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For Patients or For Profits? The Price of the Commercialization of the Healthcare Industry

 

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Introduction

In 2023, the United States spent a staggering $4.9 trillion on healthcare, which accounts for 17.6% of the nation’s GDP.1This extreme amount of expenditure – which is only projected to increase in future years – is primarily caused by the recent commercialization of the healthcare industry. The commercialization of healthcare refers to the process by which medical institutions and services adopt market and business-oriented practices that prioritize profit alongside or even above patient well-being. While healthcare was once an industry rooted in morality and altruism, it has recently begun being exploited by the private sector as a means to make profit, primarily through the privatization of hospitals and the skyrocketing costs of prescription drugs. These actions not only spark an ethical debate about the purpose of healthcare, but are also having immediate, harmful effects on patients by exacerbating health disparities and reducing both access to and quality of preventative healthcare for all but the wealthiest of patients.

Section I: The Privatization of Hospitals

The privatization of hospitals can be defined as a transfer of ownership and/or management of hospital services from the public sector (run by the government) to the private sector (run by for-profit companies). This change poses a critical problem to the goals and priorities of healthcare. In the words of John McDonough, a Public Health Professor at Harvard T.H. Chan School of Public Health, “if the bottom-line obligation of for-profit companies is highest return to its shareholders, and the essential obligation of medicine is patient-centered care, you have two masters. This conflict has never been reconciled – because it’s irreconcilable”.2 Hospitals that become for-profit suddenly have a duty to maximize their profits as much as possible, which they do through increasing the average revenue per patient that they admit. One of the ways that for-profit hospitals have done this is by largely decreasing the number of Medicaid patients that they admit for care, as these patients provide the least profits for the hospital.3 Through this action, hospitals severely restrict healthcare access for low-income and marginalized demographics, exacerbating the already existing health disparities in our society and limiting preventive healthcare accessibility to the wealthy.

Furthermore, the privatization of hospitals forcefully alters the doctor-patient relationship and the services provided at hospitals. For-profit hospitals are shortening the time patients can see their physicians, forcing physicians to see more patients for shorter visits, pressuring physicians into recommending unnecessary but highly priced treatments, and eliminating hospital services that are not efficient for profits, even if they are necessary for patient health.4 Marilyn Cade, a retired nurse living in Burnsville, North Carolina, has had first-hand experience with how the privatization of hospitals can negatively impact patient health. In her interview with the Southern Oral History Program, she described how her local hospital used to have excellent service, with a fully functioning OR and OB department that was full of kind and dedicated physicians. However, once the hospital became for-profit, the OB department and surgery were eliminated from the hospital. Cade had an emergency delivery of unknown twins at the hospital a week before the OB department was terminated, and she relayed her fear of what would have happened if her pregnancy had occurred after the OB department was eliminated.5 Cade’s fear is the reality for many patients seeking preventative care across the country, as more and more hospitals are shutting down basic services individuals need to stay healthy and are instead providing specialized, expensive surgeries that will maximize profits for shareholders.

Section II: Skyrocketing Drug Prices

The pharmaceutical industry plays a critical role in healthcare by developing, manufacturing, and distributing drugs and medications to patients. However, this sector has also become highly commercialized, with many pharmaceutical companies focusing on maximizing their profits by hiking up the costs of their drugs rather than prioritizing affordability for patients. This becomes an even bigger issue when you consider that certain drugs are only manufactured by one company due to patents, leaving patients with no choice but to pay the increased costs or forgo medication that they need to stay healthy. Over the past decade, the average annual cost of specialty drugs has tripled from $18,000 to $52,000.6 The rise in drug prices has also had the ripple effect of increasing premiums and deductibles for insurance, making both medication and insurance unaffordable for many patients seeking preventative care.

One of the most infamous cases of a pharmaceutical company prioritizing profit maximization over patient access in recent history is that of Turing Pharmaceutical and its CEO, Martin Shkreli. Turing Pharmaceutical produced a drug named Daraprim, which treated the parasite infection toxoplasmosis, amongst a few other diseases. Up until 2020, Daraprim was the only FDA approved drug that could treat toxoplasmosis. In September of 2015, Martin Shkreli raised the price of Daraprim from $13.50 to $750 overnight – a 5,000% price increase.7 When asked for his reasoning, Shkreli responded that he had a fiduciary duty to his shareholders to maximize the profits of Turing Pharmaceutical.8 This mindset perfectly proves how the commercialization of healthcare has resulted in industry professional’s goals shifting from helping patients to helping profits. Shkreli spent several years in prison for securities fraud, but his price hike of Daraprim made the drug unaffordable for hundreds of people who relied on the drug to treat their toxoplasmosis.

From a physician’s perspective, this new trend of increased drug prices is particularly concerning. Jane Hammond, who is a physician at CommWell Health, believes the only way to fix healthcare is to collapse the entire system we currently have and to create a new system of universal healthcare in the US. In her interview with the Southern Oral History Program, she stated that “it is deeply distressing to be practicing medicine in this country where, no matter where I am, whether it’s here where people are very poor but getting sliding-scale medicine and treatment, or I am in an affluent suburban community somewhere outside the city of Asheville or outside of anywhere, I rarely have an appointment with a patient where cost does not become part of the discussion. And it’s not only disheartening, it’s stressful”.9 Hammonds remarks show that the affordability of preventative healthcare is now a ubiquitous issue across the US, and one that will only worsen if no changes are made to the healthcare industry.

Conclusion

Whether it’s preventative or emergency care, patients should always have the ability to get the help they need to lead healthy, happy lives. To achieve this goal, the healthcare system must prioritize people over profits. While the commercialization of healthcare has brought about some benefits, such as increased innovation in the medical field, patients cannot be allowed to become collateral damage in the pursuit of profits for businesses. We must come together as a society to reform the healthcare industry – and create a system where patient well-being is the ultimate bottom line.

 

 

References

  1. Spurgeon, D. (2008a, February 16). Commercialisation of health care in US distorts resource allocation, expert says. BMJ : British Medical Journal. https://pmc.ncbi.nlm.nih.gov/articles/PMC2244780/
  2. Writer, S. (2024, November 22).How for-profit medicine is harming health care. Harvard T.H. Chan School of Public Health. https://hsph.harvard.edu/news/how-for-profit-medicine-is-harming-health-care/
  3. Wilson, J. F. (2023, May 16).Hospital Privatization Increases Profits, at What Cost?. Penn LDI. https://ldi.upenn.edu/our-work/research-updates/hospital-privatization-increases-profits-at-what-cost/
  4. Spurgeon (n 1).
  5. Cade, Marilyn. Interview with Carolina Efird. 19 June 2019 (Y-0083). Southern Oral History Program Collection (#4007), Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.
  6. Komendant, E. (n.d.).Skyrocketing drug prices: What’s driving up costs? Association for Accessible Medicines. https://accessiblemeds.org/resources/blog/skyrocketing-drug-prices-whats-driving-costs/
  7. Daraprim Price hike. Ethics Unwrapped. (2023, February 16). https://ethicsunwrapped.utexas.edu/video/daraprim-price-hike#
  8. Whitrap, D. (2021, January 27).Morningstar’s report on socially conscious investment strategies. ICER. https://icer.org/news-insights/press-releases/morningstars-report-on-socially-conscious-investment-strategies/
  9. Hammond, Jane. Interview with Maddy Kameny. 27 June 2018 (Y-0028). Southern Oral History Program Collection (#4007), Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.
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