The Inevitable Corporatization of the American Health Care System


Recently on the CBS television program 60 Minutes (“Hospitals: The Cost of Admission,” Dec. 2, 2012) there were allegations made by former emergency room physicians and employees of the 70-hospital corporation Health Management Associates (HMA) that they were expected to admit to hospital beds a specific percentage of patients seen in the emergency room (click here for a transcript of the broadcast). The implied reason for encouraging the doctors to meet admissions targets  would be to increase revenue by filling the beds and billing for the services provided.  The old saying was, “a filled bed is a billed bed.”  An HMA spokesman refuted the allegations even before the program was aired and said that this was not company policy, “administrators cannot and do not admit patients,” and he claimed to be unfamiliar with the guidelines and reports produced by 60 Minutes as evidence of these policies.  60 Minutes reporter Steve Kroft  said that, “Hardly anyone we talked to complained about the quality of care at HMA hospitals, only the quantity of care.”

Putting aside the specific possibility of fraud or that administrators were practicing medicine, one should not be too surprised that such charges and refutations have occurred.  Corporations, driven by the need for profit, now control most of organized health care delivery in this country.  Hospitals have been joining for-profit and not-for-profit hospital systems for years to achieve economies of scale and negotiating power with insurers and lenders.  Physicians are now being compelled to join together in Accountable Care Organizations (ACO) to meet the requirements for enhanced payments under Medicare.

While the 60 Minutes story dealt with the perceived over-admitting practices of HMA there have been stories elsewhere about pressure on physicians to discharge quickly so that hospitals would lower their expenditures and be able to keep more of the DRG or global fee for an admission.  So, on one hand there are accusations of hospital corporations wanting  more patients admitted so that  greater revenues are achieved by filling beds, but in other circumstances physicians saying that hospitals award them bonuses when they discharge patients early.  Both of these scenarios may be true to a certain extent, for many reasons, good and bad, and in many types of hospitals.

While some hospitals are locally controlled and managed, many belong to systems which must meet national standards for payment by Medicare and insurers.  No longer can hospitals or their medical staffs limit their functions according to the expectations of the community or just accept the standard practice of medicine found there.  Corporatization puts professional management in charge with obligations to stockholders as well as to the community.  Managers will manage to increase revenues and this may mean putting pressure on, or setting expectations for, physicians to perform in certain ways for the benefit of  the hospital and themselves.

This change, along with many others in the provision of health care, was not snuck in on us by a foreign power.  The federal government and Wall Street investors were active participants in this evolution over the last 30-40 years.   Many of the provisions of Obamacare are inevitable steps on this path and are not much different from what would have happened under a President Romney.  Health care has gone from a social good to a corporate service.