A Family Company


pharma

It’s all about money

it’s always been that way

it’s not about our welfare

or the quality of each day

It’s all about

shareholder return

it’s not about the continuum of care

or finding a cure.

….

and more on that train of thought, here is a great op-ed piece by

Is The Profit Motive Ruining American Healthcare?

We all know that healthcare costs in the U.S. are too high.  But why is American healthcare so expensive?  Some experts blame the desire for profit.  Russell Andrews, a  neurosurgeon and author of Too Big To Succeed laments “the morphing of American medicine from a function of a humanitarian society into a revenue stream for healthcare profits, drug and medical device companies, hospitals, and insurance companies.  In essence, we have transformed healthcare in the U.S. into an industry whose goal is to profitable.”  Andrews goes on to characterize the profit motive as “a virus” infecting the system.

Sachin Shah, a physician affiliated with Doctors For America, contrasts the struggles patients have paying for their medical bills to the enormous profits of American insurance companies:

“The five largest health insurance companies – WellPoint, United Health, Aetna, Humana, and Cigna – … earned over $3.3 billion in profits [between April and June 2011].”  Shah goes on to contend that “Profit in the health insurance industry is the single greatest barrier to building an efficient, sustainable system of healthcare in this country.”

David Goldhill is not convinced that profits are the problem.  Author of Catastrophic Care: How American Healthcare Killed My Father and How We Can Fix It, Goldhill points out how small those profits are in the face of overall healthcare spending:

“Imagine confiscating all the profits of all the famously greedy health insurance companies.  That would pay for 4 days of healthcare for all Americans.  Now add in the profits of the 10 biggest ‘rapacious’ drug companies.  Another 13 days.”

Who is right:  Goldhill, a cable television executive who wrote a book after his father had a horrible medical experience, or Andrews and Shah, two physicians who claim to have seen the effects of the profit motive up close, in their own patients’ lives?

Would it surprise you to learn that my answer is: Neither?  Instead, all of them are having a hard time distinguishing between income and profits.

Let’s start with the two physicians I quoted above.  Both bemoan the way that money influences medical care in the U.S., with physicians no longer concerned primarily with patients’ best interests.  As Andrews puts it: “Medical services since ancient Greek times have sworn to uphold the Hippocratic Oath.  Medical students since ancient Greek times have sworn to uphold the Hippocratic Oath.  Yet nowhere in the Hippocratic Oath is money, financing or making a profit mentioned.”

Andrews is wrong about the Oath, which does mention money, but only in the context of medical training, instructing physicians in training to regard their teachers as partners: “and when he [the teacher] is in need of money, to share mine with him.”  Hippocrates aside, Andrews is harking back to a time when the medical industry was presumably not focused on profits the way it is today.

Shah does not focus on the physician/patient relationship, but instead on profit mongering companies: “These companies,” Shah writes, referring to for-profit insurance companies, “are morally bankrupt parasites.”  Shah then concludes that their “business model is to profit by finding ways to avoid caring for sick people in their time of greatest need.”

I think these well-intentioned physicians are conflating interest in making money with the pursuit of profits.  Shah vilifies for-profit insurance companies, but non-profit insurance companies also have a financial incentive to withhold care from patients.  Indeed, much of the money in the American healthcare system flows through very well paid non-profit businesses.  The Mayo Clinic?  A wealthy non-profit institution, whose CEO makes around $2 million a year.  The CEO of Blue Cross/Blue Shield of Illinois, a non-profit insurance company, made $16 million in 2012.  Shah and Andrews are upset about the profit motive in medicine, but should be more focused on greed.  Profits are not to blame for healthcare costs in the United States.  We could run an entirely non-profit system and still witness high healthcare costs.

Goldhill is also focused too much on profits rather than on health care spending more generally.  Perhaps insurance company profits only amount to a few billion dollars here, another few billion dollars there, all amounting to a drop in the proverbial healthcare spending bucket.  But by focusing on profits, Goldhill ignores the salaries that insurance company employees make, salaries that are paid before the company can determine whether it has made any profits.  Remember, Blue Cross/Blue Shield receives billions and billions of dollars of money from health insurance enrollees.  It pays most of that out to healthcare providers.  But it also rewards many of its employees, especially its executives, with very lucrative salaries, salaries that influence healthcare costs, even though they are not counted as healthcare profits.

When we debate healthcare costs in the U.S., we need to be clear on whether we are focusing on profits, per se, or instead on the simple fact that everyone in the healthcare industry – from for-profit insurance companies to private practice physiotherapists – understandably need to focus on their own bottom lines.  Undoubtedly, being a for-profit company with anxious shareholders puts more pressure on that bottom line.  But everyone working in the healthcare industry has to make sure that the revenues they receive, in the long run, at a minimum cover their operating costs.

A more nuanced debate about health care costs in the US should better distinguish between health care related income and outright profit.  No one should go bankrupt either paying for medical care or providing it. But that doesn’t mean health care businesses, whether profit or non-profit, should enrich themselves at the expense of society. It is important not only to recognize that health care businesses—from solo medical practices to ginormous insurance companies–ignore the bottom line at their own peril, but also to recognize that too much money grubbing—whether from for profit or non-profit health care businesses—threatens our ability to provide needy patients with affordable medical care.

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11 thoughts on “A Family Company

  1. Thanks for access to this interesting piece, Harlon. The one idea I might add to the comments of sheketechad is that it strikes me (though I don’t know the numbers) that litigation may contribute significantly to the cost of our healthcare as well in the US. Some of these are difficult lines to draw, as malpractice certainly shouldn’t be protected. On the other hand, in a system that is based on the premise that we ourselves are first and foremost responsible for our health and well-being, it seems many of these parameters could be changed…

    Peace
    Michael

    Liked by 1 person

    1. Hello Michael, that’s a great observation about malpractice. I know that’s a huge issue in the US and it adds an unnecessary cost to the big healthcare pile of money and I think it’s also tainted the patient/Doctor relationship. We don’t have that in Canada – your healthcare system does have it’s Trump-esque elements and of course we have our Trudeau-esque ones. My concern with healthcare, especially here in Canada where we have a public program, is that is was created at a simpler time and hasn’t adapted to an era of complex and chronic conditions and innovation which comes at a cost and apparently at a ridiculous markup without necessarily improving the quality of life. It’s such a big system and interconnected so how do we fix it? I don’t know but I think talking about it and hearing how people feel that the care component has degraded then maybe, just maybe healthcare won’t be about extending life but giving us dignity and making our time here more meaningful and removing health obstacles that may prevent us from reaching our potential. Again, I could go on forever. Maybe we should have our own TED talk sometime. 🙂 Harlon

      Liked by 2 people

  2. Yes, I was also hoping when Obama got in, he would create a healthcare system like the UK. He just didn’t have the power to make it happen. America’s healthcare system is horrible for doctors and patients. Somehow all the money goes to administrators and insurance companies and drug companies. People go to Canada from here and India for health care. I know so many people who can’t get the meds they need. It’s criminal. I could really go on and on here….I’ll stop. 🙂 I hope you have a wonderful day, Harlon.
    Peace
    Mary

    Liked by 2 people

  3. Thanks for the balanced op-ed piece. The original point of insurance was pooling risk to lower costs for everyone. In that respect it has lost its way I feel. Nowhere do I see the costs in healthcare itself addressed. Those burdens begin in our medical colleges upon physicians, in the costs to develop knife-edge therapies or drugs, and increasingly, the demands of the public for expensive life extension interventions, where quality of life may not even be the primary focal point.

    In the way-back machine, a local doctor had limited skills to handle normal injuries, baby births, infections and the like. Today we ask them to be miracle workers – we don’t want to be 75 with bad knees and a cane, we want NEW knees! The consumptive mentality alas, has also reached into the minds of the treatable public.

    To look at the faults in health care means looking at more than one root cause, and the hope that we’ll be mature enough to examine them all and come up with a viable solution is, imo, a pipe dream. We’d have to start with food quality, lifestyle, medical school costs, reasonable development costs for drugs, reduced salaries for administrators, insurance company practices, and on and on it goes.

    Live wisely. Care for your body. Accept aging limitations with grace. And admit that some people are going to die, despite our love for them and our desire to have them with us always.

    ~SE

    Liked by 2 people

    1. Loved what you said, THANK YOU. This is the stuff I love to talk about. I agree with what you have said. Of course, there are huge differences between Canada (my home) and the US – so some of the issues vary, particularly with insurance companies. Otherwise, I think that we do have to revisit – perhaps first on a personal level. What does it mean to be healthy, what does one do to be healthy and to stay healthy? Next, what exactly is healthcare? To me it’s become layers of administration, bureaucracy, lots of overhead, lots of profit along the way but then how much of our taxpayer dollars are left to actually support and improve the quality of life of health care consumers. I could go on forever!
      Harlon

      Liked by 3 people

      1. There are as many opinions on how to be healthy and stay healthy as there are opinions about how to reform health care, lol (maybe more, come to think of it). It is a hard discussion to have, as no one likes to be told what to do, or what is best, since we’re all adults you know 🙂
        Our food system in the states is maximized for profit, not for health (of human bodies or sustainable earth activities). Our palates are spoiled for tomatoes in February and apples in May.
        But I am one desirous of many of the old ways, so my opinion is just that, an opinion.
        Always good ‘food’ for thought 🙂
        Best,
        ~SE

        Liked by 1 person

  4. I had high hopes some years ago when President Obama was first elected that his aim was to create a National Health Service like the one in the UK, but that worked.Free to everyone, No insurance companies involved and deductions being taken directly from wages. I was so disappointed that Americans seemed to want to keep the current system that really hurt their pocket trying to pay Insurance costs and having them decide whether you could be treated for an illness or not and whether your insurance had reached it’s limit.As far as I’m concerned, if a doctor says the treatment is needed, you should get it. The care of people should be paramount, not profit.
    Hugs

    Liked by 1 person

    1. I am a big supporter that the best value when get in healthcare is the relationship between the clinician and their expertise and the patient and their values. If a Doctor recommends a treatment or regiment and the patient agrees, then yes, they should get it. The UK does it very well. Canada does it much less well. Peace, Harlon

      Liked by 1 person

  5. Will the for profit motive ruin healthcare? Ask anyone who has lost a loved one to treatable illnesses (and that includes all of the mentally ill who have died on our streets) and they will say that it’s been ruined since the 1980’s.

    Certainly our mental health system is the most lethal in the world.

    Liked by 2 people

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