Would Allowing Privately Funded Health Care Reduce Public Waiting Time? Theory and Empirical Evidence from Canadian Joint Replacement Surgery Data

Production and Operations Management · 2015 · Volume 24 · Issue 4

Abstract

This study develops a theoretical model and then, using Canadian joint replacement surgery data, empirically tests the relationship between government policies that promote privately funded health care and patients’ waiting time in the public health care system. Two policies are tested: one policy allows opt-out physicians to extra-bill private patients, and the other provides public subsidies to private patients. We find that both policies are associated with shorter public waiting time, and that the subsidy policy appears to be more effective in waiting time reduction than the extra-billing policy. Our findings are consistent with a dominant demand-side effect in that these policies would provide patients an option, and some incentive, to opt out of the public health system, shifting the demand from the public health system to the private care market.

Keywords

health care waiting time, elective surgery, health policy, privately funded health service

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