Question

Healthcare is a business with an ethical obligation to provide a reasonable volume of treatment free of charge. Discuss why this expectation is, or is not, fair and equitable for nonprofit and for-profit healthcare organizations. Provide a cogent argument on why for-profit healthcare is ethical and legal. Provide a cogent argument on why nonprofit healthcare is legal and ethical.

Answer 1

The rapid evolution of for-profit corporate delivery of health care over the past few years poses critical questions for those interested in the ethics of health care delivery. The development of commercial dialysis centers, corporate for-profit hospital chains, and other health care delivery systems linking health care to profit-making enterprise raises critical sociological, legal, economic, administrative, and political issues. In addition to all of these it challenges some of the most fundamental ethical presuppositions of both the business and the health care communities.

The relationship between business and professional health care has always been an ambivalent one. Organized medicine in the United States has never condemned outright the practice of medicine within a profit-making context. Yet over the years, beginning with concern about restraining unorthodox practitioners and continuing in debates over physician control of pharmacies, patents, advertising, and financial arrangements in group practice, organized medicine has constantly been nervous about the pestilential taint of commercialization.
Where as Few changes in the organization of health care in the United States have stimulated more interest and alarm than the rise of a new form of entrepreneurism—investor-owned, for-profit organizations that provide health services as a business. Although proprietary health care organizations are not new, publicly traded health care companies that own multiple facilities have appeared only in the past 20 years. With their rapid growth and diversification they have become increasingly visible and influential. In many ways they represent a challenge to established interests, practices, values, and ideals.

The revenues of businesses that provide health services for profit have been estimated at 20 to 25 percent of the nation's expenditures on personal health services (Relman, 1980), which would amount to $70 to $90 billion dollars today. Investor-owned health service businesses range from large companies that own or operate hundreds of hospitals, nursing homes, and other facilities to independent institutions owned by local investors. In mid-1985 the stock of 34 investor-owned companies that provide health care was publicly traded. Some of these companies concentrate on a particular type of facility or service, such as hospitals, nursing homes, psychiatric hospitals, health maintenance organizations (HMOs), alcoholism and drug abuse treatment, rehabilitation, home health care, urgent care, or medical offices. Others are diversified into a variety of health care and related services. In addition, several large companies whose primary lines of business are not in the delivery of health services have established or acquired health services subsidiaries. Many other proprietary or for-profit health care organizations are not publicly traded. Some of these are subsidiaries of not-for-profit hospitals and hospital chains; others are owned by local investors, many of whom, anecdotes suggest, are physicians.

Although ours is a predominantly capitalistic society, there has long been concern about the possible adverse or pernicious effects of profit motivations in health care. Conflicting opinions about for-profit health care mirror common views of the profit motive and market-driven behavior. Thus, various positive benefits of the investor-owned model are often cited: that it provides new impetus for innovation, more responsiveness to the needs and desires of patients and physicians, sounder approaches to management, and an important source of new capital for health services. On the other hand, some observers see for-profit health care organizations as antithetical to the traditional mission and values of health care institutions, as a threat to the autonomy and ideals of the medical profession, and as destructive of implicit social arrangements by which medical care has often been provided to people who could not pay for it and by which teaching and research have been indirectly supported. Others are skeptical about these fears or are dubious about the extent to which health care institutions and professionals actually embody the ideals that they enunciate. Some view physicians as a type of businessperson and see nothing wrong in making money from health care. Others identify the problems not in the behavior of providers but in terms of (1) inflationary economic incentives in the way that health care is paid for (a factor that has been undergoing rapid change), (2) the lack of competition among health care providers (also rapidly changing), and 3) failures of public policy, particularly regarding people who lack insurance coverage and who are not eligible for public programs. Thus, the debate about for-profit health care touches upon most issues of health care policy in the United States.