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                                                     A hospital case

    Sweden is leading the world in allowing private companies to run public institutions

    Saint Goran's hospital is one of the glories of the Swedish welfare state. It is also a laboratory for applying business principles to the public sector. The hospital is run by a private company, Capio, which in turn is run by a consortium of private-equity funds, including Nordic Capital and Apax Partners. The doctors and nurses are Capio employees, answerable to a boss and a board.

    Welcome to health care in post-ideological Sweden. From the patient's point of view, St Goran's is no different from any other public hospital. Treatment is free, after a nominal charge which is universal in Sweden. St Goran's gets nearly all its money from the state. But behind the scenes it has led a revolution in the relationship between government and business. In the mid-1990s St Goran's was slated for closure. Then, in 1999, the Stockholm County Council struck a deal with Capio to take over the day-to-day operation of the hospital. In 2006 Capio was taken over by a group of private-equity firms led by Nordic Capital. Stockholm County Council recently extended Capio's contract until 2021.

    St Goran's is now a temple to “lean management" - an idea that was pioneered by Toyota in the 1950s and has since spread from car-making to services and from Japan to the rest of the world. Britta Wallgren, the hospital's chief executive, says she never heard the term “lean" when she was at medical school (she is an anaesthetist by training). Now she hears it all the time.

    The hospital today is organised on the twin lean principles of “flow" and “quality". Doctors and nurses used to keep a professional distance from each other. Now they work (and sit) together in teams. In the old days people concentrated solely on their field of medical expertise. Now they are all responsible for suggesting operational improvements as well.

                                                                                          Internet: < www.economist.com> (adapted).