State Takes Aim at Israel's Largest Private Hospital Chain in Bid to Curb Private Medicine

If reform inititive is unsuccessful, Assuta could be forced to provide public medicine only.

PR

The finance and health ministries are working on a plan to force Israel’s largest private hospital chain to dedicate its services exclusively to the public health system, as part of a proposal to curtail the operation of private medicine at the expense of Israel’s public health system.

The ministries intend to push through the plan if their current initiative to cap private hospitals’ revenues is unsuccessful.

Currently, half of all medical care at the Assuta chain of private hospitals is provided on behalf of Israel’s public medical system, meaning that it is paid for by the HMOs. Some 60% of care provided at the hospital’s largest branch, in Tel Aviv’s Ramat Hahayal neighborhood, is private; at the other branches, the most of the care is public.

While the majority of operations at Assuta are funded privately – often via private health insurance policies taken out through Israel’s insurance companies – Assuta’ provides public care in fields such as oncology, dialysis and cardiology.

The plan is based on the recommendations of a committee led by Health Minister Yael German, that was charged with finding ways to strengthen Israel’s public health system. That committee recommended limiting the scope of private health services offered by Assuta, as well as Israel’s public hospitals and private medical clinics.

The ministries stated that they hoped to have the private health system reform implemented through the Economic Arrangements Bill, which accompanies the budget.

According to the committee, the biggest threat to Israel’s public health services is the growth of private medicine, alongside the unequal regulation imposed on private and public medicine.

Figures provided by the committee indicate a 64% jump in the number of operations carried out by private hospitals between the years 2007 and 2011, versus a 4% increase at public hospitals. They also include a double-digit increase in the number of hospital stays funded by the private health system. In addition, Assuta’s revenues have nearly doubled over the past few years, and are now 1.5 billion shekels annually.

The government argues that this comes at the expense of public medicine, which uses the same doctors and nurses as the private medical system, while also being forced to fund expensive necessities such as emergency rooms and internal wards and the legal obligation of not turning patients away.

The proposal would impose a heavy tax on Assuta’s private activity beyond a cap, set at 95% of the hospital chain’s revenues from private medicine in 2013. Tax revenues would be used to shorten the wait for services within the public health system.

German’s reform also calls for blocking patients from hiring doctors privately in order to carry out operations. Instead, payment would pass through the hospital, which would pay the doctor’s salary.

The proposal also calls for a 15% surcharge on medical tourism, and on dropping the VAT exemption that medical tourists enjoy at private hospitals.

Not surprisingly, these proposals are drawing objections from hospitals and doctors, who have hired lobbyists and lawyers to campaign against them.

If Assuta is blocked from receiving payment from sources other than the HMOs, it could have broad implications for Israel’s insurance industry. Some 70% of Israelis have private health insurance, and a major component of this insurance is private operations. Assuta has some 80% of Israel’s private operating theaters.