These web pages explore the corporatisation of health care. They examine the oldest corporate health and aged care marketplace in the world - the USA. They show quite clearly that its has failed and that the victims of the disturbing systems which resulted are US citizens.
They reveal that corporations have built vast empires by misusing vulnerable citizens in order to reap vast profits. Corporations have reduced services and neglected the elderly to reduce costs. In pursuit of their objectives they have committed fraud repeatedly and on a massive scale.
The marketplace ideology which gives their activities legitimacy is powerful and all pervasive. Despite alarming insights which challenge the validity of market theory in health care, economists and politician continue to impose new marketplace solutions to the problems created by previous marketplace solutions.
Marketplace solutions are being imposed on health and aged care across the globe. Health and aged care are on the table for global trade agreements. They have been targeted for inclusion in agreements made by the World Trade Organisation (WTO). Marketplace health care is even being promoted as a means of resolving the health care problems in developing countries. If health and aged care is included in WTO agreements then matters which would profoundly affect the way health care is provided and the sort of care provided will be decided by an industrial court at the WTO and not by Australian citizens and their governments.
Australia's National Competition Council is at the forefront of these moves and its past chairman Graeme Samuel attempted to persuade the World Bank to accept a marketplace model which he proposed. Both Labour and Coalition governments have promoted market systems in Australia and welcomed multination health and aged care corporations into Australia.
But for the misconduct of US corporations and the actions of the professions and individuals in publicising this misconduct it is likely that Ron William's depressing 1992 predictions would have been fulfilled. The Australian health and aged care services would already be dominated by US megacorps. Some pages on this site describe these activities. Australia's previous health minister Dr. Wooldridge was on side with the market lobby. He supported the corporatisation of general practice and continued to appoint corporate representatives to senior government positions. Wooldridge's policies failed and he was discredited by the Scan scam. He resigned from politics.
While the government's market policies have failed repeatedly, it has not changed its policies. This is reflected in the appointment of Graeme Samuel to chair the ACCC in 2003. There have been a series of new health ministers and a lack of direction. The federal government has failed to work constructively with the medical association or the states, although their position is softening and relationships have improved.
Outside the USA New Zealand has had the longest period of experience with marketplace reform and has now firmly rejected it. At a previous election the electorate voted to unwind their market "reforms". Canada is engulfed in a heated debate. In 2002 a Royal Commission which consulted widely with Canadians emphatically rejected the market model of care. Other countries are still enthused by the deceptive promises and are in the early stages.
Objectives of the pages
The web site has grown since 1996 and it has become unwieldly. It grows steadily in response to events and some pages are left behind. I struggle to keep some up to date. Where the lessons are clear and immediate matters resolved I no longer update that secction. Because readers access the web pages out of context most must stand alone. There is of necessity duplication. Anyone reading systematically will need to skim read or skip sections.
A set of site maps lists a hierarchy of pages. They indicate what is on the site and briefly describes the content of each page. Readers can go directly to their interests from these maps or explore the site from different perspectives.
CLICK HERE to go to the Central site map which sets out paths through the site.
The remainder of this home page outlines the major sections of the site and indicates their content. The pages start with general reviews and summaries. They link to pages with more depth and documentation.
An explanation of the difficulties and problems in making information public and the justification for doing so.
History of the site
This page describes the development of the site and some of the problems in trying to bring it up to date. There have been ongoing startling revelations of dysfunction. The ideological blinkers of those who are responsible for health care decisions are ever more difficult to dislodge. There are still gaps where events have exceeded my ability to keep up.
A number of pages give an account of my background, and my experiences in blowing the whistle about corporate misconduct, and in dissent. This may be of interest to those interested in whistle blowing and in the process of dissent. Those contemplating blowing the whistle may find it helpful. Those wanting to study corporate health care will probably navigate the site using a different path.
Grips with Health Care
The first page to this set of pages summarises each and then links to a series of pages which look at the broad context of corporate health care, starting from simple and moving to the more complex. The first is a 600 word article summarising the essential concerns about corporate health care. Another page looks at the development of health systems and the essential differences between them in more depth. Others describe the theoretical framework I have used in examining corporate health care. These pages give greater understanding and create a deeper understanding. This page also provides links to pages in other sections which explore and expand the theoretical ideas with actual corporate examples and situations.
A shorter page summarises these and other key issues. This serves as an introduction to each of the pages on the web site.
CLICK HERE to go to the Initial Site Map
corporate marketplace in the USA
The USA is the longest established and best example of a corporate health and aged care marketplace. Market principles have been applied and then repeatedly modified in an attempt to address the problems resulting from commercial pressures by using additional marketplace pressures. As these are the cause of the problems they have not worked.
Web pages examine the conduct of most of the major corporate health and aged care providers in the USA. They reveal extensive exploitation of patients for profit - the misuse, neglect, denial of care, and massive fraud. All this is in order to fund the growth of vast empires. The public are alienated. US legislators have been forced to legislate to protect citizens from exploitation by the people employed to look after them when they can no longer look after themselves. It provides a profound insight into the way in which market principles and the pressures of the share market destroy our humanitarian efforts and undermine society's concept of itself as a humane community.
Our politicians have repeatedly assured Australians that we will not get the American health system. Both parties are committed to the "reform" of health and aged care by market forces rather than community service, and by competition rather than cooperation. This is the American system.
What has happened in the USA is a direct consequence of market principles rather than the manner in which they were applied. This is transparently obvious in aged care, and particularly in US nursing homes. That the same sort of things have happened in Psychiatry, Rehabilitation, Substance Abuse, Assisted Living, Dialysis Services, Laboratory Services, Medical Appliances, General Hospitals, and Managed care speaks for the centrality of market principles to dysfunction. I have written pages about most but not all of these.
Increased oversight, policing, prosecution, massive fines and stronger market forces seem only to have increased the disturbing practices. HCA (then called (Columbia/HCA), the largest hospital owner in the USA had paid US $1.7 billion in fraud settlements by 2002. In October 2002 Tenet Healthcare (previously the scandalalous National Medical Enterprises), the second largest hospital owner in the USA collapsed in a massive financial scandal. Some doctors were accused of carrying out profit generating invasive procedures and bypass operations on the hearts of over 700 patients when they were not needed. Out of a total of approximately US $2 billion in fraud related settlements, US $ 500 million related to the cardiac surgeries, many on people with normal hearts. The company has repeatedly ignored complaints about its conduct.
Tenet provides one of the most fascinating and revealing insights into the operation of the corporate marketplace. It is clear that its startling conduct is representative of what happens in the sector - if a little more extreme than some. The pages about Tenet Healthcare were revised and many new pages added in July 2007.
Eighteen senior staff at HealthSouth, the dominant provider of rehabilitation services and outpatient surgery in the USA have pleaded guilty to being part of the company's US $4 billion fraud over the last 15 years. They implicated Richard Scrushy, HealthSouth's founder as the driving force in what happened. Scrushy faced a criminal fraud case which indicted him on 85 counts. A jury in his home town acquitted him after an interesting trial. He has since been found guilty of bribery. The company has defied all predictions to avoid bankruptcy.
The disturbing nursing home chain Sun Healthcare bought into Australia in 1997, intending to enter our nursing home sector. Its charismatic founder exerted a profound adverse impact on US and Australian aged care thinking. Sun came apart and, like a number of others in the US nursing home sector ,Sun was caught up in scandal fraud and bankruptcy. The sector in the USA has been characterised by the neglect of the frail aged who required costly nursing care in favour of step down care, a strategy that avoided the restriction of DRG payments and exploited the vulnerability of Medicare.
Corporate Dialysis services in the USA have a higher mortality than not-for-profit services. The sector is plagued by fraud. Three of the largest provide dialysis services in Australia. Pages about this were added in 2008.
It is increasingly clear that the giant global financial institutions exert a profound influence on the health care corporations whose stock is at the mercy of their analysts and whose bankers lend them money. Bankers and their analysts advise health corporations, even attending board meetings. They advise on, organise and promote corporate share floats, mergers, and take overs. They set up the loans when corporations need more money. They set up structured finance arrangements to meet their accounting needs. Much of this is done on their advice and they make their large profits by implementing their own advice.
The global financial institutions have been involved in multiple massive frauds and scandals over the last 15 years. Not content with their own frauds they have been caught up and fined for assisting others including Enron to defraud their stock holders. Citigroup has recently paid WorldCom creditors US $2.65 billion to settle allegations of complicity in the WorldCom fraud and Enron investors US $2 billion. Two leading financial conglomerates Citigroup and UBS Warburg have been intimately involved in advising HealthSouth during the 17 years a US $4 billion fraud was perpetrated. Shareholders accuse bankers of complicity.
These revelations point to the likelihood that these financial giants have been a prime generator of the pressures towards dysfunction in the US health care share market and have been the major conduit for these pressures. It also raises questions both about their direct or indirect role in the many previous health care scandals in the USA and their conduct in other countries including Australia. There is insufficient information from which to draw any direct inferences.
More recently these giant financial institutions have taken direct control of health care corporations. Their private equity divisions have purchased HCA, the largest hospital chain and 6 of the 10 largest nursing home chains.
A new book "Critical Condition" published in November 2004 examines the US Health system and clearly shows the link between the competitive market system and dysfunction. The role of the financiers is emphasised.
Long time critic Professor Arnold Relman's 2007 book "A Second Opinion : Rescuing Anerica's Heath Care : A Plan for Universal Coverage Serving Patients Over Profit" argues that marketplace medicine is economicaly unsustainable, and ultimately the USA will have to abandon it, in spite of the enormous costs involved.
CLICK HERE to go to the Site Map for the USA.
Multinationals:- Australian Governments of both major political parties have adopted economic rationalist approaches to health care. They have attempted to introduce a health care marketplace. They have welcomed multinationals, supported local corporations and attempted to introduce care by contract - a version of managed care. Members of the public and the medical profession have resisted their efforts. I participated in this. These corporations have fallen foul of the probity regulations governing hospital licenses. Multinationals have not yet succeeded in dominating the Australian Health Care System. All US multinational hospital companies have now left or gone bankrupt. This was a very important battle for Australia. It prevented us from following the US path as rapidly. These matters are summarised in a paper published in New Doctor in 2004 (pdf file). More details are available on the individual company pages. (see links under US section above)
Local hospital companies:- Politicians switched their support to local corporations, particularly Mayne Nickless. A damaging scandal, the scan scam resulted from this.
Attempts by Mayne, an insurer and the minister to drive doctors into contracts that might have limited their ability to protect their patients were strongly resisted by the profession. Mayne did not prosper. When Mayne introduced practices which doctors felt compromised care they exerted the leverage they had preserved and walked away from Mayne hospitals. They took their patients with them. Mayne's profits crashed and it sold all of its hospitals. The lessons were not lost on other corporations who are now careful to keep doctors on side. This I believe is one of the main reasons why we have not seen the dreadful problems encountered in the hospital marketplace in the USA. The doctors are able to restore some balance against market forces.
The 1990's were a tough period for hospitals. They were forced by the government's managed care policies to compete for contracts with insurers. Care was squeezed and so was profitability. Two companies Ramsay Health Care and Healthscope shrewdly bought hospitals where there were no competitors and they were able to set their fees. They were able to conserve their resources and acquire struggling competitors. When good times returned in 2000 they were able to buy up remaining competitors. Ramsay and Healthscope now dominate the for profit hospital sector with only a few small competitors. Both have been careful to maintain good relations with doctors and meet their requirements. In Australia half of all private hospitals are owned by not for profit church and community groups.
Further corporatisation:- During the early 1990s there was a concerted effort to privatise public hospitals and to colocate private hospitals on public hospital sites. The former was a disaster and enthusiasm for the latter died a natural death. States have moved to buy back the hospitals. Incredibly the federal minister for health in 2006 is once again talking up this practice.
The thrust of corporatisation was then directed at General Practice, a sector where it had already failed in the USA. In spite of the introduction of some disturbing but potentially profitable business practices it has not worked out well. Only one company has been profitable. Pathology and radiology were rapidly acquired by market entities and are now almost entirely corporatised. Starting in about 2000 renal dialysis (artificial kidney) services were privatised and the care of public patients contracted to private companies. This has progressed very rapidly. The operators are three global multinationals operating in the fraud plagued US dialysis marketplace. Two of them have paid massive fraud settlements, one a recurrent offender. New pages were added in 2008 describing how this happened and asking why.
Citigroup:- In late 2003 Mayne Health sold all of its hospitals to a group of venture capitalists dominated by a Citigroup subsidiary. The new company was called Affinity Health. A new web page was added in February 2004 describing this venture capital process, and another describing how this purchase was accomplished without alerting anyone to the fact that Citigroup was behind it.
Citigroup has close links to health care in the USA. It has a special health section, which funds health care corporations and advises them on business practices. Its bankers attend health corporations' board meetings to advise them. One of its main predecessor companies was alleged to have been implicated in the HealthSouth fraud. It has paid large fines for complicity in the giant Enron and other frauds.
Over the last 14 years Citigroup, a giant multinational Wall Street based financial group has been implicated in many unsavoury scandals and frauds. It deceived and misinformed those who trusted it to advise them in order to increase it own profits. It was fined for this. It played a major part in setting up the Enron, Worldcom and other scandals. It has paid many billions to recompense the shareholders who were defrauded. A series of web pages have been added addressing these problems on Wall Street.
NSW Health carried out a long and thorough probity investigation of Citigroup and was so concerned that it only granted hospital licences with conditions. Affinity was by then busy selling its hospitals to Ramsay Health.
An aged care takeover:- In what I felt was an alarming move the same Citigroup subsidiaries mounted a takeover of Development Corporation of Australia (DCA), Australia's largest for profit owner of nursing homes in September 2006. Nursing homes are far more vulnerable to strong market pressures and are already in a parlous state in Australia. This, I believe, is in large measure because doctors do not refer patients to nursing homes so have no leverage. It is the nursing homes who decide to whom to refer residents for care giving the homes economic leverage over the doctors, rather like the USA.
In 1994 a federal government aged care department boasted to me of their probity provisions. I believed these were removed in the 1997 revision of regulations. When I corresponded with federal aged care departments in 1999 they were unable to confirm that probity as such was an issue. They said instead that they were concerned that only suitable groups be providers of aged care. I lodged objections with multiple authorities but particularly with the aged care body responsible for approvong nursing home operators. It subsequently emerged that there was a gaping hole in the legislation. Citigroup, despite its previous failuree to meet probity requirements was not required to seek approval to operate bursing homes in Australia. I took this up with politicians and the ministers responsible have indicated that they are making changes to the legislation. These matters are described on a web page and this links to copies of the correspondence. FIRB and other bodies did not take any action in regard to this purchase.
World trade agreements:- There was concern that the Howard government will trade an open multinational health care marketplace, which liberalises our system and gives access to US corporations, with the USA in return for a trade agreement that gives Australian farmers access to US markets. Powerful groups in the USA have been pressing for international trade liberalisation of health care through the WTO. This is congruent with the Australian governments economic ideology and in keeping with their past conduct. In February 2004 a bilateral trade agreement was signed with the USA but health care seemed to escape. This issue is currently on the back burner.
Aged care:- Even though over 70% of nursing homes are owned by not for profit organisations aged care in Australia has been turned into a competitive marketplace by government policy and legislation in 1997. Large numbers of private for profit groups have entered the market. DCA, a large publicly listed company came to dominate the for profit sector and spread internationally. It has been sold to a Citigroup private equity subsidiary.
The story of aged care is a sad one characterised by wild enthusiasm from the market and misery, deteriorating care and demoralisation in the nursing homes. The market mission has challenged the caring and humanitarian patterns of thinking on which care in this sector depends. As indicated above doctors have no leverage and so do not protect the system.
Deliberate understaffing, deskilling, a focus on profits and process, and the promotion of unsuitable managers with no mission of care have devastated the sector. Those with motivation have left and there are few recruits. Instead poorly trained and disinterested people have been pulled off the streets to do skilled work. Some homes have become "battery farms", processing residents to generate profits for their investors.
A scandal exposing major problems and neglect in 2000 was followed by a series of similar but worsening exposures. By 2006 carers were taunting their charges. Ninety year old residents were being raped and sexually abused in a few homes. Other nurses took no action and one manager did not see it as her role to report such abuse. Regulatory oversight and complaints management has been a disastrous failure.
While the aged care minister wishfully maintains that these events are isolated and that the system is excellent, a study of the material available shows that the problems are systemic, widespread and getting steadily worse. The extreme examples that have hit the headlines are simply the tip of extensive dysfunction.
In September 2006 a large number of new pages were added to the site describing the marketisation of the aged in retirement villages, nursing homes and home care. The largest home care corporation in the USA and world was welcomed into Australia in 2006.
In 2006 the same Citigroup private equity groups purchased DCA. Objections were lodged and when it was discovered that Citigroup had not been required to seek approved provider status or undergo any sort of asessment, a gaping loophole was revealed. It is clear that few if any of the large private equity groups that had bought nursing homes would have sought approval. The matter was taken up and the two ministers gave assurances that changes would be made to address the problem. Sunbsequent revelations show that this did not happen.
In October 2007 the UK insurer BUPA bought these nursing homes from from DCA. The department of aging has refused to respond to urgent inquiries asking whether BUPA would have to seek approved provider status. This matter is being pursued.
Private Equity's dominance in aged care has become an issue. A senate inquiry report in August 2007 discounted fears of adverse consequences expressed in two submissions but within weeks a study revealed the adverse impact of private equity on nursing homes in the USA.
Australian pages:- The main Australian web page has been completely rewritten. It now broadly describes the background to and the manner in which the corporatisation of health care in Australia has developed. It links to a tree like collection of pages exploring the issues in greater and greater depth.
CLICK HERE to go to the site map for Australia to get an overview of the material available.
Economic theory and marketplace solutions have been applied in a variety of different ways around the world. Ideology is all pervasive but the manner in which market principles are applied differs. This is often influenced by the sort of system which existed before market ideology reached its ascendancy. I cannot deal with every system around the world but will try to write more about some representative systems if I find the time. At the present time this section has languished.
US corporations, particularly managed care groups have sought to sell their solutions around the world. Many have international divisions. Frustrated by local resistance and local legislation which they consider to be based on obsolete understandings they have sought to use international trade agreements and the World Trade Organisation as a means of gaining entry to countries which are not receptive. They also wish to force the removal of local regulations.
The World Bank supports health care in developing country around the globe. This provides a venue for setting in place marketplace health care systems and making corporate solutions legitimate. The world bank is therefore being targeted by those eager to impose "marketplace reform" on the rest of us.
Graeme Samuel, the chairman of Australia's National Competition Council (NCC), gave a remarkable lecture to the World Bank in February 2000. In this he urged developing nations to rapidly adopt an elaborate and complex market model for public health care. It provides a unique insight into market economists' thinking and the patterns of thought that lay behind the current Australian government's health care policies.
CLICK HERE to go to the site map for the international section
PRACTICES ::: The Way the Health Care Market
Over the years and particularly after the speech by Graeme Samuel I wrote a number of web pages which covered broad issues, principles, relationships as well as social and ethical matters across the whole marketplace. A number of these were my reactions to what I was seeing and were not deeply researched - nor have I gone back to revise and do needed editing although I still plan to do so. There is some repetition. In spite of this the pages do raise important questions and should stimulate thought about them. I have brought them together in this section and grouped them under themes.
An introductory page, "Coming to Grips with Health Care" describes the themes running through these pages and some considerations relevant to criticising corporate health care. The main page contains links and a few lines outlining the content of a number of pages analysing the corporate health care marketplace.
CLICK HERE to go to the Corporate Practices Map
Lessons for the
This is really the final page of the web site and does not fit well into any section. It returns to some theoretical concepts illustrated repeatedly on the web pages and uses them to develop some ideas for progressing the health care debate in ways which will meet the problems which confront us. For those who don't like my theories there is a KISS (Keep it simple stupid) section at the end!
The page does not propose another "model" for health care. There are too many of these. Nor does it argue for public or private systems. The analysis of corporate medicine is used to develop some ideas which might help to progress the health care debate in a more sensible manner. New directions are suggested. It is suggested that health care should progress by wide ranging debate involving the community. The community (rather than corporations) should be involved more directly in the control and provision of health and aged care.
The critical lesson from these pages is that we should develop starting points which are congruent with what we as a community consider health and aged care care to be. Experience with marketplace starting points suggests that it should be an individualised empathic Samaritan service which we as a community provide to those of us who have the misfortune to be ill or incapacitated. When it is packaged as a commodity to be competitively and impersonally traded for the benefit of shareholders then the paradigm conflicts which result lead to social pathology and the misuse of vulnerable people. This degrades the humane social fabric of our society and the social ambience within which we live.
When the site is upgraded new material is added, older areas are updated and gaps are filled with new pages. Anyone revisiting the site will not find this material easily. Links to major updates will be found on the update page.