canadian Institute for Health Information (CIHI) reports that total expenditures on Ontario hospitals increased to $23.7 billion in 2016.

This is an increase of 2.4% since 2015 and 6.1% since the 2012. While provincial government expenditures increased 4.7% over the four years between 2012 and 2016, private sector expenditures on hospitals increased at a much faster rate -- 15.8%That is more than three times the percentage increase of the provincial government increases. 

Private sector expenditures increased $124.9 million in 2016 to $3.62 billion.  That was a typical increase. The four year private sector increase was $493.1 million, averaging $123.3 million per year.  

That's  a lot more than chump change. Key types of private sector payments to hospitals are payments by private insurance companies and out-of pocket payments by individuals. 

Hospitals are now relying significantly more on private sector funds.  In 2012 private sector expenditures accounted for 13.99% of total expenditures on hospitals but by 2016 they accounted for 15.27%.  

Looking deeper, this in fact continues a decades long trend of an increasing portion of expenditures on hospitals coming from the private sector.

In 1975 just 6.17% of expenditures on hospitals came from the private sector.  But this has continuously increased:

• 10.57% in 1985
• 11.95% in 1995
• 13.34% in 2005
• 13.99% in 2011
• 15.09% in 2015
• 15.27% in 2016

The average increase in private sector expenditure on hospitals since 1975 has been 8.9%  compared with a total average expenditure increase on hospitals of 6.4%.  Over the last 41 years, private sector percentage increases have averaged almost one-third more than public sector expenditure increases. 
Private sector payments to Ontario hospitals compared to total payments to hospitals
Over the last four years, however, private sector percentage expenditure increases have been over twice as much as total expenditure increases.

Here is a comparison of the annual percentage increases for the last four years:





This is an alarming trend -- private payments are made for a purpose and that purpose is likely access to some aspect of hospital service on better terms than the general public.  

As this change is four decades long, it likely reflects some deeply entrenched trends that will not be easy to reverse, unfortunately. It certainly sounds like it fits with the squeeze of public services and the increasing inequality that has characterized developed capitalist societies since the 1970s.   

But the larger role of private sector expenditures on hospitals also indicates that provincial government or public sector expenditures no longer paint a full story of hospital funding. 

Even with provincial government (austerity) expenditure increases of only 4.7% over the last four years, total expenditures on hospitals increased 6.1% thanks entirely to a 15.8% increase in private payments.

The relevant CIHI numbers are embedded below. (For all the CIHI health care expenditure data download "data tables" on this CIHI hyperlink)






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