April 1997 XVIII/8


If anyone lives on the far side of the moon, perhaps they have not heard of the changes occurring in health care. But the majority of the population realizes that the provision and financing of health care has changed considerably. The days when health care was offered by individuals or stand alone facilities are past. Corporations now dominate the provision of health care. Not only are physicians and acute care facilities assimilated into corporations, but corporations now offer home health care and hospice care as well. In the past few months, scores of articles have been published in prominent health care journals seeking to analyze the new developments resulting from the phenomenon of increased corporate provision of health care. Most articles list only the harmful affects of corporate activity; but there are good effects as well. Moreover, most articles seek to counteract the harmful effects by means of legislation. While some legislation may be helpful, it seems legislation treats only the symptoms, not the fundamental causes. This essay will attempt to recognize some of the beneficial effects of corporate health care and offer more fundamental norms than legislation for counteracting the harmful effects of corporate health care.


Most of the aforementioned articles seem to use the term "managed care" to designate all the unpopular or harmful innovations introduced by corporate health care in the past ten years. In fact, managed care, or corporate care, is not all bad. As one prominent physician states:

"The inherent virtues of managed care have manifested themselves in many salutary improvements to the system that might otherwise never have been made. Those include attempts to eliminate waste and redundancy, a greater focus on health promotion and disease prevention, more attention to the management of chronic diseases, a focus on the accountability of physicians and health plans on the quality of care, lower hospitalization rates without an obvious decline in the quality of care, heavy investment in patient information systems and control of employer health care costs. " (1)

A second characteristic of articles evaluating corporate or managed care is that they overlook significant problems in our health care system. In order to have a viable and mutually beneficial health care system, the ultimate goal of the system must be the well-being of all citizens; not generating a profit for stockholders. Clearly, in order to maintain a viable presence, all health corporations must generate an excess of income over expenditures. Health care professionals and administrators must receive a just salary. But the notion that some people not connected with health care should make money, or even become wealthy, as the result of investments which depend upon illness and suffering of others is reprehensible. The obstacle preventing a beneficent and just health care system is best illustrated by the phrase "investor- owned" health care corporations. This phrase conveys the notion that all practices of health care corporations are to be governed by market forces. Of course, the market has no concern for vulnerable people, no matter what the source of their vulnerability. Many representatives of investor-owned health care corporations will respond to the foregoing statement by saying: "We seek to do both; we provide quality health care and make a profit at the same time." The problem with this argument is that in human affairs we always direct our endeavors to one ultimate goal. Jesus stated this truth in the words: "No one can serve two masters." It is possible to have an intermediate goal of making a profit with an ultimate goal of providing services to people and still provide beneficent health care. But if profit is the ultimate goal, service sooner or later will be sacrificed for profit. This bit of wisdom has been denied over the years by investor-owned corporations. But the practices of these corporations support the principle. Recently, there have been several reports in the national press which demonstrate the illegal, dishonest and abusive practices associated with investor-owned hospital chains. (2) A large investor-owned hospital chain is under investigation by the FBI for escalating medicare billing by falsifying DRG claims. The same corporation was convicted of violating labor laws in order to prevent nurses from unionizing. There are other practices which have been brought to light, such as, limiting the stay after child birth and persuading physicians to change DRG's. Most of the aberrations reported in the press arise from a desire to make profits for administrators of the corporations or for physicians who will send patients to the health care facilities conducted by the corporations. Statistical studies demonstrate that investor-owned HMO's spend only 80% of assets on patient care, while not-for-profit HMO's average over 90% for patient care. (3) In sum, health care is a service, not a commodity; a profession, not a business.

In addition, there are goods which are so important for the well-being of people that they should be considered public goods, that is, goods which must be made available to all. Health care is one of those goods. This conviction does not result only from religious teaching; it was affirmed by a secular commission appointed by the federal government to study the health care system in the United States:

"Society has a moral obligation to ensure that everyone has access to adequate care without being subject to excessive burdens. ..But the recognition of a collective or societal obligation does not imply that government should be the only or even the primary institution involved in the complex enterprise of making health care available. It is the Commission's view that the societal obligation to ensure equitable access for everyone may best be fulfilled in this country by a pluralistic approach that relies upon the coordinated contributions of actions by both the private and public sectors. " (4)

In the United States about 50% of the people have health care coverage as a result of employment. Others, for example, children with mothers who have limited income and people over age 65, have most of their health care costs funded by the federal government. But there are many people who fall in the cracks and who do not have adequate access to health care. At present, this totals some 40 million people. If persons are unable to achieve these goods, they should be provided by society. We recognize the importance of education and so we try to provide a basic education for all; including those who cannot afford to pay for it. To date, we have not considered health care to be of the same nature. Equal health care for all is not possible, (5) but basic care should be provided. In order to do this, we will probably have to change the manner in which we fund health care in the United States. In the past few years, many of the Medicaid patients previously cared for in city or county hospitals are now cared for in private hospitals. Does it seem unreasonable to suggest that the Medicaid program could be enlarged to care for those without adequate access at present?

Finally, other public goods are the education of health care professionals and research in health care. Both of these goods have been subsidized by health care fees in the past. But with the effort to limit costs of health care then less money will be available for the important public needs. Perhaps education and research should not be funded by fees for services as they have been in the past but from some other source. Other sources of funds, whether public or private, must be found to assure that these public goods will be provided in the future to the extent they have been in the past.


To those of you who are familiar with these essays, the ideas we present for a renewal of corporate health care in the U.S. are not surprising. They are foundational insofar as a just health care system is concerned. To others, not familiar with these essays, the thoughts proposed above might sound like a message from the Flat Earth Society. "How can anyone challenge the worth and validity of investor-owned health care corporations when they are so much in accord with the U.S. free enterprise economic system?" But I would challenge the proponents of investor-owned health care corporations to demonstrate that overall, better patient care has resulted from market-driven activities or that our society benefits from a simple assumption that the market will solve all economic and health care needs and problems.

Kevin O'Rourke, OP


1. Jerome Kassirer, MD. "Is Managed Care Here to Stay?" NEJM (April 3, 1997):1014.

2. Kurt Eichenwald. NY Times (March 31, 1997 and April 1, 1997); Wall Street Journal (March 16, 1997).

3. George Church. "Backlash Against HMO's," Time (April 14, 1997):32-36.

4. President's Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research. Securing Access to Health Care (Washington, DC: Government Printing Office, 1983), 22-23.

5. Kevin Wildes. "Health Care, Equality and Inequality," Christian Bioethics 2 (1996):271-280.

© Kevin O'Rourke, O.P.