Amitabh and Chandra contend this is because healthcare is unique in the U.S. market as demand does not waver in most cases with the quality or scope of the healthcare provided or available. Profitability can be achieved by taking financially efficient shortcuts, consolidating market share, or avoiding providing care options that are expensive. This can lead to an environment in which profits and value do not have to align.
This is why, the authors argue, cases like the fertility treatment industry and its patients benefit from corporatization as service improvements driven by demand improve options. Yet in contrast, for nursing home care, where profitability increases patient costs and reduces care and/or services, corporatization has a very different negative effect on care costs and options.
The biomedical research arms of pharmaceutical companies are also unique in benefiting patients through corporatization with new and innovative treatment options. However, corporate aims “may distort the direction of innovation” as corporations seek to address more-common diseases while allowing rarer ones to languish with lesser or no attention. Corporations may also harm care options by influencing which ones are available or affordable, including guarding intellectual property in ways that are potentially profitable but that stifle other innovations and research.
Understanding why corporatization has happened—and what its positive aspects may be—is powerful, particularly as private fundraising is not the only option for healthcare finance. Public options are potentially viable, including public and non-profit options. These options raise their own challenges such as political volatility, budgetary constraints, and motivational problems in innovation.
The authors tackle whether a balance between these options can unlock the potential value of each in healthcare. Chandra and Shepard state that if corporations can orient toward patient value, patient demand may drive better quality services. They further state that regulators can use anti-trust and other regulatory tools to cap pricing or prevent unintended market constriction. Such practices are likely to be “imperfect,” the authors write, but they can help address present issues.
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