Corporate mergers, retail clinics, and monopoly capital

Two huge mergers have recently been announced in the health insurance sector. First, Aetna announced its intention to acquire Humana for $35 billion, creating a behemoth. Not to be outdone, Anthem (the enormous group of formerly non-profit Blue Cross/Blue Shields that have gone for-profit) announced it will buy Cigna for $47 billion. Consolidation in the industry is moving fast, and soon there will be oligopoly. Robert Reich, in his July 5, 2015 article The Choice Ahead: A Private Health-Insurance Monopoly or a Single Payer discusses these mergers, observing that

Executives say these combinations will make their companies more efficient, allowing them to gain economies of scale and squeeze waste out of the system. This is what big companies always say when they acquire rivals.
Yes, indeed. They always say it, and while sometimes they achieve efficiencies– this usually involves firing people — it almost never benefits the consumer; prices almost always go up. Remember airline mergers? Bought a ticket lately? Despite the rhetoric of capitalism about competition, virtually all companies would prefer to be monopolies, control the industry, and set prices, guaranteeing huge profit. If they cannot, the next best thing is oligopoly, control by a few companies, with collusion so that they all make huge profits. Competition is their bugbear. Yes, we have federal regulators, but the result of their regulation has been those airline mergers. And telecommunications mergers. And financial services mergers. And banks too big to fail. So don’t count on them.
Health insurance companies are not the only mega-corporations profiting from “health care” by siphoning off money that could actually be spent improving health, or at least providing medical care. Obviously, there are drug companies (as I recently discussed in Chemotherapy, Quality of Life, and Corporate Profit on July 26, 2015), but also big pharmacy chains (like CVS, Rite Aid, and Walgreens) as well as other retailers that usually have a pharmacy (like Walmart, Kroger and Target) that have now branched out into providing health care, through what are known as “retail clinics”.
In the New England Journal of Medicine on July 15, 2015, John Iglehart writes about “The expansion of retail clinics—corporate titans vs. organized medicine”.[1] Here the case against the corporations is less clear, or at least the case in favor of organized medicine is. Iglehart points out that the opposition from organizations like the AMA, the American Academy of Family Physicians (AAFP), and American Academy of Pediatrics (AAP) have focused on the lack of continuity of care and “disruption of the patient-physician” relationship. Recently, opposition has softened (I guess folks know when they’ve lost) except from the AAP. It seems to me that these clinics provide a menu of services that primarily is focused on acute care for relatively minor infections and injuries, immunizations, and monitoring of chronic diseases like high blood pressure, and are pretty popular with the people who use them. They are conveniently located (for the people who use them), generally have little or no wait, and are staffed by professionals (usually nurse practitioners) who know what they are doing.
The problems with such retail clinics fall into two broad categories. First, when people use them inappropriately, not for acute or minor conditions, but as their usual source of care. For healthy younger people, this may be all they need. For older folks and others with chronic conditions such as high blood pressure, diabetes, hyperlipidemia, chronic lung disease, heart disease, etc., they are not sufficient. The danger is when people only seek care when they have symptoms, such as (particularly) pain, whether to such a retail clinic, traditional physician’s office, or emergency room, and ignore prevention and management of their chronic conditions. I do not fault the providers in these settings; there is evidence that they urge people with such needs to follow up with their primary provider. But, once the acute symptoms are gone, they may not. Some of this, sadly, may be financial.
The other problem is more interesting, and gets back to the financial issue. Providers and the organizations representing them (“organized medicine”) has real concerns because such retail clinics “cherry pick”, or skim the easy cases that pay for (or more than pay for) themselves, leaving physicians with the care of patients with diseases that take more time and are reimbursed less per hour (or minute) of work; this destroys the business model of primary care practice. As long as we depend upon a fee-for-service, reimbursed-for-care-provided, private medical model, this puts a real burden on physician practices which, while looking bigger than the small retail clinics, are usually tiny compared to the corporations that own those clinics.
Another medical area in which there is a clearer case of fear of competition disguising itself as virtue is in the shrill hostility of US-based medical schools, represented by the Association of American Medical Colleges (AAMC) to off-shore (mainly Caribbean-based) medical schools, as described by Robert Goldberg in Discrimination against foreign medical schools is bad for your health in the online publication “The Hill”. The argument against such schools from the AAMC is in part that the students are “lower quality”, the ones rejected by US medical schools. The flaw here is that there are many highly-qualified students who do not get into US medical schools, demonstrated by the recent dramatic expansion of the number of US schools and the class size of existing schools. Are there Caribbean schools of poor quality? Yes. Is the academic preparation of students in Caribbean schools, on average, lower than those in US schools? Probably. Is this a reason to try to put them out of business, by both bad-mouthing and trying to limit the access that their students have to educational loans? I don’t think so.
Our US medical schools get talented students, and then put them through a process that ends up producing doctors underrepresented in the primary care specialties and overrepresented in urban – and especially suburban – areas. As I have often pointed out, we produce the wrong mix of doctors who practice in the wrong mix of places. If (and it is, of course, an if) graduates of off-shore medical schools are likely to fill the medical needs not being met by graduates of US medical schools, then the title of Goldberg’s piece is correct. The same might be said for retail clinics, if indeed they were mostly present in underserved communities, but, based on the business models of their owners, they are generally not.
So, then, we see a spectrum of corporate involvement in health care ranging from the off-shore, for-profit medical school, to the acute care clinics run by large retailers, to the consolidation into oligopoly of health insurance companies, to the large pharmaceutical manufacturers. We also see a response of tepid regulation of the latter two, and protectionism by organized medicine and organized medical schools to the first two. None of these are good for our health. What would be good for our health would be the rational use of health care dollars to provide health care, for everyone, of the right kind in the right setting.
Reich ends his article with
If we continue in the direction we’re headed we’ll soon have a health insurance system dominated by two or three mammoth for-profit corporations capable of squeezing employees and consumers for all they’re worth – and handing over the profits to their shareholders and executives. The alternative is a government-run single payer system – such as is in place in almost every other advanced economy – dedicated to lower premiums and better care.
Which do you prefer?
I feel like raising my hand and waving it in the air saying “I know, I know!”



[1]Iglehart JK, The expansion of retail clinics—corporate titans vs. organized medicine, NEJM 15 Jul 2015;373(4):301-303