It means that the business elements are not neutral tools that merely enhance efficiency without impinging on medical science itself; rather, the science, the practice, and the business of medicine are intertwined at the most fundamental level. What exactly are these elements, and where did they come from?
Order new kind of enterprise boomed in the American economy in the late nineteenth and early twentieth centuries, creating organizational changes that some would call a second industrial revolution. This new enterprise changed the workplace, the nature of work, and its products. Its productive features included concentration in large plants, labor specialization, process standardization, monopoly of technology, and professional management. Extending the division of labor of Adam Smith's pin factory, Frederick Winslow Taylor further subdivided and managed labor processes, publishing The Principles of Scientific Management in 1911. Incorporating such a labor division, managers designed production processes to achieve the most efficient and intensive use of their highly capitalized facilities.
Superimposed on developments throughout the century, providers and insurance companies consolidated providers and expanded managerial processes in the 1980s and 1990s. They called the whole package "market reform." To justify this somewhat contradictory use of the term market, leaders attributed the bureaucratic growth and vertical and horizontal integration in medicine as well as in industry to strategic adaptations to the market. Most market reformers at the end of the century, however, did not really mean a laissez-faire market. They were actively engaged in rationalizing medical care as industry. In so doing, they consolidated and managed hospitals, organized regional markets, integrated production with finance, mobilized capital, and promulgated professional as well as governmental regulation.
Twentieth-century models of medical organization can also be called capitalist, the label with the most baggage of all. Medical care did to a certain extent employ organizational elements that economist Robert Heilbroner as well as business school professor Thomas McCraw identified as characteristics of capitalism. These elements included division of tasks according to a tiered labor structure, factory-like institutions, accumulation of fixed capital, and market regulation of production and distribution. (Partially) excluding the role of the market, however, these elements also developed in what was called socialist medicine both in Britain and in the Soviet Union. The other important distinction was that these countries removed medical care from the private, investor-profit system. The term capitalist in the sense of being dominated by finance capital was particularly pertinent in the United States at the end of the century, when insurance and finance companies tried to restructure medical care as a rewarding place to invest capital. The financial restructuring of that time was said to have transferred billions of dollars from providing medicine to the wallets of investors and executive management teams.
Supporters as well as critics of reforms at the end of the century tended to single out profit making as the crucial characteristic of business, capitalist, or market models of medicine. Profit was far from new to medicine at that time, however. Private physician practices, proprietary hospitals, and the pharmaceutical, insurance, and supply industries had always been for-profit. Profit making did loom larger, to be sure, when previously nonprofit hospitals and Blue Cross health insurance plans "converted" to for-profit status. Yet, contrary to market economic theory, I do not infer that financial self-interest necessarily drove either individual or institutional behavior. Although profit incentives did have an impact in medical care, they do not sufficiently explain its professional or institutional developments or its clinical activities. Most hospitals and physicians were committed to developing their services and their interventions as science, as service, and as progress. I am questioning the validity of these assumptions, not the beneficence of their intentions. Irrespective of intentions, however, the business elements in medical care had clinical consequences.
Battistella, Roger M., "Hospital Receptivity to Market Competition: Image and Reality," Health Care Management Review 10, no. 3 (1985): 19-26
Califano, Joseph A., "The Health-Care Chaos," New York Times Magazine, March 20, 1988, 44, 46, 56-58.
Eisenberg, John M., and Kabcenell, Andrea., "Organized Practice and the Quality of Medical Care," Inquiry 25, no. 1 (1988): 78-89.
Light, Donald W., "The Restructuring of the American Health Care System," in Litman and Robins, Health Politics and Policy, 46-63.
Morone, James A., "Gridlock and Breakthrough in American Health Politics," in Theodor J. Litman and Leonard S. Robins, eds., Health Politics and Policy (Albany: Delmar, 1997),…