Non-Profit vs. For Profit: Health Care Systems at a Crossroads

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In Alameda County, a private hospital turned away a woman in labor because the hospital’s computer showed that she didn’t have insurance. Hours later, her baby was born dead in a county hospital. The woman was simply not “good business.”

This concern for “good business” has moved to the heart of health care, a sector once relatively insulated from the pursuit of profit that drives the rest of the U.S. economy. And though the debate is currently taking place largely in America, it has reverberations throughout the rest of the developed and developing world, even in those countries with primarily publicly funded health care systems where privatization is slowly creeping in – and with the various stakeholders, including the interests of pharmacy and pharmaceutical companies as well as non-profit health care providers, vying to make their voices heard…


Opposing the commercialization of health care are those who base their arguments primarily on considerations of justice. They argue that a society has a moral obligation to meet the basic needs of all of its members. Every citizen, rich or poor, should have access to the health care he or she needs. The rise of for-profit health care only exacerbates the growing problem of access to care and mainly pointed at the pharmaceutical companies as the cause.


Further, critics of health care for profit maintain that all persons have a right to live their lives with dignity. Mixing business with medicine will inevitably lead to abuses that violate patient dignity. A patient is in a vulnerable position, necessarily trusting that the doctor’s decisions about his or her medical care will be guided solely by the patient’s best interests. But in a system of for-profit health care, doctors will become subject to the control of lay managers accountable to share-holders, including Pharmaceutical companies, whose primary aim is making a profit. Such hospitals will encourage doctors to promote profit-producing drugs, surgeries, tests and treatments. And, medical treatments and counseling lacking profit potential, however effective, will be discouraged. Even more worrisome are physicians who themselves own the facilities they operate.


In a system of for-profit health care, the opportunities for patient manipulation and exploitation are endless. Society, the proponents of non-profit health care argue, must not allow the motive of economic gain to enter so directly into the practice of medicine, placing the well-being of patients in serious jeopardy, and undermining the trust so essential to the physician-patient relationship.


How will for-profits, its critics ask, help control health care expenditures and the overuse of health services when, by definition, they are in the business of increasing total sales?


Finally, some critics of for-profit health care claim that the commercialization of medicine by the pharmaceutical companies will lead to the abandonment of certain virtues and ideals that are necessary to a moral community. Most non profits continue to uphold an ideal of service to humankind. The virtues of caring, compassion, and charity, and a sense of community have guided their decisions about the range of services to provide and the kinds of research or education to support. The ideal of altruism has been perpetuated by physicians whose primary concern has been the alleviation of human suffering and the restoration of health. Society must not allow such important and fragile virtues and ideals, the champions of non-profit health care argue, to be extinguished by the self-interest that drives for-profit enterprise.


Those favoring the growing commercialization of health care argue, on the other hand, that society ought always to follow that course of action that will bring about the greatest benefits at the lowest cost. A health care system run by for profits will provide the greatest benefits at the lowest cost.


First, for-profit health care will lower the costs of care. Commercialized health care, its supporters argue, is our only hope for controlling the soaring costs and over-utilization of health services.


Under the present system, administrators and physicians have no incentives to operate in a cost-efficient manner. More concerned with institutional prestige than with the bottom line, administrators of nonprofit organizations acquire sophisticated equipment and highly trained personnel, without regard for their need or likely use. Physician’s themselves are offered little incentive to concern themselves with the cost of care, and go about ordering treatments that yield little or no benefit. Moreover, its critics maintain, the non-profit health care system is rife with costly, under-used facilities.


As the number of for-profit health care facilities increase, its supporters argue, we can expect to see an end to such gross inefficiency. Aiming to maximize profits, for profits will invest only in the equipment and the personnel necessary to provide services that patients actually need. Decisions about what technologies should be adopted will be based on whether the benefits of these technologies outweigh their costs. The entrepreneurial spirit will give rise to innovation in the delivery and management of services, leading to more efficient methods of production and treatment. Doctors will be forced to come to terms with what will really benefit patients, resulting in fewer unnecessary hospitalizations, shorter hospital stays, and fewer needless tests and less visits at the pharmacy.


Second, society will benefit from the enhanced access to care promised by for-profits. For-profits can pass on savings they achieve through more cost-efficient operations by lowering the price of care, so more people are able to afford it.


Third, for-profit health care enterprises produce benefits for society because for-profits have greater and quicker access to capital at lower costs than do non-profits. At a time when massive investments of capital are needed to keep up with the state of the art in medicine and developed, non-profits pharmaceutical organisations are experiencing increasing difficulty in attracting funding. For-profits pharmaceutical companies, on the other hand, can lure investors by issuing stocks, securing the money sorely needed to build and renovate facilities and to replace and modernize outdated equipment.


Finally, it is argued, health care is like food, clothing and shelter. Just as these “basic needs” are sold on the market and distributed according to ability to pay, so too should health care. If some cannot afford to pay for such basic needs, it is up to the government or voluntary agencies to see that they secure it.


What is the moral response to the increasing commercialization of health care? The arguments in favor of for-profits pharmaceutical companies appeal to the values we place on the freedom of free enterprise and the economic benefits that may flow from a more efficient health care system. But are we willing to uphold these values at the cost of other important values, including a concern for justice, the dignity of persons and a community-centered ethics that places the needs of people before profits? What is a “healthy” bottom line?

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