The Corporate Practice of Medicine ― Competition and Innovation in Health Care

One of the country's leading health economists presents a provocative analysis of the transformation of American medicine from a system of professional dominance to an industry under corporate control. James Robinson examines the economic and political forces that have eroded the traditional medical system of solo practice and fee-for-service insurance, hindered governmental regulation, and invited the market competition and organizational innovations that now are under way. The trend toward health care corporatization is irreversible, he says, and it parallels analogous trends toward privatization in the world economy.

The physician is the key figure in health care, and how physicians are organized is central to the health care system, says Robinson. He focuses on four forms of physician organization to illustrate how external pressures have led to health care innovations: multispecialty medical groups, Independent Practice Associations (IPAs), physician practice management firms, and physician-hospital organizations. These physician organizations have evolved in the past two decades by adopting from the larger corporate sector similar forms of ownership, governance, finance, compensation, and marketing.

In applying economic principles to the maelstrom of health care, Robinson highlights the similarities between competition and consolidation in medicine and in other sectors of the economy. He points to hidden costs in fee-for-service medicine?overtreatment, rampant inflation, uncritical professional dominance regarding treatment decisions?factors often overlooked when newer organizational models are criticized.

Not everyone will share Robinson's appreciation for market competition and corporate organization in American health care, but he challenges those who would return to the inefficient and inequitable era of medicine from which we've just emerged. Forcefully written and thoroughly documented, The Corporate Practice of Medicine presents a thoughtful?and optimistic?view of a future health care system, one in which physician entrepreneurship is a dynamic component.

James C. Robinson is Professor of Health Economics at the University of California, Berkeley, School of Public Health. He is the author of Toil and Toxics (California, 1991) and of many articles in journals, including Health Affairs and the Journal of the American Medical Association.