Is Medical Care a Good Business?

For the past several decades, America has been experimenting with applying the principles of business to our health care system. Many believed that by unleashing the power of markets, health care costs would be controlled and access and quality improved.

That experiment has been a spectacular failure. Today, a larger percentage of Americans lack health insurance or are seriously under-insured than at any time since the enactment of Medicare and Medicaid 46 years ago. That number is increasing every day.

Health care costs are at levels never before seen anywhere in the world and are increasing in an uncontrolled and unsustainable way. Despite our high per-person costs — double those of other developed countries — tens of thousands of Americans die every year from lack of timely access to health care.

The degree of interference with doctors’ and patients’ health care decisions that exists in America today would not be tolerated anywhere else in the world. “Death panels” do exist in America, but they are run not by government but by private corporations. Their purpose is to maximize profits.

Americans are unique in the world in thinking about health care as a business. In no other country is that notion so widely and unquestioningly accepted.

In his landmark 1983 book about the sociology of American medicine, Paul Starr describes its evolution throughout much of the 19th and 20th centuries as being driven primarily by mission — preventing illness when it could and diagnosing, treating, curing and comforting patients when it couldn’t. In the early 20th century, George Merck, founder of the large pharmaceutical company bearing his name, provided an example of this approach when he said “If we develop good medicine that cures people, money will take care of itself.” Mission, not money, motivated most of those involved in medical care.

Starr’s book describes the successful efforts of physicians to block the creation of health care as a right of all Americans during the first half of the 20th century. They were afraid of a government takeover of medicine. But, Starr warned, the real threat to the autonomy of American doctors was not government, but corporations.

Now, almost thirty years later, Starr’s warning has come true. Large corporations, many of them for-profit and publicly traded now dominate the financing and delivery of American medical care. As Melody Petersen has documented in her book “Our Daily Meds,” instead of embracing George Merck’s philosophy, pharmaceutical companies have become huge marketing machines. They now are focused far more on their profitability than on their healing mission. Producing medicine that cures diseases instead of just treating symptoms has become a bad business model. Once a disease is cured the customer disappears and profits decline.

It was not always this way. Thinking about medicine shifted during the late 1970s due to the belief that what was needed to cure the rising costs and increasing numbers of uninsured was a more businesslike approach. Business schools began to offer courses in health care and doctors began to acquire MBAs.

The culture and vocabulary of health care underwent a remarkable change. Where hospital directors used to be called “administrators,” they became CEOs. What used to be called “hospital services” became “product lines.” Those who used to be called “patients” became “market share.” Advertising by doctors and hospitals, once considered unethical, became commonly accepted.

Although these changes resonated with many Americans, there was one huge problem. The mission of health care is very different from the mission of business. Health care is about keeping people healthy or returning them to health when they become ill. Business is about generating wealth for its owners. In investor-owned businesses, wealth comes in the form of profits. In nonprofit businesses, it is in the form of unchecked expansion and high executive compensation.

Both health and wealth are missions that have their places. But in health care they often conflict. In Maine, 80 percent of doctors are now corporate employees. In too many cases, corporate executives, not caregivers, are calling the shots. In today’s corporate health care industry, physician “productivity” is often measured not by patient health but by profit.

That conflict explains why so many doctors are becoming so frustrated with their profession. Likewise, many patients are becoming distrustful of our increasingly corporatized and bottom-line-driven health care system and of their own doctors. But trust is crucial to healing.

The corporate takeover of health care in America is one of the most important factors driving the explosion in health care costs and the rising number of Americans without timely access to medical care. This change in the culture of American health care from a mission of healing to a mission of profit has had profoundly damaging consequences.