Little Discussion of Social and Health Effects of the Growth of Investor Ownership Among Medical Professionals
by Marcelle Cendrars

“To afford universal coverage, we must first develop a new system that lowers costs and controls inflation without impairing the quality of care.” — The author’s personal physician

In 1980, in the New England Journal of Medicine, Arnold S. Relman called attention to the changing, increasingly commercialized face of U.S. medical care, calling it the “new medical-industrial complex.” (1) The commercialization of U.S. medical services which first began to take shape in the late 1960s is addressed here, focusing on a single aspect of how our health care is saturated with market ideology.

I recently learned about a company that markets an expensive patented device (list price $149,000) that can be used in a doctor’s office for the treatment of back pain. Physicians can buy or lease these devices and, according to the company’s ads, can increase their practice income by several hundred thousand dollars a year.

Under the lease arrangement, the company will install and service the device without charge in exchange for a per-treatment fee from the doctor, who can then charge the patient’s medical insurance enough to make a substantial profit.

The company recommends a series of twenty or thirty treatments for each patient, which can be administered by a company-trained office assistant (allowing the physician to continue seeing other patients). It recommends a fee of $5,000-$7,000 for each patient so treated. The company also provides marketing advice and materials designed to recruit new patients and generate referrals from other doctors.

The device itself is approved by the FDA as “safe and effective” but has not yet been systematically compared with the many other techniques for the treatment of back pain. Neither is there any good evidence on the duration of the benefit afforded by this device.

The company’s advertising materials emphasize the financial benefits to physicians at least as much as the alleged (but still unproven) benefits to patients.

Why have the consequences of this sort of commercial transformation of medical care generated relatively little concern among health policy experts? A few authors have written about this phenomenon, but virtually no connections have been made between it and the current problems of our health care system.

Health policy articles often consider whether we should rely largely on market forces or on government regulation to control health care costs and whether private insurance should be based on employment or individual ownership. But there is little discussion of the social and health effects of the growth of investor ownership and the transformation of health care into a gigantic profit-oriented business.

Seth Sandronsky’s “California’s Raging Health Care Crisis” (http://www.counterpunch.org/sandronsky01272008.html) does an excellent job of putting in a plug for a) ABXl-1 (the Nunez-Perata Health-Care Reform Bill), b) Democratic Senator Sheila Kuehl’s SB840, and c) The California Health Security Plan (which many forces are trying to get signatures for as a November constitutional ballot initiative), the three of which collectively represent, arguably, the greatest effort nationwide to make significant change in health care. (2)

But the growth of investor-ownership among medical professionals is hardly being addressed by anyone these days; for all practical purposes it’s ignored in the three efforts above.  And too little that’s positive will come about without such discussion, inclusion…no matter what legislation is pushed through. (3)

You can get all the “coverage” you want, but if your Doc doesn’t honestly tell you “what’s up” we’re all going to stay down vis-a-vis health care.

And the way things are going –with growing numbers of medical schools offering joint programs leading to combined M.D.-M.B.A. degrees– the relationship between doctor and patient will increasingly resemble the relationship between vendors and consumers in commercial markets in general. (4)

Special note: To see more details concerning how physicians have become increasingly involved in entrepreneurial ventures in health care, and how the ethics of medical professionalism are being undermined by commercialization of medical care, review a) Jerome P. Kassirer’s On the Take: How Medicine’s Complicity with Big Business Can Endanger Your Health (Oxford University Press, 2005), b) Marc Rodwin’s Medicine, Money and Morals: Physicians Conflicts of Interest (Oxford University Press, 1993), and/or c) Arnold S. Relman’s “What Market Values Are Doing to Medicine” (Atlantic Monthly, March 1992, pp. 99-106.

However, for those who do not have time to research, I can offer up a general take on what the basic stranglehold is that’s being addressed here. In short, when a large enough part of the system becomes an investor-owned industry, continuous growth of revenue (meaning increased expenditure on health care) is a fundamental imperative for the providers. Furthermore, insurance coverage reduces the concerns of beneficiaries about expenditures. And given the fact that the demand for most medical services is determined by professional medical judgment, neither consumers nor payers have much leverage in controlling expenditures. That is especially true if the medical judgment is exercised by physicians who benefit financially from each service that is provided. It stands to reason that a commercially motivated health care system will be constantly pushing for the delivery of more services, because the providers who profit from increased expenditures will resist all efforts at cost control. So long as that system remains, we cannot expect much from attempts at controlling expenditures.

Footnotes:

(1) Arnold S. Relman, “The New Medical-Industrial Complex,” New England Journal of Medicine (1980) 303:963-997.

(2) The Nunez-Perata reforms, backed by Governor Schwarzenegger, just (as I was submitting this to Partisan) were defeated. That’s in part because it’s clear that expanding our current system of employer-based coverage is not nearly enough…if you’re going to have genuine reforms. The stranglehold on our healthcare system is greatly a function of physicians not being in well-managed multi-specialty groups, ambulatory facilities and hospitals which are investor-owned, the ratio of specialists to primary caregivers, and the influence of PhARMA, among other elements not sufficiently addressed by Arnold S. or his colleagues. Not even Sheila Kuehl’s SB 840, also called “single payer” or “universal health care,” which establishes one payer for all health care needs, is enough of a change. See this article’s opening quotation. Anyone interested in further details on this should contact the author.

(3) See Arnold S. Relman’s A Second Opinion: Rescuing America’s Health Care (New York: The Century Foundation, 2007) which was indispensable in the writing of this article; Chapter 1 makes an excellent case for the idea that current proposals for health care improvement (like the ones noted in Sandronsky’s article) need to include greater consideration of the conflicts of interest which now pervade the practice of medicine.

(4) There’s also the related problem of investor-owned health insurance businesses. Dr. William McGuire became a billionaire while serving as the chairman and CEO of UnitedHealth Group, the country’s largest investor-owned health insurance business; he was exposed by the Wall Street Journal (hardly an enemy of business) April 18, 2006. That was while patients and doctors were feeling the pinch. The enormous profits and overhead costs which investor-owned insurance companies take out of the system are not warranted, to say the least.

Marcelle Cendrars can be reached at bcendra@yahoo.com.