4 - Corporatization of Health Care

Summary

“There is a new world of medicine in the United States, a world that pulsates to the impersonal and incessantly driving rhythms of corporate greed. Patients are not important in this world. They are little more than data entries in elaborate schemes to cut costs and bolster profits as radically as possible.”

Bob Herbert, New York Times, September 11, 1994

Introduction

In the decade prior to the Clinton health care initiative, mergers and acquisitions involving health insurance companies and other for-profit corporations, HMOs, and networks of hospitals and physicians resulted in a dramatic and rapid change in the health care environment in all major populations centers across the country. In this vertical integration of our health care system, doctors were herded into managed care networks, hospitals merged and created large for-profit corporations, and both became increasingly dominated by the private health insurance industry.

Blue Cross affiliates were switching to for-profit status, taking over hospitals, and setting up clinics and managed care networks. The largest for-profit hospital chain in the United States, Colombia Hospital Corporation, having taken over Galen and HCA-Healthcare, announced that it would combine with Healthtrust (which had previously purchased Epic), creating a chain of 311 hospitals. At the same time, National Medical Enterprises merged with American Medical Holdings to create the second largest health chain, Quorum acquired part of Charter, and American Healthcare Management merged with Ornda Healthcorp. In addition to mergers between investorowed groups, these large corporations turned their attention to buying not-for-profit hospitals. There were also several mergers and alliances of insurers such as Travelers Insurance's joint venture with Metlife (13 million customers). In Minnesota, where antitrust enforcement had been suspended, three enormous integrated service networks came to dominate health care in the Minneapolis–St. Paul area. At the core of each was a large private health insurer striving to take over as may hospitals and doctors as possible. By the time of the Clinton health care initiative, in other words, vertical integration in health care was well on its way to dominating our health care system.

As pointed out by Ginzberg, corporate control of health care facilities and health care professionals is the logical outcome of other trends that have accelerated over the last several decades and have contributed to the destabilization of medicine.