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The role of competition in health care

Criticism Number 20


In his conclusion Samuel indicates that his model will mean significant changes in the operation and underlying dynamics of the public health system and "can ensure the preservation of the social values that underlay public health provision" while putting the service on a sound financial footing.

Regardless of Samuel's argument that what he proposes is different to the USA, the consequences of the sort of changes resulting from this model can be deduced by an analysis of the system in the USA. There is ample evidence on this www site.

The model is built on the premise that corporate for profit interests will provide services under contract without compromising care or our social values. An examination of the majority of the leading health care corporations in the world reveals that they have been profit centred and not care centred. They have been dishonest and consistently shown a lack of integrity. They have repeatedly betrayed the trust of citizens. They have built enormous corporate empires by defrauding the government of many billions of dollars. They have compromised care and neglected patients in their search for profits. They have angered the entire community by denying care which had been paid for. They have understaffed their facilities and limited the sort of services provided in the interest of profit and not of the community. They have accomplished this by buying the allegiance of the medical profession - people whom our citizens trust.

A very similar system "managed care" is in trouble financially and in the courts. Social values have been so severely breached that government is passing laws to protect citizens from exploitation. The most recent reports suggest that costs of health cover have have started increasing at the rate of about 10-14% a year. All this is despite 30 years of dealing with and regulating corporate medicine.

Our politicians have already tried to bring these corporations into Australia and have undermined our regulatory structures in order to keep them here. They have strongly supported an Australian corporation with a criminal record.

Samuel claims that a service provided by these people will not compromise our social values. In attempting to impose a privatised corporate model of care in Australia government has already compromised our social values by subverting the regulations which uphold them - the probity requirements in our licensing regulations.

An investigation by the West Australian Department of Health reached a different conclusion to Samuel. Does he really expect us to accept his assurances and put our trust in this model and anyone implementing it.

Surely a much more simple system in which those who will receive care, the community sit down with those who are motivated to provide care would be infinitely preferable. Together they can work out how much they can reasonably afford to spend and how best this can be stretched.

Samuel proceeds to highlight the advantages of what he proposes.

1. Ensuring the development of competitive provider markets

Samuel's personal prejudices, blind commitment to competition, lack of insight into the importance of human values and trust are a disservice to developing nations. I have worked in Africa and have some idea of the possible impact of his model. I can only reiterate that in spite of many faults professionalism has attempted to uphold value systems and a commitment to care in these countries. The medical services which have been provided have often been provided by medical missionaries and philanthropic institutions.

At the same time foreign corporate groups have in the past fairly systematically raped these countries and exploited their labour. Samuel is persuading these people that the sort of corporate groups which I have described can be trusted to provide care to their citizens.

If citizens in the USA were exploited then these people are likely to be ripped apart. There are absolutely no controls and no impediments to unscrupulous conduct in most of these countries. They have more pressing priorities for their resources than spending vast sums on the surveillance of health care.

Fortunately many countries do not yet provide sufficient profit opportunities. One can only hope that by the time they do the corporate health care "reform" bubble will have burst.

Links to pages on this site addressing professionalism

CLICK HERE -- Professionalism and Regulation.
This page examines the important regulatory role of professional values and ethics when contrasted with the ethic of the marketplace.

This page explores the claims that in the market consumers would decide what care they were given, and that health care is currently organised for the benefit of the medical profession. It examines the way in which decisions about care are actually made in the marketplace. It does so by using examples.

CLICK HERE -- Trust,The Market and Professionalism
This page examines the way in which the market has corroded the values and ethics of the professions and induced doctors to place care for the corporation ahead of care for the patient.

CLICK HERE -- Professionalism - response to economists criticisms
This page acknowledges that professionalism has failed on a number of occasions and more so recently. It explores the reasons for this and argues that the meaning systems and the values which form the basis for professionalism are sound. Professionalism has failed when confronted by powerful forces which introduce meaning systems which are not congruent with professional values.

CLICK HERE -- Professional Independence
The medical profession has cherished and protected its professional independence. There are pluses and minuses to professional independence. On balance this independence has served society well and should continue to do so. While it has bent to the winds of change it has served democracy by keeping the embers of community values burning in the face of totalitarianism and ideology. The embers reignite as soon as the wind changes. Its response to economic ideology is no different to its response to apartheid.


2. Choosing between different service provision possibilities

Samuel repeats claims about competition which fly in the face of logic and fact. He is promoting the entry of grossly immoral corporations into countries which are ill equipped to deal with them. The chairman of the Australian NCC is in fact promoting the interests of Mayne Nickless, an Australian multinational which has a criminal record in Australia. Surely we cannot sink as low as this.

Market systems have destroyed confidence in the USA. A lack of confidence in the competitive market model was a major factor in the overthrow of the last New Zealand government. The new government is structuring the service around cooperation and the community.

3. Mobilising necessary capital resources

Samuel's is skillfully playing on "politicians pain" finding money. Many developing countries simply do not have the financial resources to fund a health care system and the world bank has stopped hand outs for health care. One must ask whether those which can provide the profits for a corporate service might not be able to afford a not for profit service as a preferable alternative. Fortunately Australia is not in that position.

I can understand that developing countries may be forced to allow in corporate groups when they have no money. They need to be forewarned and prepared to address serious problems. They should understand that these groups are not coming to care for their citizens but to take money for their shareholders. They must be forced to provide care and this is no mean task. It is more important to pay attention to probity than to the details of contracts and oversight. Experience suggests that these are unlikely to work.

4. Contractual and regulatory sophistication

Samuel is recommending to developing nations that they make sophisticated contracts with corporate groups like Columbia/HCA. Columbia/HCA employed a train of sophisticated lawyers to ensure that its Pacman activities were legal and served its interests. Its track record for serving the community were poor.

To advise a system which is so liable to exploit citizens that costly "sophisticated contractual and regulatory arrangements" are essential is disturbing. Few will have the funds and corporations will not come if they cannot provide the care in the profit making way they want.

As I have indicated I question the wisdom of setting in place a system which requires this level of regulation and control. We cannot build a decent world to live in like this. I am not an advocate of functionalism, nor conflict theory. I do believe that we should strive to build systems which work by making the forces in them congruent with desired outcomes. I do not believe in deliberately building in conflict. The pressures generated so often end in disaster,

5. Maximising affordability

One of the attractions of market listed corporations is the access which they provide to capital for development. In suggesting any alternative one is immediately confronted with the arguments "where is the money coming from" The answer of course is exactly the same place where the money to pay corporate interests comes from - the people.

The whole community in an integrated not for profit system, and government in publicly funded systems provide far greater security than a company listed on Wall Street The money is as safe as the country. Taxes will be raised to repay it when all else fails. It is also possible to raise loans at favourable rates because of the low risk. Government can sell bonds to raise money.

In addition there should be no objection to corporations leasing physical facilities or providing catering services to government or not for profit services provided they are not involved in care. This would give them a return on their capital.

Raising capital should not be a problem in developed countries. Government is a secure borrower. I am aware that in developing countries there may be more difficulty in raising money particularly if there is political instability. Lenders might be concerned about the ability of the local group to use the money wisely. They might prefer to lend money to large and credible multinationals.

I accept this as a problem, but stable government is a prerequisite for any sort of development and social stability - as important as health care. Where possible governments might be wiser to contract for the building of facilities and lease them. It might be safer to employ international staff to run facilities and train local staff than to accept the risks to citizens created by the corporate providers. At the very least developing countries should have their eyes wide open when they pursue this path. I do not envy them their choices.

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This page created October 2000 by Michael Wynne