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majority of patients can be handled by either

what we call the corporate model of health care.

a corporation or a small practice.

Both pay physicians on salary, rather than on a

fee-for-service basis. In effect, both receive a set

amount of money per customer to keep their

Opening Markets to

patients well. Both have been leaders in deploy-

Corporate Competition

ing electronic medical records, which enable

coordination of care. Kaiser Permanente offers

bonuses to its clinicians to ensure that patients

There is nothing magical about a corpora-

receive recommended services.17

tion as an organization. Corporate bureaucra-

Yet a corporate model does not necessari-

cies are inherently inflexible, imperfect, and

ly mean an integrated HMO model, which

unimaginative. Competitive market pressures

combines the functions of health care

force corporations to overcome those limita-

provider and insurance company. The com-

tions and are therefore essential to improving

pany providing health care need not be the

medical care. If corporations risk losing cus-

same as the insurance company.

tomers when they fail to keep pace with mar-

ket standards for excellence, they will find a

way to improve--or go out of business.18

Consumers

Putting Patients ahead of

At least two forces stand in the way of

must control the

Providers

robust competition from corporate models

of health care delivery. First, there is the

money that

If you ask doctors, you will find that they

regime of third-party fee-for-service reim-

purchases their

want more autonomy, more reward for ideas

bursement, heavily entrenched by Medicare,

health insurance

that work, less severe penalties for mistakes,

Medicaid, and the regulatory and tax distor-

and less competition. That is what every

tions that tilt employer-provided health care

and must be free

worker in every profession wants. What mat-

in the same direction. Second, there are med-

to choose their

ters in health care, however, is the interest of

ical practice regulations that make it difficult

insurer.

the patient.

for corporations to design optimal work

Some doctors practicing today would be

flows for health care delivery.

unhappy in a corporate environment. They

Let the Patient Control the Money

may value their autonomy and resent having

to answer to a boss who is not as technically

Most doctors want to serve patients. But

skilled as they are (an issue familiar to engi-

there is a conflict: the patient is not the one

neers, among others). On the other hand, a

who pays the bills. Instead, the customer that

corporation might be able to offer doctors bet-

health care providers must learn to serve is

ter work-life balance, more relief from admin-

the private insurance company or the govern-

istrative hassles, better information technolo-

ment program. If doctors want to get paid in

gy systems, and a day-to-day environment that

today's environment, they have to play by

operates more smoothly. Most doctors want

rigid third-party rules imposed by employers

to see their patients treated well, and if a cor-

and government, not patients' choices.

poration better serves the interests of a com-

Reducing our reliance on third-party pay-

plex patient, doctors will be happier working

ments will not be easy. Our moral instinct tells

in that environment than in an environment

us not to take advantage of someone in dis-

where the patients suffer because of flaws in

tress. That translates into a reluctance to have

the system.

individual patients pay for their own health

The health care delivery system will prob-

care services. Unfortunately, insulating con-

ably include doctors who work in a corporate

sumers from the cost of what they buy is

environment and doctors who work in small-

incompatible with efficiency. In health care,

er practices. Complex patients will tend to be

third-party payments force providers to serve

handled by corporate medical care, but the

two masters--the patient and the bureaucrat.

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