The New Health Care for Profit Doctors and Hospitals in a Competitive Environment (1983) / Chapter Skim
Currently Skimming:
An Introduction to the New Health Care for Profit
An Introduction to the New Health Care for Profit
Pages 1-16
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From page 1... ...
Health services are now being provided by thousands of for-profit organizations that range from large investor-owned hospital and nursing home chains, whose stock has rapidly appreciated on the New York Stock Exchange, to various types of independent medical facilities—such as ambulatory surgery centers, cardiopulmonary testing centers, etc. owned by local investors who often are also physicians.
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(An interesting and largely unrecognized aspect of the growth of the large proprietary chains in the past decade is that it has apparently decreased the amount of direct physician ownership and entrepreneurial control of hospitals.) Some physicians also have owned pharmacies, laboratories, and radiology units and have engaged in specialty referral networks and self-referral.
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More than three-quarters of nursing homes are proprietary,5 and about 40 percent of hemodialysis in this country is provided by profit-~naking units.6 For-profit organizations now provide emergency medical services, home care, mobile CAT scanning, cardiopulmonary testing, industrial health screening, rehabilitation counseling, dental care, weight control clin~cs, alcohol and drug abuse prograrnLs, comprehensive prepaid HMO programs, and laboratory and related services. An example of the proliferation of specialized for-prof~t health care organization is the existence of a trade association for "urgent care centers," which are estimated to number 500 to 600.7 Gorse analogous changes are also taking place in the not-for-profit health care sector.
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From page 4... ...
Other consequences may affect the future well-being of such important activities as graduate medical education, research, and care of indigent patients that have been at least partially subsidized through revenues from paying patients. This changing atmosphere may also have important implications regarding the plausibility of the beliefs and assumptions that have given patients the confidence to entrust their well-being to physicians and that have led society to vest control of a vital component part in a relatively autonomous profession.
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From page 5... ...
shift from clients to colleagues in the orientation of work, which professionalism demands, represents a clear departure from the normal rule of the market.9 Thus, the growth of the for-profit sector in health care provides a reason to reconsider the assumptions on which so much of our health policy has rested. Professional Autonomy, Trust, and Health Policy Our entire health care system is organized largely to carry out decisions made by highly autonomous and independent physicians.
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in the technical competence of medical practitioners to decide what drugs to give to patients under what circumstances. Distrust may also lead patients to seek independent sources of information or to seek help from outside the health care system.
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Such skepticism is influencing health policy in such ways as regulatory efforts to change physicians' patient care decisions by modifying the economic incentives to which they are seen as responding. Our dominant medical institutions hospitals have their origins in charity and local government and have long been seen as existing primarily to serve a public interest.~5 Nonprofit hospitals benefited from tax exemptions and had public funds and charitable donations as the primary sources of money for construction.
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From page 8... ...
A second source of power stems from the increasing willingness of physicians to enter into direct competition with hospitals for certain types of patients a development seen, for example, in the growth of physician-owned ambulatory surgery centers. However, hospitals, particularly those that are part of a chain, are not without their own sources of power in relation to physicians.
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From page 9... ...
The physician with an economic stake in the full utilization of a facility has an apparent conflict of interest when evaluating patients' needs for the type of service that the facility provides. Finally, there are situations in which physicians enter into incentive arrangements with institutions such that the institution rewards the physician for making patient care decisions that benefit the institution.
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From page 10... ...
They are being published at the beginning of a two-year study that will describe the ways that physicians are becoming engaged in forprofit health care enterprises; will summarize information about the consequences of physician involvement in different forms of for-profit enterprises; will discuss the functions of "profits" and how these func-' tions are met in not-for-profit organizations; will analyze the public policies and economic forces that are contributing to the growth of for-profit enterprise in health care; and will examine professional and ethical issues in conflict-of-interest, professional autonomy, and public trust.
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Siegrist, dr.'s paper treats a distinctive feature of investor-owned hospital management companies the fact that their stock is traded on the stock exchange. Siegrist describes the major hospital management firms from the perspective of the investment analysts who follow them.
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Does the development of for-profit medical care represent a change in the goals pursued by medical professionals and institutions, or is it only a change in the methods by which the traditional goals of service are pursued? Does the growth in for-profit health care represent a decline in the ideals that morally anchored a powerful profession and facilitated necessary patient trust, or does it embody a more honest acknowledgment of realities that have always been present?
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From page 14... ...
One of the most interesting aspects of the emergence of the forprofit sector is that, in this era of heavy government involvement in the financing and regulation of health care, no government program or policy set out to create a for-profit sector. Nevertheless, various governmental decisions have helped create an environment in which for-profit health care organizations have been able to compete very successfully.
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From page 15... ...
The growth in the number of hospitals owned by management companies has been substantial, particularly in light of a slight decline in both the number of hospitals in the United States and in the investor-owned sector, as shown below: Independently Owned Investor-Owned Total U.S. Community Proprietary Chain Hospitals Hospitals Hospitals Hospitals 1977 7,099 5,881 584 420 1981 6,933 5,813 not available 586 1982 not available not available 377 668 Between 1977 and 1981 there was a 2 percent decline in the total number of hospitals, a 1 percent decline in the number of community hospitals, and a 40 percent expansion of management-company ownership, followed by another year of substantial growth (14 percent)
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From page 16... ...
; Paul Starr, The Social Transformation of American Medicine (New York: Basic Books, 1983) ; Rosemary Stevens, " 'A Poor Sort of Memory': Voluntary Hospitals and Government Before the Depression," Milbank Memorial Fund Quarterly 60 (Fall 1982)
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