3 Medicine in the Liberal State
In the last chapter, I suggested that medical ethics has been conceptually at odds with liberalism. In this chapter, we further explore this conceptual dissonance, and the changes that have brought the medical enterprise more in step with our market-based, pluralist society.
Much of the discussion necessarily will proceed at a rather theoretical level. Physician behavior itself does not overtly evince many of the moral overtones we discuss here. Indeed, observers have noted that the typical practitioner pays little attention to the role of an ethical code in his daily work. Friedson's empirical study led him to the following conclusion:
Curiously enough, we could raise little interest among physicians by interview questions about the problem of ethics in medical work. Ethics seemed to be unproblematic to them and rather less related to being a doctor than to being a properly brought up (middle-class) human being. Ethicality was "pretty much common sense,"... was learned "when you are brought up by your mother."... To most physicians the word seemed to refer to the norms of decency and honesty, that were expected of all proper middle-class people and that had not and need not [have] been taught to students in medical school.1
Nonetheless, for the moment, a certain theoretical purity must be maintained to illustrate medical ethics in the liberal state.2
Medical Ethics and Paternalism
The central theme of medical ethics, from the perspective of the beneficence model, is the doctor and patient partnership. The physician is in a sense a friend who has a commitment, a duty, to the patient and is bound to treat the patient as an end in himself and, if necessary, to make sacrifices to help the patient return to health. The doctor and patient thus work together, but under the physician's leadership, for mutual ends. More accurately, the physician uses her specialized knowledge on behalf of the patient.
The problem with this model of medical ethics is that it overlooks pluralism, one of the primary virtues of the liberal state. Alasdair Mac-Intyre has argued quite convincingly that the liberal state allows and encourages a number of different moral points of view.3 This pluralism creates the diversity that enriches the social morality. But it also eliminates the grounds one would use to justify action on behalf of another.
As MacIntyre relates, previous societies did not celebrate pluralism; rather, they encouraged conformity, with a single moral point of view. But our society eschews such shared values. Instead we have only the minimal glue provided by the public morality of liberalism. More important, that public morality emphasizes the importance of individual choice and negative freedom, not shared values. Pluralism makes no effort to shape shared assumptions.
The medical ethics of "the patient comes first" model assumes that physicians can act on behalf of the patient simply because the physician is duty bound to help the patient place his welfare first. The problem for such a theory is that in a liberal state only the individual can define his or her own personal welfare. Thus the "patient comes first" model must conflict with liberalism. Specifically, the liberal state cannot accept the paternalism inherent in medical ethics.
Paternalism can be defined as interference with or failure to respect affairs normally designated as matters within an individual's sphere of liberty for the sake of that individual. Dworkin offers a more technical definition of paternalism as "roughly the interference with a person's liberty of action justified by reasons referring exclusively to the welfare, food, happiness, needs, interests or values of the person being co-
creed."4 Paternalism thus represents a decrease in personal liberty by interfering with another's behavior, choice, or opportunity for choice for that person's well-being, though that interference need not be actual or physical, and indeed may simply be a failure to seek consent.
While that interference may be justified on the basis of a higher good, it is viewed in the liberal state with a great deal of suspicion. The liberal state maximizes the amount of negative freedom granted individuals so as to minimize the possibility of the abuses that can occur under the name of positive freedom. Liberalism assumes that the individual citizen typically knows what is best for himself; thus the rationale for paternalism is undercut, and individual autonomy is accorded the widest respect possible.
Times and situations occur even in the most liberal of states in which paternalism may be justified. For example, in our society, parents are allowed and encouraged to restrict their children's freedom and to make decisions on their behalf. The close, affective ties between parents and children are the justification for paternalism. We do not fear, as a rule, that parents will take advantage of paternalism and exploit their children because parents usually behave in a dutiful and self-effacing manner. The ends of child welfare then are central to parental decision making.
To a certain degree, the analysis of the "patient comes first" medical ethics is analogous to familial love, in which the doctor (the parent) and the patient (the child) work together for a common good—the patient's welfare. This commitment justifies the doctor's decisions on behalf of the patient, and also justifies an institutional framework that isolates doctor and patient from the oversight of the liberal state. To the extent that these institutions flourish, we can assume that society is convinced that the medical profession's paternalism is not exploitive.
Others have taken a narrower position that paternalism is justified "only when the person's choice is different from what it would be given his or her normal character and decision-making abilities, and more specifically, only when the impairments in these abilities are such that they result in the person withholding consent to paternalistic interference to which he or she would have given consent."5 By twisting or exaggerating the notion of impairments, however, a physician could justify, paternalism every time her patient disagrees with a prescribed course of therapy (which leads Childress to argue that medical paternalism is much broader than mere coercion6 ). Believing that the expert knows best, the physician pushes ahead with a program of her own
design in order to benefit the patient. Medical institutions nurture this endeavor, protecting the doctor's decisions from public judgment.
In a liberal state, in particular our liberal state, however, such broad physician prerogatives cannot be sustained. The medical enterprise, and the overly broad paternalism it sanctions, inevitably must be addressed. That is what occurred around 1970 when the American public's perception of medicine began to change. In a variety of ways, the public became convinced that physician paternalism was really physician exploitation and that medicine was set up not to nurture the patient but to benefit the physician. This led to an assertion of patient autonomy and liberty, and restriction of physician power. In the following section, we will review, evidence of how the American liberal state began to rein in the powers of the medical profession and to reintegrate it with the principles of liberalism. In the process, physician paternalism was limited and the "patient comes first" ethic was discredited.
The End of the Golden Years
In the early 1970s both politicians and business leaders became alarmed about health care in the United States. Start details evidence of this concern:
President Nixon told a press conference in July 1969, "We face a massive crisis in this area. Unless action is taken within the next two or three years, we will have a breakdown of our medical system." In January 1970 Business Week ran a cover story on the "$60 Billion Crisis" that compared medical care in America unfavorably to national health programs in Western Europe. That same month, editors of Fortune, in a special issue on medical care, declared that American medicine stood on "the brink of chaos."7
This sense of crisis was a result of the staggering rise in health costs initiated by the operation of Medicare and Medicaid. The average annual rise in health costs more than doubled to 8 percent in the five years after the legislation passed, as compared to the five years before enactment.8 Health costs more than doubled to $336 per capita from 1960 to 1970.9
Nor did cost escalations moderate in the 1970s. Total health costs
rose from $61 billion in 1969 to nearly $200 billion in 1981,10 and grew throughout the 1970s at a rate 50 to 100 percent higher than that of inflation.11 By 1980 the U.S. government was contributing $59.8 billion to the total health care bill,12 while the rest was paid by consumers or by third parties, including Blue Cross, Blue Shield, and private insurance companies. This system proved quite lucrative to the medical profession; throughout the 1970s physicians ranked first among all professional groups in total income. By 1981, Americans spent $1,225 per capita on health care.13
This phenomenon was the result of the economic structure of medical care. Incentives under the third-party system maximized reimbursement instead of saving money. As Alain Enthoven has noted, "Third party reimbursement leaves the consumer with, at most, a weak financial incentive to question the need for or value of services or to seek out a less costly provider or style of care."14 The physician was, of course, seen as an integral part of medical hyperinflation. "Physicians receive only about 20 percent of the health-care dollar, but they control or influence most of the rest.... Their professional values combine with the financial incentives and other factors, such as malpractice threat, to minimize concern over cost and to foster cost-increasing behavior."15
Most physicians chose to ignore this aspect of practice. Those few who reflected on it, however, realized the significance of unrestricted cost increases. For example, Benson Roe, a cardiothoracic surgeon, wrote in 1981 that the need for controls on medical practice was in large part a result of doctors' abuse of the system.16 He noted that AMA pressure had managed to integrate customary-and-reasonable fee reimbursement patterns into third-party payment plans, and he argued that this had led to an explosion of fees by young doctors unable to steer themselves away from the "moral hazard."17 Moreover, he detailed his charge with evidence from California Blue Shield that fees for coronary artery bypass surgery had risen to $9,000 for four to five hours of work. The impact of such reports on the public's perception of physicians cannot be doubted.18 Both the public and government began to see medical practice only in terms of the great and lucrative power exercised by doctors. Medical paternalism no longer seemed justified in the 1970s.
To control physicians and hospitals, states began to pass laws that regulated hospital reimbursement rates. Led by New York and New Jersey, many states by 1976 had some system for oversight of costs.19
These were the first efforts to control medical costs and to limit the physician's role as sole arbiter in the medical market.
Even more radical in terms of its intended impact on physician independence was a federal initiative involving facility-use review. Most hospitals had utilization review committees by 1975 that were intended to prevent inappropriate practices. Yet, as the Senate Committee on Finance noted, "Utilization review activities have, generally speaking, been of a token nature and ineffective as a curb to unnecessary use of institutional care and services. Utilization review in Medicare can be characterized as more form than substance."20 In an attempt to rectify this, Congress in 1972 enacted legislation that instituted Professional Standard Review Organizations (PSROs). PSROs were to be independent of hospitals and medical societies and were to develop standards of care.21 Unfortunately, these organizations were prematurely instituted and never really overcame the collegial attitudes of the medical profession. Yet as a challenge to physician hegemony over the consumers of medical care, they marked a milestone.
Another reform effort in the 1970s was the National Health Planning and Resource Development Act. This act set up two hundred regional health system agencies (HSAs), with boards that had consumer majorities. The HSAs were to coordinate health care services within regions. As Starr has noted, "The law seemed to be a decisive rejection of the view that the market could correct itself, and that the doctors and hospitals had the last word on how medical care ought to be organized."22 But the HSAs never managed to free themselves from professional control and have had little impact in most areas. The concept of the need for social control of health care was, however, a significant development.
The third reform movement of the 1970s had as its goal a national health insurance. In 1976 the Carter administration renewed the government's attempt to provide wider access to medical care. The president was willing to, at least rhetorically, emphasize the great importance of a national health plan: "One of the highest goals of the 96th Congress should be taking action to provide all Americans with the opportunity to lead a more healthy life. This opportunity, has been denied to many in our country because of health care services which are unaffordable, inaccessible, and inefficient."23 The federal government finally seemed to have realized that intervention was necessary if the United States was to have a more equitable health system.
Thus several legislative proposals on national health insurance were made by Congress during the late 1970s. B. Mitchell and J. Schwartz have analyzed these proposals and have arrived at the following conclusions:
Continued controversy over national health insurance financing revolves around two major issues. The first involves the extent to which additional national resources should be expended on the health care of families above the lowest income levels.... Among the four prototypical proposals, the Long-Ribicoff bill produces the smallest increase in national expenditure ($3 billion) and the Kennedy-Cormon the largest ($13 billion). The second issue concerns the extent to which, for any given level of spending on health care, a national health insurance program should redistribute income. Here controversy is sharpest between advocates of a premium based program (Administration) who wish to minimize redistribution of income, and advocates of a payroll tax approach (Kennedy-Mills), who seek to shift income toward those at lower earning levels.24
The Long-Ribicoff Bill, on the one hand, proposed coverage only for those who had contracted a catastrophic illness; the federal government was to step in once a family had spent a large amount of their own money. Kennedy-Cormon, on the other hand, was a step toward a real national health system.
The Kennedy-Corman Bill was always perceived as the most radical of the health care system proposals and was also recognized as the one that most assertively incorporated the concept of a right: "At one end of the spectrum, as exemplified by the full coverage provisions of the Kennedy-Corman bill, are those who feel that 'health care is a right'—that access to health services should neither be limited or rationed by price."25
The Kennedy-Corman plan explicitly brought the notion of right into the debate over a national health care system/national health insurance. This is clear from the sources of revenue for the plan. A payroll tax was relied upon to generate about half the total revenues needed to operate the plan. This was seen as the best way to spread the cost of the system throughout the society. In addition, there was no cost-sharing requirement. In cost-sharing arrangements, the patient must pay as much as the third-party source, in this case the government, up to a certain total. Cost-sharing tends to penalize those with limited resources. The Kennedy-Corman plan's avoidance of this device demonstrated its full-fledged commitment to free access for all to health care. The tax burden resulting from the plan would thus fall on
those more able to pay: "Although it raises approximately 50 percent more total revenue than the other bills, [it] places a much smaller burden on lower income families."26
The set of principles embodied by the bill was very clear. Health care was treated as a right.27 Proponents of this type of plan were most concerned about redressing the inequality, of the health care system; they wanted equal access for all. They also chose the language of rights to express this valuation of equality because they recognized that they must confront the power of the medical profession. Implicit within such proposals was the criticism that the existing system was "tailor made to maximize the income of the providers."28 The legislative initiative thus had to be organized as a direct challenge to medical exploitation and paternalism. The Kennedy-Corman plan would have greatly constrained the fee-for-practice system with restrictions that were seen as essential to an equitable health care system.
But the Kennedy staff and the Carter administration could never reach a compromise position. Carter wanted a much less radical restructuring of health care. Moreover, by 1979 the Democratic House did not even want a bill on national health insurance submitted.29 Soon Kennedy opposed Carter in the primaries, Carter won, and then lost to Reagan. National health insurance faded from the political agenda.
Despite this series of failures in the late 1970s to reform health care in the United States, several important themes had become clear. There was significant political pressure to change the existing structure of medical practice, and reform proposals were offered that centered on the need to limit doctors' prerogatives as a way to bring down costs. Thus many politicians were ready to reject the profession's claims that a proper doctor-patient relationship depended on a fee-for-service system and its attendant undivided loyalty of physician to patient. They were ready to end the isolation that the profession had defended as necessary to medical morality. The liberal public morality was reasserting itself. The rise in health costs had convinced many that medical ethics, and the motivations upon which it depended, masked professional economic advantage.
Brave New World
With the 1980s came the first modifications in the health care system inserting liberal imperatives into the doctor-patient relationship. The new modifications were really three different developments, but all combined to produce a new kind of doctor-patient interaction. The new relationship, as we shall see, became more like others found in the liberal state—one in which rights, rather than duties, are the appropriate form of moral discourse.
The first and by far most important development was the institution of competitive market values in health care. It involved several initiatives, beginning modestly with a set of suggestions about how to incorporate the market into health care in order to control costs. In 1978, Enthoven wrote what was to become a very. influential article in the New England Journal of Medicine,30 noting that there was "very little competition among providers of care to produce sen, ices more efficiently or to offer a less costly style of care, and to pass the savings on to consumers."31 He recommended expanding health maintenance organizations (HMOs) to provide large third-party health care purchasers with a choice of providers.
The HMO concept had been discussed for years.32 Its advocates saw in it the answer to the failures of the American health care system. As Saward and Sorenson argued in 1982, "The new [procompetition] effort hinges on HMO-like concepts. Organized medical-care systems can enroll populations for a predetermined price to deliver defined services for which they will be at risk. The hypothesis is that there will be a number of such organizations competing in each area of the medical movement."33 Moreover, the HMOs of the future were encouraged to be "for profit," in order to assure greater efficiency. Employee/physicians would thus bear a responsibility to shareholders to return a profit. The physicians would be employed by, and owe loyalty to, the institution rather than to the patient alone.
But reliance on HMOs was not enough for many businesspeople, who increasingly felt the pinch of costs associated with financing health plans.34 In the Reagan administration, business found a welcome ear with regard to cost-saving and increased economic competition. Indeed the administration threw its support wholeheartedly be-
hind the Gephardt-Stockman Bill, which would have deregulated much of hospital administration and emphasized profit-making by hospitals.35 The AMA, as one might expect, opposed this bill. As Iglehart noted, the organization took "strong exception to provisions in the Gephardt-Stockman Bill that the AMA feared would lead to federal preemptions of state laws, to more corporate involvement in the direct provision of health care, to open hospital staffing and to broad authority, for the HHS secretary."36 As usual, the AMA opposed any innovation that might have diluted the physician's control over the delivery of health care. The AMA's political base within the profession had weakened over the 1970s, however, and its opposition to the Gephardt-Stockman Bill was not well organized. Nor was the AMA prepared for the next development coming down the congressional pike.
Spurred by an increasing number of academic voices in favor of competition,37 Congress moved to make Medicare reimbursement a competitive issue. Faced with gaping budget deficits, the Reagan White House and the Republican Senate decided that it was time to develop prospective payment policies that would put a ceiling on Medicare reimbursement.38 The hospital and medical professional lobbies had largely lost their influence by the early 1980s as a result of the ineffectiveness of their voluntary efforts to control costs. Thus in the fall of 1982, Congress amended section 223 of the Social Security, Act, instructing the Department of Health and Human Sen, ices (DHHS) to work out a prospective payment plan.
The conference report attached to the bill instructed DHHS to rely upon the diagnostically related group (DRG) case classification system developed by Professors Robert Fetter and John Thompson of Yale University.39 Used by the state of New Jersey since 1980, the DRG concept based reimbursement on diagnosis. A hospital is reimbursed according to the classification into which a patient's diagnosis fits; that is, not according to costs, but according to the preset amount for each diagnosis. The DRG concept assumed that every patient's condition could be fit into a discrete diagnostic category, an assumption that some have criticized.40
The DRG scheme created new incentives for hospital administrators. They realized that they would be receiving only one sum for each patient with a given diagnosis. As a result, a premium was put on moving the patient through a care program as quickly as possible.41
This meant that hospital executives placed pressure on physicians to minimize care programs and eliminate needless testing. These pressures were formalized into hospital policy, to which doctors were expected to adhere.42 Thus the doctor-patient relationship was no longer isolated from institutional pressures—the fiscal health of the hospital now intruded as a factor under prospective payment plans.
The new situation was exemplified by the fact that while DRGs were being considered in Congress, the main political players were the American Hospital Association and the American Association of Medical Colleges (AAMC).43 The AMA, on behalf of the organized profession, did not play a significant lobbying role. There are several possible explanations for this change of professional posture in the early 1980s. Perhaps doctors accepted that intervention was a foregone conclusion, given the public opposition to rising medical costs. Perhaps the organized profession no longer believed that the ethical duty to put the patient first required an independent doctor-patient relationship. In any case, the development of DRGs and the profession's acceptance of them signaled a departure from the traditional scheme of the medical enterprise and medical ethics. It indicated that physicians had acknowledged that medicine, like any other industry, could not continue to operate outside the imperatives of the liberal state and market economy.44
The DRG initiative applied only to federal reimbursement. Iglehart noted that a plan as comprehensive as this could create incentives to shift costs to the Blues and private insurers. He added, however, that "commercial insurers [were] active at the state level, pushing legislation that [required] equalization of payment among public and private payers."45 Thus private insurers moved quickly to avoid cost shifting by physicians and hospitals eager to retain some semblance of the previous set of economic relationships.
The new reimbursement system for Medicare was signed by President Reagan on April 20, 1983. The DHHS report to Congress signaled how different the new system would be:
Within each hospital, staff physicians can be expected to compete with each other for available resources as the hospital budget is constrained. This competitive atmosphere will encourage recognition of the costs as well as the benefits of existing treatments and new technologies as they are developed. Peer pressure should influence physicians with relatively costly and cost ineffective practice patterns to modify their behavior.46
The diagnostically related group method of reimbursement is thus revolutionary, at least with regard to its impact on the constellation of ideas that I have argued provided the grounds for the ethical practice of medicine in the decades before 1970. The DRG concept is designed to force doctor and hospital to think about cost-effective care. Moreover, it creates incentives for hospitals to assert control over physician decision making. These changes have been antithetical to medical ethics as we have described it. They are a reflection of the values of the market, the engine of pure procedural justice in the liberal state. Thus DRGs are an outcome of the liberal state's struggle to gain control over the medical enterprise, to use the public morality to constrain physicians. In this struggle, two developments are likely. First, as the virtues of the marketplace, including cost-benefit analysis, efficiency considerations, and competition, are brought to medical care, then all actors—doctors, patients, and administrators—become more likely to utilize the language of rights and liberties, just as other people in a liberal state do.47 Second, the "patient comes first" ethic becomes obsolete unless it undergoes major modification.
Diagnostically related group reimbursement schemes are not, of course, the only method of cost control that have intruded into health care. States have attempted to halt the rise in medical costs by placing limits on the budgets of hospitals.48 Among the most important of these were the initiatives in the 1980s in Massachusetts and California. Massachusetts favored an "essentially noncompetitive" economic franchise "because it sustains the sometimes extreme disparities between hospitals in terms of cost and price."49 Massachusetts, like Connecticut, set prospective budgets for each hospital. As a result of compromise among hospitals, the Massachusetts Medical Society, and the major third-party purchasers, the reimbursement system created "incentives for hospitals to reduce the number of days of care, deliver outpatient services as an alternative to inpatient care, and restrain growth in ancillary, services."50 The impact of such incentives should prove to be much the same as those of DRGs. They tend to render both the traditional medical enterprise and traditional medical ethics obsolete by bringing about cost consciousness.
Even more radical was California's new Medi-Cal reimbursement program. California decided that government and private insurance companies should "negotiate prepaid contracts with hospitals and providers as a 'tool' to contain costs."51 The negotiated contracts were
designed to bring hospitals into competition with one another for care contracts. Both hospitals and care providers were to be designated as policyholders. The California legislature thus hoped to confine fee-for-practice reimbursement; to promote management consulting in hospitals; to encourage physicians to create diagnostic protocols and standard treatment plans; to further health education and preventive practices; and to foster competition among hospitals and doctors.
David Kinzer predicted that the new California system would result in a two-tier system of care for indigent and affluent52 and there is evidence that he is correct.53 All the intricacies of the California program are but a chapter in the long volume on hospital cost control. For our purposes, it is important to note that the competitive structure in California probably will bring provider competition, management consulting techniques, and standard treatment protocols to health care. All of this cuts in the same direction that the DRG concept did: the doctor-patient relationship will no longer take place in a context isolated from the demands of the market-based liberal state.
The second major development that will draw the medical enterprise into the liberal state is the change in medical manpower demographics. In 1980 the Report of the Graduate Medical Education National Advisory Committee (GMENAC Report) suggested that there would be a physician surplus in most subspecialty fields by 1990.54 Concern about the limited supply of physicians in the 1950s and 1960s had produced a massive increase in the number of people graduating from medical schools. Between 1959 and 1978 the number of medical schools increased from 85 to 126.
Now at the beginning of the 1990s, we know that there are definitely more physicians available, but it does not appear that there is a surplus now, nor that there will be in the next twenty years.55 New research suggests that GMENAC overestimated the growth of physician supply and underestimated demand because it failed to take into account the decreased amount of time most female physicians work, the aging of the general population, and the relatively sluggish growth of HMOs. Nonetheless, there is little doubt that for many areas there is no lack of physicians.
The expanding numbers of physicians should have at least two effects. First, medically underserved areas will finally begin to have physicians available. There are signs that this is happening already, with a general relocation of physicians to once underserved rural areas.56 Second, physicians will undoubtedly attempt to increase demand to keep
step with supply, leading to more unnecessary, operations and procedures.57 Even so, there will still be greater competition among doctors for a smaller health care pie.
Alvan Tarlov and his former group at the University of Chicago discussed the repercussions of increased competition in the early 1980s.58 First, Tarlov argued, "Salaried positions are becoming increasingly attractive to newly trained physicians in an increasingly competitive environment as they demonstrate willingness to sacrifice income flexibility in favor of income security and fewer work hours."59 Tarlov predicted that more doctors will be willing to practice in HMOs; in addition, professional autonomy will be sacrificed for collective bargaining. Second, he foresaw a general movement to more entrepreneurship in medicine, with growth of prepaid group practices. With aggressive marketing, "the trusting covenantal relationship between doctors and patients, which has characterized medical practice for hundreds of years, will react to the contractual structures' interest in organized medical plans."60
Third, in Tarlov's analysis, competition will dovetail with new prospective payment plans to make doctors much more aware of costs. As a result, there will be greater incentives to adopt a corporate approach to efficient practice, including the use of organizational schemes and diagnostic algorithms.61 Fourth, there will be more choices for the patient as consumer. Patients will change physicians more frequently and become effective shoppers in the medical marketplace. Tarlov very effectively summarized the results of these changes:
Formerly, a physician and a patient developed a covenantal relationship in which the patient's well-being was supposed to be the dominant consideration. Multiple accountabilities will soon distract from that simple relationship. The physician will be accountable to the underwriting plans, to restrain costs; to the hospital, to help make it financially viable; to the health-services corporation, of which he or she may be a partial owner; and to governments. These accountabilities will be reinforced by preset quantitative expectations of physician productivity and regular feedback on performance data, and perhaps by penalties. Working agreements, such as a 40-hour week and weekend coverage, may further contribute to the erosion of the traditional sense of the physician's personal responsibility for the patient. The patient will become a client of the corporation. The physician's attentiveness to the patient could become an effort to maintain good business.62
Thus the changes in medical demography will parallel and in some ways complement those changes rooted in reimbursement patterns.
The old "patient comes first" duty, which required a doctor-patient relationship isolated from the liberal economy, seems increasingly inappropriate. Ethical relations will thus have to be redeveloped to resemble more those of the liberal state—negative freedoms guaranteed by rights will have to be balanced against mutual duties. But before developing this argument, there is a third major health care issue to be considered.
This third issue is the growth in investor-owned for-profit hospitals. The term "growth" must be explained. In 1928 there were 2,435 proprietary, hospitals, which made up 36 percent of the total number of hospitals. By 1969 this number was down to 769, 11 percent of the total, and by 1979 down to 727.63 These numbers reflect the decline of the small family-owned hospital in rural America. But the decline from 1970 to 1979 in the number of proprietary, hospitals is deceiving. Many proprietary hospitals were replaced by small for-profit hospitals owned by corporate hospital chains.64 As a result, the percentage of hospital beds that were for-profit rose in the 1970s. Moreover, these beds were concentrated in high-growth areas such as in California and Florida.65
By 1979 "there were 35 investor-owned corporations directly owning or holding contracts for the operation of two or more general hospitals."66 These chains also owned a number of psychiatric hospitals.67 The gross income of the proprietary, hospitals was between $12 billion and $13 billion in 1984. The largest chains, Humana and Hospital Corporation of America, each gross about $1 billion annually. Thus the proprietary, hospital chains carry, massive financial and political clout. Moreover, hospitals are only a part of the corporate push; a large number of imaging centers, dialysis facilities, and especially nursing homes are operated for profit.
The growth of for-profit hospitals is startling only in light of the fact that the hospital sector has traditionally been nonprofit. Some would play down the differences in profit versus not-for-profit hospitals. For instance, R. M. Cunningham argues that "the two systems are not that far apart in their interest in providing high quality, patient care in their communities, Moreover, many nonprofit institutions and systems are now pursuing the kind of aggressive marketing and merchandising of their services for which they criticized for-profit hospitals just a few years ago."68 Good management is good management, runs this argument. Others are not so sure. Edmund Pellegrino has asked whether
the ethic of a "proprietary. hospital" is the ethic of business, a minimalist ethic always indelibly stamped by the need to make a profit.... In a competitive ethos, price becomes the criterion, and the canons of ethics can be submerged in the canons of economics. When costs and finances come into conflict with needs of those who are sick and who come in the expectation of help, how shall the conflict be resolved?69
Advocates of proprietary, hospitals answer this question by saying that nonprofits run into management problems as well; neither type of hospital can afford to run deficits for long. In addition, the for-profit boosters roll out typical liberal economic arguments to make their point: for example, investor-owned hospitals stimulate competition among hospitals and thus hold down inflation in health costs.70 These nicely complement other "competition" arguments noted above. It is not, however, entirely clear that for-profit hospitals are the paradigms of efficiency they pretend to be.71 Indeed, in one study for-profit hospitals did not appear to be any more efficient than not-for-profit hospitals.72
Yet they continue to grow, although the rate of growth has dropped off.73 Bruce teinwald has argued that much of the impetus for the growth of for-profits is that proprietaries "skim"—in other words, they selectively admit "patients who are likely to generate the greatest profit."74 These patients are patients who require uncomplicated nursing care and who use operating rooms, intensive care units, and other services that generate a good deal of hospital revenue. Another aspect of skimming is that for-profits are accused of taking only patients with high reimbursement medical plans—Medicaid patients are excluded. Thus some argue that investor-owned growth is discriminatory.
None of this, however, answers the question posed by Pellegrino, when he Points out that health care is not usually thought of as a commodity. Moreover, as Arnold Relman notes, most patients are not perfect consumers of health care.75 Relman feels that physician investment in for-profits should be prohibited to avoid the conflict of interest:
What I am suggesting is that the medical profession would be in a stronger position, and its voice would carry more moral authority with the public and government, if it adopted the principle that practicing physicians should derive no financial benefit from the health care market except from their own professional services.76
It is doubtful that this kind of prohibition is politically viable. Indeed, recent efforts by Congressman Pete Stark to limit physician self-referral have not met with much interest in Congress.77 Nonetheless, Relman's proposals reflect an interest on the part of at least some leaders in medicine in addressing the ethical dilemmas raised by the new institutional setting of health care. Thoughtful reformulations of medical ethics in light of the changes in the medical enterprise have not, unfortunately, been the rule.
Professional Reaction to the Liberal Market
The American Medical Association's Principles of Medical Ethics reflect the profession's increasing awareness of the changes in medical practice. Principle 4 clearly states: "A physician shall respect the rights of patients, of colleagues, and of other health professionals, and shall safeguard patient confidences within the constraints of the law."78 the rest of the AMA's judicial opinions are peppered with similar acknowledgments noting that market issues and liberal rights are part of medical practice. The AMA defers to the government to work out equitable allocation of health care. the doctor must be conscious of costs, although patient care is the first consideration. Patients' choices arc to be primary, especially in life and death situations.
Doctors are allowed to own or "have a financial interest in a for-profit hospital, nursing home, or other health facility. However if a conflict arises, it must be resolved for the patient's benefit." Physicians may advertise with few restrictions. Physicians may also contract freely with hospitals or other health care units. Division of income in a group practice is allowed. The AMA determines that "competition between and among physicians and other health care practitioners on the basis of... factors such as quality services, skill, experience, miscellaneous conveniences offered to patients... is not only ethical, but l should be] encouraged."79 Finally, the profession notes that "the patient's right of self-decision can be effectively exercised only if the patient possesses enough information to enable an intelligent choice. The patient should make his own determination of treatment."80
Thus the organized medical profession has accepted the increasing
role of the liberal marketplace in health care, and it has abandoned in many ways the duty-based medical ethics that justified physician paternalism. This development is viewed as sad, if not entirely destructive, by some observers. Mark Siegler, for instance, describes three ages of medicine. The first he calls the age of paternalism, from the time of Hippocrates to 1965. Next came the age of autonomy from 1965 until October 1983. Since that time, he notes with some regret, we have been in the age of "bureaucratic parsimony," in which the good of the patient must be weighed against other goods including the needs of society, and the rights of patients. Siegler argues that the core trust between doctors and patients has been lost because of the intrusion of liberal notions of rights into their relationships. In other work, he states that the "imposition of rights language may supplant the traditional model of medicine, a covenant model premised on promise keeping, indebtedness to society, justice and fidelity, and replace it with a narrowly contractual model based on libertarian principles of self-determination."81 I would argue that this contractual model has already supplanted the "patient comes first" ethic.82
Other physicians have reacted to the changes of the past decade by emphasizing the importance of negative freedom in the liberal state. One of the most consistent of these arguments is that of Robert Sade, who has written a number of articles in response to demands for national health insurance. Sade assumes that "the concept of rights has its roots in the moral nature of man and its practical expression in the political system he creates."83 The rights he speaks of are not, however, those of the patient, but those of the physician, and they are concerned largely with physician autonomy.
Sade's argument takes the following course. He states that the moral foundation of liberal rights are traceable to the most sublime fact of existence: "The moral foundation of the rights of man begins with the fact that he is a living creature: he has the right to his own life."84 From this foundation, Sade deduces that since man as a being is capable of action, he must be granted unbridled choice in order to express his humanity. Sade, of course, values the free choice of man and individual expression of humanness just as Mill and Nozick would. Rights guarantee that the individual will retain personal prerogatives, what we have called a large sphere of personal liberty.
The right to life implies three corollaries: First, the right to select those values one deems necessary, to guide one's own life; second, the right to exercise one's
own judgment of the best course of action to achieve the chosen values; and third, the right to dispose of those values, once gained, in the way one chooses, without coercion by other men.85
It is clear that Sade draws heavily on Nozick. Sade would support a negative rather than a positive sense of freedom and would not compromise the values of liberties for those of equality.
Sade then applies his political philosophy to the practice of medicine. The physician is the bearer of the rights he has discussed.
The concept of medical care as the patient's right is immoral because it denies the most fundamental of all rights, that of a man to his own life and the freedom of action to support it.... Health care cannot morally be granted to anyone. It is a service: it must be purchased by those who wish to buy it, or given as a gift to the sick by the only human beings who are competent to give that gift; the health care professionals themselves.86
This is a classic interpretation of rights as the guarantees of personal liberty. Sade's thesis is straight out of the contractual rights tradition that Nozick has summarized. The core of this tradition is that one has a right over the products of one's labor. Just as Wilt Chamberlain should be allowed those dollars he earned by playing basketball, so too should the physician have control over and be paid for the treatment he produces. As Sade puts it, "The economic values produced, however, are not given as gifts by nature, but exist by virtue of the thought and effort of individual men. Goods and services are thus owned as a consequence of the right to sustain life by one's own physical and mental effort."87 Thus Sade sees the doctor as being in much the same position as a baker: he has a right to sell or give what he has produced, whether it is medical knowledge or a loaf of bread.
Sade's support for liberty, is obviously at odds with government intervention. Such intervention puts "immoral" limits on the individual's free choice. Government regulation of reimbursement or of standards review limits the physician's prerogatives. Sade believes that "the only proper function of government is to provide for the defense of individuals against those who would take their property, by force."88 Sade, with Nozick, accepts only negative freedom, certified by a set of rights, as the means through which one expresses one's autonomy. For Sade, justice prohibits government intervention in the form of the removal of obstacles to health care.
His argument against a right to health care is not so interesting, in that it is based on the conception of the right in personam against a
physician. Most would conceive of a right to health care as in rem against society. (an issue discussed later in his book). What is of interest is Sade's rendition of the rights of doctors. His conception of doctors' rights has been roundly criticized. He conveniently seems to forget that the doctor is not the only rights bearer in the doctor-patient relationship. The patient, too, has rights, as George Annas has pointed out: "Not being able to recognize the difference between medical care and the baking industry, Sade is completely incapable of going on to consider the human rights of his patients while they are under his care."89 Annas's message is that rights are not solely the accoutrements of those who can afford them; rather, they are borne by every, person in the liberal state. This is not his only point. He also makes a statement about the specialness of the caring occupations. Gene Outka also speaks of this: "To assume that doctors autonomously produce goods and services in a fashion akin to a baker is grossly oversimplified."90 Outka and Annas thus balk at Sade's defense of the practice of medicine with liberties that emphasize the individual and his privileges in dealing with other people.
Outka's criticism is more limited than one that challenges Sade's entire conception of society. It is based on the observation that doctor-patient interchanges are unlike most other interchanges, and that they therefore deserve special rules. Outka admits that Sade's "stress on a free exchange of goods and services reflects one historically influential rationale for much of medical practice."91 Nevertheless, Outka will not accept that the notion of contract, which is the paradigm Sade uses to characterize encounters with his doctor-baker, is appropriate in the field of medicine: "When lumps appear on someone's neck, it makes little sense to talk of choosing whether to buy a doctor's service rather than a color television set."92 To Outka, it simply does not seem right that a doctor should approach his patient's situation assuming that the patient has a choice similar to those that might be made in commercial matters.
Masters presents this argument very clearly:
(1) The "interest" of the buyer of health services in his own life is not comparable to the "interest" or concern of the purchaser of ordinary, economic goods; (2) the knowledge of the health care buyer is limited, unlike that of the partner in a paradigmatic contract; (3) the purchase of health care cannot be deferred until options in the market have been surveyed; (4) the institutional context of medical practice determines the kind of treatments offered, not a free negotiation between equals.93
These points represent the salient differences between a doctor-patient relationship and a true contract. The contract is indeed the ideal relationship in the liberal society, that Sade envisions. Nevertheless, doctors cannot hope to elaborate the same set of rights in dealing with a patient as would a baker in dealing with a customer. In short, Kass has put it, it is only "loose talk" to refer to health as a commodity. Sade's characterization of medical practice is inappropriate even in a society that highly values liberties guaranteed by rights, even in a society that believes the contract model is the best way for people to deal with one another, and even in a society that insists that medical enterprise should be directed by the public morality of the liberal state.
For the better part of this century, doctors thought in terms of duties when considering their responsibilities to patients. The choice of the language of obligation was significant, given our society's emphasis on rights. The medical emphasis on duties and the sanctity of the doctor-patient relationship were closely associated with, and nurtured by, a system of health care that relied on fee-for-practice reimbursement. The doctor's decisions were thus unfettered by economic or organizational influences—only the patient's best interest was to be considered. Supervision of professional conduct was limited to the profession itself. This set of relationships created great moral hazards for the physician, who was placed in control of both the supply and demand of medical care.
The moral hazard, and the costs associated with it, proved to be too great. Over the past twenty years society, has come to realize it cannot afford a medical care system completely controlled by doctors. A competitive marketplace has been encouraged and is taking shape. In many ways the doctor's role is being redefined. Doctors increasingly experience competing loyalties in their interactions with patients. Because of the demand for cost efficiency, medicine is becoming more bureaucratic as it is reintegrated into the liberal marketplace.
Of course this is not the only explanation for the changes that are occurring in medical care. Pellegrino, for instance, cities the growth of participatory democracy, the increasing education of patients and the increasing moral diversity of our country. All of these factors no doubt play a role.
In light of these changes, however they are explained, doctors and patients are going to have to become accustomed to thinking in terms of negative rights and autonomy. Doctors cannot be offended when a patient claims a right to something. Nor should patients be offended
by the doctor's assertion of her own rights. Traditional ethical notions must be modified because doctors can no longer say the "patient comes first," for they must also consider the hospital, the group practice, and the publicly approved reimbursement scheme. This is not to say that the language of rights exhausts the set of concepts that defines ethical relations. Indeed, the doctor-patient relationship can likely never be purely contractual nor should a contract be the goal.
In light of the evolution of medical care, a new notion of medical ethics is needed which must take into account the virtues of the institutions of the liberal state. The doctor-patient relationship can no longer operate outside institutional considerations. In other words, justice, as instantiated by laws, must become part of the fabric of medical morality. Patients' rights must be considered, but without losing the sense of service that has been central to the traditions of the profession. The potential for exploitation of the patient through a set of noncompetitive economic relationships must also be avoided. In the following chapter, we will formulate such a medical morality, and then specify, it further in succeeding chapters as we consider the relationship of medical morality to law and justice.