Medicine as A Business

No margin, no mission.

Sister Irene Krause (1924-1998), CEO of Daughters of Charity National Health System

The first test of any business is not the maximization of profit but the achievement of sufficient profit to cover the risks of economic activity and a thus to avoid loss....What is the bottom-line when there is no “bottom line?”

 

Peter F.Drucker (1909-2005) , Management, Tasks, Responsibilities, Practices,  Harper and Row, 1974; and Managing the Non-Profit Organization, Harper Business, 1990

On February 4, The New York Times published the following letter from Howard A. Corwin, MD, a former clinical professor of psychiatry at Tufts.  The Times titled the letter as “Invitation to a Dialogue: Health Care for Profit.”

Here is the letter.

To the Editor:

Recent accusations against the for-profit hospital chain Health Management Associates (“Hospital Chain Said to Scheme to Inflate Bills,” front page, Jan. 24), including that it put pressure on doctors to admit patients to increase profits, demonstrate the destructive power of the corporatization of medicine on the practice of medicine. The ethical base is lost when businesspeople take over and destroy the traditions of medical practice. Hospital Corporation of America, the nation’s largest for-profit hospital chain, is under investigation for similar practices.

Leaders of corporate America care little about the credo that established medicine as a noble profession, operated not for profitability but for the good of the patients. Sadly, doctors within the corporate system who have opposed fraudulent and illegal practices designed to maximize profitability are punished and terminated. Meanwhile, the white-collar criminal behavior of corporate executives is not adequately punished.

Such practices have a corrosive effect on independent doctors as well. This leads many to game the system and find loopholes to maximize profits. Costs soar. Hospitals and medical schools are often complicit.

Many decent doctors deplore the changes in health care delivery systems that foster such abuses. But I find it hard to be heard when I speak of accountability. I call on our current and next generation of medical school graduates to have the vision and courage to take back the leadership of medicine and restore its right to be considered a noble profession.

Howard A, Corwin, MD, former professor of psychiatry,  Tufts University School of Medicine
Naples, Fla., Feb. 3, 2014

 .

Here are excerpts of four letters of response.   Three of the letters agree with Doctor Corwin. One does not. 

Except from Letter Number One

Asking new graduates to take back medicine is not the solution. Instead, we must open up a debate about whether we consider health care a basic right rather than a commodity.  If so, then we move towards some sort o universal single-payer system.  If not, we should resign ourselves to futher encroachment by the corporations and invite the executives into bedside rounds each morning.

Prameet Singh, MD, Psychiatrist, Bronxville, NY

Excerpt from Letter Number Two

Physicians have compounded the problem by choosing to become employees of hospitals.  Hospitals, whether profit or nonprofit, usually behave like business corporations seeking more income.

Corruption of the independent professional practice of medicine could be avoided if physicians chose to join non-profit doctor-managed groups, and their patients actively supported the kind of basic reform advocated by Physicians for National Health.

Arnold Relman, MD,  professor emeritus of Medicine and former editor in chief of New England Journal of Medicine, Cambridge, Massachusetts

Excerpt from Letter Number Three

Doctor Corwin is right about the “destructive power of the corporization of medicine,” but sadly, the problem is much broader than for-profit hospitals since nonprofits (the majority of health care systems) are also driven by businesspeople…The problem is that medicine is a business today rather than a profession.

Walt Grazer, cancer patient at top-rated hospital system

Excerpt from Letter Number Four

I strongly disagree that the profit motive is running health care.   I come to this conclusion as a chief financial officer who has worked for many industries over the last 25 year, including “for profit” hospital companies. ..Having lived through hospital bankruptcies in New York City over the past 10 years, I have had a ringside seat to market economies at work. ..It is naive to think that money to treat patients magically appears from taxpayers or insurance companies. We are all captive to the fee-based system we have, and like other C.F.Os in this horrifically low-margin business, we have to figure out how to make money.  I, like many, wish it were different; but health care follows principles like any other business, which includes the need to pay its bills, such as doctors’ salaries…The loss of each of these hospitals had its own story, but they were all losing money.  The survivors have one thing in common: They figured out that to survive they had to be profitable.

Patrick Seiler, former hospital C.F.O,  Brooklyn, New York

To which, Dr. Corwin responds, in part.

The heart of the doctor is the soul of medicine.  Historically the doctor-patient relationship has earned medicine recognition as a noble profession. Corporatization keeps doctors from practicing that time-honored tradition.. . Capitalism is right for many fields but not medicine… The next generation of sophisticated and caring doctors ..can be the engine of change and take back medicine from business domination.  Their vision, courage and idealism can lead us to a well-managed, government sponsore , single –payer universal health care.

My Comment

The propositions that  business persons are universally bad and medical people are universally good, that government is more efficient than the private sector, and that universal coverage can be provided with no profit required of participants in such a system, whether in the government or private section, whether we are deemed profit on nonprofit,   has  always struck me as absurd.  We all must pay our bills, and we all  must maintain margins.   Doctors have educational debts and expenses,  malpractice premiums, regulation expenses,   and staff salaries to meet.  Hospitals have overheads to pay,  70% of which are related to salaries of nurses, doctors, and other health professionals, 25% of which stem from government regulations.  Government may think is has no margins and it  can rely on taxpayer largess, but in the end, we must all pay the Piper. The business of health care and the business of life  is  about survival and thrival in the real world.

Tweet:  Medicine is a business, and so is government, and never the twain shall meet, at least on the philosophical debate battleground.