“The Broken Promises of Profit-Driven Medicine”

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N Tomes. NEJM 2025; 393: 521-524. A Gilded Age for Patients? The Broken Promises of Profit-Driven Medicine

This article (one of several in a series) describes the development of the current corporate-centered health care system over the past 100 years and the drawbacks.

An excerpt:

Between the 1920s and the 1960s, the American medical profession adopted a new doctor-controlled business model of care delivery, dependent on continual investment in new drugs, technologies, and procedures. That model created the profit opportunities that enticed corporate stakeholders to invest in health care in the 1970s and 1980s. But as the corporate presence increased, physicians lost control of their business model; the “tail” of financialization began wagging the “dog” of medical practice. That shift coincided with corporate cooptation of the language of consumerism to justify these changes as in patients’ best interests. In the process, physicians and patients lost economic autonomy over health care choices…

Insurance plans let doctors and hospitals set prices, facilitating more investment in the capital-intensive technologies equated with higher-quality care. But that dynamic also created an upward spiral of costs…These problems led to a second transformative movement: the federal government’s entry into the health insurance business, with the creation of Medicare and Medicaid, which also let doctors and hospitals set prices. This… aimed to relieve Americans of the duty of financing the medical system themselves, bringing in third parties to help. Enrollees in the new plans got more coverage but only on the terms set by those parties; uninsured people had to manage on their own. Meanwhile, the cycle of rising costs continued unabated…

Medical entrepreneurs believed that applying market discipline to health care would produce the right combination of innovation, efficiency, and cost–benefit balance to ensure better care for patients while profiting investors…

While adopting some consumer-industry practices, corporate health care players strove to avoid others, such as direct price competition. Policy efforts to rein in costs stressed the need for price transparency: consumer–patients needed to “shop” more critically for the cheapest care. In this spirit, political conservatives promoted “consumer-driven” health care. But such schemes foundered on the reality that many insurance plans gave patients little flexibility to price-shop for care…

Many powerful health care industry stakeholders still believe allowing corporate interests freer rein will produce that “golden age for patients.” The health care economy’s fragility suggests otherwise…When they [hospitals] pivoted from profitable surgeries to unprofitable Covid care, they needed massive infusions of government funding to survive.  Similarly, recent shortages of essential but low-profit drugs, including chemotherapy agents and insulin, reveal the limits of the pharmaceutical industry’s profit-oriented approach to essential drug production…

No market solution has arisen for the most critical determinant of poor health and health care outcomes in the United States: extreme income inequality. Countless studies indicate that poverty is the most important health risk factor that Americans face…little profit can be made by preventing or treating poverty-induced illnesses.

U.S. health care needs a new business model…only more collective physician and patient action will help medicine find a more equitable, sustainable model…Many people will suffer if the system collapses completely, but perhaps a more sustainable health care system can be built from the rubble.

My take: This analysis of the U.S. healthcare system, like many others, is analogous to getting the license plate of the truck that ran you over. At this time, there is little prospect of stopping the truck.

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