Aligning Profits and Patient Value: An Analysis of Healthcare Corporatization

TL/DR –

Many Americans attribute high healthcare costs and reduced patient choice to the “corporatization” trend in US healthcare, where investors inject capital into healthcare companies, institutions, and physicians in return for a share of profits. Amitabh Chandra, director of the Malcolm Wiener Center for Public Policy at Harvard Kennedy School, argues that private investment in healthcare fills a crucial need not met by the government and non-profit organizations, and that profit-seeking doesn’t necessarily compromise patient welfare. Chandra believes the key lies in aligning profits with patient value and strengthening regulation, to ensure efficient use of corporate investment in expanding healthcare access, improving quality, and driving innovation.

Public Opinion on Rising Healthcare Costs and Corporatization

With healthcare costs spiraling, many Americans attribute the escalating prices of prescription drugs, the closing of local healthcare centers, and the mergers of healthcare practices to corporate influence and private equity firms. Critics argue that the corporatization trend in U.S healthcare, driven by profit, often results in diminished quality and choice, and rising costs for patients.

Role of Corporatization in Healthcare

Corporatization refers to the partnership between medical organizations and investors. The organization receives capital for improved facilities, research, and competitive salaries, while investors expect a profit share. However, critics argue that this approach often prioritizes profits over patient care.

Benefits of Private Investment in Healthcare

In a recent publication, Amitabh Chandra from Harvard Business School, argues that private investment in healthcare fills a necessary gap that cannot be met by the federal government and non-profits. Chandra points out that the corporatization of areas like in-vitro fertilization and drug development have proven beneficial, with measurable improvements in patient outcomes.

Profits versus Patient Well-being in Healthcare

Chandra refutes the idea that profit-seeking in healthcare compromises the well-being of patients, claiming that profits attract the crucial capital necessary for improving quality and driving innovation in healthcare. He emphasizes the importance of aligning profits with value for patients, indicating that the real issue isn’t profit, but how it’s used.

Role of Quality Measures in Corporatization

Chandra suggests that the success of corporatization hinges on how observable the quality of care is in a given sector. In the case of nursing homes, the lack of clear quality measures has resulted in poor patient outcomes, with cuts in staffing and quality to boost profits. By contrast, sectors with clear quality measures and strong regulatory oversight show better results.

Public vs Private Investment in Healthcare

Chandra argues that private investment, rather than government funding, is better suited to support long-term investments in healthcare, such as research and development. He explains that governments are typically unreliable for long-term funding, citing the example of the National Institutes of Health (NIH) that struggles to provide consistent funding, making it an unviable option for long-term investment in healthcare.

Aligning Profits with Patient Value

Chandra advocates for strengthened regulation in healthcare as a step towards aligning profits with patient value. He notes that a well-resourced, independent regulator is crucial to ensure that corporate investment contributes to improved access, quality, and innovation without undermining patient well-being.

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