The Business Roundtable — an association of chief executive officers of the top U.S. companies — recently changed its definition of why companies exist to embrace their customers, employees and other stakeholders. This bold move should be replicated in health care, where abusive practices are exploding federal spending, hurting Americans and, in some cases, are simply immoral.
The dark side of free market capitalism is when unregulated greed erases the social contract among citizens to treat each other ethically and fairly. In health care, the market force of pushing profits first often hurts, rather than helps, the health care system and its consumers. And though many people do not directly pay for health care, the high cost of medical care can be devastating to the uninsured. A recent study showed that two-thirds of people who file for bankruptcy cite medical issues as a key contributing factor.
Some in the health care industry ignore an ethos of selling needed services and instead push policies and services helping themselves, while actually hurting consumers or our common good. Here are some examples:
Private equity has rapidly bought medical practices, so most doctors have become employees rather than owners. Between 2012 and 2018, the share of doctors who owned their practices dropped by more than 7 percent. The new private equity owners are ruthless in maximizing revenue. The New York Times recently reported that two of the largest private equity companies secretly funded a multimillion-dollar campaign to thwart Congress from passing a law restricting surprise unlimited medical charges.
As private equity increasingly takes over health care, the impact on our federal debt and health care costs will be devastating. Private equity firms are now buying retina practices for millions per partner. While the partners will do well, the employees, and perhaps patients, may suffer as bottom-line numbers rather than patient care or government costs drive decisions by the new owners. The private equity owners will push revenue to the max, and consumers and taxpayers will pay — until the owners sell at a profit and wash their hands of the collateral damage.
Fortunately, Congress is examining the impact of private equity on health care. Hopefully, they will realize it is time for restrictions on how non-doctors incentivize and thus control what doctors prescribe, use, test and bill. The Stark law puts a wall between doctors and drug companies, so the precedent is there to build a wall against private equity using doctors to deliver Medicare and other payables to their investors. We need to align incentives, so doctors are not encouraged to do every test, use the most expensive medicine and upcharge insurance claims.
A better alternative is to incentivize doctors to provide value-based care, an idea that reimburses health care providers based on the quality — not quantity — of care they administer. Our system needs to start recognizing that over-testing and frequency of treatment affects patients, and that minuscule improvements in health may not be worth the cost, discomfort or inconvenience.
We should also consider how technology is solving problems in health care. Over-the-counter hearing aids will give people with moderate hearing loss affordable options for better hearing. And technologies such as focused ultrasound and wearable technologies could lead to lower costs, less intrusive procedures and healthier outcomes.
Every American should have a right to health care. But not every investor should make a fortune by investing in drug companies and buying medical practices. And private equity shouldn’t be allowed to distort incentives, so they win. If the system doesn’t change, the federal debt will continue to expand — and patients and taxpayers will increasingly lose.
Gary Shapiro is president and CEO of the Consumer Technology Association (CTA), the U.S. trade association representing more than 2,000 consumer technology companies, and a New York Times best-selling author. He is the author of Ninja Future: Secrets to Success in the New World of Innovation.
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