Private equity, private profit, Medicare and your health: They are incompatible

When recently scheduling a procedure with a physician, he just shook his head and told me how lucky I was to have retired, and how difficult the practice of medicine is now. Before the outpatient procedure, he had wanted me to get a consultation from a physician in another specialty, but it turned out that that group no longer saw outpatients but only did hospital consultations because they no longer had the capacity. From his perspective, the problem is lack of people, especially doctors and nurses.

 But there are other big reasons, which I have discussed in previous blog posts. There are different aspects to them, but they essentially boil down to the transformation of American healthcare into another profit-driven industry. My doctor, and the doctors he wanted to consult, and the nurses and other staff with whom they work, are all interested in providing high-quality and effective care to people. The corporations for which they work (or are forced to work with, such as hospitals) are interested in making money.

This transformation, like most, is incomplete, but it seems to have passed an inflection point from which, if something major is not done, there is no turning back. The changes have been in process for a long time, documented in books such as the Health Policy Advisory Center (HealthPAC)’s 1971 “The American Health Empire” (Barbara Ehrenreich and others), and Paul Starr’s “The Social Transformation of American Medicine” published in 1982. They document the change from a cottage industry of independent doctors to one dominated by large institutional players. In the 1980s, Physicians for a National Health Program (PHNP) was created with the goal of, if not reversing this trend, at least harnessing the system to serve all of our people through the creation of a centrally-financed single-payer health insurance system. While every other wealthy (and many non-wealthy) countries in the world have such coverage, the US is the outlier. PNHP has advocated for decades for a coverage system more like that of Canada, where provincially-run financing plans cover everyone under a set of rules set by the federal government.

At that time, and today, a huge part of the problem was, and is health insurance companies. They are the obvious predators, drawing profit from ‘managing’, which often means restricting, your access to health care. Insurance in general makes money when it takes in more than it pays out, and as customers we “win” when we lose. That is, we collect when we have a car accident, or our house catches fire, or we die. We bet against ourselves, and hope we will not need the insurance. But health care is different, because we want to receive it. To be paid by insurance may have made sense in the early days, when it covered the hopefully-unneeded hospitalization or surgery (“major medical”, it was called) and we paid doctors out of our pockets or in chickens. But it makes no sense for routine and necessary health care.

The other big abuser back then was pharmaceutical companies, which made even more than insurance companies, marking up prices to whatever the market would bear, no matter how many people were left out and could not afford them. Sadly, the news is not that the character, behavior or profit taking by insurance or pharmaceutical companies has improved; now they are both even worse! What is sad, and terrible, is that the actual health care providers have become more predatory, and more often owned and controlled by companies whose primary business is making money, and only incidentally providing health care. I have written about this sort of abuse by hospitals and corporate-controlled physician groups, and it has just scratched the surface.

Recently, the Kaiser Family Foundation Health News reported on ‘Sick Profit: Investigating Private Equity’s Stealthy Takeover of Health Care Across Cities and Specialties’, exposing once again the way in which for-profit companies, and increasingly private equity, have bought up healthcare practices and limited access or worse in the name of making money. The article leads with the story of a 2-year old child in Yuma, AZ who died of complications of anesthesia while receiving extensive dental work that, his parents say in a lawsuit, was unnecessary (it almost certain was). They charge that the dentists were pressured by the private equity firm that owns the practice to do the maximum number of procedures on children with Medicaid to maximize revenue and profit. But that is just the lede; the article documents the increasing frequency of practices owned by for-profit companies abusing and sometimes killing people, either by over or under treatment. Which one depends on which will make the most money, not on whether folks need medical care or not.

Killing children in pursuit of profit is something most of us would frown upon, but while all practices owned by private equity or other profit-making entities may not behave so badly, it would be a mistake to call those that do “bad actors” and excuse the others. It is the entire concept that YOUR health should be a source of profit, and be attractive to the venture capitalists investing in these practices because they can make so much money. The money, whether paid by you directly, or indirectly through your insurance premiums, or by the government through your taxes, should be going toward your healthcare, not their private jets.

This practice complements the impending takeover of Medicare by for-profit Medicare “Advantage"”plans, and private-equity controlled ACO/REACH plans, just recently reported on in the New York Times, “Corporate Giants Buy Up Primary Care Practices at Rapid Pace”. The article begins by noting the shortage of primary care doctors, and that it is getting worse (also something I have written about often) because they get little respect and less money (than other specialists). It would be nice to think that this evidence of the impact of family doctors and other primary care clinicians on patients was a sign of respect, but it is just a sign of greed, especially through the programs that privatize your Medicare. This represents a huge potential profit center for these companies. “That’s the big pot of money everyone is aiming at.” Yup. It’s $400 billion!

This is why most of us who are paying attention agree that we now need to go much farther than simply national universal health insurance. While that is important and good, it could end up being another vehicle for profit-taking; remember the Yuma dentists were ripping off Medicaid, a government funded program. Thus, only a truly non-profit (unlike the ostensibly “not-for-profit” hospital sector than emulates for-profit competitors to maximize revenue) is acceptable. Steffi Woolhandler and David Himmelstein, founders of PNHP, call for such a national health service in a recent interview in Jacobin, and it makes sense.

The justification cited by these companies for their rapacity is that they increase efficiency. This is of course, BS. Efficiency in generation of more money for them, perhaps, by cutting back the number of doctors, nurses, and other staff, overworking those who remain, and making them all, along with their patients, miserable. That is not efficiency in production of healthcare, and is certainly not efficacy.

Doctors and nurses are being “sped up” as if they were on an assembly line, and are burning out and leaving in droves. The people who are the “products” are getting 7 minute visits, don’t have time to even talk about their problems not to mention get adequately treated. It is bad for everyone but those few earning the profit.

The Times article says “The companies say these new arrangements will bring better, more coordinated care for patients, but some experts warn the consolidation will lead to higher prices and systems driven by the quest for profits, not patients’ welfare.” Yup. That’s what they say. Not to put too fine a point on it, it is a self-serving lie.

We need one system, well-funded, to handle all of our needs, generously paid for without a cent going to private profit.

Drug corporations from manufacturers to retailers are rotten down the line

Drugs, drugs, drugs. We hear a lot about drugs. Especially about the Opioid Crisis, which is a very serious problem in the US. But the other drug problem we hear about is also very serious: the cost of drugs and the inability of people to access the drugs that they need, not to mention to save their lives, because of the cost.

One such drug is insulin, needed by people with Type 1 diabetes to survive. Stories of people dying from, or almost dying from, lack of access to insulin, or having to go to Canada or Mexico to buy it, are both sad and galling.  It is particularly so in the case of insulin because its discoverers wanted it to be free. In 1923, Frederick Banting and his colleagues Charles Best and James Collip sold the patent to the University of Toronto for $1 each, worried that if they did not patent it drug companies would patent an inferior version of insulin (imagine that!) and people would die. The University of Toronto gave the patent royalty-free to drug companies, specifically Eli Lilly.

Unsurprisingly, that marked the end of being motivated by the public interest. As early as 1941, Lilly and two other companies were indicted for price fixing of insulin, and it has gone on from there. In 1982, Lilly was able to synthesize human insulin (previously insulin was made from beef or pork pancreas, which had a lot of reactions, although pork was closer to human and thus preferred). Of course, the price took off. With the complicity of the government, worse in administrations that believed corporate profit (especially for big donors) was more important than human lives, the price continued to rise. This has led us to story after story about people with diabetes, like Josh Wilkerson, dying because they could not afford $1,200 co-pays. Banting and Best are turning in their graves.

Yes, pharmaceutical manufacturers are greedy and evil, whether they make insulin or Epi-Pen or colchicine, or other drugs (like pyrimethamine – see Martin Shrkeli) and deserve every bit of anger, hatred, and scorn that has been visited on them. They are continually the #1 (or, sometimes, #1!) profitable industry in the US, making lots of money because, well, people need their products to live. But they are not the only part of the drug industry that is responsible for bleeding us for profit. They are complicit with insurance companies, who agree to pay the outrageous prices that they demand (because, after all, they just raise their premiums), and with our bought-and-paid-for Congress. For example, when Congress passed the Medicare Part D Drug Act in 2003 it contained a prohibition against Medicare, the nation’s largest insurer, negotiating drug prices, thus ensuring that American pay far more for drugs than people in other countries (there is a reason uninsured folks go to Canada or Mexico)! As I noted recently, the idea is often put forward that without drug company profit, innovation in pharmaceutical discovery would grind to a halt, but in fact nearly 2/3 of discoveries are made outside the US and most of those in the US are discovered through research funded by the National Institutes of Health.

But beyond the usual villains, pharmaceutical and insurance companies, we have the wholesalers, retailers, and “bundlers” of drugs also making out like bandits (they are bandits, even if, thanks to that bought-and-paid-for Congress, their schemes are often legal) from our health needs. The “bundlers”, called Pharmacy Benefit Managers (PBMs) are contracted by large insurers to negotiate for the “best prices” with pharmacy retailers. For a positive spin on what they do, see this piece from “The Balance”. However, they are also responsible for a lot of the high cost of drugs, especially for those with worse, or no, insurance. In addition, they have a lot of practices that enhance their profit at your expense, many explained in this piece from the Commonwealth Fund, such as jacking up the price charged to insurers and pocketing the difference (“spread pricing”) and pocketing rebates from manufacturers. The entire role of PBMs is complex and bewildering, but they play a critical role in the important process of profiting off of your illness.

More recently, we have seen exposure of the nefarious practices of the final link in the chain of getting you your needed medicines, the retail pharmacies themselves. Of course, the old mom-and-pop drugstore on the corner is almost a thing of the past, having been replaced by mega-chain pharmacies such as CVS, Walgreens, Rite Aid and Duane Reed. (Of course, in many big cities they are still on every corner, not just competing with each other but with themselves; in places like New York City they are more ubiquitous than Starbucks!) These chains drove out the small drugstores by underpricing them, but having been successful in that, they have adopted practices that are frequently unethical, sometimes illegal, and always guaranteed to make them more profit. Indeed, two of the largest PBMs are now owned by these chains (Caremark by CVS and Envision by Walgreens), enhancing the vertical integration of the industry.

A New York Times exposé of January 31, 2020 by Ellen Gabler tells how retail pharmacies overwork their employees, sometimes with resultant errors such as patients getting the wrong medicines and often having adverse effects. It was titled “How Chaos at Chain Pharmacies is Putting Patients at Risk”, but this headline, while accurate, does not explain the real reason for the chaos, which is that these pharmacies are using an old and dishonorable technique made famous by Henry Ford in the early days of assembly lines called “speed up”. Speed-up, increasing the expectations for “production” (in this case, number of prescriptions filled per hour) has been a target of union contracts since the 1930s, but as the influence of unions has waned (with the collaboration of pro-corporate legislatures) these practices have increased. Pharmacists may be “professionals” (like nurses and doctors) but whatever your education and training, if you work for a large corporation who sets the rules and standard and has control, you are a worker, and need the protections that all workers should have. The most conscientious of these professionals have protested, often to the state boards that regulate them, as cited in the Gabler article:

In letters to state regulatory boards and in interviews with The New York Times, many pharmacists at companies like CVS, Rite Aid and Walgreens described understaffed and chaotic workplaces where they said it had become difficult to perform their jobs safely, putting the public at risk of medication errors.

They struggle to fill prescriptions, give flu shots, tend the drive-through, answer phones, work the register, counsel patients and call doctors and insurance companies, they said — all the while racing to meet corporate performance metrics that they characterized as unreasonable and unsafe in an industry squeezed to do more with less.

“I am a danger to the public working for CVS,” one pharmacist wrote in an anonymous letter to the Texas State Board of Pharmacy in April.

“The amount of busywork we must do while verifying prescriptions is absolutely dangerous,” another wrote to the Pennsylvania board in February. “Mistakes are going to be made and the patients are going to be the ones suffering.

So is the problem being addressed? You can be sure that it is, by the corporations that run these pharmacies. How? The complaints of the pharmacists are being taken care of in the way that big corporations often do, that is, ignoring them and deleting mention of them from their reports. In a follow up on February 21, 2020, “At Walgreens, complaints of medication errors go missing”, Ms. Gabler writes:

Pharmacy employees at Walgreens told consultants late last year that high levels of stress and “unreasonable” expectations had led them to make mistakes while filling prescriptions and to ignore some safety procedures.

But when the consultants presented their findings at Walgreens’s corporate offices this month, there was no reference to the errors and little mention of other concerns the employees had raised.

That’s because senior leaders at Walgreens had directed the consultants to remove some damaging findings after seeing a draft of their presentation, a review of internal emails, chat logs and two versions of the report shows.

In one instance, Amy Bixler, the director of pharmacy and retail operations at Walgreens, told them to delete a bullet point last month that mentioned how employees “sometimes skirted or completely ignored” proper procedures to meet corporate metrics, according to the chat logs and the draft report.

Good for you, Ms. Bixler! Took care of that problem! You should get a nice bonus this year!

If these practice are of concern to you, they should be. So should the price gouging up and down the line in the pharmaceutical industry, the drive to profit for manufacturers, PBMs, insurance companies, and retail pharmacies to make lots of money off you, or you die. “Your money or your life!” is an old cliché attributed to highwaymen. It should be the mantra of the pharmaceutical industry in this age of unfettered capitalism.

But no highwayman ever had the reach or power or ownership of politicians that these folks do.