Comment by bandushrew | Hacker News Reader

Comment by bandushrew | Hacker News Reader

Parent Full thread

To me the only sensible way to judge privatization is to look at the incentives that are created.

Prisons - If we assume the corporation profit comes from prisoner rent, the private corporation is incentivized to encourage more prisoners and longer sentences.

Im not convinced that is a healthy incentive, and the evidence seems to show it is not.

School privatization - Where does the profit come? if it is based on children/hour then the corporation is incentivized to have more people attending school for longer periods.

that again sounds like a problem to me - you COULD achieve it in positive ways, but you could also achieve it by not teaching anyone anything....or by teaching at a slower rate...

Hospital privatization - This just sounds like a total cluster fuck to me, assuming the corporation makes its profit from rent/medical treatment then the incentives are there to keep patients as long as possible and undergoing as much treatment as possible, while actually curing as few problem as possible...

Some things, are just not meant to be privatized IMO.

The issue is that you assume that the payment models will also encourage the behavior you pointed out.

For example, Medicare doesn't pay hospitals more money to treat patients longer. They pay them a flat rate (based on what an average stay would cost) and that's it. Patient gets better quicker? Great hospital made a big profit. Patient gets more sick and stays in the hospital longer? Well I guess the hospital takes a loss on that patient.

Or the hospitals kicks out patients who are still sick, so they either become someone else's problem, or they make money when they're readmitted.

Aligning incentives is hard.

I would assume that schools are paid by students/year and that someone other than the school gets to decide who goes there (in the real-world examples I've seen this is usually the parents and a lottery system to work out who picks first). The first criteria means the incentive is to get as many students enrolled as they can, but the second one means that no one will enroll if the school's quality falls off.

Hospitals work for care when you have enough time to decide and can look up average costs and results. Certainly not appropriate for car accidents or gunshot victims, but it works if you're getting a early-stage tumor removed and can afford to wait a week.

This does require enough extra space in the local system for people to be able to make a choice.

"The first criteria means the incentive is to get as many students enrolled as they can, "

"but the second one means that no one will enroll if the school's quality falls off."

that statement needs to be qualified, I think. something like "no one will enrol if the school's quality falls markedly below that of its (also private) competitors"

It doesn't need to be the best, just good enough that parents who live in its catchment area have no incentive to travel further to a different school.

"Hospitals work for care when you have enough time to decide and can look up average costs and results. Certainly not appropriate for car accidents or gunshot victims, but it works if you're getting a early-stage tumor removed and can afford to wait a week."

heh. thats a pretty specific use case.

On an almost entirely unrelated note, it would be interesting to see "hospitals" focused on single purpose delivery....literally birth, or early stage tumors etc....

I bet there would be savings available if certain kinds of treatments were treated along a production line.

Both of these examples do rely on the non-existence of a local monopoly, which I would expect the government to enforce. I'm not advocating a government-free environment here; there would also presumably be rules about the minimum quality of education. It's worth noting that charter schools have done very well in DC.

I think you're underestimating the amount of work done in hospitals that can be scheduled ahead of time - there really is a ton of it, especially for older folks. Not all hospital visits are to the ER.

Also, single purpose hospitals would be a bad idea - what if you're delivering a baby and the mother starts bleeding profusely? They'd all need to have their own ER (and the attendant facilities). You'd really just have specialized hospitals, which already exist.

" single purpose hospitals would be a bad idea - what if you're delivering a baby and the mother starts bleeding profusely?"

you would clearly need to provide immediate care, but then move them on as soon as possible to a general purpose hospital.

Here in NZ we already do something like that specifically for birth - mothers have the choice of using a midwife and having a home birth, and the midwives move the mothers on to the hospital only if problems present.

Well, if we can make up incentives then we can come up with scenarios to make anything look bad. Let's judge public equivalents:

Prisons - the US has the biggest prison population in the world. Private prisons are becoming a more lucrative business because of the failure of public prisons to manage the prison population. It's clear that public prisons already had incentive for (or no incentive against) longer sentences.

Schools - the schools have little incentive to teach kids well. Kids in the US fall further behind of their international counterparts. Perhaps public schools are already teaching at a slower rate? In any case, public schools resist tooth and nail any attempt to have them cede kids, territory, and power to private/charter schools.

Hospitals - today in America they are facing huge liabilities due to patients' inability to pay. Keeping patients as long as possible only helps the hospital if patients are actually able to pay for all that treatment, which, seeing how health care was such a hot button issue for the past six years, does not seem to be the case.

Some things, we should question whether it's in our best interests to maintain the status quo (keep them public).

Your prison example just shows poor incentives and not the dangers of privatization. The Prison Union in various states lobbies heavily for more prison time for offenders of all sorts. More prisoners equals more guards equals more money and power.

Change the private contract to pay based on a set capacity and former prisoners getting employed after their sentence and see how it turns out.

* Budget cuts * Firing teachers and making the rest work longer hours

The private equity playbook is fairly consistent.

Reply on news.ycombinator.com