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Your money and your life: The cost of private medicine

Silver Donald Cameron / First Words

IF THERE'S one thing that's clear about politics in this country, it is that Canadians cherish medicare. Medicare defines us; it is how we care for one another. And, as an article published this past week in the Canadian Medical Association Journal makes clear, Canadians are dead right to cherish their system.

The article analyzed the cost of care at privately-owned, profit-making hospitals compared with non-profit ones. The study team was headed by Dr. P.J. Devereaux of the McMaster University medical school. Costs at investor-owned hospitals in the U.S., they found, are higher by a whopping 19 per cent than in non-profit institutions.

"The reality is that for-profits face significant economic challenges," Dr. Devereaux told Reuters. "The first is that they have to generate revenues that will satisfy shareholders. Second, they have high executive bonuses. Thirdly, they are very top-heavy and have high administrative costs. Also, they have to pay taxes.

"That is a lot of extra money that they have to come up with," says Dr. Devereaux. And so investor-owned hospitals "were cutting corners in quality health care, and also people were having to pay more for care."

Free-market dogmatists argue that competition will ensure the best possible product at the lowest possible price. In other fields, that's true - but in health care, it's a fallacy. First, many hospitals have no real competition; my local hospital is the only one for 80 kilometres in any direction. Second, hospital patients are not model consumers, shopping around for the best price and the highest quality, and refusing to buy if the cost is too high. They are usually frail, elderly and/or desperately ill. They take what they can get, and pay what they must.

From a business viewpoint, one could hardly ask for a more glorious opportunity than this: a desperate customer, an essential service that's difficult to evaluate, and a lack of competition. And if the costs are being paid by government - which rarely quibbles about a bill, and never goes bankrupt - that's even better.

But not for patients or taxpayers. Commenting on the Devereaux study (which they describe as "meticulous"), Harvard professors Steffie Woolhandler and David Himmelstein note that for-profit hospitals "are profit maximizers, not cost minimizers" and that "strategies that bolster profitability often worsen efficiency and drive up costs."

Such strategies, say the Harvard duo, often cross the boundary into outright fraud. Columbia/HCA, the largest U.S. hospital firm, "has paid the U.S. government $1.7 billion" in fraud settlements, and Tenet, the second-largest, has paid settlements of over half a billion dollars. The frauds included kickbacks to physicians, over-billing, and such antics as "performing cardiac procedures on healthy patients."

These frauds are not occasional excesses; they reveal a pattern of criminality and greed. The CEO of Columbia/HCA, the largest hospital company in the U.S., resigned in the face of fraud allegations - picking up $10 million in severance and $324 million in stock as he left. The departing CEO of Tenet exercised $111 million in stock options. The head of HealthSouth, another giant health firm, was paid $112 million in 2002, and indicted for fraud the following year.

Furthermore, say Woolhandler and Himmelstein, in non-profit or government-owned institutions the CEO makes about 20 times as much as the cleaning staff. In U.S. corporations, the average CEO makes 180 times as much as the lowest-paid worker. Worst of all, for-profit health care affronts the whole ethos of medicine. It "severs the community roots and Samaritan traditions of hospitals, makes physicians and nurses into instruments of investors, and views patients as commodities."

This spectacle of avarice and plunder might find some justification if it actually delivered superior results. But a 2002 study by Devereaux's research team showed that death rates in investor-owned hospitals and kidney dialysis centres were significantly higher than in non-profit institutions.

"Our previous study showed the profit motive results in increased death rates, and this one shows it also costs public payers more," said Dr. Devereaux. "With for-profit care, you end up paying with your money, and your life."

The study is important to Canadians, says the Canadian Medical Association, because these are the same companies who would quickly buy up Canadian hospitals if they could. And the Devereaux study estimates that if Canada's hospitals were privately owned, they would cost the Canadian taxpayer $7.2 billion more a year. That's equivalent to 72 sponsorship scandals every year.

Think about all this when you vote. Paul Martin's health minister, Pierre Pettigrew, opined in April that "the Canada Health Act does not preclude delivery of services by private elements as long as there is a single public payer." Stephen Harper says exactly the same thing: "It does not matter who delivers health care; it matters who can receive it."

Inferior health care at larcenous cost may not matter to Pettigrew and Harper. But it certainly matters to the rest of us.

Author Silver Donald Cameron lives in D'Escousse.