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Clarifying different roles in health care provision

The roles

Criticism Number 10

1. Funder

As Samuel indicates it is government which funds the system. In Australia the federal government is the funder. Purchasing is split between federal and state governments. Funding by government is, as Samuel accepts limited. This in effect means rationing. Samuel plans to contract this rationing to groups whose interest in entering the contract is commercial. We will be faced by a system where every cut in care will be seen as an attempt to increase profit. Not only is the situation immoral, but it is likely to generate intense distrust and suspicion in the community.

CLICK HERE -- for more information about funding problems and rationing in Australia

2. Purchaser

The second role is that of purchaser. This role includes "determining what services will be purchased and in what quantities. It also includes the question of what providers will be engaged to provide those services and on what terms". This is where Samuel considers the "potential benefits of competition are greatest". He sees no impediment to this role being privatised.

Samuel does not use the word managed care which has a dreadful reputation in the USA and internationally. The activities and the processes which the purchaser will use are exactly those of managed care companies. To create the illusion that this is something quite different Samuel later calls them "corporatised Health Improvement Agencies". This is like the international conmen who sell managed care to ignorant politicians as "health care reform" claiming that it will improve standards of care right away.

Managed care obtains its savings by taking control of doctor's incomes and then using this leverage to get doctors to serve corporate profits rather than their patients. The misuse of patients has been so extensive that a public backlash has forced government to pass patients rights laws to protect them.

CLICK HERE -- to expand on this criticism of purchaser and managed care.

CLICK HERE -- to go to the section on managed care

3. Provider

Who Provides:- The providers include individual doctors and the owners of hospitals, both for profit, not for profit and teaching hospitals. This is exactly the spectrum which exists in the USA.

Squeezing Providers:- Managed care makes money by denying care whenever it can. It uses its competitive advantage to squeeze providers and so wring profits by paying them less. It is clear that this is how Samuel's purchasers will keep down costs. The provider has no choice but to squeezes care to make a profit. These providers make money by overservicing, by understaffing, by skimping on the care provided, by illegal kickbacks, and of course by defrauding the funders, particularly medicare. The stronger the commercial competitive pressures, the stronger is the pressure to indulge in these practices. What a wonderfullt immoral way to ration scarce resources.

Fraud:- Fraud is endemic among for profit corporate providers. The largest and most successful groups in each sector have paid large fines - hundreds of millions of dollars. While these sound enormous they only represent the sale of a few hospitals in enormous empires. It is clear that this fraud was the platform on which some built their corporate empires. The government boasts of recovering several billion dollars in fraud prosecutions. This is only a fraction of the many billions of estimated fraud. Crime still pays.

Many non profit providers have been forced to indulge in similar practices in order to remain competitive. Not for profit hospitals which failed to follow corporate practices could not compete and were taken over. A group of Catholic hospitals even went as far as to pay kickbacks for the referral of patients. Teaching hospitals which Samuel mentions specifically must support training and research. They are in terrible trouble as they cannot do so and still remain competitive.

CLICK HERE -- to learn more about fraud in the health care marketplace

The Costs of Provider Competition:- In a competitive marketplace corporate providers must compete aggressively to survive. They must take over or merge else they will be taken over. They have considerable expenses directly related to competition. The Managed Care companies do not fund this so it must be taken from care.

Additional expenses include large administrative costs, the costs of securing market dominance., the costs of takeovers, massive marketing budgets, political donations and lobbying. Competitors must be attacked and discredited. In some facilities only about 50% (eg Integrated Health Services) of the money paid by the purchaser is actually spent on the care of patients. Not only is money frittered away on competitive activities which have nothing to do with care but vast amounts of time and mental effort are diverted to these activities.

Wasted Resources:- This is what the believers in the marketplace call efficiency. It is difficult to believe that this time and effort could not be more profitably and more efficiently spent on caring for the patients in a different system where people cooperate to do the best they can. I have considerable doubts about the possibility of providing caring and empathic care in the sort of interpersonal environment which internal corporate documents show these corporate and competitive practices give rise to. The experiences of patients in Tent/NME facilities and in corporate aged care homes are testimony to this.

4. Regulator

Samuel clearly feels that regulation and oversight are the answer to the adverse and/or unintended outcomes of what he proposes. He needs to address a number of important considerations.

In short do regulations work, are those responsible for regulation allowed to regulate, and does government set in place regulations when they are clearly required and/or provide the backup needed to make them effective.

What has happened in Australia is startling - even more startling than in the USA.

Historical :::: Professionalism as Regulator:- The values and ethics of professionalism have acted as the prime regulator of care for the last 2000 years. Like other social structures they are fragile. They have been vulnerable to social context and have required ongoing social support. The marketplace creates a context which threatens professional ethics and devalues professional norms. Professionalism is seen to be outdated, anticompetitive and self serving. When their welfare and the welfare of their families was threatened the professions in the USA failed to protect the community and vulnerable patients from corporate exploitation. Many even connived in these practices.

I argue that other forms of regulation have failed to control market excesses. They are unable to address the nuances of the daily events which impact on the lives of citizens receiving care. Professionalism, for all its limitations should remain central to regulation in the day to day provision of care. To do so it must have the support and trust of the community.

CLICK HERE -- for more about regulation and professionalism.

Regulation in the USA:- In the USA regulation has been singularly ineffective in the health care marketplace. It has been frustrated by commercial pressures, ideological beliefs and by the application of strong corporate influence. It simply has not worked.

CLICK HERE -- for more about regulation in the USA

Regulation in Australia

An examination of regulation in health care in Australia shows that instead of facilitating the regulation and control of undesirable practices., the marketplace has undermined the regulatory process and rendered it ineffective. Regulatory structures which have a proven record of success have been delegitimised. In an area newly subjected to market pressures, government has not supported existing regulations by giving them legislative support.

When powerful corporate groups were involved government has ignored regulatory requirements. It has actively undermined them. It has even elected to remove them. Government has not set in place any effective arms length structures. When these have been in place governments have intruded and except in Victoria they have not been allowed to function independently or at arms length.

The Australian experience throws a very disturbing light on the extent to which corporations will dishonestly deceive regulators and undermine the intention of regulatory processes. It illustrates the way in which politicians willingly tolerate and even connive in this. Above all else it shows the willingness of our leaders to enter into disturbingly close relationships with criminal organisations - groups which should fill us all with revulsion.

The inescapable conclusion is that the competitive health care marketplace which Samuel advocates has been very successful in undermining and emasculating the regulatory system which he claims is an integral and essential role in this marketplace system. The prime offenders in doing so are those who support Samuel's policies for health care.

CLICK HERE -- for the story of regulatory failure in Australia

5. Monitor

Samuel acknowledges that monitoring the care which patients receive is essential if standards are to be maintained in the face of market pressures. The problem is that corporate competitors control information and it is commercially sensitive. It is consequently extremely difficult to get the sort of information needed from a market system when care is compromised. This is well illustrated in the USA.

Perhaps I am misreading Samuel when he talks of outcomes. Perhaps Samuel as an economist and market advocate is referring to cost outcomes That sort of data is valuable to economists, insurers and others who do commercial assessments and then modify practices to ensure better commercial outcomes. This is what Tenet/NME did in great detail. They then spoke about "quality care". The health care outcomes which they did not measure were awful. This sort of measurement is simply not acceptable.

CLICK HERE -- to proceed to the next criticism - Number 11

CLICK HERE -- to go to the next section of Samuel's speech

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This page created April 2000 by Michael Wynne