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Health Care Should Be Driven by Mission, Not Money

As health care reform legislation enters a critical phase in Congress, it's important to keep our eye on the ball -- elements essential to the success of any reform effort. In order to define those elements, we must have a clear understanding of the nature of the pathology in our dysfunctional health care system.

Modern high tech health care is a right of the residents of most wealthy countries in the world -- except the United States. America is exceptional in this regard. It is also exceptional in being the only wealthy nation where health care is considered to be a business.

Prior to about the mid-1970s, American health care institutions like those in other developed countries were overwhelmingly non-profit locally controlled entities driven by their mission -- comforting the sick, curing illness, and promoting healing.

Most physicians practiced independently or in small groups, free to carry out their Hippocratic oath. Hospitals were community based non-profit institutions governed by local volunteer boards. Private insurance companies were also mostly non-profit, and rarely crossed state lines. Pharmaceutical companies were small, often family owned and mostly driven by George Merck's ethic: "If we develop medicines that cure disease, the money will take care of itself."

In the mid-1970s, leaders in American health care fell in love with business. They began to believe that management could be improved and costs controlled by a stiff dose of good old American business know-how. As a result, first MBAs and then full-fledged corporatism began to engulf and transform medical care. Hospital administrators became CEOs, services became product lines, patients became market share and so on.

Hospitals consolidated and became part of larger networks. Local control was weakened or lost. Insurance companies consolidated across state lines, and ownership was transferred from non-profit local corporations to for-profit multi-state and national corporations. As pharmaceuticals became a larger part of medical care pharmaceutical companies grew, became more profitable and merged, eventually creating huge multi-national conglomerates. Ownership was transferred from private (often family) hands to distant shareholders through lucrative public offerings. Health care products and services became just another commodity to be traded on the stock exchange -- their value judged only in terms of return on shareholder on investment.

The practice of medicine, the bedrock of any modern health care system, changed too. Doctors went from being independent professionals, bound only by their Hippocratic oath, to being employees of increasingly large corporate entities, many of them also for-profit. As a result, physicians have come under growing pressure to tailor their clinical decisions to the revenue and profit demands of their corporate employers. These demands often conflict with the profit driven demands of insurers, attempting to maximize their profits by minimizing their "medical losses." Revenue driven medical care was born. This profit-driven micromanagement of physicians' decisions about how to treat their patients exists nowhere else in the world. It too is uniquely American.

As a result of these structural changes, the mission of the American health care system changed. Increasing shareholder value became the driving force in the financing and provision of medical services. In the process, the healing mission of medical care has been diminished and sometimes lost altogether. This too is a uniquely American phenomenon.

In order to resuscitate the healing mission of medicine, a few very important changes must be made to drive the profit motive out of the financing and direct provision of health care. They must be a dominant part of any successful reform effort.

The first step must be the strengthening of our publicly controlled non-profit system of financing medical care. From a policy perspective, the simplest and most direct way to do that would be to gradually expand Medicare. Medicare is effective, efficient and popular. The eligibility age could initially be dropped to 55, and then gradually lowered to eventually encompass the entire population. Unfortunately this fair, simple and elegant solution is also the most politically difficult due to the enormous influence of the medical-industrial complex on our politicians.

The second step must be to remove the profit motive from the direct provision of health care services by changing the way doctors, hospitals and other providers are paid. We must eliminate the fee for service system, and move toward global budgets for hospitals, and salaries and bonuses for doctors. This would remove the influence of fees for individual services on clinical decisions and would eliminate the single largest driver of exploding costs in American health care. It would also allow the incomes of primary caregivers to be brought closer to those of specialists and stem the exodus of doctors out of primary care practice. Higher incomes for primary caregivers relative to specialists would be justified by their role in managing the use of specialists and expensive tests and procedures.

Third, we must greatly strengthen the ability of our public insurance system to control the prices of pharmaceuticals and medical devices to bring the US more in line with all other developed countries. These companies are entitled to a fair profit but not the windfalls they are currently receiving due to the market protection they enjoy from federal patents, protection from price negotiations by Medicare and the massive public investment in biomedical research that often forms the basis of pharmaceutical products.

Health care reform without these basic changes is probably not worth doing, as it would simply reinforce the existing dysfunctional system. If these changes are part of reform, we will be on the way to joining other civilized countries in making health care a right of all our people. If not, it will continue to be an increasingly expensive commodity that only the wealthy can afford.

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As health care reform legislation enters a critical phase in Congress, it's important to keep our eye on the ball -- elements essential to the success of any reform effort. In order to define those elements, we must have a clear understanding of the nature of the pathology in our dysfunctional health care system.

Modern high tech health care is a right of the residents of most wealthy countries in the world -- except the United States. America is exceptional in this regard. It is also exceptional in being the only wealthy nation where health care is considered to be a business.

Prior to about the mid-1970s, American health care institutions like those in other developed countries were overwhelmingly non-profit locally controlled entities driven by their mission -- comforting the sick, curing illness, and promoting healing.

Most physicians practiced independently or in small groups, free to carry out their Hippocratic oath. Hospitals were community based non-profit institutions governed by local volunteer boards. Private insurance companies were also mostly non-profit, and rarely crossed state lines. Pharmaceutical companies were small, often family owned and mostly driven by George Merck's ethic: "If we develop medicines that cure disease, the money will take care of itself."

In the mid-1970s, leaders in American health care fell in love with business. They began to believe that management could be improved and costs controlled by a stiff dose of good old American business know-how. As a result, first MBAs and then full-fledged corporatism began to engulf and transform medical care. Hospital administrators became CEOs, services became product lines, patients became market share and so on.

Hospitals consolidated and became part of larger networks. Local control was weakened or lost. Insurance companies consolidated across state lines, and ownership was transferred from non-profit local corporations to for-profit multi-state and national corporations. As pharmaceuticals became a larger part of medical care pharmaceutical companies grew, became more profitable and merged, eventually creating huge multi-national conglomerates. Ownership was transferred from private (often family) hands to distant shareholders through lucrative public offerings. Health care products and services became just another commodity to be traded on the stock exchange -- their value judged only in terms of return on shareholder on investment.

The practice of medicine, the bedrock of any modern health care system, changed too. Doctors went from being independent professionals, bound only by their Hippocratic oath, to being employees of increasingly large corporate entities, many of them also for-profit. As a result, physicians have come under growing pressure to tailor their clinical decisions to the revenue and profit demands of their corporate employers. These demands often conflict with the profit driven demands of insurers, attempting to maximize their profits by minimizing their "medical losses." Revenue driven medical care was born. This profit-driven micromanagement of physicians' decisions about how to treat their patients exists nowhere else in the world. It too is uniquely American.

As a result of these structural changes, the mission of the American health care system changed. Increasing shareholder value became the driving force in the financing and provision of medical services. In the process, the healing mission of medical care has been diminished and sometimes lost altogether. This too is a uniquely American phenomenon.

In order to resuscitate the healing mission of medicine, a few very important changes must be made to drive the profit motive out of the financing and direct provision of health care. They must be a dominant part of any successful reform effort.

The first step must be the strengthening of our publicly controlled non-profit system of financing medical care. From a policy perspective, the simplest and most direct way to do that would be to gradually expand Medicare. Medicare is effective, efficient and popular. The eligibility age could initially be dropped to 55, and then gradually lowered to eventually encompass the entire population. Unfortunately this fair, simple and elegant solution is also the most politically difficult due to the enormous influence of the medical-industrial complex on our politicians.

The second step must be to remove the profit motive from the direct provision of health care services by changing the way doctors, hospitals and other providers are paid. We must eliminate the fee for service system, and move toward global budgets for hospitals, and salaries and bonuses for doctors. This would remove the influence of fees for individual services on clinical decisions and would eliminate the single largest driver of exploding costs in American health care. It would also allow the incomes of primary caregivers to be brought closer to those of specialists and stem the exodus of doctors out of primary care practice. Higher incomes for primary caregivers relative to specialists would be justified by their role in managing the use of specialists and expensive tests and procedures.

Third, we must greatly strengthen the ability of our public insurance system to control the prices of pharmaceuticals and medical devices to bring the US more in line with all other developed countries. These companies are entitled to a fair profit but not the windfalls they are currently receiving due to the market protection they enjoy from federal patents, protection from price negotiations by Medicare and the massive public investment in biomedical research that often forms the basis of pharmaceutical products.

Health care reform without these basic changes is probably not worth doing, as it would simply reinforce the existing dysfunctional system. If these changes are part of reform, we will be on the way to joining other civilized countries in making health care a right of all our people. If not, it will continue to be an increasingly expensive commodity that only the wealthy can afford.

As health care reform legislation enters a critical phase in Congress, it's important to keep our eye on the ball -- elements essential to the success of any reform effort. In order to define those elements, we must have a clear understanding of the nature of the pathology in our dysfunctional health care system.

Modern high tech health care is a right of the residents of most wealthy countries in the world -- except the United States. America is exceptional in this regard. It is also exceptional in being the only wealthy nation where health care is considered to be a business.

Prior to about the mid-1970s, American health care institutions like those in other developed countries were overwhelmingly non-profit locally controlled entities driven by their mission -- comforting the sick, curing illness, and promoting healing.

Most physicians practiced independently or in small groups, free to carry out their Hippocratic oath. Hospitals were community based non-profit institutions governed by local volunteer boards. Private insurance companies were also mostly non-profit, and rarely crossed state lines. Pharmaceutical companies were small, often family owned and mostly driven by George Merck's ethic: "If we develop medicines that cure disease, the money will take care of itself."

In the mid-1970s, leaders in American health care fell in love with business. They began to believe that management could be improved and costs controlled by a stiff dose of good old American business know-how. As a result, first MBAs and then full-fledged corporatism began to engulf and transform medical care. Hospital administrators became CEOs, services became product lines, patients became market share and so on.

Hospitals consolidated and became part of larger networks. Local control was weakened or lost. Insurance companies consolidated across state lines, and ownership was transferred from non-profit local corporations to for-profit multi-state and national corporations. As pharmaceuticals became a larger part of medical care pharmaceutical companies grew, became more profitable and merged, eventually creating huge multi-national conglomerates. Ownership was transferred from private (often family) hands to distant shareholders through lucrative public offerings. Health care products and services became just another commodity to be traded on the stock exchange -- their value judged only in terms of return on shareholder on investment.

The practice of medicine, the bedrock of any modern health care system, changed too. Doctors went from being independent professionals, bound only by their Hippocratic oath, to being employees of increasingly large corporate entities, many of them also for-profit. As a result, physicians have come under growing pressure to tailor their clinical decisions to the revenue and profit demands of their corporate employers. These demands often conflict with the profit driven demands of insurers, attempting to maximize their profits by minimizing their "medical losses." Revenue driven medical care was born. This profit-driven micromanagement of physicians' decisions about how to treat their patients exists nowhere else in the world. It too is uniquely American.

As a result of these structural changes, the mission of the American health care system changed. Increasing shareholder value became the driving force in the financing and provision of medical services. In the process, the healing mission of medical care has been diminished and sometimes lost altogether. This too is a uniquely American phenomenon.

In order to resuscitate the healing mission of medicine, a few very important changes must be made to drive the profit motive out of the financing and direct provision of health care. They must be a dominant part of any successful reform effort.

The first step must be the strengthening of our publicly controlled non-profit system of financing medical care. From a policy perspective, the simplest and most direct way to do that would be to gradually expand Medicare. Medicare is effective, efficient and popular. The eligibility age could initially be dropped to 55, and then gradually lowered to eventually encompass the entire population. Unfortunately this fair, simple and elegant solution is also the most politically difficult due to the enormous influence of the medical-industrial complex on our politicians.

The second step must be to remove the profit motive from the direct provision of health care services by changing the way doctors, hospitals and other providers are paid. We must eliminate the fee for service system, and move toward global budgets for hospitals, and salaries and bonuses for doctors. This would remove the influence of fees for individual services on clinical decisions and would eliminate the single largest driver of exploding costs in American health care. It would also allow the incomes of primary caregivers to be brought closer to those of specialists and stem the exodus of doctors out of primary care practice. Higher incomes for primary caregivers relative to specialists would be justified by their role in managing the use of specialists and expensive tests and procedures.

Third, we must greatly strengthen the ability of our public insurance system to control the prices of pharmaceuticals and medical devices to bring the US more in line with all other developed countries. These companies are entitled to a fair profit but not the windfalls they are currently receiving due to the market protection they enjoy from federal patents, protection from price negotiations by Medicare and the massive public investment in biomedical research that often forms the basis of pharmaceutical products.

Health care reform without these basic changes is probably not worth doing, as it would simply reinforce the existing dysfunctional system. If these changes are part of reform, we will be on the way to joining other civilized countries in making health care a right of all our people. If not, it will continue to be an increasingly expensive commodity that only the wealthy can afford.