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In this page I contrast the world the rest of us live in with the health care corporate world and suggest that one of us lives in an illusionary world - and I don't think it is the rest of us. The page ends by looking at risk and cost as understood in these two worlds.


The material in this page was written as a criticism of Graeme Samuel's speech to the World Bank. I have set it up as a separate page as the criticisms are equally applicable to Dr Wooldridge and many other advocates for a corporate marketplace. It contrasts the world most of us live in with that of those who have imposed a health care marketplace on Australia.

Samuel claimed "expected benefits of the move to a market-based model in terms of the broad outcomes of performance, equity and quality" -- "long-run affordability" -- "maintenance and improvement of service quality standards in line with consumer expectations" -- "avoids the imposition of arbitrary or ad hoc rationing decisions" -- "operational risks are removed from governments and accrue to those best placed to control and manage them". These claims are addressed directly in another www page which is a direct criticism of this section of Samuel's speech. The page below expands on these issues.


Samuel calls his "purchaser" a "Health Improvement Agency" or HIA. The principles which underly Samuels model seem to be identical to a managed care organisation - something which has a totally different image in the USA. By giving it a different name he seeks to escape the odium which such systems have attracted. He does not see anything wrong in calling this "health improvement". It is a legitimate marketing strategy and occurs all the time in the corporate world.

This misuse of language was one of the central characteristics of what I called "NMEspeak" when I saw Tenet/NME letters to New South Wales Health in 1992. This was to stress the similarity with the similar word "newspeak" in George Orwells famous novel "1984". NMEspeak uses a word or phrase with associative meanings which are the very opposite of any criticism made. NME would then assert it dogmatically and insistently as a fundamental and obvious truth, ignoring evidence. When confronted they would either ignore the criticism or simply ridicule it as untenable. This is clearly a well recognised strategy in the public relations world.

Using the same technique the introduction of market practices, long recognised by the professions and the community as a threat to the care of patients has become "reform".

Managed care and HMO's are the subject of intense anger in the US community. They perceive that care is denied and standards are compromised. It seems highly probable if not certain that this is so. Managed care advocates speak of "Health Improvement" - anything rather than confront the reality.

When I first read Tenet/NME's letters I thought that they were being deliberately dishonest and deceptive. As I read more corporate material and the statement of evidence by a corporate founder I realised that they really believed what they were saying. This is how they thought and acted. They had no doubts and did not for a moment consider that they were doing anything wrong. They had established a complex and interwoven world of associative meanings and plausible sounding arguments which had tenuous if any links to what I considered to be the real world. We lived in totally different worlds. As Saul explained in his Massey lectures they had entered a world of abstractions which rendered them unconscious.

Since that time I have read many corporate health care documents and corporate responses to unpalatable information. I have read Samuel and Wooldridge's speeches. I have no reason to doubt that these people are any less genuine than for example Dr Verwoed, the devout theorist who developed and expounded the theory of apartheid. They simply live in a different world - a looking glass world where everything is as they want it to be.

Managed care Examples:- Many corporate documents and statements about managed care are simply a play on words - their words. Compare this with our world and the words we use.

HMO's have a well deserved and unpopular image across the world. Numbers of US television soapies and comedy shows portray the evils of managed care. The managed care gate keeper is portrayed as the villian.

The Mike Moore television show "The Awful Truth" shown on SBS early this year was an expose of Humana. This HMO denied care which might have saved someone's life. Mike Moore set up a rehearsal for this patient's funeral complete with hearse and coffin in the foyer of Humana's massively impressive headquarters.

The studio audience roared its approval as Humana backed down and paid for the treatment. This is the real image of managed care - how it is experienced by the US citizen. To those who experience it this is the real meaning of the words "managed care". Members of the World Bank would have seen some material like this.

It is citizens, not corporations, not directors, not politicians and not regulators who have exposed the serious deficiencies and severely dysfunctional practices in health care. They have done this over and over again. They have been shown to be correct again and again over the years. Marketplace advocates like Samuel and Wooldridge should explain why they are wrong now?


It is true that managed care has stopped the rising costs in one of the most extravagant and expensive health care systems in the world - the only system built entirely on the market. I was not in Australia but in the UK in the 1960's.

We shook our heads as colleagues returning from training spells told us how the US market worked and how it was abused. These strong commercial health care market values were not adopted in any Western country until recently when the profession increasingly absorbed the market values of the establishment. This trend peaked in Australia with a backlash against labour in about 1991. Bruce Shepherd was elected to fight Brian Howe's plan to nationalise our health system. At the time he was sympathetic to the US system. Like others he has changed his views.

What managed care has done is to take much more money out of care than it needed to do to restore the system to economic sense. This additional money has been frittered away in a complex system of competing self interested groups each screwing as much out of care as possible for its shareholders and for growth .


A more unsuitable environment than HMO's or HIA's for the community to provide the care needed for its trusting and vulnerable members is difficult to imagine. Managed care is the most inefficient system in the developed world. It is certainly the most heartless and the most ruthless as is well illustrated by Aetna Healthcare and Kaiser Healthcare.

Other countries with less money and less wasteful systems make it go much further. The level of health in their communities and the overall standard of their service is as good. The USA ranks poorly among developed countries in most assessments, including that recently made by the World Health Organisation. If Samuel wants us to embrace a model which uses the same principles and is so similar to that in the USA then he has a lot more explaining to do. If it really is different then how do we stop US corporations taking over and imposing their understanding of it rather than Samuel's? - the WTO isn't going to help. The multinationals are larger and more powerful than most governments. Proposed international trade agreements will give them free access to all markets.


Graeme Samuel's model is going to use the marketplace to ration care. He claims that despite the swings on Wall Street and the large number of bankruptcies this will provide a more steady stream of resources and avoid the "ad hoc rationing decisions" which the "stresses on affordability" create. Presumably this is caused by government's unstable management. It requires a very special and sophisticated language to grasp reality so profoundly. George Orwell called it "newspeak". I called it "NMEspeak" when I encountered it in Tenet/NME documents in 1992. John Ralston Saul gave a series of lectures about it in Canada and they were aired by the ABC. My colleagues call it "econobabble"

The only rationing in the marketplace I have seen is for profit and there is a lot of that. That care will be better rationed in the market where rationing has allowed people to die while corporate groups take large profits and their directors massive bonuses is a measure of Samuel's detachment from the reality the rest of us live in.


The rest of us live in a world where Sun Healthcare expanded from about 8 to over 400 nursing homes in less than 10 years using the profits it took by rationing care to the frail elderly. It was a Wall Street success story. Its directors received many millions in bonuses and it built a series of impressive corporate buildings. One was appropriately nicknamed "Taj Ma Horse" by citizens who were less than enchanted. This massive empire was literally built with the ashes of the people who died because they did not get care. Sun faces over 300 lawsuits many of which claim that Sun advertised and promised high quality care then deliberately understaffed knowing what the consequences would be.

An ordinary but extraordinary Californian citizen called Ila Swan took out death certificates and looked at them -- not complicated competing arms length corporate groups, not managed care, not insurers, and not government. She had no medical training. She had simply experienced a for profit nursing home herself, taken the trouble to look around and realised what was happening. What she found was that thousands were simply dying of neglect. Her efforts resulted in a federal government investigation which has confirmed most of her findings. This can now be seen to be a consequences of Sun Healthcare's policy of boosting profits by "cutting the fat". In 1996 Sun's chairman boasted publicly of his policies. Similar problems have now been demonstrated in corporate nursing homes across the USA. This is corporate rationing. Is it the sort of rationing, which Wooldridge and Samuel have in store for us?

How strange that the uncompetitive not for profit organisations in the USA have maintained standards and remained economically viable as corporate groups crashed.


We live in the world where psychiatric corporations needlessly incarcerated and misused thousands of children and adults in psychiatric hospitals across the USA. This was despite a complex system of oversight and accreditation by multiple private and government bodies. This was only exposed when some very ordinary parents objected to the kidnapping of their 15 year old son and acted to get him back.

A group of off duty policemen, moonlighting for the hospital arrived with a medical certificate signed by a doctor authorising enforced admission. He had never seen the young adolescent. When this abuse of human rights appeared in the press thousands of people came forward to tell of their frightening experiences in psychiatric hospitals. Texas was fortunate in having senator's Moncrief and Zafarelli. Unlike our senator Bishop they believed the citizens and set up a senate inquiry. This exposed what was happening. In other states such as California, politicians who receive funding from health care corporations have resisted every effort to address health care issues in the same way. Citizens have been forced to confront them and drag them kicking and screaming to the reform table.

Tenet/NME, the prime offender in Texas was the toast of Wall Street. The profits generated from its proudly advertised "programmatic" system of care made it the quality gold standard. Will Wooldridge, Samuel and the corporate community in Australia similarly measure quality of care in terms of profit and the credibility it brings?


We live in a world where Columbia/HCA expanded from about 4 hospitals to over 400 across the world in less than 10 years. We wonder where the money came from. It didn't grow on trees. Was this rationing? Could some of it have been intended for patients or did it all come from the massive fraud being investigated by the justice department?

Did the federal and state medicare monitoring and oversight structures detect any of this? - well no! Who blew the whistle on this? Well just an ordinary guy who worked for a while in one of their hospitals and didn't like what he saw. He took documents with him when he left and used them to initiate a Qui Tam action on behalf of US citizens. He did all the mathematics to show the fraud and explained it to government. Only much later when there was increasing public outrage did the government join the action.

New York Times reporters had also decided to look at the company. They took the information publicly available to them about billing and put them through a computer analysis - the sort of things the oversight bodies would surely have been doing. But no! They had to be told by the newspaper of the disturbing trends. The newspaper acted responsibly and informed government. It did not publish until after the FBI raided the company's hospitals and seized documents.


We live in a world where managed care companies face massive class actions for denying care, and where judges award US $120 million dollar penalty payments to a single patient in an attempt to stop them. These actions threaten the largest Aetna Healthcare. Its chairman has resigned. Even shareholders are shocked and acutely aware of the anger it has generated across the community. Its shares have plummeted and it is breaking up. Shareholders are angry it did not accept a takeover offer.

Half a dozen HMO's faced a court action by the Texas government claiming that they have offered doctors illegal inducements to prevent them providing care to their patients. HMO's have misinformed consumers, understaffed facilities, set up deceptive arbitration processes, illegally removed expensive drugs needed for care from their lists and paid state fines for denying care to those who were entitled to it.


We read about the market and learn that in a market some succeed and some become bankrupt. We shudder as we read of the fears expressed by state and federal governments for the welfare of the aged in the USA because several aged care providers face bankruptcy. What is happening to care as these companies struggle to survive? How strong are the pressures to cut staffing further? We know Sun Healthcare has already cut 10,000 staff from facilities from which it had already "cut the fat". How will government manage when thousands of the aged are suddenly homeless? Texas was severely stretched when it was forced to step in to run the nursing homes from a local nursing home chain which collapsed. Patients were about to be turfed out into the streets. What happens when the same thing happens to the really big chains like Sun, Vencor, and IHS which are now struggling along under chapter 11 protection?


We read of Mayne Nickless guilty plea to a criminal conviction and $7.4 million fine for running a price fixing racket which disadvantaged its customers. We read the scathing comments of Professor Fels and the press. We examine the judges comments. No one questions whether Mayne Nickless is a fit and proper person to provide care to Australians in its hospitals. This is a requirement in all states. A little more than a year later Mayne buys a large number of hospitals from another company. Objections are lodged to state authorities granting licenses on the basis that a criminal organisation cannot be a fit and proper person under the act. The objections are ignored.

We see television and press reports describing socially discordant practices and criticism of Mayne's contracts with government. We read reports which describe business policies which mirror Columbia/HCA, a company under investigation by the FBI following raids on its hospitals. We wonder what has happened to our world when care is provided to citizens by criminals?

Our government then passes laws specifically to enable this company, guilty of criminal arrangements to enter into arrangements with doctors about patient care. Our health minister appoints a senior executive from this criminal organisation to chair the Health Insurance Commission (HIC). This is the body responsible for monitoring and prosecuting health care fraud in Australia.

In our world things like this simply are not allowed. We conclude that Australia is becoming a banana republic where corruption is rife and criminals hold positions of power and influence.


We read about the use of kerosene baths rather than effective but expensive medication at Riverside in Victoria. It is run by a company which is in receivership. It owes the government money which will be lost if it enters bankruptcy. This is followed by further revelations across Australia. We learn that complaints which should have alerted government to serious problems in aged care were simply disregarded. Instead authoritiies discredited the complainants as habitual complainers. What conclusions do we draw in our world?


We read of the advantages of the marketplace and how it will reduce costs and increase efficiency. We are aware of the strong commercial competitive pressures introduced into radiology. We learn that the political creators of this competitive marketplace leaked information to radiologists. This lead to a massive buying of expensive MRI machines as radiologists rushed to protect their market share. Everyone blamed everyone else then it was all quietly dropped. In our world we wonder about the extra costs of all this and the impact of a glut of MRI machines. Will radiologists be under pressure to overservice in order to pay for these machines? Will they allow machines to stand idle as they enter bankruptcy? We wonder that a system which we are told is so efficient could generate pressures like this. We ponder on the nature of the level playing field.


We live in a world where despite being embarassed repeatedly by their failure to address widely known problems in corporate health care chains the FIRB process was used to bring Sun healthcare into Australia despite the objections of the state where it was to operate. There were serious concerns about standards of care, financial practices and fraud. Despite further revelations confirming all this no action has been taken to get rid of them.

We live in a world where despite the wealth of information our politciians continue a policy of privatising health care and reforming it using competitive market principles. Corporations intent only on profits continue to take over general practice, pathology and radiology. Their objective is to snare the money making referrals of general practitioners, exactly the objectives of the corporate integrated systems which have ravaged the USA. Speakers from our federal government's health department speak for this new marketplave medicine at conferences.

We live in a world where US politicians receive vast sums of money from health care corporations and then act in the corporate interest to frustrate the will of the people. Studies show that political decisions closely follow the money. We are aware of the close links between our own political establishment and the corporate world. We ask whether the services of our political system has been purchased in the same way.


To us this is the real marketplace. This is how Samuel and Wooldridge are going to ration care. They plan to hand it all over to the people who have done all these things. They will ration our care when we are ill. If Samuel is some sort of conjurer and has some other kind and fair competitive marketplace hidden in his world then he should pull it out of the hat and tell us about it in simple everyday language which we can understand in our world. Doctors are expected to explain and discuss illnesses with patients in simple terms which they can understand. It is not unreasonable to ask Samuel to do the same to doctors and the public when setting out his model.


Moving the risks from public to private: - What can we think of Samuel's plan? He talks about the private sector sharing the risks. Many other government papers support the same idea.

We have read many accounts of corporate profits falling and of threatened corporate bankruptcy. Does that mean that private corporations might be put in a position where they will need to compromise care to survive? Mayne Nickless has perfornmed poorly. It has appointed a new razor man to "turn the company around". He has a reputation for cutting costs and reducing services. He comes from a company with a dreadful human rights record. Will he cut care?

Could corporations go bankrupt and leave citizens without care? Surely government which will be forced to pick up the pieces is in a better position if it simply provided the care itself so that this did not happen. We know it would be cheaper. Government has the option of increasing taxes instead of going bankrupt if this is needed for an emergency. In our world a government which we elect to protect our interests sounds much more secure than a corporation whose excutives have a duty to generate profits from our care for shareholders in another country. Our government seems a safer option for us when we are no longer able to defend ourselves. If government fails us our relatives can install a new government. This is not an option in corporate health care.

Samuel talks of an "optimal transfer of risks" and of "the risks associated with purchasing to be shifted to these corporatised entities" Can he mean that it is better for us if the risk that something might cost more than anticipated is transferred to the private sector - the people who are going to look after us, - the same people who are at risk of going bankrupt when they lose money. We have just seen (in the USA and Riverside) what happens to patients when companies are threatened with bankruptcy.

This is what is so nice about econobabble. It is so impressive, so reassuringly sophisticated! It enables a stable government to transfer the risk to someone who is at far greater risk of failing. No one even considers that the patients are the people who are really carrying the risks - it is the risks to their health and their lives which are being transferred to unstable corporate groups!

In Our World:- When we are ill we want security. We need to know that the money we have been paying all these years in taxes or medicare is secure and will be used for our care - not given to shareholders, not used to "grow the organisation", and not used to bail out a company which is going bankrupt. Doesn't a community service where the risks are spread across the whole community sound good. When the financially unexpected happens then the fallout for our care will be cushioned by the humanity of the community.

In our world we need examples - Who will assume the risk? Who will ration? Perhaps Samuel can give us an indication of the sort of companies which would assume the risk and do the rationing. The sort of companies which would fit his model.

Perhaps Vencor is a good model. When money was tight it rationed by simply tipping a large numbers of medicare patients out of its homes and replacing them with wealthy private patients who paid more. The government had to step in, fine them and insist they take back the medicare patients. Government is also claiming US $3 billion which it alleges the Vencor deliberately overbilled. Despite this fraud Vencor is in chapter 11 and taxpayers will whistle for their money. It seems the risk wasn't transferred after all.

What about Integrated Health Services (IHS)? The press carry reports of failures in its facilities almost on a daily basis. It must be rationing care. One study showed that only about 50% of the money the company gets paid is actually spent on the care of patients. This is Riverside multiplied many times - but then IHS is in chapter 11 bankruptcy too.

If we want a purchaser or HIA we might choose Aetna Healthcare. It was the largest and most successful HMO and would have felt at home. It would have been welcome. A pity that its share value has plumeted as citizens revolt at its practices and take to the courts.

In Australia we could choose a local company Mayne Nickless with its history of deceiving its customers with a price fixing racket. Then there is Alpha. Its dominant shareholder is Sun Healthcare and Andrew Turner is an expert at rationing. He knows where to "cut the fat" to fuel growth. Perhaps Revesco would be the best. It has no convictions for fraud. It is quite open about its reasons for entering health care. It wants to make money out of our misfortunes and believes that it can make a lot.

If Samuel had taken the trouble to do a literature search he would have found a letter describing corporate rationing in the marketplace and warning Australians of the danger.

(Wynne J.M. "Rationing in Australian health care services" MJA Vol 168, p 581 - 1 June 1998)


The first paragraph in the section of Samuel's speech addressing the advantages of his market model is headed "costs". I thought I must have missed what he said about it. I went back and read it again to see what the claimed cost advantages will be. In all that econobabble the word costs appears only once and that is in the heading. He doesn't actually talk about it in the paragraph. Nowhere does he claim that costs in his model are going to be less, yet that is what most hearing or reading that paragraph might think. After all isn't that what we believe this is all about? Surely there isn't a hidden agenda?

It is interesting to compare this paragraph with what happened in Alberta in Canada. The state premier Ralph Klein, a Kennett act-alike has been running down the public system for several years. At the same time he has been progressively increasing privatisation and contracting out care. He claimed all sorts of advantages and everyone thought he meant this would cheaper. Like our "honest John" most trusted him - a few didn't. His benchmark was privatised cataract surgery. When a recent study showed that this was much more costly, and provided an inferior service the health minister simply said that they had never claimed that this would cost less. When they looked carefully at the speeches he was quite right. He didn't quite say it. He is now struggling to tell a very sceptical electorate and a critical press just what he was talking about and what the advantages are supposed to be. The government is pressing ahead with further legislation which the electorate opposes.

WHAT ARE THE FACTS ABOUT COSTS:- So lets state the obvious - what we all know. Corporatised private systems, particularly that in the USA are the most costly in the world and the least equitable. National Health systems such as those in the U.K. are the cheapest, the most equitable and provide outcomes which are the same or better. Inbetween systems like we have in Canada and Australia come in the middle as far as cost is concerned. The outcomes from care are not much different. It is simply a case of whether we are prepared to pay a little more for the extras and the choice which we have in Australia. Those of us who have worked in the UK think that it is worth paying a little more for the comfort of this if we can afford it. The not for profit hospitals offer this without the risks to care which corporatisation brings. If we were a developing country this extra money might be better spent elsewhere.

We can elect to pay much more for a fully privatised corporate system so that we can be ripped off by corporate providers and our care squeezed by corporate HMO's. This is what Wooldridge and Samuel want. This is a much more profitable system - the one wanted by the market and the WTO! Those of us who have been there and looked at it are bitterly opposed to bringing it here.

Costs in Australia: - Private hospital care in Australia is more costly than public health care even though the public treats sicker patients. The standards of care as indicated by complication rates appear to be no different. The number of corporate hospitals is still small and I do not have figures. The contracting of hospitals to private health care corporations has not been a success and there have been no financial advantages.

Costs in the USA: - In the USA the underfunded public system is too small for proper evaluation but seems to do surprisingly well when it appears in analyses. Studies comparing for profit hospitals with not for profit hospitals show that care in for profits costs more, and they provide more limited services. They employ less staff. Studies of nursing homes found a similar pattern with corporate homes providing very poor care. In one state Beverly homes were among the most profitable. At the same time state surveillance data revealed that its performance in patient care was very poor. It has recently paid a $125 million fraud fine but has not gone bankrupt. As I recall this was initiated by another whistleblower.

Costs in the UK: - In the UK a group reanalysed the data from a typical case where a public hospital service was contracted to a private corporation. The NHS had claimed a very significant financial benefit. When a more appropriate analysis was performed the benefit translated into a multimillion pound loss to the NHS - money, a scarce resource which could have gone to care. There would have been fewer haemodialysis patients rationed, perhaps another 50 or 100 lives extended.

COSTS AND RATIONING: - So lets not talk about costs when advocating privatised care, and particularly corporate shareholder privatised care. Lets be clear that when we talk about scarce resources and rationing then we should be talking about the cheaper more cost effective public system.

There are pluses for private care but they are not cost or standard of care. My social responsibility as a taxpayer extends to providing the level of funding for everyone to benefit from a public system of care which is equal to that in the private system. I include interpersonal conduct in providing care. My social responsibility need not extend to paying for the other comfy pluses, these extras for others. I resent dishing out large sums to prop up the private system, even though I might be prepared to pay for these myself when I want them.

My own suggestion is that there should be a drawing together of public and not for profit systems into a single cooperating integrated system which offers the benefits of both and allows the patient maximum choice. The community would take over from government. The health system could be built around the community as a central pillar. Citizens in Australia are interested and are increasingly demanding a say in the funding and the running of the health system. This is a very healthy beginning and we should capitalise on it. (see "Here Cometh the Consumer Advisory Committeees" by Natalie Savin -- editorial - Health Issues Sept 2000 p 3)

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This page created October 2000 by Michael Wynne