Veteran journalist Ann MacMillan signed on as a reporter-producer for CBC TV in London in 1981. She is now Managing Editor of the CBC London Bureau.

While based in London, MacMillan has reported on a variety of events for The National, including the Royal Weddings, the death of Diana, Princess of Wales, major anniversaries of The Second World War, peace efforts in Northern Ireland and other European stories.

Sweden's health system is held up as a model of cost effective efficiency. But 30 years ago, it was a very different story.

Waiting lists were long, hospitals run down and health workers' pay low. With an aging population and demands for health services increasing, the government decided drastic action was necessary. One of the more controversial reforms encouraged groups of health workers to set up private clinics that then sold their services back to the government.

In Sweden, local governments are responsible for managing health care, paying around 80 per cent of all costs. An additional four per cent comes from user fees. Patients pay 100 krona ($15) for every visit to a doctor, 250 krona ($37) for a specialist. Central government makes up the balance. Unlike Canada, doctors and other medical staff are on annual salaries.

Stockholm, the largest local government, pioneered private clinics. Under the system, known as the Stockholm model, the government pays the private sector to provide a wide range of services. Someone who needs a hip replacement, for example, can go to a state funded hospital or to a private clinic at government expense. Patient choice is paramount and the public sector is forced to compete with the private. Today, more than half of Stockholm's primary care is supplied by private companies.

Frida Peterson suffers from Crohn's disease, a bowel disorder. When her public-sector doctor retired, she searched the internet for the best specialist in Sweden.

She found Prof. Robert Loftberg, who runs a clinic at the private Sophiahemmet Hospital in Stockholm. She prefers the private experience because she says there is a more relaxed atmosphere and she gets 30 minutes per appointment compared to 15 in the state sector.

Workers benefit from two-tier system

Peter Seger, the head of Sophiahammet Hospital, says private clinics are more efficient and cost effective than their state-run counterparts because they are more highly organized and make better use of resources.

You might think unions would object to private medicine but not in Sweden.

Health workers have benefited from competition between private and public sectors: There are collective agreements in both sectors.

Anna Karin Eklund, president of the Swedish Association of Health Professionals says the fact that workers can choose between private and state employers has led to improved working conditions, higher salaries and more job satisfaction, particularly in private clinics.

The Barnsmorskorna Maternity Clinic occupies a beautifully decorated building overlooking Stockholm harbour. Helena Bonde is one of 22 midwives employed by company that owns the clinic.

She's kept fully informed about how the business is doing, which she says makes her work harder. She knows if the company is profitable, she'll get a bonus. She also feels closer to the decision makers. When she suggested changes in the way newborn babies were treated, her ideas were put into effect within days something she says would never happen in the bureaucratic state clinic where she used to work.

There are critics of the Stockholm model. Some say it benefits more highly educated, better off people who know how to work the system to their best advantage.

Easy access to virtually free health treatments can also lead to overconsumption. There are more clinics in Stockholm, per capita, than there are in California.

But what really worries Marten Ingvar, professor of cognitive neurophysiology at the famous Karolinska Hospital, a state-funded establishment, is that the private sector has no time for research, development or for really serious medical cases.

Healthy public sector crucial

He uses the example of a clinic that is contracted to supply 38 hip replacement operations each year. Since the clinic is out to make a profit, it wants patients who can be moved through the system quickly, without complications. If someone needing a hip replacement also has diabetes or a mental health disorder, a private clinic would not want to treat him because too much care would be required. He says making a commodity out of health care favours those with the easy disorders.

For him, it's crucial to have a healthy public sector to insure all patients' needs are met.

In the end, the reforms started in the 1970s appear to have paid off: Waiting lists have been reduced; there are state of the art hospitals and clinics and most health workers seem satisfied with pay levels.

But there are challenges ahead. Sweden has the highest proportion of senior citizens in Europe. Nearly 20 per cent of the population is over the age of 65 compared to 12 per cent in Canada. But Sweden spends less per capita on health care than Canada and life expectancy is higher.

Experts say that has a lot to do with using private health clinics for the public good.