Six Reasons Why Health Care is not a Commodity

By Cynthis Levine-Rasky, Canadian Dimenion, September/October 2002

In the fall of 200, my aging mother went for a walk to buy a birthday card at the shopping plaza near her home. While attempting to climb a curb, she fell and fractured her hip. After surgery in an acute-care hospital, she spent eight weeks in two different nursing homes.

Compare them:

Why Health Care is not a Commodity

In place Number One, during the week it took to straighten out her medications, my mother was sent drugs she didn't use and failed to receive her necessary medications, including the correct kind of insulin. Errors were made in the scheduling of meal crucial for a diabetic. As a result, my mother's blood-sugar level rose to a value of 40, threatening a diabetic coma. When asked to explain, a nurse told us that it was likely psychological in cause. It took a few visits from the dietician to straighten out my mother's meals, although often the food was too bad to eat. With only one nurse for about 30 residents, there was usually a 20-minute wait for help after pulling a cord. Cleaning of rooms was perfunctory. Soiled laundry sat in clear plastic bags in the hallways and the broadloom smelled of urine. To conceal the persistent odours, automatic misters were mounted on the walls and sprayed fragrance at regular intervals.

In place Number Two, we didn't reach my mother's room before the nurses requested her medication list and dietary needs. They had it all straightened out in half an hour. Within two hours, she had seen the physiotherapist, the dietician and three nurses to learn about her medical history, her home support and her need for medical aids. The food was of good quality; we even met the cook when he came on his rounds. The place was cleaned thoroughly after each patient. There was no sign of garbage or odour. Each patient had a private phone. For what it was, the environment was cheerful.

Given promises of superior efficiency and service in private provision of health care, how many would guess that place Number One was the private facility? Yet it was recommended to us as one of the better nursing homes in the city. The care there cost $100 per day excluding the fees for a phone, wheelchair rental and transportation to the hospital for tests. When I tell this story to my students, many of them are fooled. They associate public care with inferior service. Yet, despite the erosion of the public system, the contrast between these two facilities, the former fully private, the latter fully public, couldn't be greater.

Public care is the only way to go. This is because health care is not a commodity.

Here's why. One: Need, Not Choice

Patients are in a position of need, not choice. Their survival can be dependent upon regular visits to a clinic or to a doctor. Unlike other products in the marketplace, if you need medical services to make you well or function normally you can't shop around for the best deal, nor can you compare makes and models, nor withdraw your consumer choice because the product is over-priced with the hope that if enough patients do the same the price will drop as supply exceeds demand. If you need medical care, you need it now. You've got to pay the price, whatever it is. Patients are at the mercy of the provider and they are unable to influence the competition and costs of services as in a free-market model. In fact, the reverse is more likely: the market manipulates patients to pay whatever cost is set by a private provider.

Two: Insufficient Information

Patients do not have the information necessary to make an informed consumer choice. Imagine Consumer Reports on dialysis units or magnetic resonance imaging devices (MRIs). Only specialists have the knowledge required to make such choices and patients are dependent upon their expertise for a referral. Patients trust that their doctor will make the best choices for treatment on their behalf. It's wrong to burden sick people with these decisions and unreasonable to expect them to do the research necessary to be informed about illnesses and their treatments. How many senior citizens even use the Internet?

Three: Profit Motive Inappropriate

Patients trust their health-care providers. The profit motive is inappropriate for health-care providers because it can interfere with the quality of care within a relationship of trust. Patients assume this relationship is based on the doctor's commitment to health, not to profit. The profit motive could encourage a practitioner to make unwise decisions like prescribing more drugs and recommending costly surgery since these represent opportunities to increase profits. Health-care providers motivated by profits may be tempted to select patients who require these interventions. But we expect our health-care workers to want to help us because they're interested in our well-being, not because we pay them to take care of us or because we pay more than someone else who will receive inferior care as a result.

Four: Maintaining Standards

Patients depend on the public regulation of standards in care. Like other concessions to companies in the private sector, private firms delivering health-care services may win exemptions from standards in technology, safety and licensing of technicians. How would quality be regulated? How could consumers as patients have an influence upon standards, given their circumstances? Given the narrow margin for error, a patient would be too sick to register an official complaint if something goes wrong during a procedure. Their family could do so on their behalf, but in terrible circumstances.

Five: Lower Cost

Private health care can't compete with the lower costs of public health care. In the U. S., where a private health-care system parallels a public one, health care takes up 14 per cent of the GDP, highest in the world. Canada spends about 9.5 per cent of its GDP on health care, less than Germany, France and other European countries respected for their vibrant social programs. Why is private health care more expensive? Like any other profit-making venture, private health care must create a 10-to-15 per cent return for shareholders. It also must cover costs that are non-existent in public organizations like marketing, advertising, taxes, compensation packages for senior executives and higher administrative costs. In March, 2000, the Toronto Star reported that the Australian government has to subsidize its private hospitals by $2.2 billion in operating costs. These hospitals are not a viable business without this assistance. Many studies show private health care is more costly than a fully public system. A 1999 article in New England Journal of Medicine states that No peer-reviewed study has found that for-profit hospitals are less expensive.

Six: Superior Quality

Private health care can't compete with the superior quality of public health care. Public health care saves lives. The Canadian Medical Association Journal just published a report on 15 studies on for-profit and not-for-profit U. S. hospitals. They found that patients treated in for-profit centres were 2 per cent more likely to die. While this may sound like a small number, given that the sample was 38 million patients between 1982 and 1995, this means that 760,000 people died in private facilities who might have lived had they been treated in public hospitals. More funds are diverted away from patient care toward other expenditures like marketing and executive salaries. The profit motive obscures the priority of saving lives.

The Alberta Model

The urgency in arguments for private health care is based on claims that the public system is unsustainable. We are told that if we want shorter waiting lists, more doctors and nurses and technicians, and better access to primary care and medical technologies, we will have to abandon our idea that medical care is a right, rather than a privilege. We are told to look to Alberta and its Health Care Protection Act for inspiration. The act allows for-profit clinics to be paid by public funds. Yet health-care costs in Alberta are not spiralling out of control. The province spends 33 per cent of its total budget on health care. At five percent of its GDP, this is one of the smallest shares for any province. According to Friends of Medicare, this figure has been stable for 20 years. From 1992 to 1998, Alberta's per-capita spending on health (adjusted for inflation) increased by less than one percent.

If there is no crisis in health-care spending, why then did the province rush to legislate for-profit services? Why is Alberta regarded as a pioneer in health-care reform if private health care remains unpopular, more expensive, of lower quality and less efficient? The only reason remaining is to tempt foreign investment into this new growth industry. Public health care safeguards private-sector incursion into Canadian Medicare. This is how it works: Health care is exempt from international free-trade agreements if it remains fully public. But with partial privatization in the form of user fees, home care, physiotherapy, or private clinics, foreign companies can claim the Canadian government is giving an unfair subsidy to those private companies now providing medical products and services. Since NAFTA guarantees free-market access and the elimination of trade barriers, partial privatization may be interpreted as the denial of access and a trade barrier. Alberta's Health Care Protection Act, therefore, may be defined as a government subsidy to a private health-care firm. Through an international arbitration tribunal, foreign companies can sue the Canadian government for lost revenue and for compensation for prohibiting access to the marketplace in health-care industry. This decision will not be open for appeal. This is how NAFTA may be used to force open the Canadian Medicare system to competition from private firms who want equal opportunity to compete in selling health products and services in Canada.

Through free-trade agreements, private, foreign firms are seeking inroads into this new and potentially lucrative business opportunity. The market is expansive. Canadians already pay privately for many medical services: nursing homes, drugs, home care, diagnostic services, alternative therapies, rehabilitation, ambulances. In June, 2000, the World Health Organization ranked Canada thirtieth for health care since we pay more out of our pockets for medical expenses than many other Western countries. In a 1999 poll of 2,381 Canadians, PriceWaterhouseCoopers found that seniors and disabled people were spending an average of $407 per month on home care. Friends of Medicare shows that 67 per cent of drugs are privately funded. And the home-care industry is growing. About 14 pages of the Sears catalogue is dedicated to home-care products. Recently discharged patients can choose among several kinds of stethoscopes, grab bars, toilet seats, examination gloves, incontinence aids, walkers, wheelchairs and blood-pressure monitors. Although some provinces may cover some of the costs for some individuals, the range of products now marketed to the individual consumer reflects the possibilities of this new niche.

The challenge lies in persuading supporters that the so-called crisis in health-care costs lies not in increased demand nor in abuse of the system. It lies in the government's withdrawal from the public sphere. The state values its relationship with business more highly than its relationship with the public. Accumulated effects of government cutbacks have caused the problems we face. Federal contributions to health-care costs dropped from 50 per cent in the 1960s to less than 15 per cent in the 1990s. Funding has improved recently with federal reinvestment of billions of dollars in health care, but, by this time, things have become so bad that these funds had to be applied to servicing accumulated debts and to improving the services that deteriorated during the years of cutbacks. Instead of attributing problems to lack of stable financing and supportive policies, we turn it around and blame the users of the system.

We must highlight the fact that a fully public health-care system works well. It fulfils the demands for cost effectiveness, quality and equity that Canadians (and others) traditionally associate with our national health-care program. Yet the system is under attack. Without a fight, it will most certainly be compromised. It already is. We must develop a collective response to the spin generated by supporters of privatization: that health care is better paid for, owned and delivered by private hands. Just like any other commodity. But health care is not a commodity. It is a public good. It must be in public hands.