For healthcare executives, corporate benefits managers, bedside practitioners, patients and consumers, recent changes that have transformed the structure of the healthcare industry have been startling.
Healthcare mergers have reached a record high, following similar developments in the media, telecommunications, entertainment and banking industries. The explosion in mergers and acquisitions has evolved substantially in response to loosening of restrictions on market-driven business practices.
Nowhere is this more true than in the healthcare industry. The increase in mergers of all kinds of healthcare organizations has been driven by calls for healthcare reform and cost containment.
But are mergers, morals and medical goals consistent? As ethicists, we raise serious questions. While different types of mergers present distinct challenges, the ethical questions that are present in all of them is whether consolidation is in the best interest of stakeholders and whether the proliferation of new corporate relationships are properly motivated.
Bioethicists are fond of asking about the moral meaning of new practices. In large part, the academic discipline of ethics is structured around defining or describing a given action, decision or policy, and then asking whether or not an endeavor of that type can be judged as good or right. Looking at the impact of mergers on the business of healthcare delivery begins, for a bioethicist, with a careful appraisal of both the varieties of actions that describe mergers and the outcomes of such consolidation.
But reflection on outcomes is not enough. Since Kant, ethicists have worried about the motivation for action and about whether we would want a given motivation to universally guide future actions and decisions. So, applied to the question of mergers, we would ask whether a merger of healthcare organizations is supportive of a system that represents the best vision of how we should care for the injured, ill and vulnerable, and whether it's largely a use of the sick as a commodity in a profit-driven enterprise.
In raising these questions, we're not claiming that moves toward economies of scale, efficiency or prudent use of resources are inherently evil. In fact, the development of mergers has been seen historically as a positive outgrowth of the development of capitalism. That's why mergers in the 19th century were seen initially as progressive. At a certain point, however, both workers and consumers created social movements that demanded restraints on the unfettered growth of monopoly capitalism. By setting limits on the organization of the workplace and the marketplace, such regulations were intended to serve the interests of all.
As deregulation leads to a new wave of consolidation, it's time once again to assess its legitimacy. Surely mergers and acquisitions still have their dramatic benefits to companies, consumers and society. In fact, there are some goals, motives and outcomes that are undoubtedly praiseworthy from an ethical perspective.
Consolidation can introduce much-needed capital into a healthcare organization, helping to reinvigorate and reposition a business in a difficult marketplace, ensure its survival and therefore maintain its ability to provide services to those in need. Consolidation also can offer the benefits of economies of scale, increased efficiency, increased bargaining power and, theoretically, decreased costs to consumers. Further, mergers can standardize and correct outmoded, overly localized or idiosyncratic medical practices, spreading the most advanced treatments to all regions of the country.
Nonetheless, ethicists consider in their evaluation of these benefits who are the recipients and who are the bearers of the attendant burdens and risks. Mergers and acquisitions may put companies, consumers and society at measurably increased risk in their pursuit of profit.
Leading the list of concerns about consolidation is that quality and safety will suffer, or at least be substantially compromised. Decisionmaking authority can be shifted away from the front line-the caregiver who has an obligation to be an advocate on behalf of her patient-to stockholders and corporate executives, whose primary focus may be on the bottom line.
Furthermore, as healthcare companies merge, patients are traded like so many grain futures, transformed from persons to whom special obligations are owed to commodities in a business deal.
A further concern is the extent to which these dramatic changes in the industry are happening without public knowledge, much less review and input. The public has only recently begun to notice the changing terrain of the healthcare marketplace, and its concerns have led to increasing demands for governmental oversight.
In a novel piece of proposed federal legislation called "The Patient Safety Act of 1996," introduced by Rep. Maurice D. Hinchey (D-N.Y.), a more robust review of mergers and acquisitions in the healthcare industry is recommended. Behind the legislation is a recognition that changes in the business and structure of healthcare have a direct impact on health as well as on the competitive marketplace. For that reason, in addition to the already existing review of mergers and acquisitions by the Federal Trade Commission and the Department of Justice, the bill would require review by HHS.
Specifically, all mergers and acquisitions by or among Medicare providers would be reviewed with respect to the impact they would have on the following: availability and accessibility of services, including services to particular patient populations; the safety and quality of healthcare services; the status of employment in the provider's work force and within the community; and the financial stability of the proposed merger.
Similar efforts have been made at the state level as unions have introduced initiatives that would build in further mechanisms for oversight and review before sweeping changes in the corporate structure of healthcare could be made.
Broadening the scope of review in these ways would signal an important turn in the approach to healthcare as an industry. It would lay the foundation for a robust public discourse on the ethics and business of providing healthcare.
Such an evaluation must be thoughtfully conducted and led. We are impressed with the wisdom that has led MODERN HEALTHCARE to devote serious and timely attention to the conversation about mergers and their implications. It's our hope that more forums such as these will be created for continued discussion and review of these critically important issues.