Corporate Takeover of Medicine: Good or Bad?

Way back in 1992, I wrote about how corporate takeovers were interfering with physician decisions in Modern Medicine: What You’re Dying to Know. At that time, communities and physicians owned many hospitals. In the 1980s and 1990s many metropolitan hospitals started buying up rural hospitals and clinics just to close them down. This forced rural residents to go to the large metropolitan hospitals for their care.  

By 1996, the pharmacy and insurance companies had convinced Congress that physicians shouldn’t own hospitals because they would pad the bills with unnecessary services. What a laugh, considering the way corporately owned hospitals charge patients. Thankfully, there is a move among physicians to rescind that law and allow physicians to own hospitals again. The takeaway here: physicians are not going to deny patients needed care to save a buck.  

In the 1990s, Medicare developed a payment plan that involved rural hospitals becoming Critical Access Hospitals (CAHs). From then on, Medicare reimbursed rural hospitals who opted into the program with a fixed fee for basic services. In time, these hospitals merely became band-aid stations because the payment wasn’t enough for them to maintain many of the services they had offered for years.  As rural hospitals struggled with the reduced CAH payments, large hospital systems purchased many of these rural hospitals for pennies on the dollar. As soon as these corporate organizations took over, they dropped many services. The first to go was usually obstetrics. Fast forward to the present and you will find many of these rural hospitals are being closed by the owning corporations after the corporate tax write-offs have been used up. 

As mentioned before, many rural hospitals no longer provide obstetrical services. This means that if you are a pregnant woman living in a rural area, you must travel a great distance to deliver your baby, often 100 or more miles. This is far riskier and more dangerous than the imagined risk of malpractice and high insurance costs. In fact, I asked my insurance company for a quote to cover obstetrical services in the hospital I was working at the time. It would have cost the hospital about $50,000 to be insured for obstetrical services. It isn’t rocket science to see that providing obstetrical services to the community would have brought in far more income than the cost of the insurance. 

Obstetricians don’t worry about their patients in urban areas because they live closer to hospitals. It’s the patients in rural areas who present a problem. There must be a good logistics plan to ensure that the pregnant woman will arrive on time to deliver her baby. Often, this plan involves setting a date, trying to induce the woman into labor—only to eventually perform a c-section because of “failure to progress.” Many urban obstetricians prefer c-sections because they are quick, easy, and c-section deliveries pay more than vaginally deliveries. Any pregnant woman should check the c-section rate for the hospital in which she plans to deliver her baby. This rate varies enormously from hospital to hospital.   

The increase in c-sections is a direct result of the evolving business of medicine. With corporations taking over hospitals, the physician judgment is often bypassed when it comes to patient care. Corporate hospitals often choose to employ doctors rather than give independent physicians privileges so the hospital management can pressure physicians to cut costs, often for patient care their physicians believe is needed.    

The bottom line is that corporations often enforce protocols that reduce the quality of your care and increase your risk. This is why I have always believed that there should be birthing centers, especially in rural areas. 

Having a specialty center that can accommodate women until they can safely deliver naturally would be a huge help in reducing the c-section rate and maternal mortality. I hope to see more of these centers in the near future to bring us closer to the vision of safe childbirth for everyone and greatly reduce the U.S. maternal mortality rate. 

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Dr. Alan Lindemann

Obstetrician-Gynecologist (OB/GYN)​

He is an obstetrician and maternal mortality expert with 4 decades of medical practice beginning in Minnesota and presently in North Dakota. He has delivered around 6,000 babies with zero maternal deaths.