The following objectives should be met by the end of this first module:
- Define corporatization of health care in the United States
- Discuss reasons why corporatization has occurred and some of the legal and ethical issues created by this phenomenon
- Discuss the history of the consolidation of the hospital system
- Discuss the decomposition of voluntarism and its effects on the not-for-profit organizations
- Understand the changes in the environment that drove the medical field into practicing corporate medicine
These notes are intended only to supplement your readings. The best way to ensure each module is absorbed is to complete all the readings prior to reviewing these lecture notes. I will try to highlight what I believe to be the most important topics from your module readings. If you have any questions or concerns or there is something you do not understand, please ask me. You can either post on the webboard the question you have (that way others can benefit from the response), or you can e-mail me if you want a more private response. Either way it is extremely important that you have a complete and thorough understanding of the material for the module. Good luck and have a great semester!
To remain competitive in health care today, there has been a rush for corporate growth in health care. This is the drive to "create increasingly integrated and diversified organizations". It is based upon the ideas of traditional industries in the United States under the assumption that it will lead to improved coordination of care, cost control and reduction of excess capacity.Both horizontal and vertical integration in health care has been used during this "corporatization" phase of growth in healthcare. Horizontal integration has not been the panacea it was anticipated, as evidenced by recent events with Columbia HCA. Large hospital systems are under scrutiny to ensure that price negotiations and monopolistic environments are not created. Vertical integration still may have the potential for health care solutions. They make good sense, but are still facing many organizational problems prior to success. These arise from bringing together different organization with different missions, structure, and providers.
The most significant increase in mergers and acquisitions in healthcare occurred in 1994 with the defeat of the Clinton Health Care Plan. Integration occurred to promote continuums of care and in 1994, 10% of all hospitals were involved in this process. This includes both entrepreneurial for-profit hospitals, as well as not-for-profits and educational hospital systems. Corporate alliances are also occurring between different health service organizations. For example, physician hospital organizations have developed that bring physician groups into hospital networks to improve competition, maintain market share and share financial risk.
The reading assigned to you from The Social Transformation of American Medicine by Paul Starr is an excellent reading to understanding corporatization in health care. I would highly recommend this text, that reads as a "novel", of the history of the American health care system. Paul Starr argues that the corporatization of health care in the United States will lead to further weakening of the professional sovereignty of physicians and health care professionals in general. Other consequences include disunity, inequality, and conflict. This is very prophetic, I believe, since it was written in 1984.
Starr continues that the corporatization of health care not only includes increasing penetration of for-profit health care systems but also five other dimensions. These include:
- change in type of ownership and control
- horizontal integration
- diversification and corporate restructuring
- vertical integration
- industry concentration
The consolidation of the hospital system has played a major role in this corporatization process as does the fall of the voluntary (not-for-profit) entity in healthcare. The corporate health care entities that have emerged predominate as four types, these are:
- the academic medical center
- the regional, nonprofit multi hospital center
- the national, for-profit hospital chain
- HMOs
- diversified health care conglomerates and other managed care organizations
The change from a "health center" to a "profit center" in health care is a hard pill to swallow for many. The attitude that must follow to practice corporate healthcare does not seem to be patient focused. Due to many environmental factors, this is the path that was chosen for HSOs and practitioners to survive. The future is difficult to predict. Based upon your readings you have two authors opinion of what the future holds. Will corporate medicine continue to thrive or will we return to the physician, rather than the corporation providing patient care. I think Starr says it best.
"But a trend is not necessarily fate. Images of the future are usually only caricatures of the present. Perhaps this picture of the future of medical care will also prove to be a caricature. Whether it does depends on choices that Americans still have to make".
That is it for notes for module #9! Let me know if you have any questions.