The business of health: A critical diagnosis

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The 1980s were a decade in which the rich got richer and the poor got poorer.

Some of the rich got richer by investing in the nation's health care system, which in recent years has been afflicted by a virulent strain of market-driven greed that has transformed the practice of the "healing arts" into a feverish scramble for profits in the medical marketplace.

Some of the poor not only got poorer, but sicker, too, as the trend toward corporate health care found its corollary in drastic cutbacks in public health programs, epidemic hospital closings, and swelling ranks of uninsured patients; all the most visible aspects of a growing tangle of obstacles to care for millions of Americans.

The U.S. health-care system has become "a paradox of excess and deprivation," as Stanford researchers noted in a recent article in The New England Journal of Medicine (Jan. J, 1989), spending more-and delivering less-than any other industrialized nation. The United States, in fact, spends 40 percent more per capita on health care than the country ranked second in per-capita expenditures, Canada. Despite the exorbitant cost of care, an estimated 37 million people lack medical insurance. Ten to fifteen million more are seriously underinsured.

The profit motive has, of course, always been a factor in the health-care "industry" as it has developed in the United States. But only in the late 1960s did corporate medicine begin to assume a more central role in the delivery of health services. The emergence of this new "medical-industrial complex," as Arnold Reiman, editor of The New England Journal of Medicine, cautioned in 1980, represents the "most important health-care development of the day."

Previously, the health system was based largely on thousands of practitioners, free-standing, nonprofit hospitals run by religious charities, public hospitals, and urban teaching hospitals. Large capital interests were mostly limited to pharmaceutical concerns and medical equipment and supply companies.

During the last decade investor-owned chains have emerged as an integral component of the health-care economy. By 1985, the four largest health-care corporations owned or managed 12 percent of all U.S. hospitals. This year it is expected that about 30 percent of general hospital beds will be managed by for-profit chains. Some health policy experts predict that by the mid-1990s about 10 large firms will provide 50 percent of the medical care in the United States.

"The rise of the for-profit chains, has for the first time introduced managerial capitalism into American medicine on a large scale," notes sociologist Paul Starr in The 4 SOCIALIST ACTION Social Transformation of American Medicine. The results have been far reaching-and insidious.

Uninsured, unprofitable, unwanted The growing influence of for-profit health care has had a systemic effect on the delivery of services, forcing non-profit providers to mimic the marketing strategies of investorowned groups in a frenzied competition for X-RAY 688R what time is it now?

"paying customers." Health-care marketing has replaced health care planning in hospitals run by administrators who speak the language of consumer demographics and winning product lines. Uninsured patients, however, are not a "winning product line;" they have become unprofitable and unwanted.

The commodification of health care, as Starr observes, "is part of two broad currents in the political economy of contemporary societies. The older of these two movements is the steady expansion of the corporation into sectors of the economy traditionally occupied by self-employed small businessmen or family enterprises.... IT]he second and more recent movement is the transfer of public services to the administrative control or ownership of private corporations-the reprivatization of the public household."

Ironically, it was the creation in 1965 of Medicare and Medicaid, the publicly funded programs to provide medical care for the IULY 1990 elderly and the indigent, that sparked the corporate invasion of the health-care industry. The government, in effect, provided a blank check subsidy to organized doctors, nursing homes, and hospitals to charge whatever they liked for services. The Medicare program also allowed providers to charge an additional fee to the patient, above the bill presented to the government.

This fee-for-service payment system, (ADMISSIONS will Medicare cover you?.. Well, which also included private insurers, propelled the economy of health care into an inflationary stratosphere of soaring costs: medical prices have risen at two to three times the annual inflation rate during the last two decades.

Cost-containment crusade

Business interests who were not investing in health care, but instead paying the costs of employee benefits began to rebel against this inflationary trend in the early 1970s. The Washington Business Group on Health, initiated in 1974 by chief executive officers of some of the largest U.S. corporations, conducted dozens of coalitions of business and health industry leaders in a sonorous campaign to "trim the fat" from health costs.

This cost-cutting chorus sang a melody of efficiency in service, but in reality struck an altogether different note-health care was a commodity, to be bought, sold, and rationed. measures to introduce incentives to limit care was the new Medicare prospective payment system established in 1983. Fee-forservice was abolished, replaced by reimbursement based on diagnosis-related groups (DRGs) that set an average cost of treatment for any given diagnosis. Thus, hospitals that could reduce service and discharge patients more quickly would profit.

However, while some hospitals have profited, those that treat a large number of medically indigent patients in poor, primarily urban neighborhoods have been financially strained, often to the breaking point. In general, people lacking medical coverage seek care later and are sicker than those with the means to pay. The primary care physician's office is frequently replaced by the emergency room and longer, more costly-and inadequately compensated- hospitalization.

Further, Medicare and Medicaid have suffered sharp spending cuts, coupled with more restrictive eligibility requirements and higher co-payments that have squeezed the ranks of eligible participants. Currently, only about 40 percent or those classified as poor, according to federal guidelines, receive Medicaid coverage, a decline from 65 percent in 1976. This translates into additional financial burden as hospitals absorb an ever-growing share of unremunerated expenses: In 1987 an estimated $7 billion in hospital bills went uncollected, according to the American Hospital Association.

Hospitals, in turn, have countered by "cost shifting" these losses to employer-funded health plans in the form of higher charges. Employers, too, have cost-shifted the rising cost of health plansto their employees. In 1980, one out of three insurance policies required no out-of-pocket payment by the policy holder. By 1987, only one out of 14 offered such a benefit.

"Cost containment, it became clear, was a euphemism in many settings for cost shifting," observes Joan O'C. Hamilton in Stanford magazine (September 1989). "Every time the cost balloon was squeezea in one place, it expanded in another."

The "dumping" of uninsured patients at public hospitals by private health providers has also emerged as a de facto and illegal cost-containment practice. Some hospitals have also closed emergency rooms. An alarming number have gone even further and simply shut down. Between 1980 and 1988, 445 hospitals in the United States went out of business. In 1988, a record 81 hospitals closed. The National Association for Hospital Development predicts that as many as 40 percent of the nation's 2200 acute-care hospitals will close or be converted to other uses over the next 10 years.

Still, health-care spending continues its upward spiral. The 1980s, the "decade of cost containment," saw the pace of cost increases accelerated even more, rising at an adjusted rate of 4.4 percent per year compared to a rate of 3.8 percent during the 1970s. Despite the ostensible failure of budget-pairing strategies, cost-containment blather continues to inform the literature and policy statements of health industry leaders. And so also does support for the market-based practices that are at the root of escalating costs.

The commodification of health care has led to a proliferation of lucrative outpatient and specialty services (i.e., sports medicine, cosmetic surgery, liposuction, chemical dependence, walk-in clinics) that often operate outside the scope of cost-containment strictures. The "medical arms race" in which hospitals compete to acquire the state-of-theart technology that will attract top physicians and generate business also continues unabated. The result is not only wasteful duplication of services (hospitals within blocks of each other may offer the same highly specialized services), but costs that continue to escalate.

One such competitive rivalry was recently noted in The Wall Street Journal (June 6, 1990), which reported the game of high-tech one-upmanship being played between the two hospitals that serve Kalamazoo, Mich. A range of specialized services have been implemented, and duplicated, first by one, then by the other hospital. Both hospitals even added, amidst much fanfare, a helicopter ambulance to their list of services. There are only 90 helicopter ambulances operating in the United States. When one hospital boasted that its helicopter carried a nurse on every flight, the other countered by adding a doctor to every flight. Eventually, both hospitals upgraded to twin-engine helicopters.

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"Health care marketing has replaced health care planning in hospitals run by administrators who speak the language of consumer demographics and winning product lines. Uninsured patients, however;

not 'winning product line; they have become unprofitable and (continued from preceding page) As for Kalamazoo's residents, they have seen more than helicopters flying high-local hospital charges are among the highest in the nation.

In fact, The Journal reports hospital costs in two-hospital towns average 30 percent more than in one-hospital communities. Other studies have confirmed that competition among provider organizations is contributing to-not mitigating-rising-medical costs.

Declining health among

The impact of cost-containment strategies is actually more tangibly measured, not in efficient allocation of resources, but in further limits to care, and the deteriorating health status of millions of Americans.

The RAND health insurance experiment recently found that funding cuts in Medicaid, community health clinics, and child nutrition programs has contributed to poorer health among beneficiaries. Larger out-ofpocket expenses have deterred the poor from seeking primary care for childhood respiratory infections, allergies, sore throats, and other conditions. An increase in maternal anemia, hospital admissions for infant diarrhea and dehydration, and low-birth-weight babies has also been documented.

The infant mortality rate, an important gauge of a society's overall health, has, after decades of improvement, reversed itself and begun to increase since 1985. The United States now ranks 19th among nations, behind such countries as Singapore and Spain, with a rate of 10.6 deaths per 1000 births.

For Blacks, the situation is even more lean rate in sage or earles the an ., the inian side neighborhoods is more than three times the national average; worse, in fact, than in any country in the Western hemisphere except Haiti. Significantly, overall life expectancy for Blacks has actually declined since 1984.

The rising neonatal death rate offers an indication of the extent and depth of poverty in the U.S. population. "In recent years there have been more and more people ... with no prenatal care," Dr. Sharon Langendoerfer, a neonatologist at Denver General Hospital, told the Rocky Mountain News (Oct. 9, 1988), "and they tell us it is because they simply could not afford it."

Colorado denies prenatal Medicaid benefits to pregnant women in a family of three if family income exceeds about $6000 a year. And, like most states, Colorado practices another type of care rationalization: an estimated 25 percent of women who do qualify for Medicaid benefits are effectively excluded by the confusing jungle of paperwork that confronts applicants.

A high-tech ivory tower The link between poverty and the infant mortality rate also highlights another fundamental problem in the medical system: a narrow technological focus that downplays preventive medicine and the social and environmental causes of illnesses.

"I can fly a sick baby by helicopter to a neonatal unit," as Dr. Virginia Floyd, director of the family health section of the Georgia Department of Human Resources, illustrated in remarks to a 1988 Institute of Medicine of Chicago conference on infant mortality, "but I can't get $3 for a mother to get to the doctor for a prenatal visit." (Chicago Tribune, Nov. 6, 1988).

A clinical orientation that bombards illness and disease with a dazzling array of sophisticated technology, but pays little attencourage the placement of older workers in jobs that involve exposure to carcinogens because they are more likely to die of old age before cancer strikes.

More generally, cancer research tends to focus on viral, hereditary, and immunological factors in the etiology of the disease. Cancer prevention strategies emphasize the individual's responsibility to lead a healthy lifestyle. Yet there is strong evidence that up to 90 percent of all cancers are environmentally caused, and that perhaps 40 percent are tied to occupational risks.

Still, this technological bias expresses more than an ideological congruence with a social structure based on corporate power. There are also more down-to-earth financial stakes; pharmaceutical and medical supply companies, organized doctors, and hospitals promote new medical technologies and treatments as much for their money-making potential as for any proven clinical efficacy.

As a 1977 Congressional Office of Technology Assessment Report explained, government research subsidies provide much of the backing for development of new technologies and products, but it is private industry that will determine whether the resulting knowledge leads to new medical prod"Once a product or service is developed," Brown explains in his history of American medicine, "the major medical interest groups determine its market. The commodity's proinequities of wealth and poverty; all find expression in the health status of the population.

Every 1.4 percent increase in unemployment, according to a 1976 Congressional report, correlates to an additional 51,570 deaths, including 1540 suicides, 1740 homicides, 7660 state prison admissions, and 5520 state psychiatric admissions. The poor and racial minorities in general suffer higher rates of alcoholism, mental illness, and homicide than the rest of the population. Non-whites in every age category, in fact, die at rates 40 percent to 100 percent higher than whites.

The crisis in the U.S. health care system has prompted discussion within the medical community of the need for a national health plan to provide comprehensive health services for the entire population. The American College of Physicians has adopted a position in favor of some form of national health insurance, and groups such as Physicians for a National Health Plan have organized to press for basic change in the health-care economy.

This discussion indicates not so much an emerging ideological shift in U.S. health policy toward recognition that health care is a fundamental human right, as it reveals the severity of the crisis ravaging a system that is wasteful, expensive, and increasingly inaccessible.

The acute condition of the health-care sysdiscovered. "Improvements in general living and working conditions as well as sanitation, all brought about by labor struggles and social reform movements," Brown concludes, "are most responsible for improved health status."

The excess and deprivation that pervade the U.S. health-care system are symptoms of a more fundamental disorder in the pathology of society: the supremacy of a corporate power structure that pursues, plunders, and profits from the wealth and resources of the country.

The struggle for a health care system that genuinely serves the interests of the population cannot be separated from the larger historical movement for a social system—controlled by the working-class majority that produces the wealth and resources of the country-that will determine political, economic, and social policies by the criteria of human needs, not private profit. Such a society will consider excess and deprivation, wealth and poverty, insured and uninsured as the archaic vocabulary of an earlier era, and will consider the only "winning product line" the health needs of every human being.

Mark Harris is a former editor of a medica newsletter published in Chicago.

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