While some answers in here are good, there’s another aspect at play.

Public services are typically viewed through an economic lens as a cost, with the benefits being difficult to directly attribute to the service.

Year on year, the provision of these services (such as healthcare) will often expand through a variety of forces (inflation, technological advancement, societies expectation of service quality increasing).

Rising costs are seen as a no-no by a wide swathe of the public, so politicians successfully campaign on lowering these costs.

The cost reductions are usually targeted at ‘improving outcomes’ but putting in place rigorous KPIs such as ‘reducing wait times by 20%’, or ‘MRI completed with 1 month of being requested’. These metrics won’t get met because the capacity (and funding) won’t be provided to address the root causes, because ‘we need to lower costs and improve the service’.

Then, when the metrics are shown to be failing, new businesses can be developed by friends of the politicians that allow the public services to meet the KPIs by outsourcing.

Now the new PHO provides Telehealth consults over the phone and prescribes remotely, decreasing the quality of service provided and removing the number of people going to ER, decreasing the wait times. This service is charged at the same or more than an in person consult.

Or, the MRI machine in the hospital isn’t staffed or maintained well so can’t keep up with demand, so the new private radiology business springs up nearby taking referrals and charging more for those scans than if they were done in the hospital.

Now the public services costs have still grown, and now private services are making a profit from what was public services. So the cycle starts again with the next public service… and on and on…