Publicly held companies are increasingly under pressure to produce in the short-term to keep their investors happy. The bottom line is to achieve as high of profits as possible. Long-term plans are often given up to maximize
So what happens when these companies are inserted into a dysfunctional healthcare system? Insurers, pharmaceuticals, and device manufacturers are among the publicly-held companies through which a huge amount of cash is flowing. Is it any wonder why reform is slow to happen?
Think about it. What are things in the system that bother you the most?
- Direct to consumer marketing by pharmaceuticals.
- The influence of drug reps on physician behavior – prescribing more expensive medications due to their influence.
- Physicians taking large stipends from device manufacturers.
- The influence of Pharma on the FDA.
- The “authorization” process keeping patients from procedures and keeping money from physicians.
- The incredibly high salaries of CEO’s of insurance companies and pharmaceutical manufacturers.
What is the reason for these things? I don’t think there is an evil conspiracy behind it. I see companies doing what they need to do to make a profit. This isn’t wrong. These companies are morally obligated to maximize the financial returns for their investors. and they give best return when they take the most money out of the system. This is not evil, it is what they are supposed to do.
So should we really believe that a system can be reformed where some of the biggest players in the industry are doing everything they can to take as much money as possible? We can’t expect them to act any other way – not because they are greedy and evil, but because of the high pressure to produce on the short-term. All of those with these companies in their portfolio expect it.
I am aware of the fact that some of the insurance companies are non-profits: specifically Blue Cross/Blue Shield. Why this has not caused them to have a bigger view of things is difficult to say. In my experience, they behave exactly the same as the for-profit companies; they delay payment, deny procedures, and require paperwork just like the publicly traded companies.
To me, this is one of the best arguments for more government involvement in this area. To say “it should be a free market” sounds nice to some, but there isn’t anything to suggest that less regulation would cause cost to come down – it would simply make profits go up. The goal of healthcare should not be to provide a good investment opportunity for people. One of the biggest challenges ahead of anyone who is going to try to reform healthcare will be to plug the holes where money is spilling out of the system.
Even if it hurts my portfolio.This material, written by me, is free to re-post and share under the Creative Commons agreement. In other words, use it all you want; just give me credit.