These include nonprofit boards resembling their for-profit peers, for-profit subsidiaries for new service areas, joint ventures with proprietary physician groups or specialized for-profit companies, and more. Today’s nonprofit health care providers engage in advertising, marketing, and other business practices that have long typified for-profit companies. Gray and Schlesinger observe that the for-profit sector’s impact extends beyond its walls:Įven where nonprofits have maintained their role in health care, they have often responded to the challenges confronting them by becoming institutionally more like commercial enterprises. The most rapid path is via acquisitions, and many of the publicly traded health care companies have gone through periods of omnivorous growth, fed by high stock prices, which in turn were fed by the expectations and fact of further growth. Since a company’s access to capital and the wealth of its executives are a function of stock price, investor-owned corporations have strong incentives to grow. The stock price of publicly traded companies is a function of both the company’s earnings and investors’ expectations of future earnings. ![]() As Gray and Schlesinger note in The State of Nonprofit America, ![]() 6Īlthough for-profit ownership growth of acute care hospitals was not as dramatic, most for-profit hospitals are now part of investor-owned national chains. Not all sectors saw such growth-for example, for-profit ownership of nursing homes dropped from 75% to 68%-though the growth in homes claimed by investor-owned corporations since the 1970s has been explosive. Between the mid-1980s and the late 2000s, for-profit ownership of dialysis centers rose from 42% to 78%, rehab hospitals from 15% to 61%, in-home health from 36% to 68%, and hospices from 13% to 53%. The transformation can be seen within health industry sectors. Between 19, while the overall Standard and Poor’s (S&P) 500 Index grew 696%, from 348 to 2419, the S&P 500 Health Index of stocks increased by 1389%, from 66 to 921, twice the rate of the overall index (data obtained from Compustat Health Index is unavailable before 1989). Relman and Starr foresaw that the investor-owned health sector would grow. the rise of corporate enterprise in health services, which is already having a profound impact on the ethos and politics of medical care as well as its institutions.” 5 (p420–421) ![]() In Paul Starr’s 1982 Pulitzer Prize–winning book, The Social Transformation of American Medicine, he presciently titled his final chapter “The Coming of the Corporation,” predicting that “the last decades of the 20th century are likely to be a time of. 4 In 1979 alone, net earnings of health companies with public stock shares rose by 30% to 35%, with more banner years ahead, Relman reported. Health Care Spending as Percentage of Gross Domestic ProductĪrnold Relman, late editor of the New England Journal of Medicine, described what happened in a 1980 article, “The New Medical Industrial Complex,” documenting “a vast array of investor-owned businesses supplying health services for profit-services heretofore provided by nonprofit institutions or individual practitioners” including hospitals, nursing homes, home care, laboratory and other services, hemodialysis, and more. When and how did we get to this place, and is there any way out? Financial incentives to order more and do more-to default to the most expensive treatment for whatever ails you- drive much of our healthcare. ![]() These days our treatment follows not scientific guidelines, but the logic of commerce in an imperfect and poorly regulated market, whose big players spend more on lobbying than defense contractors. Rosenthal, a medical doctor and now editor of the Kaiser Health News, pulls no punches and lets no one off the hook, including health insurers, hospitals, physicians, drug and medical device makers, ancillary service providers, home health companies, contractors, researchers, philanthropists, and more: In short, her answer is a five-letter word, g-r-e-e-d. Instead it attends more or less single-mindedly to its own profits. In the past quarter century, the American medical system has stopped focusing on health or even science. What really ails the US health care system? My answer is documented in the compelling 2017 book by Elizabeth Rosenthal called An American Sickness: How Healthcare Became Big Business and How You Can Take It Back, 1 which was reviewed in AJPH by Fox and Grogan.
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