I used to think that these big corporations offered financial opportunities for health care, but about 20 years ago, soon after I started studying how they worked, I realised that this was an illusion. If they did so, they could not compete against those who were more profit-focused and would not survive.

While companies brought money in, they ultimately took much more money out. If they did not, they were not viable. They saved money in costly areas where it was needed - areas which did not justify the investment because they did not generate a profit. Treatment that was profitable but not needed, was sometimes supported instead. Profit dominated.

Outline of this page: This page looks at the way big companies think about health and by implication aged care, although they have learned not to say it as publicly any more! It also looks at their claim to efficiency.  It looks at the reasons why politicians welcome large corporations.  Finally, I look at earlier thoughts about health and aged care systems and why I changed.

Corporate thinking

Richard Rainwater, co-founder of Columbia/HCA: "Health care is a business like anything else." and "The day has come when somebody has to do in the hospital business what Macdonald's has done in the fast-food business and what Wal-Mart has done in the retailing business,"

Richard Scott, cofounder, chairman, CEO and President of Columbia/HCA: "Do we have an obligation to provide health care for everybody? Where do we draw the line? Is any fast food restaurant obliged to feed everyone who shows up?"

Source: Carl Ginsburg The patient as a profit centre: Hospital Inc. Comes to Town, The Nation, 18 Nov 1996

The thought patterns and rationalisations used, are well illustrated by a statement from the USA's biggest hospital company, then called Columbia/HCA. It paid a US$1.7 billion fraud fine a few years later. As revealed by Rainwater, the justification offered by the market was that because it worked for selling burgers, and for the giant stores selling commodities, it would work for health care. They claimed there was no reason why health care should be any different.

Richard Scott, founder of Columbia became chairman when it merged with HCA (Health Care of America).  In the second quote he was referring to the Samaritan traditions of the US health system to which his company did not intend to conform - and they often did not. In the USA there is no public health system and every hospital is expected to do its share by providing emergency care to those who can't pay, even though this means paying for it from the payments others make.


In the USA, the new corporate market introduced in the 1960s to 1980s distorted the system, increasing overall costs and radically altering it. They put money in, in order to get more money out, claiming that this was cheaper because they were providing the same care more efficiently. This was loudly asserted again and again.

What resulted is the most expensive system in the world, but one providing one of the poorest overall health outcomes in the developed world. By any standards this must be the worlds most inefficient system. Paradigm paralysis has prevented any significant change. World Health figures a few years ago showed they were out-performed by Cuba, a much poorer country.

'Efficiency' is in the directives to most Productivity Commission Inquiries in Australia, and they focus most of their thoughts on it. If we had the information to measure the product, the care provided, then, like the USA, this might also prove to be just another illusion. In spite of 19 years of asking, no one has tried to collect this information - but then, no one who is part of this system wants to look.


The attraction of the market for politicians, was that the money did not come from taxes, the big corporations produced the money for them using banks, private equity and investors in the stock market - but ultimately citizens still paid, and with interest.  The alternative of raising taxes to provide and support projects for the common good is anathema to neoliberal ideology and always causes electoral pain. 

The liberals believe in smaller government and few, if any taxes.  There is no common sense middle ground.  They push the electorate as far in this direction as they can go.  As the public response to the 2014 budget shows, they sometimes overplay their hand and have to back away then return to try again later as they are doing in 2016.

In 1997 international consultants advising companies interested in global expansion urged them to "play on politicians' pain". International corporations came lobbying politicians in countries like Australia. They promised to take away their pain by investing their money. I would argue that what they did in aged care was to transfer the pain to the vulnerable members of the public - with interest.

A colleague in the USA, Professor Arnold Relman, told US citizens all about this in the 1980s but no one was listening. He argued long and hard for a not-for-profit dominated system. A 1992 article What Market Values Are Doing to Medicine is representative.

Early thoughts and why I changed

Like Relman, I felt that in providing care in vulnerable sectors like health and aged care, those who provided care should be restricted to, or the sector dominated, by government, not-for-profit entities, and groups of motivated people interested in earning their living by creating companies that provided services to the community (called 'private for-profit' as contrasted with share market listed for-profit and private equity). As early as 1994, a consumer group in the USA showed that not-for-profit groups provided better aged care than the share market listed groups.

Interestingly, one half of the private for-profit group, were among those who provided the best care, while another set from this group were among the worst. This was an early illustration of the importance of mission for the provision of care - an early example of the difference in the care provided between those who devoted their lives and came to the system to care, and those who came to make money.

I wrote about some ideas for a system like this on a web page called Lessons for the Future in 2000 - but times have changed and those ideas are no longer applicable. At that time I was interested in how ethical barriers could be built and respected by the for-profit market on one side and the less-for-profit health sector on the other, so that they could work constructively together for mutual benefit, while serving the vulnerable.

But much of what I said then underpins the proposal I am making here.  A few quotes below.

Using Informal Structures:- It is inappropriate to use formal structures and processes, imposing laws and regulations as the starting point for change. This is how our governments have operated. It alienates and is seldom successful. It creates an uncivil society.

The debate can be lead by representative groups but must extend into and involve all of those providing health care and those receiving it. By doing so we develop the informal structures, which become the repositories for concordant paradigms, - the norms and values with which people identify. In a civil society formal structures when they are developed represent and give objective form to informally developed paradigms, norms and values. They consequently rest lightly and are seldom used. The system is inherently more stable and less likely to fracture and need recurrent patching.

We must take great care that politicians do not frustrate the process by setting the agenda and so obtaining the outcomes they want. Another debate like that on a republic would be a great disservice to Australia. Politicians must learn to relinquish power if they want to retain it.

I was reluctant to press my personal solutions believing that the public needed to confront the issues then generate ideas.  I have given up any hope of that happening and am trying to stimulate them by making some preliminary proposals.

Personal views:- If I tried to promote my own ideas here it would divert attention from the failures of the market, and the processes for progressing the health care debate. I would undermine the points I am making. I would direct attention to the solution I proposed and criticisms of it and this would be counterproductive. What I am looking for is something which comes from the people directly involved. I would I see this as the recipe for success.

In writing critically about our democracy

Democracy is particularly prone to influence by powerful groups and is seriously threatened by the dominance, wealth and power of corporate groups - particularly multinational megacorps. There is much to suggest that in some countries they already use their market positions and wealth to control government and buy the policies they want. There are good reasons why the community may wish to address many issues themselves using a modernised technology based version of Athenian democracy.

It's too late now

It's much too late to go back to that now. Somehow, we have to find a way to reduce the harm and develop a system that helps rather than harms our citizens. I doubt that it will ever work as well as the sort of system that Relman and I both had in mind. We are facing a massive aged care bulge, and we have to do something to make this market work - and do it soon.

Please note: The first four sections of Aged Care Analysis are published and the remaining sections will be made available as soon as possible.

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