Volume 71 Number 4 September 2004	back to contents

Address all correspondence to Merrill Matthews Jr., Ph.D., Institute for Policy Innovation, 250 S. Stemmons, Suite 215, Lewisville, TX 75067; E-mail: policyguy1@aol.com.

Adapted from a presentation at the Issues in Medical Ethics 2001 Conference on “Medicine, Money and Morals” at the Mount Sinai School of Medicine, New York, NY on November 2, 2001, and updated February 2004.

ABSTRACT
There is a growing debate over whether medicine should function like a business, guided, as businesses are, by concerns such as profits and customer satisfaction. Of course, for-profit businesses already permeate medicine, and those businesses are not confused about their priorities: providing high quality goods and services people want, at affordable prices. These companies know that they must do well in order to continue doing good.

Critics of the business model argue that the profit motive makes health care too expensive and that only by nationalizing the health care system can doctors provide high quality care at an affordable cost to society. However, a survey of journals and newspaper articles about the Canadian health care system, often cited as an anti-business model for U.S. reform, reveals that quality has suffered significantly under that system. Patients wait in long lines for health care, and sometimes cannot get help at all.

This paper argues that incentives in the U.S. health care system are complicated, and that health care needs to work more like a business—not less. Doctors don’t know whom they are serving—patients, insurers, employers or the government—because it is usually someone other than the patient who it paying the bill. The way to get the incentives structured properly is to allow patients to control more of their health care dollars—perhaps through a system of Medical Savings Accounts. Following the business model is the only way to ensure that medicine provides high quality services at affordable prices—just like every other sector of the economy.

KEY WORDS
Business model, Canada, single payer, rationing, incentives, medical savings accounts, managed care.