DR WARWICK YONGE. Corporate medicine: Illness or cure?

Mar 27, 2018

Australia has a unique mix of private, public, for profit and NFP stakeholders in its health system. This structure derives significantly from Constitutional issues. Corporate medicine now occupies a significant part of the health landscape. Is this a cause for concern?

During three decades since the introduction of Medicare, increasing the complexity of medical treatments and diagnostic modalities, and rise of accreditation standards, profit-driven corporations delivering medical services have been born and flourished.

Perhaps the most notorious example (in the medical profession) is Primary Health Care Ltd. Established in the 1980s by the late Dr Edmund Bateman, it now boasts revenues in excess of $1.6B (majority MBS service fees) and is ranked 264 out of the top 2000 companies in Australia. Critics of Primary point to poor clinical governance, disgruntled doctors, unhappy patients and “6-minute medicine.” However, its spectacular growth would only be possible if at least some stakeholders were happy. After hours services and bulk billing go a long way to explaining this.

There are many other examples. But there are also examples of non-corporate medical structures delivering suboptimal care. In my experience in 4 states working in private, not for profit (government and NGO), in primary secondary and tertiary centres: no ownership structure monopolises either poor care or good care, nor efficiency or inefficiency.

What is corporate medicine? My preferred definition would be a structure that separates ownership and management from lead clinicians. This would include many non-listed medical centres owned by investors, pharmacists etc, but would be more difficult to quantify than simply public listing.

There is an upside for all stakeholders from ethical business efficiency but a downside to allowing non-clinicians to drive them. Ideally, a positive engagement between clinicians and non-clinicians leads to efficiencies within an optimal clinical framework. In my experience engaged clinicians lead to both better clinical outcomes and efficiencies.

The AMA provides limited business training for its members. Some specialist accounting firms go further. But how does public policy encourage this?

Pharmacies must include a pharmacist in their ownership/ governance structure. However, there is no requirement that a medical centre, radiology or pathology practice have a relevant doctor in its structure. Public policy is inconsistent here. Yes, there is a conflict of interest if a doctor owns a pharmacy, but there is also a conflict if the pharmacy owns the doctor’s surgery. Currently the former is prohibited but the latter is not. Perhaps including relevant doctors in the ownership/governance structure would link clinicians to management more efficiently?

Another example of inconsistent public policy is found in aspects of regulations around the prohibited practice amendments (2007) to the Health Insurance and Medicare Acts. Many of these regulations effectively apply only to independent general practices and GPs, not to GPs contracted to large companies that own the pathology or radiology services. A “corporate” like Primary will be able to retain the considerable commercial benefits of colocation of services simply because they also own the collocated service and therefore they are not subject to a commercial lease. This is not a level playing field, and current attempts to define the term “market” will make it considerably worse.

Some commentators suggest that commercial benefits of colocation should be banned altogether. But they are only commercially valuable because patients and other stakeholders find them convenient and efficient. If this wealth generation is used to make services viable, in an ethical way, by allowing lower fees (eg bulk billing) is this a bad thing? Doesn’t this help reduce cost barriers for patients to healthcare?

Public policy around medicine is a minefield. There are numerous powerful interest groups which often advocate a confusion of good public policy and naked self-interest. The debate around the issue of corporate medicine is scant outside medical circles and contested within medical circles.

Personally I don’t believe Corporate medicine itself is the problem. It is more a natural response to the current policy settings. But I say that with the comfort of never being in any danger of working for one, and acknowledging that debate must be had about the regulatory framework around corporate medicine.

Dr Warwick Yonge is a GP in Port Macquarie. He is a GP supervisor and examiner for the RACGP, a fellow of the RACGP and ACRRM, GAICD, Director of 2 GP Superclinics and a Director of GPSynergy. His views are personal and do not represent that of any organisation he is associated with.

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