Adaptation of public hospitals in Israel to competitive market- private vs. public

01/12/2020 | Dr. Lior Naamati-Schneider | Management (B.A) | Management of Service Organizations (M.A)

Dr. Lior Naamati Schneider, head of Health Track in the Management of Service Organizations program in HAC, had published a new article in International Journal of Organizational Analysis (Emerald Insight) magazine.

About the article

Economic, demographic, and technological changes are causing a steady increase in per capita health costs, which must be checked. In Israel, health system reforms in recent decades have wrought far-reaching changes. Meanwhile, a growing private health system has begun competing unequally with the public system, forcing public institutions to adopt strategies that are contrary to their basic nature.

This study maps 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.

The study used a qualitative data analysis of 40 open-ended in-depth interviews with key figures in the health system and administrators at various levels of management.
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. But 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.

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.

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Read the full article on Emerald Insight