A matter of value. Profits and losses in healthcare

In the growing debate over for profit enterprise in healthcare, the real issues are ownership, conflicts of interest, profit margins, and what is done with those profits--not tax status or the presence or lack of a profit. Every healthcare sector--except hospitals--is now dominated by proprietary enterprise, and current attention is focusing on three types of entities: megasystems, systems and group practices, and for-profit HMOs. The question is, Do we indeed have a problem with the profit-related issues I have mentioned? A great deal of fog surrounds the discussion. Both the public and many healthcare people feel discomfort with the idea that healthcare is a commercial commodity. But there seems to be a certain amount of hypocrisy in how the argument has been framed; only certain for-profits are characterized as posing a threat. What we are really dealing with is a massive shift of power from one interest to another. Some not-for-profit providers' loss of money and power, however, does not mean that for-profits that gain money and power are scurrilous. Thus the debate over proprietary enterprise has been colored by extraneous concerns and hidden agendas. Nonetheless, three serious issues merit closer inspection: 1. Is the for-profit model flawed? Indeed, moral hazards certainly seem to be involved in stock holder-held entities that provide direct services to patients. 2. Is the problem making a profit or profiteering? Even if nonprofits are sometimes profiteers, the for-profits are hardly innocent. In addition to the huge sums being provided to stockholders, executives of proprietary firms often do very well indeed. 3. Do new models such as systems and HMOs pose any special problems when they are proprietary? In terms of systems, the jury is still out. Despite evidence that proprietary systems are forcing everyone to be more efficient, the question remains of who will subsidize unprofitable services like burn units and true indigent care if the system's hospitals and clinics do not provide it. When it comes to managed care, the tempting incentives to constrain access and skimp on services, combined with the requirements of for-profit enterprise, simply produce too dangerous a situation.