Why the profit-driven market model doesn’t work in health care

We now see health care as a commodity. Applying this model to medical care creates perverse incentives.
We now see health care as a commodity. Applying this model to medical care creates perverse incentives. Getty Images

“Is medicine a business or is that an oxymoron?” asked the moderator of panel members convened by Leadership Charlotte recently.

When I started my medical career, we reflected on the nature of medicine – namely, whether it was an art or a science. No one talked about the business of medicine.

Healing medicine has been practiced for over 2000 years, and scientific medicine for more than 100. The perception of medicine as a business is relatively new.

We now view medical care as a commodity, much as we view buying shoes. Though the market model is pervasive, it does not apply to everything. Some services remain public goods such as police protection, fire protection, and education. I posed this question to our audience: Why do we view health care as different from education, to which most of us believe all children are entitled?

Applying the market model to medical care is a poor fit. Many factors interfere with choice, on which market models rely, in health care. When patients have decisions to make about medical care, they are often scared, vulnerable – and sick. If your doctor tells you you need an MRI because you might have a brain tumor, you are unlikely to do extensive research to see which is the cheapest or most accurate – or if an MRI is actually indicated. And, if you research a medical intervention, you are likely to find cost information opaque – and reliable quality measures even more elusive.

A for-profit system creates perverse incentives. Insurance companies make money for investors when they provide less care. For-profit medical institutions have troubling outcomes. Investor-owned hospitals are more expensive. Death rates are higher in for-profit hospitals and dialysis units.

Drug companies make more profits when they sell newer drugs, still patent-protected. This leads to promotion of new drugs as safe, such as rofecoxib (Vioxx), an anti-inflammatory. After being widely prescribed, it was linked to thousands of deaths.

This incentive to promote new drugs obscures the fact that it is generally better to take an old drug rather than the glittery new drug being promoted.

Also obscured is the fact that often non-drug treatments are superior. For instance, exercise is often as effective a treatment for depression as antidepressant medications.

Your neighbor’s health care has different implications for you than most things that we view as commodities. While we are unaffected by which shoes our neighbors buy, their health and health care affect us. For example, we are better off if the sick server at our local restaurant can see a doctor and have the flu or tuberculosis diagnosed and treated.

One of the biggest casualties of the marketization of medicine has been the doctor-patient relationship. When I started my practice, the patient and I were the only ones in the exam room. Now, the room also contains an insurance company, an administrator and a coding specialist. Though invisible, they all have something to say about what the doctor does.

Is the “business of medicine” its future or a blip in a distinguished history that spans centuries?

Do the words of our exemplars still inspire us? If so, let Sir William Osler, father of modern medicine, have the last word: “We are in the profession as a calling, not as a business. . . Once you get down to a purely business level, your influence is gone and the true light of your life is dimmed.”

Jessica Schorr Saxe is a Charlotte family physician and the chair of Health Care Justice – NC. Contact her at: