Wall Street takes on health care
Wall Street takes on health careBy Rohn Robbins, Peter Brill and Diane VoytkoSpecial to the DailyOf the many issues raised in the current health-care debate, perhaps some of the most pre-eminent, but least discussed, are those of “privatization,” the shift toward for-profit medical centers and the influence of Madison Avenue, particularly in the advertising of prescription drugs. Collectively, these are sometimes referred to as Wall Street and/or Madison Avenue medicine. It is a subject we will take several columns to explore.Wall Street lives on buying and selling, mergers and acquisitions, as Donald Trump once coined it, on the “art of the deal.” And the move of monied Wall Street interests into the health-care industry signaled a tectonic change in both the way that modern medicine is practiced and in the options open to what once were patients and now are little more than “consumers” of medical services. A field once know for stability has been ground zero in the battle for American hearts, minds and perhaps most importantly, pocketbooks. There is little doubt that this new corporate battleground has spelled a bonanza for Wall Street, but one must question whether physicians and patients have been equally well-served.One cannot dispute that the business practices that have replaced the traditional, once intimate, way of practicing medicine have earned tremendous profits for the medical and pharmaceutical conglomerates. But traditional business practices are, simply, often at odds with good medicine. The overarching business practices of trimming costs – replacing skilled employees with the unskilled, lay-offs, and other cost-cutting measures – could hardly be more at odds with the traditional medical model of doing what is best and what is right for the patient.Beginning in the 1970s and accelerating through the ’80s to today, health care has become a particularly fertile ground for the incursion of business interests because it was so highly fragmented. Not an insignificant part of the cash cow to Wall Street is the federal government’s Medicare and Medicaid programs, which have been rife with abuse.One of the many out-falls of the “Wall Streetization” of health care has been to drive nurses from the hospitals in which they were traditionally employed. This has given rise, in turn, to a host of temporary staffing agencies. Some of the larger ones have been Cross Country Healthcare Inc., Medical Staffing Network Holdings Inc., AMN Healthcare Services Inc. and On Assignment Inc. The revenues of these agencies are staggering, for at least a handful of the larger ones, comfortably exceeding half a billion dollars annually or more. Collectively, temporary nursing agencies accounted for almost $11 billion in revenues in 2002 and the projected annual growth rate that year was 16 percent.But what’s good for the corporate bottom line isn’t necessarily what’s good for the patient. Is the patient equally well-served by a “temp” as by a nurse with continuity with the hospital in which the patient is receiving care? Is communication as effective? Are “hand-off” errors more likely with a temp who lacks the institutional knowledge of the facility in which he or she is temporarily employed? Similarly, can a temp be as competent when he or she is learning his or her way around and is unfamiliar with the doctors with whom he or she is temporarily serving? Can he or she know with the same certitude a particular doctor’s idiosyncracies and preferences? Are potentially lethal errors flowing from the nurse’s simple inability to read an unfamiliar doctor’s famously bad handwriting more likely?It is not mere caprice that American health care became a profit generator for Wall Street. The transformation of many non-profit centers into avaricious for-profit businesses was actively engineered by Washington in the go-go 1980s. Among other things, the Reagan Revolution ushered in an ethos of reducing governmental funding and introducing competition by unleashing “free market forces.” To that end, one of the administration’s first moves was to cut off federal funding for the nascent non-profit HMO movement which devolved, originally, from the successful Kaiser Permanente system in California.During the Nixon administration, Congress passed the HMO Act of 1973, which provided start-up money to create similar health-care networks in other states. The intent was to de-emphasize fee-for-services medicine and replace it with a system of flat fees. But the Reaganites considered the program too costly, and after funding was cut in 1981, each HMO had to sink or swim in the currents of the marketplace. That, of course, encouraged Wall Street to mount its charge and ride like a self-professed white knight to the rescue of the foundering industry.Washington offered various incentives and actively encouraged a market-driven system. That nudge from Washington in turn ignited Wall Street into an explosion of activity as it set about converting non-profit HMOs into investor-owned corporations. The move to for-profit health-care companies was to be a profound transformation that continues to affect millions of Americans today – many would say for the worse.In the next column, we will continue to explore the impacts of the privatization begun in earnest in the 1980s and explore the repercussions which continue to redound in the current health care crisis two and a half decades later.Rohn K. Robbins, principal of The Law Offices of Rohn K. Robbins LLC, can be reached at 926-4461 or at Robbins@colorado.net. Peter A. Brill, principal of Brill Insurance Agency, can be reached at 845-8910 or email@example.com. Diane Voytko, a family medicine physician at Colorado Mountain Medical in Edwards, can be reached at 926-6340 or firstname.lastname@example.org.Vail, Colorado
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