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The flawed ideology of healthcare as business



The shortcomings of the American health sector, surely the biggest exercise in predatory profiteering in the world, have been exposed in the COVID-19 crisis. It is a graphic illustration of why health should not be turned into a business. America had to radically reconfigure the way it provided health care just to provide a basic level of protection against the virus. Initially just getting tested for the virus cost about $US2000, for example. One person, who reported for testing, had his temperature and pulse taken and then was sent home. The bill? $US1000.

Hospital bed (Photo by Daan Stevens on Unsplash)

The US health sector accounts for approximately 16 per cent of the nation’s GDP. In Australia and Britain, the health sector is about half that: eight per cent of GDP (Canada’s is a bit higher).

If we take that eight per cent as a base line for providing a universal basic health care system — bearing in mind that America’s health care system is far from universal — then that leaves $US1.6 trillion as just the profiteering element, undertaken by insurance companies, pharmaceutical companies, hospital conglomerates, lawyers, ‘consultants’ and a range of other predators.

That $US1.6 trillion is bigger than the entire Australian company and is approaching two per cent of the world economy. There really is no bigger scam in the world; it even dwarfs America’s military outlays.

Calling healthcare a business was always logically flawed. Money is involved, but it is unlike any consumer product businesses. For one thing, the ‘customer’ in health does not decide what represents value, the provider (the doctor or equivalent) does. Patients may have a say, but usually only on the margin. Health enterprises do not attempt to ‘serve the customer’, they dictate to them, hopefully in the patient’s interests.

Health is also very different when it comes to pricing. One might decide, for example, not to buy a car because you cannot afford it. But who says: ‘I cannot afford my life-or-death treatment because I do not have the money at this time, so I will wait until I am dead and then we will see?'


'Predatory health practices, whereby "doing the most good" has been replaced with "making the most money", are not just confined to America. The effects are everywhere, especially with treatments and vaccines, whose development and marketing is global.'


Health provision is consequently not subject to the usual interplay between supply and demand mediated by the pricing mechanism. In a public system it is about how much money can be allocated to provide treatments. In a private system it is about how much you can charge and get away with it. As America’s profiteering shows, the latter option becomes brutally expensive and inequitable. To give an anecdotal insight into what kind of thinking it engenders, some hospitals even charge mothers for holding their new-born child. The approach to hospital beds is ruthless, a glimpse of which was seen when the governor of New York, Anthony Cuomo sent 4300 recovering coronavirus patients back to nursing homes, with predictable results.

Predatory health practices, whereby ‘doing the most good’ has been replaced with ‘making the most money’, are not just confined to America. The effects are everywhere, especially with treatments and vaccines, whose development and marketing is global. As University of Sydney academic Toby Rogers points out, the pharmaceutical industry is subject to endemic regulatory capture: the sometimes subtle, sometimes aggressive, ways that government bureaucrats are co-opted.

Explicit corruption is bad enough, but as Rogers explains what is worse is the quieter way that the majority of regulators are drawn into seeing the world from the perspective of the companies they are scrutinising rather than the people they are supposed to serve. There is just too much money involved. Witness the endlessly vacillating Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases. He has registered a dozen patents in his own name, mainly related to vaccines.

The corruption is in many countries. Roberto Formigoni, the former governor of Lombardy — where the effect of the virus was severe — is serving six years in prison for stealing millions from the health sector. Privatisation has badly affected hospital purchasing in the region, a big reason for the unusual stresses.

Another, more subterranean toxic effect of seeing health as a business has been evident during the crisis. Sunetra Gupta, professor of Theoretical Epidemiology at the University of Oxford persuasively argues that the information upon which much ‘expert’ advice has been based has been so poor it has not been possible to draw safe conclusions.

But in business you have to make the sale. Sell yourself first, because your ‘product’, is supposedly superior knowledge. Admitting ignorance is bad business. Those wondering at Australia's rollout of restrictions, which was on the basis of modelling that turned out to be inaccurate — for example, the $60 billion Jobkeeper error was because the epidemiological models were wrong — might want to start with the business ideology.



David JamesDavid James is the managing editor of businessadvantagepng.com. He has a PhD in English literature and is author of the musical comedy The Bard Bites Back, which is about Shakespeare's ghost.

Main image: Hospital bed (Photo by Daan Stevens on Unsplash)

Topic tags: David James, COVID-19, economics, US, COVID-19



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Existing comments

David, I am glad I don't live in the "States" as to get sick there can bankrupt you and your loved ones. The UK's NHS is much better, although from my experience in England a decade ago, woefully underfunded. Thank heavens the Hawke /Keating Government ensured the concept of Medicare was established firmly in the public consciences as low income people affected by the current Pandemic would be in dire straights now if they had been admitted to Hospital. The private health providers have been very much 'missing in action' at present.

Gavin O'Brien | 28 May 2020  

Thanks for a very thought provoking article. The links, eg to Offguardian, which I had not come across before, are most interesting. While the American health system with its profit taking by insurance companies and big pharmaceutical companies has its many faults, where is the evidence that single payer big government as the decider of the individual’s fate will lead to more equitable, appropriate or fairer allocation of resources? The current position of the NHS with its universal, but not advertised, rationing of services is arguably not superior.

Sophie | 28 May 2020  

I have reason to suspect that there's a rort going on here. My husband required a hernia repair but before it was done (then postponed because of COVID) his surgeon ordered a colonoscopy. An xray and a scan had been done already but nothing untoward was indicated. Afterwards when the report from the colonoscopy came, it listed Abdominal Pain and Constipation as reasons for doing it. At no stage has my husband had either of these symptoms or told either doctor he did, so in my opinion, the surgeon was lying. It was an outright lie that he hoped no one would notice. I can't work out what financial benefit the doctor and surgeon gained from this but as these days they always ask if the patient belongs to a fund, there must be some. A year or so back the surgeon I saw suggested a colonoscopy for no obvious reason and I refused. He didn't pursue the matter which he should have if it was important enough to suggest in the first place. They are taking advantage of people who think there might be something wrong eg cancer with them if a colonoscopy is suggested.

Mary Round | 29 May 2020  

Gavin O'Brien. Why would low income people affected by the pandemic be in dire straits if they were admitted to hospital? The fact is that everyone, regardless of personal wealth or penury, is entitled to be admitted and treated in the public hospitals for no charge. During this pandemic one of the saving graces has been that unessential admissions and surgery were stopped in both public and private hospitals which provided a dearth of available facilities for both medical emergencies and Covid-19 sufferers. In fact in some quarters the government is being criticised for having made too many services available to the point of wards and ICU units becoming idle!

john frawley | 30 May 2020  

Mary Round. There are rorts and rorts. What you are objecting to is that the doctors [seemingly acquisitive businessmen] seem to have ordered unnecessary tests. This is widespread practice these days and is not a rort. It is called defensive medical practice which has resulted from the spate of litigation brought against doctors by lawyers advertising their "no win, no pay" services to those who think they may have a case. This has cost multimillions of dollars in expert opinion fees, legal fees, court costs and out of court settlements most of that money ending up in the coffers of the lawyers. When patients have a win the legal fees that come out of their "win" are obscene, leaving little for the plaintiff. The doctors are the ones who pay that money through their high insurance fees and are simply protecting themselves from litigation brought because they failed to do this test or that test amongst a plethora of other perceived failures created by uninformed patients and avaricious lawyers. In my experience over the last 15 years as an expert, specialist medical witness providing opinions for the courts in matters of litigation brought against doctors and hospitals, only one case has come to court for settlement. The rest were either settled for small amounts covering lawyers and medical expert costs mainly or else thrown out. Unfortunately, these unnecessary tests of which you rightly complain are paid for by the patient either through the compulsory Medicare levy on all tax payers or, for those who choose the private sector, by their private insurance premiums and partly out of their own pockets in varying amounts depending on the level of greed of the private hospital or private doctor treating them. Our society needs good lawyers who serve the cause of justice and there are many of them. We do not, however, need nor should we tolerate those who , like some doctors, are not true professionals but self-interested, greedy businessmen.

john frawley | 30 May 2020