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OCR for page 224
For-Profit Enterprise in Health Care. 1986.
National Academy Press, Washington, D.C.
Ethical Issues In
For Profit Health Care
Dan W. Brock and Allen Buchanan
The American health care system is under-
going a rapid socioeconomic revolution. Within
a general environment of heightening com-
petition, the number of investor-owned for-
profit hospitals has more than doubled in the
past 10 years, while the number of indepen-
dent proprietary for-profit hospitals has de-
clined by half.2 Investor-owned for-profit
corporations are controlled ultimately by
stocl~olders who appropriate surplus reve-
nues either in the form of stock dividends or
increased stock values. Independent proprie-
tary institutions are for-profit entities owned
by an individual, a partnership, or a corpo-
ration, but which are not controlled by stock-
holders. Nonprofit corporations are tax-exempt
and are controlled ultimately by boards of
trustees who are prohibited by law from ap-
propriating surplus revenues after expenses
(including salaries) are paid. Although the in-
crease in investor-owned hospitals has been
most dramatic and publicized, a rise in inves-
tor-owned health care facilities of other types,
from dialysis clinics to outpatient surgery and
"urgent care" centers has also occurred.
The above definitions treat "for-profit" rather
narrowly as a legal status term referring to
investor-owned and independent proprietary
institutions. However, much of the current
concern over "for-profit health care" has a wider,
though much less clear focus. It is often said,
for instance, that health care in America is
being transformed from a profession into a
business like any other because of the growing
Dr. Brock is professor and chairman of the Philos-
ophy Department of Brown University. Dr. Buchanan
is a professor with the Department of Philosophy at
the University of Arizona as well as the Division of
Social Perspectives in Medicine in the university's Col-
lege of Medicine.
224
dominance of those types of motivation, de-
cision-making techniques, and organizational
structures that are characteristic of large-scale
commercial enterprises.
A recent book published by the Institute of
Medicine bears the title The New Health Care
for Profit, with the subtitle Doctors and Hos-
pitals in a Competitive Environment. The dif-
ference in scope between the title and subtitle
is but one example of a widespread tendency
of discussions of "for-profit health care" to run
together concerns about the effects of increas-
ing competition in health care, which affects
both "for-profit" and "nonprofit" institutions
in the legal sense, and special concerns about
the growth of those health care institutions
which have the distinctive "for-profit" legal
status.
This essay will focus primarily on the ethical
implications of the grown of for-profit health
care institutions in the legal sense. However,
although the ethical problems we shall explore
have been brought to public attention by the
rapid rise of for-profit institutions (in the legal
sense), it would be a mistake to assume that
they are all peculiar to institutions that have
this legal form.
In what follows, "for-profit" will be used
only to denote a distinctive legal status and
not as a vague reference to "commercial" mo-
tivation or decision making and organizational
structure, or as a synonym for the equally neb-
ulous concept of"competitive health care."
We shall explore, however, some moral con-
cems about the rise offor-profit institutions in
the legal sense that focus on the profit moti-
vation, decision-making forms, and organiza-
tional structures common to those institutions.
Serious moral criticisms of for-profit health
care have been voiced, both within and out-
side of the medical profession. Before they can
be evaluated, these criticisms must be more
OCR for page 225
ETHICS OF FOR-PROFIT HEALTH CARE
carefully articulated than has usually been done.
In each case, after clarifying the nature of the
criticism, we shall try to answer two questions:
(1) Is the criticism valid as a criticism of for-
profit health care? (2) If the criticism is valid,
is its validity restricted to for-profit health care?
The most serious ethical criticisms of for-
prof~t health care can be grouped under six
headings. For-profit health care institutions are
said to (1) exacerbate the problem of access to
health care, (2) constitute unfair competition
against nonprofit institutions, (3) treat health
care as a commodity rather than a right, (4)
include incentives and organizational controls
that adversely affect the physician-patient re-
lationship, creating conflicts of interest that
can diminish the quality of care and erode the
patient's trust in his physician and the public's
trust in the medical profession, (5) undermine
medical education, and (6) constitute a "med-
ical-industrial complex" that threatens to use
its great economic power to exert undue in-
Duence on public policy concerning health care.
Each of these criticisms will be examined in
turn.
FOR-PROFITS EXACERBATE THE
PROBLEM OF ACCESS TO HEALTH CARE
Twenty-two to twenty-f~ve million Ameri-
cans have no health care coverage, either
through private insurance or through govern-
ment programs including Medicare, Medi-
caid, and the Veterans Administration. Another
20 million have coverage that is inadequate by
any reasonable standards. 2 The charge that for-
profits are exacerbating this already serious
problem takes at least two forms. First, it is
said that for-profits contribute directly to the
problem by not providing care for nonpaying
patients. This is an empirical question to which
the accompanying Institute of Medicine (IOM)
report devotes a chapter. The data are not fully
consistent on whether for-profit hospitals pro-
vide less or as much uncompensated care as
do nonprofit hospitals; data from several states
show that they provide less, but national data
show minimal differences between for-profits
and nonprofits, both of which do much less
than publicly owned hospitals. In any event,
our concern here is to analyze the arguments
225
that have been advanced regarding the issue
of uncompensated care.
Second, it is also alleged that for-profits
worsen the problem of access to care in an
indirect way because the competition they
provide makes it more difficult for nonprofits
to continue their long-standing practices of
"cross-subsidization." Cross-subsidization is of
two distinct types: nonprofits have tradition-
ally financed some indigent care by inflating
the prices they charge for paying patients, and
they have subsidized more costly types of ser-
vices by revenues from those that are less costly
relative to the revenues they generate.
It is sometimes assumed that, in general,
for-profits are more efficient in the sense of
producing the same services at lower costs and
that these production efficiencies will be re-
flected in lower prices. At present, however,
there is insufficient empirical evidence to show
that for-profits on the whole are providing sig-
nificant price competition by offering the same
services at lower pnces, though this may change
in the fixture. In fact, what little data there are
at present indicate that costs, especially of an-
cillary services, tend to be higher, not lower,
in the for-profits.3
However, the argument that for-profits are
malting it more difficult for nonprofits to con-
tinue the practice of cross-subsidization does
not depend upon the assumption that for-prof-
its are successful price competitors in that sense.
Instead it is argued that for-profits "skim the
cream" in two distinct ways. First, they cap-
ture the most attractive segment of the patient
population, as noted earlier, by locating in more
affluent areas, leaving nonprofits with a cor-
respondingly smaller proportion of paying pa-
tients from which to subsidize care for
nonpaying patients. Second, by concentrating
on those services that generate higher reve-
nues relative to the costs of supplying them,
for-profits can achieve greater revenue sur-
pluses, which provide opportunities either for
lower prices or for investment in higher qual-
ity or more attractive facilities, both of which
may worsen the competitive position of non-
profits, making it more difficult for them to
cross-subsidize.
Critics of for-profits predict that access to
care will suffer in two ways: fewer nonpaying
patients will be able to get care and some pay
OCR for page 226
226
ing patients, i.e., some who are covered by
public or private insurance, will be unable to
find providers who will treat them for certain
"unprofitable" conditions.
Although these predictions have a certain a
priori plausibility, they should be tempered
by several important considerations. First, as
already indicated, there is at present a dearth
of supporting data concerning differences in
the behavior of for-profits and nonprofits, and
this is hardly surprising since the expansion of
the for-profit sector has been so recent and
rapid. However, preliminary data do support
two hypotheses which tend to weaken the force
of the criticism that for-profits are exeracer-
bating the problem of access to care by making
it more difficult for nonprofits to continue cross-
subsidization. One is that at present there seems
to be no significant difference in the propor-
tion of nonpaying care rendered by for-profits
and nonprofits.4 The other is that at present
the proportion of nonpaying care rendered by
nonprofits is on average only about 3 percent
of their total patient care expenditures.5 Here
again, however, it may be important to sep-
arate from the overall data for nonprofits, the
public hospitals in which the proportion of
nonpaying care is both higher than in the for-
profits and substantially in excess of 3 percent
of overall total patient care expenditures.6 If
the public hospitals experience a decrease in
their paying patients, their ability to carry out
their mission of serving the indigent could be
seriously jeopardized.
A third reason for viewing predictions about
the effects of for-profits on access to care with
caution is that there are other variables at work
that may be having a much more serious im-
pact. In particular, the advent of a prospective
reimbursement system for Medicare hospital
services and other efforts for cost-containment
by state and federal regulatory bodies and
businesses, as well as the general increase in
competition throughout the health care sector,
are making it more difficult for any institution
to cross-subsidize.
In addition, as defenders of for-profits have
been quick to point out, in some cases for-
prof~ts have actually improved access to care
not only by locating facilities in previously un-
derserved areas thus making it more conve-
nient for patients to use them, but also by
FOR-PROFIT ENTERPRISE IN HEALTH CARE
making certain services more affordable to more
people by removing them from the more ex-
pensive hospital setting. The growth of out-
patient surgical facilities in suburban areas, for
example, has improved access to care in both
respects. Indeed, there is some reason to be-
lieve that by making decisions on the basis of
the preferences oftheir boards oftrustees (which
may be shaped more by their own particular
preferences or considerations of prestige than
by demands of sound medical practice or re-
sponse to accurate perceptions of consumer
demand), nonprofits have in some cases du-
plicated each other's services and passed up
opportunities for improving access by failing
to expand into underserved areas.
This latter point drives home the complexity
of the access issue and the need for careful
distinctions. For-profits may improve access
to care in the sense of better meeting some
previously unmet demand for services by pay-
ing patients, while at the same time exacer-
bating the problem of access to care for
nonpaying patients. However, there is clearly
a sense in which the latter effect on access is
of greater moral concern. We assumed that
the members of a society as affluent as ours
have a collective moral obligation to ensure
that everyone has access to some "decent min-
imum" or "adequate level" of care, even if they
are not able to pay for it themselves. Surely
providing basic care for those who lack any
coverage whatsoever then should take priority
over efforts to make access to care more con-
venient for those who already enjoy coverage
and over efforts to reduce further the financial
burdens of those who already have coverage,
by providing services for which they are al-
ready insured in less costly nonhospital set-
tings.
So far we have examined the statement that
"cream skimming" by for-profits exacerbates
the problem of access to care. Ultimately this
is largely an empirical question about which
current data are inconclusive. There is another
way in which the cream skimming charge
can be understood. Sometimes it is suggested
that for-profits are acting irresponsibly or are
not fulfilling their social obligations by failing
to provide their "fair share" of indigent care
and unprofitable care, as well as making it more
difficult for nonprofits to bear their fair share
OCR for page 227
E Tall CS OF FOR-PROFI T HEALTH CARE
through cross-subsidization. To this allegation
of unfairness, defenders of for-profits have a
ready reply: "No one is entitled to the cream;
so for-profits do no wrong when they skim it.
Further, for-profits discharge their social ob-
ligations by paying taxes. Finally, since the
surplus revenues that nonprofits use to sub-
sidize nonpaying or unprofitable care are
themselves the result of overcharging charg-
ing higher prices- than would have existed in
a genuinely competitive market-then it is all
the more implausible to say that they are en-
titled to them."
While this reply is not a debate-stopper, it
should give the critic of for-profits pause since
it draws attention to the unstated and con-
troversial premises underlying the conten-
tion that cream-skimming by for-profits is unfair
because it constitutes a failure to bear a fair
share of the costs of nonpaying or unprofitable
patients. The most obvious of these is the as-
sumption that, in general, nonprofits are (or
have been) bearing their fair share.
To determine whether for-profits or non-
profits are discharging their obligations we must
distinguish between two different types of ob-
ligations-general and special. For-profit cor-
porations, like individual citizens. can argue
that they are discharging their general obli-
gation to subsidize health care for the poor by
paying taxes. To see this, assume that the fair-
ness of the overall tax system is not in ques-
tion, and in particular its taxation of corporate
profits. For-profits can then reasonably claim
that they are doing their fair share to support
overall government expenditures by paying
taxes. If the government is subsidizing health
care for the poor as part of overall government
expenditures, then for-profits would appear to
be doing their fair share towards supporting
subsidized health care for the poor. If the gov-
ernment is providing inadequate subsidization
of health care for the poor, then the fair share
funded by the for-profits' taxes will in turn be
inadequate, but proportionately no more so
than every other taxpayer's share is inade-
quate, and not unfair relative to the subsidi-
zation by other taxpayers. The responsibility
for this inadequacy, in any case, would be the
government's or society's, not the for-profit
health care corporation's.
A for-profit hospital chain cannot say that if
, O
227
it is paying, for example, $30 million in taxes,
it is providing $30 million towards funding
health care for the poor. Its taxes, whether at
the federal, state, or local level, should be
understood as a contribution to the overall ar-
ray of tax-supported programs at those levels.
But it can claim to be subsidizing health care
for the poor with the portion of its taxes pro-
portionate to the portion of overall govern-
ment expenditures devoted to subsidizing
health care for the poor.
~.1 . ~
~ ~ A ^ ~ =
An tne otner hand, those who raise the issue
of fairness have apparently assumed that health
care institutions have special obligations to help
care for indigents. Even if this assumption is
accepted, however, it is not obvious that in
general nonprofits have been discharging the
alleged special obligation successfully for the
reasons already indicated. First, even if cross-
subsidization is widespread among nonprofits,
the proportion of nonpaying and nonprofitable
care that is actually provided by many non-
profits appears not to be large. Second, some
of the revenues from "overcharging" paying
patients apparently are not channeled into care
for nonpaying patients or patients with un-
profitable conditions.
It was noted earlier that while many publicly
owned nonprofit hospitals provide a substan-
tial proportion of care for nonpaying patients,
nonpublicly owned nonprofits ("voluntaries")
as a group do not provide significantly more
uncompensated care than for-profits. One
rationale for granting tax-exempt status is that
this benefit is bestowed in exchange for the
public service of providing care for the indi-
gent. If it turns out that many nonprofit health
care institutions are in fact not providing this
public service at a level commensurate with
the benefit they receive from being tax-
exempt, then this justification for granting them
tax-exempt status is undermined.
It is also crucial to question the assumption
that for-profit health care institutions have
special obligations to help subsidize care for
the needy over and above their general obli-
gation as taxpayers. As the for-profits are quick
to point out, supermarkets are not expected
to provide free food to the hungry poor, real
estate developers are not expected to let the
poor live rent-free in their housing, and so
forth. Yet food and housing, like health care,
OCR for page 228
228
are basic necessities for even a minimal sub-
sistence existence. If there are basic human
rights or welfare rights to some adequate level
of health care, it is reasonable to think there
are such rights to food and shelter as well as
health care.
Whose obligation is it then to secure some
basic health care for those unable to secure it
for themselves? Assuming that private markets
and charity leave some without access to what-
ever amount of health care that justice re-
quires be available to all, there are several
reasons to believe that the obligation ulti-
mately rests with the federal government. First,
the obligation to secure a just or fair overall
distribution of benefits and burdens across so-
ciety is usually understood to be a general so-
cietal obligation. Second, the federal
government is the institution society com-
monly employs to meet society-wide distrib-
utive requirements. The federal government
has two sorts of powers generally lacking in
other institutions, including state and local
governments, that are necessary to meet this
obligation fairly. With its taxing power, it has
the revenue-raising capacities to finance what
would be a massively expensive program on
any reasonable account for an adequate level
of health care to be guaranteed to all. This
taxing power also allows the burden of financ-
ing health care for the poor to be spread fairly
across all members of society and not to de-
pend on the vagaries of how wealthy or poor
a state or local area happens to be. With its
nationwide scope, it also has the power to co-
ordinate programs guaranteeing access to health
care for the poor across local and state bound-
aries. This is necessary both for reducing inef-
ficiencies that allow substantial numbers of the
poor to fall between the cracks of the patch-
work of local and state programs, and for en-
suring that Mere are not great differences in
the minimum of health care guaranteed to all
in different locales within our country.
If we are one society, a United States, then
the level of health care required by justice for
all citizens should not vary greatly in different
locales because of political and economic con-
tingencies of a particular locale. It is worth
noting that food stamp programs and housing
subsidies, also aimed at basic necessities, sim-
ilarly are largely a federal, not state or local,
FOR-PROFIT ENTERPRISE IN HEALTH CARE
responsibility. These are reasons for the fed-
eral government having the obligation to guar-
antee access to health care for those unable to
secure it for themselves. It might do this by
directly providing the care itself, or by pro-
viding vouchers to be used by the poor in the
health care marketplace. How access should
be guaranteed and secured and in particular,
to what extent market mechanisms ought to
be utilized is a separate question.
Granted that the obligation to provide ac-
cess to health care for the poor rests ultimately
with the federal government, is there any rea-
son to hold that for-profit health care institu-
tions such as hospitals have any special
obligations to provide such care? The usual
reason offered is that health care institutions,
whether nonprofit or for-profit, are heavily
subsidized directly or indirectly by public ex-
penditures for medical education and research
and by Medicare and Medicaid reimburse-
ment which have created the enormous pre-
dictable demand for health care services that
has enabled health care institutions to flourish
and expand so dramatically since the advent
of these programs in 1965. However, we be-
lieve it is less clear than is commonly supposed
that these subsidies redound to the benefit of
the for-profit institution in such a way as to
ground a special institutional obligation to sub-
sidize health care for the poor.
The legal obligation of nonprofit hospitals to
provide free care to the poor is principally
derived from their receipt of Hill-Burton fed-
eral funds for hospital construction. However,
the for-profit hospital chains secure capital for
construction costs in private capital markets
and do not rely on special federal subsidies.
Even when they purchase hospitals that have
in the past received Hill-Burton monies, they
presumably now pay full market value for the
hospitals. If there is a subsidy that has not been
worked oh in free care, that redounds to the
nonprofit seller, not the for-profit purchaser.
What of other subsidies?
There is heavy governmental subsidy of
medical education; it is widely agreed that
physicians do not pay the hill costs of their
medical education. Perhaps then they have a
reciprocal duty later to pay back that subsidy,
though it would need to be shown why the
form that duty should take is to provide free
OCR for page 229
ETHICS OF FOR-PROFIT HEALTH CARE
care to the poor as opposed, for example, to
reimbursing the government directly. lIow-
ever that may be it is physicians and not the
for-profit hospitals who are the beneficiaries
of medical education subsidies. Physicians are
the owners of these publicly subsidized capital
investments in their skills and training, and
are able to sell their subsidized skills at their
full market value. Physicians, and not the own-
ers of for-profit health care institutions in which
they practice or are employed, are the bene-
ficiaries of education subsidies and so are the
ones who have any obligation there may be to
return those subsidies by in turn subsidizing
free care for the poor.
Another important area of public subsidy in
the health care field is medical research. Much
medical research has many of the features of
a public good, providing good reason for it to
be publicly supported and funded. (Where
these reasons do not apply, as for example in
drug research, the research is largely privately
funded by the drug companies.) Medical re-
search makes possible new forms of medical
technology, knowledge, and treatment. Be-
cause it is publicly funded, and once devel-
oped is generally freely available for use by
the medical profession, for-profit health care
institutions are able to make use ofthe benefits
of that research in their delivery of health care
without sharing in its cost.
But who ultimately are the principal ben-
eficiaries of this public subsidy of research?
Not, we believe, the for-profits, but rather the
patients who are the consumers of the new or
improved treatments generated by medical re-
search. It may or may not be true that for-
profits will not bear the research costs of these
treatments as part of their delivery costs. But
if, as is increasingly the case, the for-profits
operate in a competitive environment con-
cerning health care costs or charges, they will
be forced to pass on these subsidies to con-
sumers or patients. (And if they operate in a
largely noncompetitive environment, there will
be a strong case for some form of regulation
of their rates.) The price that patients pay for
health care treatments whose research costs
were subsidized by the government will not
include those research costs and so will not
reflect true costs. It is then consumers of health
care, not the for-profits, who principally ben
229
efit from research subsidies, and any obliga-
tion arising from this subsidy presumably lies
on them.
Finally, consider the large public subsidy
represented by Medicare and Medicaid. These
programs created a vast expansion in the mar-
ket for health care which many for-profits serve
and from which they benefit. This is new heals
care business which heretofore did not exist
and on which they make a profit. Perhaps this
benefit grounds a special obligation of for-profit
institutions to provide subsidized care for the
poor. The most obvious difficulty with such a
view is that the subsidized health care con-
sumers, not the deliverers of the health care,
are by far the principal beneficiaries of Med-
icare and Medicaid. Any profit that the for-
profits receive from serving Medicare and
Medicaid patients is only a small proportion
of the overall cost of their care.
It must be granted, nevertheless, that the
for-profits do earn profits from these subsi-
dized patients. But it is difficult to see how
this fact by itself is sufficient to ground a spe-
cial obligation of the for-profits to subsidize
free care for the poor. In the first place, for-
profits can again respond that they pay taxes
on these profits, like other profit-making en-
terprises. Moreover, they can point out that
in no other cases of government-generated
business of for-profit enterprises is it held that
merely earning a profit from such business
grounds a special obligation similar to that
claimed for for-profit health care enterprises.
Virtually no one holds that defense contrac-
tors, supermarkets who sell to food stamp re-
cipients, highway builders, and so forth have
any analogous special obligation based on the
fact that their business is created by govern-
ment funds. Nor is it ever made clear why this
fact should itself ground any special obligation
of for-profits in health care to provide access
to health care for the poor. Thus, we conclude
that none of the current forms of public sub-
sidy of health care will establish any significant
special obligation of for-profits to provide free
care, and so the claim cannot be sustained that
for-profits do not do their fair share in provid-
ing access to health care for the poor. We em-
phasize that we believe there is an obligation
to guarantee some adequate level of health
care for all, but the obligation is society's and
OCR for page 230
230
ultimately the federal government's and not a
special obligation of for-profit health care in-
stitutions.
Even if there are insufficient grounds for the
assumption that for-profit health care institu-
tions, or health care institutions as such, have
special obligations to provide a "fair share" of
uncompensated care, it can be argued that a
nation or a community, operating through a
democratic process, can impose such a special
obligation on the institutions in question as a
condition of their being allowed to operate.
According to this line ofthinking, a community
may, through its elected representatives, re-
quire that any hospital doing business in that
community provide some specified amount of
indigent care, either directly or by contrib-
uting to an indigent care fund through a special
tax on health care institutions (so far as they
are not legally exempt from taxes) or through
a licensing fee.
Whether or not such an arrangement would
be constitutional or compatible with statutory
law in various jurisdictions is not our concern
here. One basic ethical issue is whether the
imposition of such special obligations would
unduly infringe on the individual's occupa-
tional and economic freedoms. Although no
attempt to examine this question will be made
here, this much can be said: a community's
authority to impose a special obligation to con-
tribute a portion of revenues (as opposed to
an obligation to contribute services) for indi-
gent care seems no more (or less) ethically
problematic than its authority to levy taxes in
general.
A second basic ethical issue is then whether
such taxes, or requirements to provide uncom-
pensated care as conditions of doing business
for health care institutions, fairly distribute the
costs of providing care to the indigent. That
will depend on the details of the particular tax
or requirement to provide uncompensated care,
but since any are likely to be ultimately a tax
on the sick, it is doubtful that such provisions
will be fairer than financing care for the in-
digent through general tax revenues.
There is, moreover, an additional difficulty
with any claim that by skimming the cream
for-profits fail to fulfill an existing special ob-
ligation to bear a fair share of the burden of
providing at least some minimum level of care
FOR-PROFIT ENTERPRISE IN HEALTH CARE
for all who need it but cannot afford it. This
is the assumption that in the current U.S. health
care system any determinate sense can be given
to the notion of a "fair share" of the burden of
ensuring access to care (in the absence of spe-
cific legislation such as the Hill-Burton Act).
Unless a rather specific content can be sup-
plied for the notion of a fair share, the nature
and extent of an institution's alleged special
obligation will be correspondingly indeter-
minate. In particular, it will be difficult if not
impossible to determine whether for-profits
have met such a special obligation. But it will
also be problematic to assert what some de-
fenders of nonprofits imply, namely that non-
profits have in the past done their fair share
through cross-subsidization.
The current U.S. health care system is a
patchwork or, less charitably, a crazy quilt-
of private insurance and public program en-
titlements. There is no generally accepted
standard for a "decent minimum" or "adequate
level" of care to be ensured for all, no system-
wide plan for coordinating local, state, and fed-
eral programs, charity, and private insurance
so as to achieve it, and no overall plan for
distributing the costs of providing care for those
who are unable to afford it from their own
resources. Absent all of this, no determinate
sense can be given to the notion of an insti-
tution's special obligation to provide a "fair
share" of the burden of ensuring an "adequate
level" or "clecent minimum" of care for ev-
eryone.
Furthermore, even if it were possible at
present to determine, if only in some rough
and ready way, what an institution's "fair share"
is, this would still not be enough. Whether an
institution has an obligation a duty whose
fulfillment society can require-will depend
upon whether it can do so without unreason-
able risks to its own financial well-being. But
in a competitive environment, determining
whether one institution is contributing its "fair
share" will be unreasonably risky for it will
depend upon whether other institutions are
doing their "fair share."
The establishment of a coordinated system-
wide scheme in which institutions share the
costs of providing some minimum level of care
for all is a "public good" in the economist's
sense. Even if every governing board of every
OCR for page 231
ETHICS OF FOR-PROFIT HEALTH CARE
institution agrees that it is desirable or even
imperative to ensure some level of care for all
so long as contribution to this good is strictly
voluntary, each potential institutional contrib-
utor may attempt to take a free ride on the
contribution of others with the result that the
good will not be achieved.
It is important to understand that failure to
produce the public good of a fair system for
distributing the costs of care by voluntary ef-
forts does not depend upon the assumption
that potential contributors are crass egoists.
Even if the potential contributor has no in-
tention of taking a free ride on the contribu-
tions of others, he may nonetheless be unwilling
to contribute his fair share unless he has as-
surance that others will do their fair share. For
unless he has this assurance, to expect him to
contribute his fair share is to expect him to
bear an unreasonable risk a cost which might
put him at a serious competitive disadvantage.
In the absence of an enforced scheme for fairly
distributing the costs of care for the needy,
the current vogue for containing costs by in-
creasing competition in health care will only
exacerbate this free-rider and assurance prob-
lem. And unless an institution can shoulder its
fair share without unreasonable risk to itself,
it cannot be said that it has an obligation that
it has failed to fulfill. Granted that this is so,
what is needed is an effective mechanism for
enforcing a coordinated scheme for distribut-
ing the costs of providing some minimal level
of care for all without imposing unreasonable
competitive disadvantages on particular insti-
tutions.
It is important not to overstate this point.
Although the notion of unreasonable risk is not
sharply defined, it is almost certainly true that
many for-profit (and nonprofit) institutions could
be spending more than they currently are for
nonpaying or unprofitable patients without
compromising their financial viability. So it is
incorrect to conclude simply from this that in
the current state of affairs institutions have no
special obligations whatsoever. The point,
rather, is that debates over which institutions
are or are not fulfilling their obligations are of
limited value and that the energy they con-
sume could be more productively used to de-
velop a system in which institutional obligations
could be more concretely specified and in which
231
society would be morally justified in holding
those who control the institutions, whether
government or private, accountable for the ful-
fillment of those obligations.
Moreover, there is at least one obligation
which now can be justifiably imputed to for-
profit (and nonprofit) health care institutions
and that is the obligation to cooperate in de-
veloping a system in which determinate ob-
ligations (whether general or special) can be
fairly assigned and enforced. It is much less
plausible to argue that the initial efforts needed
to develop a coordinated, enforced system
would undermine an institution's competitive
position, even if it is true that in the absence
of such a system an institution s acting on a
strictly voluntary basis to help fund indigent
care would subject it to unreasonable risks.
Assuming that as members of this society
we all share a collective obligation to ensure
an "adequate level" or "decent minimum" of
health care for the needy, those who control
health care institutions, as individuals, have
the same obligations the rest of us have. How-
ever, because of their special knowledge ofthe
health care system and the disproportionate
influence they can wield in health policy de-
bates and decisions, health care professionals
may indeed have an additional special obli-
gation beyond the general obligations of or-
dinary citizens to help ensure that a just system
of access to health care is established.
It can still be argued that whether or not
they fail to fulfill their obligations, for-profits
have at least contributed to the decline of cross-
subsidization and that the cross-subsidization
system has made some contribution toward
coping with the problem of access to care.
Whether this provides a good reason for social
policy designed to restrain or modify the be-
havior of for-profits will depend upon the an-
swer to two further questions: (1) Are cross-
subsidization arrangements the best way of
coping with the access problem, and, just as
important, (2) is it now feasible in an increas-
ingly competitive environment to preserve
cross-subsidization even if we wish to do so?
Objections to cross-subsidization are not hard
to find. On the one hand, cross-subsidization
can be viewed as an inefficient, uncoordinated
welfare system hidden from public view and
unaccountable to the public or to its repre
OCR for page 232
232
sentatives in government. Further, it can be
argued that widespread cross-subsidization is
incompatible with effective efforts to curb costs.
Surely an effective solution to both the access
and cost containment problems requires a more
integrated, comprehensive, and publicly ac-
countable approach. Consequently, the de-
mise of cross-subsidization should be welcomed,
not lamented.
This last conclusion, however, is simplistic.
It assumes that an explicit public policy de-
signed to improve access for those not covered
by private or public insurance is presently or
in the foreseeable future politically feasible.
Perhaps the strongest argument for cross-sub-
sidization is the claim that it does though
admittedly in a haphazard and inefficient way-
what is not likely to be done through more
explicit social policies.
It might be tempting to protest that even if
this is so, cross-subsidization ought to be re-
jected as an unauthorized welfare system since
it did not come about through the democratic
political process as a conscious social policy.
However, if providing some minimum of care
for the needy is a matter of right or enforceable
societal obligation and not a matter of discre-
tion, then the lack of a democratic pedigree
may not be fatal, since rights and obligations
place limitations on the scope of the demo-
cratic process.
Controversy over the ethical status of cross-
subsidization may soon become moot if a point
is reached where it is no longer feasible to
shore up or rebuild an environment in which
cross-subsidization is economically viable for
health care institutions. So even if cross-sub-
sidization has been the best feasible way of
coping with the problem of access it does not
follow that it will continue to be a viable op-
tion. Perhaps too much energy has already
been wasted in policy debates defending or
attacking cross-subsidization when the real is-
sue is: How can we now best achieve the pur-
pose that cross-subsidization was supposed to
serve?
FOR-PROFITS ARE UNFAIR
COMPETITION FOR NONPROFITS
This criticism of for-profits can be inter-
preted in either of two different ways. The first
FOR-PROFIT ENTERPRISE IN HEALTH CARE
understands it as a charge we have already
examined in detail, that for-profits skim the
cream and gain a competitive advantage over
nonprofits by failing to discharge their insti-
tutional obligations to bear their fair share of
the costs of providing care for indigents and
those with unprofitable diseases. But the met-
aphor of cream-skimming suggests another
possible aspect of the charge of unfair com-
petition that it is worth saying a. little more
about. This is that besides not taking a fair
share of the "bad" (unprofitable) patients, the
for-profits also take more than their share of
the "good" (profitable) patients.
As we noted above, if no one is entitled to
the profitable patients, it is unclear why seek-
ing to get as many as possible of them is unfair.
Nor is it clear that the nonprofits do not also
seek as many as possible of the profitable pa-
tients. If the for-profits get a disproportionate
share of the profitable patients, which may be
true at some places but not others, why would
that be? Since paying patients have a choice
about where and from whom they receive care,
their choice of for-profits must in significant
part reflect their view that for-profits offer a
more attractive product: for example, more
convenient location, more modern and higher
quality facilities, additional amenities, cost-
saving efficiencies, and so forth. It is difficult
to see why getting a disproportionate share of
the profitable patients simply because one of-
fered a better product is unfair. Of course,
when for-profits get more of the profitable pa-
tients because of factors such as tie-in arrange-
ments with physicians, this may constitute
unfair competition, but nonprofits may engage
in such anticompetitive practices as well.
According to the second interpretation of
the unfair competition charge, nonprofit health
care institutions make a distinctive and valu-
able social contribution one that is so im-
portant that they ought to be protected from
the threat of extinction through competition
with for-profits. Three main arguments can be
given in favor of perpetuating the nonprofit
legal status for health care institutions and,
hence, for social policies that are designed to
protect them from destructive competition from
for-profits. First, nonprofit health care insti-
tutions are properly described as charitable
institutions. As such they help nurture and
.
OCR for page 233
ETHICS OF FOR-PROFIT HEALTH CARE
perpetuate the virtue of charity among mem-
bers of our otherwise highly self-interested so-
ciety, and this virtue is of great value. The
nonprofit legal form stimulates charity by ex-
empting charitable institutions from taxes. Be-
cause it also ensures that those who administer
charitable funds do not appropriate revenue
surpluses, the nonprofit legal form encourages
charity by providing potential donors with the
assurance that they will not be taken advantage
of and that their donations will be used for the
purposes for which they were given. This as-
surance is especially vital in the case of do-
nations for health care because donors usually
lack the knowledge and expertise to determine
whether the providers they support are using
their resources properly.
Second, nonprofit health care institutions
both function as and are perceived to be an
important community resource, serving the
entire community, rather than a commercial
enterprise ultimately serving its shareholders
and restricted to "paying customers." Like the
virtue of charity, the sense of community is an
important though fragile value in modern
American society, and institutions that con-
tribute significantly to it should not be lightly
discarded.
Third, nonprofit health care institutions
nurture a professional ethos that is more likely
to keep the patient's interest at center stage
than do for-profit institutions, in which the
commercial spirit is given freer rein. Hence
nonprofits are valuable because they protect
quality of care. The quality-of-care argument
will be examiner] in detail later.
The first argument above assumes that most
nonprofit health care institutions are properly
described as charitable institutions in the sense
that a substantial portion of their financial re-
sources comes from donations. At present,
however, most nonprofit hospitals are not
charitable institutions in this sense; they are
"commercial" rather than "donative" institu-
tions insofar as the major portion of their re-
sources comes from selling services rather than
from donations.7 The more closely nonprofit
health care institutions approximate the purely
"commercial" nondonative type, which is be-
coming the dominant form among nonprofit
hospitals, the weaker the value of charity ap-
pears as a justification for perpetuating the
233
nonprofit legal status. Nevertheless, even if
only a small portion of most nonprofits' reve-
nues comes from charitable donations and is
in turn used for unpaid care, nonprofits may
still be properly regarded as "charitable" if
money ao In tact serve as the provider of last
resort for those who are unable to pay for their
care and who are not covered by any insurance
or government program to fund their care.
Even if such care represents only a small por-
tion of a hospital's overall revenues, it may still
be perceived as an important charitable activ-
ity and thereby reinforce altruistic and chari-
table motivations.
It should be clear that the charity and com-
munity arguments are not unrelated. It is partly
because nonpro~ts stand ready to provide un-
paid health care to the poor (if they do) that
they are seen to be a community resource
available to the entire community. They can
serve to symbolize a shared community com-
mitment that no member of the community
should be denied access to an adequate level
of health care. This commitment is especially
important in the mission of public hospitals.
Moreover, control of nonprofits will commonly
rest with aboard oftrustees composed of mem-
bers of the local community, rather than with
a board of directors of a large national or mul-
tinational chain. This effect of nonprofits on
the sense of community as shared by members
of the community is somewhat intangible and
difficult to measure. It is also certainly true
that nonprofit hospitals are not the only insti-
tutions supporting this sense of community,
or even the only means of supporting it within
health care, and that for-profit hospitals can
often contribute to it as well. Nevertheless,
we believe the nonprofits are in general more
likely than the for-profits to promote this sig-
nificant value of community.
AL _ 1 ~ ~ . ~
FOR-PROFITS TREAT HEALTH CARE AS
A COMMODITY TO BE BOUGHT A^ND
SOLD IN THE MARKETPLACE RATHER
THAN AS A RIGHT OF EVERY CITIZEN
This next collection of ethical concerns about
the growth of for-profit health care is steeped
in stirring rhetoric. We are told that "health
care is not a commodity," that "health care
ought not be left to the market," that "access
OCR for page 234
234
to health care ought not depend on ability to
pay," and that "everyone ought to have access
to a single level of health care." And it is often
said that the ethical acceptability of for-profit
health care delivery systems depends on
whether health care is properly viewed as a
right or as a commodity.8 In this section we
attempt to sort out just what the implications
of claims like these are for for-profit health
care.
The slogan that health care is not a com-
modity is best understood as a normative, rather
than a purely descriptive claim. As a descrip-
tive claim, it is quite false: if a commodity is
defined as something which has a market price
or relative exchange value, then health care is
a commodity since various treatments, tests,
and services are assigned a market price in our
society. (Until recently, of course, codes of
professional ethics for physicians, backed up
by the coercive power of legislation, have made
it difficult for most consumers to learn the mar-
ket price of most forms of health care; but this
is a fact about the profession's success in re-
stricting consumer information about health
care, not a fact about the nature of health care.)
As a normative claim, the slogan that health
care is not, that is, should not be treated as,
a commodity implicitly depends on two sorts
of assumptions: (1) empirical assumptions about
what health care will be distributed to which
persons if production and distribution of health
care are carried out by for-profit institutions
in a marketplace and (2) moral assumptions
about what is a just distribution of health care,
and what moral right, if any, there is to health
care. With regard to the moral assumptions,
we believe it is crucial to distinguish the claim
that justice requires some level of access to
health care for all from the claim that it re-
quires equal access for all persons. We shall
argue here that only the view that justice re-
quires equality in access to health care, not
merely that it implies a right to health care,
is incompatible with for-prof~t provision of
health care in a free marketplace.
If the goal is only to ensure that everyone
is guaranteed access to some minimally ade-
quate level of health care, why not leave its
distribution to the market and so to for-profit
institutions? The difficulties with doing so are
well known and need not be rehearsed in de
FOR-PROFIT ENTERPRISE IN HEALTH CARE
tail here. Generally, a market system for the
distribution of health care, like a market dis-
tribution of all other goods and services, will
be influenced by the initial natural endow-
ments and wealth that people bring to the mar-
ket, rather than simply by their need for health
care. The market distribution of health care,
as with other goods, will only be just if the
distribution of initial assets, including income
and wealth, is just.
However, there are specific characteristics
of health care, and of health care markets, which
further ensure that a market distribution of
health care will fail to satisfy the demands of
any theory of justice requiring that some min-
imally adequate level of access to health care
be guaranteed to all. Health care needs are
highly unpredictable for any particular indi-
vidual, vary greatly between different individ-
uals (unlike other basic needs for food or
shelter), and in the context of modern health
care are very expensive relative to most other
goods and services. As a result, it is difficult
if not impossible for any but the very richest
to budget thei} health care expenditures.
The market solution to this situation, of
course, is the development of a market in in-
surance, a device for risk-sharing that enables
individuals to protect themselves from sub-
stantial unforeseen financial losses and to se-
cure very expensive professional help in coping
with disease or disability when it occurs. How-
ever, competition in the market for health care
insurance will lead to differentiation of risk
pools. Different insurance packages, with dif-
ferent premiums, will be developed for dif-
ferent groups of individuals with similar risks
of sickness and disability with the result that
those individuals who have the greatest risk of
ill health-that is, those who need insurance
the most will find it prohibitively costly.
Regulatory measures requiring community
rating of insurance risks and unlimited access
to insurance pools can be used to counter risk-
pool differentiation, although a market pro-
ponent will view these as inefficient interfer-
ences in the operation of health care markets.
With either different risk pools or commu-
nity rating, however, health care insurance will
remain extremely expensive, and beyond the
financial reach of substantial numbers of the
poor in this country. This would be true even
OCR for page 239
ETHICS OF FOR-PROFIT HEALTH CARE
documented. It may also be the case that even
though serious conflicts of interest, from sec-
ondary income and other sources, already exist
in nonprofit health care, the continued growth
of for-profits, both in their own activities and
the influence they have on the behavior of
nonprofits, will result in a significant wors-
ening ofthe problem. Our current lack of data,
however, makes it premature to predict that
this will happen or when it will happen.
There is another form of the charge that for-
profit health care creates new conflicts of in-
terest or exacerbates old ones. Some fear that
even if the physician's behavior toward pa-
tients is not distorted by incentives for sec-
ondary income or by equity ownership,
physicians in for-profits will be subject to greater
control by management and that this control
will make it more difficult for physicians to
serve the patient's interests rather than the
corporation's. There can be little doubt that
American physicians are increasingly subject
to control by others, especially by managers
and administrators, many of whom are not
~ . .
physicians.
There are two major factors that have led to
this loss of "professional dominance" which
are quite independent of the growth of for-
profits.~7 One is the institutionalization of med-
icine which itself arose from a variety of fac-
tors, including the proliferation of technologies
and specializations which call for large-scale
social cooperation and cannot be rendered ef-
ficiently, if they can be rendered at all, by
independent practitioners. The other is the
increased pressure for cost containment in a
more competitive environment, which has led
to a greater reliance on professional manage-
ment techniques within health care institu-
tions and more extensive regulatory controls
by government. At most, the growth of for-
profits may be accelerating the loss of profes-
sional dominance.
It should not simply be assumed, however,
that diminished physician control will result
in an overall lowering of the quality of care or
a worsening of the problem of conflict of in-
terests. Whether it will depends upon the an-
swer to three difficult questions. To what extent
will management or shareholders of for-profits
exercise their control over physicians in the
pursuit of profit and at the expense of patient
239
interests or will their pursuit of profit be re-
strained by ethical considerations? To what ex-
tent will management and stockholders act on
the belief that, in the long run, profits will be
maximized by serving patients' interests? To
what extent have physicians, in the physician-
dominated system that has existed up until
recently, actually acted in the best interests of
their patients? The answers to the first two
questions await data not yet available.
The third question is especially difficult to
answer because of an ambiguity in the notion
of the "patient's best interests." In a fee-for-
service, third-party payment system in which
physicians exercise a great deal of control in
ordering treatments and procedures, a phy-
sician who makes decisions according to what
is in the individual patient's best medical in-
terests will tend to order any treatment or test
whose expected net medical benefit is greater
than zero, no matter how small the net benefit
may be. Under such a system, the traditional
ethical principles of the medical profession,
which require the physician to do what is best
for the patient (or to minimize harm to him),
and the principle of self-interest speak with
one voice, at least so long as the patient's in-
terests are restricted to his medical interests.
Indeed, even if the physician considers the
patient's overall interests financial as well as
medical so long as a third party is picking up
the major portion of the bill, the physician may
still conclude that acting in the patient's best
interest requires doing anything that can be
expected to yield a nonzero net medical ben-
efit. Yet, as has often been noted, the cumu-
lative result of large numbers of such decisions,
each of which may be in the best interest of
the particular patient, is that health care is
overutilized and a cost crisis results.
"Overutilization" here does not mean the
use of medically unnecessary care, i. e., care
having no net medical benefit or which is pos-
itively harmful; instead what is meant is what
one author has called "noncostworthy care"-
care which yields less benefit than some al-
temative use to which the same resources could
be put, either for other health care services or
for nonhealth care goods. Overutilization of
health care in this sense, not just overutili-
zation as nonbeneficial care, is clearly contrary
to everyone's interest If continued profes
OCR for page 240
240
signal dominance means perpetuation of this
problem of overutilization, then even if a con-
tinued loss of professional dominance will lead
to medical decisions that are not, considered
in isolation, in the individual patient's best
interest, it may result in the elimination of one
important conflict of interest and collective ir-
rationality in the current system.
This does not rule out the possibility, of
course, that greater control by nonphysicians
will also lead to overutilization. If this occurs,
then one system which works against every-
one's best interest will merely have been re-
placed by another that does the same thing.
We have seen that in the fee-for-service,
third-party payment system in nonprofit as well
as for-profit settings the cumulative result of
many physicians acting on the desire to do
what is best for the individual patient can re-
sult in overutilization that is contrary to all
patients' best interest. Some critics of for-prof-
its suggest that we must either pay the price
of this overutilization or cope with it by meth-
ods that do not undermine physicians' com-
mitments to doing what is best for their
individual patients. They then conclude that
even if it could be shown that the growth of
for-profits would restrain overutilization by in-
troducing greater price competition into health
care, the price would be too high to pay be-
cause the physician's all-important commit-
ment to do his best for each patient would
eventually be eroded by the increasing "com-
mercialization" of health care that is being ac-
celerated if not caused by the grown of for-
profits.
The force of this objection to for-profits de-
pends, of course, not only upon the correct-
ness of the prediction that the growth of for-
proFts will in fact contribute to a weakening
of the physician's commitment to do the best
he can for each patient; it also depends upon
the assumption that under the current system
that commitment has been a dominant force
in physician behavior. This last point may be
cast in a slightly different way. How concerned
we should be about the tendency for the be-
havior of physicians to become more like that
of businessmen depends upon how great the
difference in behavior of the two groups is and
has been. If one assumes that as a group phy-
sicians have been significantly more altruistic
FOR-PROFIT ENTERPRISE IN HEALTH CARE
than businessmen and if one also assumes that
altruism is the only effective safeguard against
exploitation of the patient's special vulnera-
bility, then one will oppose any development,
including the growth of for-profit health care,
which can be expected to make physicians more
like businessmen.
Those who make the first assumption tend
to overlook two points which call it into ques-
tion. First, our society does in fact expect, and
in some cases enforces by the power of the
law, significant restrictions on the pursuit of
profit by "mere businessmen." In fact, it can
be argued that the moral obligations of busi-
nessmen to their customers are not signifi-
cantly less demanding than those of physicians
toward their patients when equally important
interests are at stake. Robert Veatch has ob-
served that if a physician becomes aware that
another physician is acting on misinformation
or performing a procedure incorrectly, then
the first physician is under an obligation to
bring this to the attention of the second and
perhaps to help him remedy the defect.23
Veatch then goes on to say that a business-
man who learns that a competitor is acting on
misinformation or using sloppy production
techniques is under no obligation to point this
out to the competitor. Veatch's contrast be-
tween the moral obligations of physicians and
businessmen, however, is overdrawn if not
outright mistaken. It is not clear that a phy-
sician has a moral obligation to inform another
physician that he is misinformed or even that
his technique is deficient unless significant pa-
tient interests are at stake. It may be true,
however, that important interests are more
frequently potentially at stake in health care
than in ordinary business transactions.
Yet surely a businessman has a moral obli-
gation to inform a competitor that he is un-
wittingly endangering people's lives even if in
giving his competitor this information he pre-
vents his competitor from ruining himself and,
thereby, foregoes a chance to eliminate the
competition. Moreover, if a businessman lies
to or defrauds a customer, we conclude not
only that he has done something illegal but
that he has acted immorally. And even if he
breaks no law, we may nonetheless condemn
him morally as a cheat and a scoundrel. All of
this is simply to emphasize a simple point that
OCR for page 241
ETHICS OF FOR-PROFIT HEALTH CARE
critics of the "commercialization" of health care
sometimes overlook, namely, that we custom-
arily do apply not only legal but also moral
standards to the behavior of businessmen. One
would not want a physician who was motivated
exclusively by financial reward, but then one
wouldn't want an electrician who was either.
Nevertheless, even if there is a tendency to
overstate the contrast between ethical and le-
gal constraints on business transactions and
the physician/patient relationship, we typi-
cally do expect a somewhat higher standard of
conduct from physicians.
Many outside the medical profession and
some within it greet the claim that physicians
as a class are especially altruistic with some
skepticism. This attitude is not groundless. One
of the difficulties of determining the strength
of altruistic motivation among physicians is that
until very recently, the fee-for-service, third-
party payment system has produced a situation
in which altruism and self-interest converge:
doing what is best for the patient (pursuing all
treatment that promises nonzero benefits) was
often doing what was financially best for the
physician. Nevertheless, critics of the thesis
that physicians are especially altruistic can
marshal! a good deal of evidence to support
their view, such as the profession's historical
opposition to HMOs and to Medicare and
Medicaid, each of which promised significant
extensions of access to health care, 24 its failure
to overcome the chronic geographical maldis-
tribution of physicians in this country, and its
support of strict entry controls to the profes-
sion through medical licensure together with
relatively weak oversight of the continuing
competence of those already licensed. We can
make Attempt to evaluate such evidence
here, but the self-interest of the profession
seems a better prima facie explanation of it
than does an altruistic concern for the health
of the ill. It is important to emphasize that
explanations of these phenomena need not as-
sume that self-interest here is exclusively or
even primarily financial self-interest. The
profession's resistance to Medicare, for ex-
ample, was probably more an attempt to pre-
serve physician autonomy.
In assessing these questions of conDict of
interest, we think it is helpful to distinguish
the behavior of physicians acting as an orga
241
nized profession addressing matters of health
policy from the behavior of individual physi-
cians toward individual patients. As we have
noted above, much behavior of medicine as an
organized profession (as reflected for example
in the political role the American Medical As-
sociation (AMA) has played in seedling to main-
tain physician dominance in the health care
profession) to protect and enhance physician
incomes, and so forth, has served the self-in-
terestofphysicians. Controversial is the extent
to which the self-interested function of the mo-
tivation for supporting such practices as med-
ical licensure is manifest or latent, explicit or
implicit. In considering the corlduct of profes-
signal trade associations such as the AMA, we
believe that forwarding the economic and other
interests of the members of the profession is
often the explicit and conscious intent of the
representatives of the profession. To the ex-
tent that the profession has been successful in
forwarding its members' interests, we would
expect to find an institutional, organizational,
and legal structure shaping the practice of
medicine that serves the economic and other
interests of members of the profession. More-
over, it would be hard to look back over the
evolution in this century of the position and
structure of the medical profession without
concluding that the profession has had consid-
erable success in promoting its interests.
It would be completely implausible to att-
ribute a high level of altruism to the medical
profession if that was interpreted to mean a
high level of economic self-sacrifice in favor of
the public's health needs. The exceptionally
high levels of physician incomes would belie
that. Nor is it plausible to claim that the or-
ganized profession has led efforts to address
some of the most serious moral deficiencies in
our health care system, such as the continued
lack of access to health care of large numbers
of the poor.
As we noted above, the history of the profes-
sion's opposition to national health insurance
and to Medicare and Medicaid belies any such
role of altruism or moral leadership. Nor fi-
nally have many members of He profession
acting as individuals been remarkably self-sac-
ri~cing or acted as moral leaders in addressing
these problems. Occasionally physicians have,
of course, located in undesirable geographical
OCR for page 242
242
areas to meet pressing health care needs or
have provided substantial unpaid care to the
poor, but such behavior has not been suffi-
ciently widespread to have a major impact on
these problems.
Despite the extent that the profession has
forwarded its members' interests and that in-
dividual members have not been self-sacrific-
ing in addressing the most serious deficiencies
in the health care system, we believe it would
be a serious mistake to conclude that the pa-
tient-centered ethic that has defined the tra-
ditional physician/patient relationship is mere
sham and rhetoric, a thin guise overlaying the
physician's self-interest.
An alternative, and we believe more plau-
sible, perspective is that in part just because
the medical profession has been exceptionally
successful in promoting and protecting an in-
stitutional and organizational setting that well
serves physicians' economic and other inter-
ests, individual physicians have thereby been
freed to follow the traditional patient-centered
ethic in their relations with their individual
patients. Put oversimply, a physician whose
overall practice structure assures him a high
income need not weigh economic benefits to
himself when considering treatment recom-
mendations for his individual patients. As we
have argued above, conflicts of interest be-
tween physicians and patients have long ex-
isted and are hardly a heretofore unknown
consequence of for-profit health care institu-
tions. As one commentator has argued, much
of medicine can be viewed as a conflict for the
physician between self-interest and altruism,
requiring a balancing of these sometimes con-
flicting motivations.~5
What we are suggesting is that the self-in-
terested organized professional behavior and
institutional structure of medicine may have
helped protect the possibility of altruistic be-
havior on the part of the physician when guid-
ing treatment with his individual patients. (This
hypothesis, of course, requires careful quali-
fication. In some cases the self-interested be-
havior of organized medicine has clearly had
a negative impact on patient interests. For ex-
ample, licensure and other forms of self-reg-
ulation by the profession have often failed to
protect patients from chemically dependent or
otherwise incompetent physicians and have
FOR-PROFIT ENTE~SE IN HEALTH CAM
exacerbated the problem of access by inhib-
iting the development of less expensive forms
of care utilizing nonphysician providers such
as midwives and nurse practitioners.)
One virtue ofthis more complex perspective
is that it allows us to accommodate the ele-
ments of truth that exist in each of two oth-
erwise seemingly incompatible perspectives,
each of which taken only by itself appears ex-
treme and incomplete. One perspective views
the physician simply as an economically self-
interested businessman in his dealings with
patients. Those who support this perspective
can point to the various ways in which the
actions of the medical profession and the in-
stitutional and financing structure in which
medicine is practiced serve the interests of
physicians, as we have done above, but they
often end up denying any significant reality to
the physician's commitment to promoting his
patients' best interests. On the other hand,
many defenders of physicians viewed as de-
voted professionals committed to the well-being
of their patients seem also to feel it necessary
to deny the extent to which medical practices
and institutional structures serve physicians'
interests.
Either perspective is by itself stubbornly
one-sided in its view of physicians simply as
self-interested economic accumulators or as
devoted altruists. We favor a view which rec-
ognizes that these two perspectives are not
incompatible and accepts the elements of truth
in each of them.
One advantage of this more balanced per-
spective is that it permits the recognition of
the reality and importance of the traditional
patient-centered ethic, without denying the
conflicts of interest between physician and pa-
tient that we have discussed above or the im-
portant historical role played by economic
interests of physicians. A perspective that en-
compasses a balance between self-interested
and altruistic motivations on the part of phy-
sicians can help articulate the concern of many
observers that the rise of for-profit medicine
while not representing an entirely new phe-
nomenon nevertheless does pose a danger to
the traditional physician/patient relationship
by shifting the traditional balance between self-
interested and altruistic motivations because
it tends to bring motivations of economic self
OCR for page 243
ETHICS OF FOR-PROFIT HEALTH CARE
b
interest more directly and substantially into
the physician's relations with individual pa-
tients.
What, more specifically, is the worry about
the erosion of the physician/patient relation-
ship by the rise of for-profit health care insti-
tutions? We think that worry can be most
pointedly brought out by initially overstating
the possible effect. The traditional account of
the patient-centered ethic makes the physician
the agent of the patient, whose "highest com-
mitment is the patient."26 The physician is to
seek to determine together with the patient
that course of treatment which will best pro-
mote the patient's well-being, setting aside ef-
fects on others, including effects on the
physician, the patient's family, or society.
This commitment to the patient's well-being
responds to the various respects discussed above
in which patients are in a very poor position
to determine for themselves what health care
if any, they need. Because the patient is un-
usually dependent on the physician, it is es-
pecially important to the success of their
partnership in the service of the patient's well-
being that the patient believe that the physi-
cian will be guided in his recommendations
solely by the patient's best interests. Patients
have compelling reasons to want the physician/
patient relationship to be one in which this
trust is warranted, quite apart from the pu-
tative therapeutic benefits of such trust.
Suppose the rise of for-profit health care so
eroded this traditional relationship, and in its
place substituted a commercial relationship,
that patients came to view their physicians as
they commonly now view used car salesmen.
We emphasize that such a radical shift in view
is not to be expected. We use this "worst-case"
example of a caveat emptor commercial rela-
tionship only because it focuses most pointedly
the worry about the effect on the physician/
patient relationship of the commercialization
of health care. Many factors will inhibit such
a shift from actually taking place in patients'
views of their physicians, including traditional
codes of ethics in medicine, requirements of
informed consent, fiduciary obligations of phy-
sicians, as well as powerful traditions of profes-
sionalism in medicine. Recognizing that the
stereotype of the used car salesman substan-
tially overstates what there is any reason to
243
expect in medicine, nevertheless what would
a shift in this direction do to the physician!
patient relationship?
Most obviously and perhaps also most im-
portantly, it would undermine the trust that
many patients are prepared to place in their
physicians' commitment to seek their (the pa-
tients') best interests. In general, there is no
such trust of a used car salesman, but rather
his claims and advice are commonly greeted
with a cool skepticism. He is viewed as pur-
suing his own economic interests, with no
commitment to the customer's welfare. It is
the rare (and probably in the end sorry) con-
sumer who places himself in the hands of the
car salesman. Anything like the fiduciary re-
lationship in which a patient trusts the phy-
sician's commitment first to the patient's interest
is quite absent with the used car salesman.
This is not to say that some additional con-
sumer skepticism of physician recommenda-
tions and increased attempts by patients to
become knowledgeable health care consumers
would not be a good thing- they would. It is
rather to say that many of the various inequal-
ities in the physician/patient relationship are
sufficiently deep and difficult to eradicate that
some substantial trust of the physician's com-
mitment to the patient is likely to remain nec-
essary and valuable. The commercial model of
arms-length, caveat emptor bargaining is not
promising for the physician/patient relation.
While there has been deception of patients
by physicians, it seems to have markedly de-
creased in recent decades, and in the past this
deception in medicine was justified as for the
patient's own good (even if in fact it often was
not). However, one does not expect the truth,
the whole truth, and nothing but the truth
from a used car salesman, nor that shadings of
the truth are done for the customer's own good.
We expect some concealment and distortion
of information in order to make the sale, al-
though this is not to say that some outright
deception in commerce may not be fraudulent
and immoral. It is also commonly believed that
businessmen are in business to sell as much
of their product as possible, however much
the consumer may not "need" the expensive
car being pushed by the salesman, whereas
physicians are expected not to encourage
needless consumption. Businessmen respond
OCR for page 244
244
to consumer wants, not needs, and will do
their best to manufacture such wants where
they do not already exist.
A shift towards commercialization of health
care could be expected to result in increasing
emphasis on marketing strategies to secure an
increasing segment of the market. Moreover,
we expect no unprofitable products or service
from a car salesman in response to consumer
need. We have argued that the moral obli-
gation to ensure access to health care for the
poor is ultimately the government's, not an
individual physician's or hospital's by way of
cross-subsidization. Nevertheless, in the face
of unmet need, physicians and health care in-
stitutions often do, and are often expected to,
respond to that need by furnishing the needed
care. Other norms important to the practice
of medicine have a weakened or nonexistent
place in most commercial transactions, such
as the requirement of confidentiality concern-
ing information about the patient.
One must be careful not to overstate the
contrast between medicine and commerce-
we have already seen it is certainly not the
case that commerce takes place in the absence
of any ethical constraints (or legal constraints,
reflecting ethical norms) or that the medical
profession is never moved by self-interest.
However, we believe there is a genuine and
important difference in the ethos of the two
enterprises that plays out in important differ-
ences in the physician/patient and business-
man/consumer transaction. Oversimplifying,
it is commonly believed that in business trans-
actions individuals pursuing their own inter-
ests, though admittedly within some ethical
and legal constraints, will best promote the
overall social good. It is this view of the mo-
tivation of self-interest as ethically acceptable
that quite reasonably worries many as medi-
cine becomes increasingly commercialized.
Since physicians are, of course, human like the
rest of us and naturally concerned with their
own interests, it is reasonable to view their
primary commitment to the patient's well-being
as inevitably fragile and always in danger of
being undermined. In that light, it is unnec-
essary to view for-profit institutions as ~ntro-
ducing a qualitatively new dimension of
commercialization and new set of conflicts of
interest into health care. As we have argued,
FOR-PROFIT ENTERPRISE lN HEaLTH CARE
such a view is indefensible. Nor need it be
expected that physicians' concern with their
patient's well-being will just disappear as soon
as they go on the payroll of a for-profit hospital
or, more likely, establish other types of con-
tractual relations with it. That view too would
be indefensible, indeed downright silly.
The realistic worry, concerning which the
data are not yet in, is rather that over time
the increased importance of investor-owned
for-profit institutions may permit considera-
tions of economic self-interest increasingly to
invade the heretofore somewhat protected
sphere of the physician/patient relationship,
and thereby weaken the patient-centered ethic
on which that relationship has traditionally de-
pended. The difference would only be one of
degree, but no less important for that. As we
have noted above, there are other indepen-
dent factors putting similar pressures on that
relationship such as the expected oversupply
of physicians. It would be a mistake to think
that these possible adverse effects on the phy-
sician/patient relationship are uniquely due to
the rise of for-profits. However, that is not a
reason to be unconcerned with these elects
of for-profits, but only a reason not to focus
one's concerns solely on for-profits.
We emphasize that the traditional patient-
centered ethic need not be incompatible with
greater attention to costs in health care utili-
zation decisions and practices. Utilization of
health care should reflect the financial costs as
well as benefits of care, but that will not be
appropriately achieved by, nor need it inev-
itably lead to, physicians making utilization
decisions solely according to their own eco-
nomic self-interest. Whatever the right mix of
incentives for reasonably limiting health care
utilization and costs, simply making physicians
fillly subject to incentives of economic self-
interest by breaking down the patient-cen-
tered ethic seems not the path to that mix. A
physician weighing the true financial costs of
care against its medical benefits to the patient
is entirely different from one who simply weighs
the economic consequences to himself of the
patient utilizing care.
The most obvious worry, then, is that the
increasing prominence of for-profits may con-
tribute to a shift in physicians' patient-oriented
behavior, which may in turn affect the patient
OCR for page 245
ETHICS OF FOR-PROFIT HEALTH CARE
trust important to a well-functioning physi-
cian/patient relationship. The test of that hy-
pothesis would then be the extent to which
physician behavior is actually different within
for-profit settings. But it is important to realize
that patient trust may be eroded, and so the
physician/patient relationship adversely af-
fected, even in the absence of any actual shift
toward more self-interested behavior by phy-
sicians. Even if outward behavior does not
change, a change in the motivations of the
behavior, and in turn of perceptions by others
of those motivations, may be important. If
physicians are increasingly perceived by pa-
tients as motivated by self-interest rather than
by a commitment to serving their patient, then
even in the absence of a change in physicians'
behavior, it is reasonable to expect an erosion
in patient trust that physicians will act for their
patients' best interests. Part of what is impor-
tant to patients in health care is the reassur-
ance that the professional cares about them
and their plight. (This is one respect in which
other health care professionals, for example
nurses, are often more important than physi-
cians in patient care. ~ A change in a physician's
motivations, or even in the patient's percep-
tions of those motivations, may be enough to
affect the patient's belief about whether the
physician "really cares" about him. This point
should give pause to those who propose to test
the effects of for-profits on the physician/pa-
tient relationship and on patient trust by look-
ing only at changes in physician behavior.
FOR-PROFITS UNDERMINE MEDICAL
EDUCATION
The charge that for-profits undermine med-
ical education parallels the claim examined
previously that for-profits exacerbate the prob-
lem of access to care. Medical education, like
care for indigents, is in part funded through
cross-subsidization, and for-profits are be-
lieved to be contributing to the demise of cross-
subsidization. It is thought that not only will
for-profits themselves refrain from providing
medical education because to do so would not
be profitable for them, but also that they will
make it increasingly difficult for nonprofit in-
stitutions such as university hospitals to carry
245
on medical education and still remain com-
petitive.
Much of what was said regarding cross-sub-
sidization of indigent care applies here as well.
Even if the growth offor-profits is contributing
to the crisis in funding for medical education
it is difficult to estimate the magnitude of its
contribution, and it is clear that other factors
are at work as well. Faced with growing pres-
sures for cost containment, nonprofit institu-
tions would presumably have strong incentives
to reduce all "unprofitable" activities, includ-
ing medical education, even in the absence of
competition from for-profits. And here, as in
the case of cross-subsidi7~tion for indigent care,
whether one laments these developments or
welcomes them will depend upon one's views
on the efficiency and ethical acceptability of a
system which in effect disguised the true costs
of medical education and upon whether one
thinks that the political process is likely to pro-
duce a workable alternative system for funding
medical education through explicit public pol-
icy choices.
Furthermore, before a convincing answer
can be given to the question of what obliga-
tions institutions or individuals have to help
support medical education, several basic eth-
ical issues must be resolved which the cross-
subsidization system has effectively kept out
of the public view. Perhaps most importantly,
to what extent should medical education be
subsidized by public resources?
To the extent that physicians benefit from
the skills which they sell at their filll market
value there is a presumptive case for making
them bear the costs of their own training.
However, there are several countervailing
considerations which may overcome this pre-
sumption. First, it can be argued that if med-
ical education is publicly subsidized we will
all benefit from a higher level of slcills than
would be possible under a system in which
individuals had to bear the full costs of their
training. Second, public subsidization makes
it possible for persons from lower socioeco-
nomic groups to become physicians and this
is desirable, not only because it promotes
equality of opportunity, but also because there
is some reason to believe that physicians from
the same socioeconomic background as their
patients may be better able to communicate
OCR for page 246
246
with those patients and to serve them effec-
tively.
Third, it may also be that a strong system
of medical education, like medical research,
has some ofthe features of a public good. Med-
ical education does not simply build economic
assets for physicians. At both the graduate and
post-graduate levels it also sets, transmits, and
improves standards and methods of sound
medical practice. Because the average patient
is in a poor position to evaluate for him- or
herself the quality of care provided by a par-
ticular physician, all patients benefit from a
high-quality system of medical education that
provides some assurance of the high quality of
training and skills of the physicians produced
by that system. If public subsidization of med-
ic41 education facilitates training geared more
toward the quality of patient care and less to-
ward the economic value to physicians of the
skills produced, that may be of benefit to pa-
tients, that is, the public.
While it would be unjustified to maintain
that the growth of for-profits is a major source
of the reported crisis in funding for medical
education, it can perhaps be said that for-prof-
its are one element in a complex array of changes
which will test the strength of the public com-
mitment to medical education and challenge
the moral assumptions on which that commit-
ment is based.
FOR-PROFITS AND THE POLITICAL
POWER OF THE MEDICAL-INDUSTRIAL
COMPLEX
The widespread view that the medical
profession's dominance in the U.S. health care
system is waning has already been noted. One
important aspect of the weakening of profes-
sional dominance is said to be the decreasing
effectiveness of organized medicine's lobbying
efforts in recent years. Whether or not one
greets this development with enthusiasm or
regret will depend, of course, upon the extent
to which one believes that these efforts to in-
fluence public policy have promoted or impeded
the public interest. However, both the sup-
porters and the critics of professional domi-
nance have voiced a concern that it may be
replaced by the dominance of a few extremely
wealthy end politically powerful giant hearth
FOR-PROFIT ENTERPRISE IN HEALTH CARE
care corporations forming a medical-industrial
complex. The fear is that a handful of the
largest corporations might "capture" the reg-
ulators, molding public policy to their own
needs through lobbying, campaign contribu-
tions, and use of the media to sway the elec-
torate.
The real concern here should be the political
effects of highly concentrated corporate power
in health care not simply the power offor-
profit health care corporations. While it is true
that the hospital "industry" is becoming in-
creasingly concentrated, it is important to point
out that some of the largest hospital chains are
owned or operated by large nonprofit corpo-
rations. Further, there is nothing to prevent
large nonprofit corporations from using their
wealth and power to influence public policy
and little reason to believe that they will in
general be less willing to do so than large for-
profit corporations. At present, however, it is
difficult to predict how concentrated the health
care sector will become or to what extent the
disparate interest groups within and across
health care institutions can be welded together
under corporate leadership to function as a
unified influence on public policy.
The issue, then, is whether it may become
necessary in the future to utilize regulation or
some other form of societal control to neu-
tralize or minimize the political ejects of the
economic power wielded by large health care
corporations, whether nonprofit or for-profit.
Some possible, even if not politically likely,
controls include limitations on campaign con-
tributions and on political advertisements in
the media, special laws designed to disqualify
legislators or regulators with conflicts of in-
terest, or limitations on the maximum size of
corporations.
It has often been remarked that it is a hall-
mark of a profession to be self-regulating. In
the case of the medical profession, the idea
that the physician/patient relationship is fi-
duciary along with the belief that medicine is
a service for healing and comfort rather than
simply one commercial enterprise among oth-
ers have buttressed the profession's claim that
it can be trusted to regulate itself.
Until recently it was widely assumed not
only that the medical profession should reg-
ulate itself, but that it should also be chiefly
OCR for page 247
ETHICS OF FOR-PROFIT HEALTH CARE
responsible for regulating health care in gen-
eral. This position rested on three main prem-
ises: (1) physicians and only physicians have
the technical training and knowledge needed
for informed control of their own professional
activities, (2) physicians' professional activities
are largely autonomous from other activities
in health care, (3) the activities of other health
care professionals are almost exclusively de-
pendent upon physicians' decision making. The
recognition that some of the most perplexing
decisions concerning the use of medical treat-
ments require complex moral, social, and legal
judgments has undermined the first premise.
(Decisions to forgo life-sustaining treatments
for terminally ill or comatose patients are only
the most obvious cases where medical judg-
ment is not sufficient for guiding the physi-
cians' own professional activities. These
decisions require moral judgments because they
rest on assumptions about the nature of indi-
viduals' rights and the quality and value of life. )
The second and third premises also become
dubious once it is seen that physicians' profes-
sional activities are increasingly dependent,
not only upon decisions of other types of health
care professionals (such as biomedical engi-
neers and laboratory and radiology techni-
cians) who sometimes possess specialized
knowledge which physicians lack, but also upon
a complex web of institutional functions, in-
cluding planning, investment, and allocation
of resources.
Some of the same reasons that make it im-
plausible to leave regulation of health care to
physicians make it equally implausible to en-
trust it to corporations or groups of corpora-
tions. In particular, the vast commitment of
public resources to health care grounds a le-
gitimate public concern that the resources be
used efficiently and fairly, and the growing list
of ethical dilemmas concerning the uses of
medical technology is no more amenable to
the administrative expertise of the corporate
manager than to the professional judgment of
the physician. There is, however, one reason
why the public is perhaps even less lilcely to
tolerate self-regulation by health care corpo-
rations third by the medical profession. If health
care is perceived to be controlled by corpo-
rations whether for-profit or nonprofit that
are in many respects indistinguishable from
247
other commercial enterprises, then the pre-
sumption in favor of self-regulation, which
flourished under professional dominance, will
erode. For if the key decision makers in health
care are perceived to be businessmen rather
than fiduciaries committed to healing and
comfort, an important barrier to societal reg-
ulation of all forms of health care will have
fallen. Whether new forms of regulation will
be needed to constrain the political influence
of large health care corporations can only be
determined after careful study not only of the
impact that these organizations have on public
policy, but also of the expected effectiveness
of proposed regulations.
CONCLUSION
Any summary conclusion of our examination
of the ethical issues in for-profit health care
will inevitably oversimplify. The one contin-
uing theme running through our analysis of
the moral objections commonly voiced against
for-profits is that those objections need to be
both framed and evaluated more carefully than
they usually are. In many instances these ob-
jections also rest on empirical claims for which
the data are not yet available.
We have been generally critical of the ar-
gument that for-profits fail to do their fair share
in providing health care to poor or unprofitable
patients. That argument assumes that for-prof-
its have special obligations to care for these
patients, that a determinate content can now
be given to that obligation, and that the ob-
ligation can be discharged without unreason-
able sacrifice on We part of the for-profit. These
assumptions are problematic. It is a mistake
to focus on how for-profits exacerbate or a~ne-
liorate access. The debate could more profit-
ably concentrate on the need for a coordinated
societal response to the serious injustices in
access to health care that now exist.
We have also been skeptical of the claim
that for-profits represent unfair competition
for nonprofits, though for-profits may have
possible adverse effects on charitable moti-
vations and a sense of community. We have
again been critical of a common objection to
for-profits, that they wrongly treat health care
as a commodity rather than a right. It is only
the view that all persons should have one sin
OCR for page 248
248
ale level of health care, not the recognition of
a right to an adequate level of health care, that
is incompatible with market provision of health
care by for-profit institutions.
The arguments in each of the first three sec-
tions of the paper ultimately raise deeper is-
sues of great importance about the just
distribution of health care that go beyond Me
for-profitlnonprofit debate. We have argued
that potential adverse effects on medico ed-
ucation, like those on access, may indeed be
worrisome, but the data on them are at this
point very limited and they probably arise more
from other forces such as cost containment ef-
forts than from for-profits. Similarly, although
the possibility that a small number of large
health care corporations may come to wield
disproportionate influence on public policy is
a serious matter for concern and vigilance, it
would be a mistake to assume that the poten-
tial for political abuse of economic power exists
only with for-profit corporations, rather than
with large institutions generally.
We believe that perhaps the most serious
ethical concern with the growth of for-profits
is their potential adverse effects on the phy-
sician/patient relationship and on the quality
of care. Here too, potential conflicts of interest
between patient and provider are not new.
Indeed, they are fundamental to the physician/
patient relationship in either for-profit or non-
profit settings. Moreover, other powerful forces
besides the growth of for-profits, in particular
cost containment efforts and increased com-
petition, are impinging on the physician/pa-
tient relationship. But the importance of the
patient's trust in his physician, and the fragile
balance between the physician's commitment
to serve the patient and his natural concern
win his own interests, give reason for serious
continuing attention to this potential effect of
for-profits.
FOR-PROFIT ENTERPRISE IN HEALTH CARE
NOTES
IWhile the number of investor-owned, as opposed
to independent for-profit hospitals has risen, hospital
ownership, classified by broad categories- federal, state,
and local government, nonprofit and for-profit-has
changed little in the past decade. Gray, B. H. (1984)
Overview: origins and trends. Keynote address, An-
nual Health Conference, The New Entrepeneurialism
in Health Care, held by the Committee on Medicine
in Society of the New York Academy of Medicine, Bul-
letin of The New York Academy of Medicine, second
senes, Vol. 61, No. 1, pp. 7-22.
2Securing Access to Health Care (1983) Report of the
President's Commission for the Study of Ethical Prob-
lems in Medicine and Biomedical and Behavioral Re-
search (Washington, D.C.: U. S. Government Printing
Office) Vol. 1, pp. 92-101.
3This statement is based on a preliminary draft of
the report of the Institute of Medicine Committee on
For-Profit Health Care. Additional data may be in-
cluded in the final report.
4Ibid.
5Ibid.
Brown, Kad~ryn J., and Richard E. Klosterman.
Hospital acquisitions and their effects: Florida, 1979-
1982. This volume.
7Hansmann, Henry D. (1980) The role of nonprofit
enterprise. Yale Law Journal 89~5~:835-901.
Robert M. Veatch seems to take this position in
Ethical dilemmas of for-profit enterprise in health care,
The New Health Care For Profit, B. H. Gray, ed.
(Washington, D.C.: National Academy Press, 1983),
p. 143. Cf. also Outka, Gene, Social justice and equal
access to health care in Ethics and Health Policy, R.
Veatch and R. Branson, eds. Cambridge: Ballinger
Publishing Co.
9See, for example, Guttman, Amy (1983) For and
against equal access to health care, and Brock, Dan W.
Distnbution of health care and individual liberty, both
in Securing Access to Health Care, Volume Two: Ap-
pendices. Sociocultural and Philosophical Studies, Re-
port of the President's Commission for He Study of
Ethical Problems in Medicine and Biomedical and Be-
ha~rioral Research (Washington, D.C.: U.S. Govern-
ment Printing Office).
2°Daniels, Norman (1985) Just Health Care (New
York: Cambridge University Press).
22Starr, P. (1982) The Social Transformation of
American Medicine (New York: Basic Books).
:2Menzel, P. (1983) Medical Costs, Moral Choices
(New Haven: Yale University Press) p. 17.
23Veatch, R. (1983) Ethical dilemmas of for-profit
enterprise in health care, B. H. Gray, ea., The New
Health Care for Profit (Washington, D.C.: National
Academy Press) pp. 145-146.
OCR for page 249
ETHICS OF FOR-PROFIT HEALTH CARE
14Starr, P. (1982) The Social Transfo~nation of
American Medicine (New York: Basic Books).
~SJonson, A. (1983) Watching the doctor, Sounding
Board, New England Journal of Medicine, 308~259:
1~31-1535.
16Amencan College of Physicians Ethics Manual (1984)
p. 7.
17The term "medical-industrial complex" is bor
249
rowed from an article by Relman, A. (1980) The new
medical-industrial complex, The New England Journal
of Medicine, 303~171:963-970. Relman expresses a num-
ber of the concerns about for-profits analyzed in the
present essay, including the fear that large for-profit
corporations may exert undue influence on public pol
~cy.
Representative terms from entire chapter:
medical education
