REVIEW ESSAY: What Can Economic Sociology Say About Health Care?

By Alaz Kilicaslan and Carmen Rowe
Doctoral Students, Boston University

More economic sociologists should study health care, and here is why. On the one hand, health care is treated as a real “commodity” in today’s world, particularly in the US. Despite the role played by the public sector, medical goods and services are overwhelmingly bought and sold in the market through a variety of actors, including the pharmaceutical industry, insurance companies, hospitals, or nursing homes, which all make immense profits. One of the largest and most rapidly growing industries, accounting for more than 17% of the US’s GDP, health care is increasingly becoming an essential part of political rhetoric, as evidenced in the current presidential campaign.

While health care reform currently tops presidential candidates’ agendas, with views ranging from abolishing the Affordable Care Act to creating a single-payer system, they also offer solutions to address outrageous medication prices, especially following public fury over Daraprim’s 5000% price hike (http://www.nytimes. com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html), which occurred overnight, this past September. With a growing awareness across the nation that the American health care system is costly and ineffective, economic sociology may shed light on the market dynamics in this industry and their social antecedents and consequences. On the other hand, health care is remarkably distinct from most other industries, in that moral judgments and debates pervade this field more than any of its counterparts, not least because it relies on a strong relationship of trust and information asymmetry between providers and clients. Thus, health care provides a fertile ground to study how values interplay with market forces; and with what outcomes for the actors involved, as well as for the larger society.

This review looks at two books, Good Pharma by Donald Light and Antonio Maturo and Selling Our Souls by Adam Reich, which are timely attempts towards understanding the potentially problematic relationship between money and medicine. Although they look at different sectors (pharmaceuticals and hospitals, respectively), both books address markets in the medical field through detailed examinations of health care organizations. The vital question Light/Maturo and Reich try to answer can be summarized as: Is it possible for medical organizations to remain loyal to their missions/ values, and simultaneously survive in today’s commercialized health care field? Light/Maturo and Reich not only vividly demonstrate the moral and professional challenges that the market poses to these organizations, but also show that there are different ways for health care providers to grapple with market forces and demands, in striking contrast to neoliberal ideology, which claims the embrace of free-market principles as the only viable way to thrive.

Good Pharma offers readers an extended-case study of a non-profit pharmaceutical organization, which not only managed to survive, but also flourished through the second half of the 20th century, in the midst of a for-profit friendly regulatory environment. Starting in the 1980s, throughout the world, policies such as the deregulation of pharmaceutical marketing and drug-development processes, as well as the strengthening of patent protection laws, have helped producers increase prices and make higher profits. The outcome has been an inefficient industry from a social perspective; one which consumes increasingly higher portions of national resources, yet with stagnant or declining levels of medical innovation. The industry now conducts its own efficacy and safety studies, and financial pressures force companies to test higher doses than needed, in order to insure efficacy, but with a higher risk of toxic reactions. Furthermore, this profit-seeking practice of raising doses has negative eco-systemic effects; as Light/Maturo note, pharmaceuticals are a source of water pollution, one which commercial water filters do not remove and which are not tested for by water companies. Thus, when the industry pushes higher-than-necessary dosages, greater toxic residues are produced in water supplies, reducing the quality of drinking water and producing negative genetic effects in wildlife. Without a holistic approach to pharmaceuticals, which acknowledges the social and ecological effects of pharmaceutical toxicity, the industry avoids accountability for its role in creating health and environmental harms.

In this context of an increasingly commercialized field, Light/Maturo highlight how the Mario Negri (MNI) Institute in Italy, which is comprised of independent scientists, has managed to create a ‘moral economy’, which remains loyal to the service ethos of medicine. This success story has been made possible by an organizational culture characterized by an open, collaborative work environment, with small teams managing their own work; minimal administrative and executive staff; flexible work schedules; gender equality; and low salary differences. More specifically, MNI operates on principles that are strikingly different from those of the pharmaceutical industry. It is funded through grants coming from government, industry, and academic sources, allowing the Institute to maintain institutional autonomy outside of Big Pharma’s reliance on patents and aggressive marketing to consumers. MNI designs its research with an emphasis on transparency in trial procedures, results, as well as risks, serving as a contrast to Big Pharma’s biased trials that exaggerate benefits and understate risks. Without an orientation towards maximizing profit, MNI is also able to pursue promising drugs and cures with low potential for profit, but high potential for promoting patient health.

Light and Maturo display great enthusiasm for a public health model, like that represented by the MNI, which favors public health and patient well-being (and more broadly, scientific integrity) over profit. But readers might still be left with a few questions, such as: Can this single case be replicated here, in the US, where, in the absence of a state-run health care system, coordination among actors and government regulation is weaker? And what would it take? After all, the MNI was founded through unique circumstances, with a fortune left in the will of a man named Mario Negri in order to establish an independent pharmacological research institute. And is the MNI model financially sustainable in a long run?

In contrast to the Mario Negri Institute, which is independent from the for-profit health market, the three US hospitals studied by Reich in Selling our Souls, though all non-profit organizations, operate within the health market, and thus they all must reconcile the contradictions between their social mission to promote public health, and their need to survive under competition. Whereas Light and Maturo focused on one organization through a longitudinal study, Reich provides a cross-sectional analysis of three hospitals. Drawing on data collected from 2006 to 2008 through field-level observations and interviews with hospital staff, he explores the variations that different hospitals display in their attempts to manage these contradictions; thus, his three cases all display unique organizational cultures, reflecting the different periods of US medicine in which they were founded. These different cultures affect the types of patients attracted by these hospitals, the medical practices used, and their financial situations. As Reich makes clear, the commodification of the hospital care field has not produced an automatic loss of professional ethics and values; however, attempts to reconcile market pressures with moral values are imperfect and contradictory, meaning outcomes are not always successful or ideal.

The first hospital explored by Reich, PubliCare, was originally formed in 1887, as a county-run hospital; however, in the 1990s, the financial burden of running the hospital led the county to sell it to a not-for-profit health care company, the Westside Health Corporation. Since its foundation, PubliCare has been committed to helping the underprivileged. For the medical professionals in this hospital, their identities were built almost in opposition to the market. In catering to the needs of the poor, a sense of camaraderie was formed among employees; however, as an organization, the hospital was struggling financially, and there was disorganization stemming from an unclear division of labor and a lack of formal systems. For example, record keeping was inconsistent and incomplete, leading to an unnecessary (and potentially risky) duplication of tests.

The next hospital examined by Reich, HolyCare, opened in 1950, and until 2007 it was operated by a group of nuns known as the Sisters of St. Francis. Since its foundation, HolyCare has emphasized the emotional and moral aspects of care, with a reputation as an “ultraprofessional” organization (P. 75) that assures individual dignity, through comfortable and aesthetically pleasing amenities and attentive personalized care; however, it is not accessible to all. As the most business-minded of the hospitals, serving the wealthiest clientele, the religious values of the hospital were seen as being used instrumentally, to attract wealthy patients and thus to serve the organization’s financial bottom line. Interestingly, Reich found that some believed that the instrumental use of these values became more transparent after the Sisters of St. Francis retired. The managers, as well as most of the medical professionals, did not see a clash between their professional mission and market values. Yet, while the hospital has state of the art facilities and equipment, providing a sense of personalized and humanized care, the entrepreneurial spirit of the hospital resulted in uncoordinated care as physicians frequently behaved as individual proprietors instead of a team. With an emphasis on individual billing, doctors had incentive to pursue patients with good insurance plans that pay out higher reimbursements; furthermore, this emphasis on individual billing provided incentive to engage in potentially risky overtreatment.

Lastly, GroupCare, a health management organization employing salaried doctors, was founded in 1979 and opened its hospital in 1990. At this time, a focus on rationalized and scientific care, aimed at bringing standardization and cost-efficiency to medicine, emerged. Most of the managers and physicians at GroupCare saw themselves as taming the market, as reconciling their professional mission and business needs through standardized care. Through the wide use of electronic medical records, as well as peer-developed protocols and monitoring practices, management strategies aimed to standardize physician behaviors and to align physician economic interests closer with the organization’s financial interests, in the hopes of producing an efficient organizational model. However, there are some indications that the needs of individual patients may have been forsaken for the needs of the whole population of patients, producing potential undertreatment in some cases, and the organization can be criticized as overly bureaucratic, potentially stifling professional discretion.

In conclusion, Reich underscores the challenges of balancing financial realities of commercialized health care with patient wellbeing and the moral mission of medicine. He points out that it is difficult to say which model is the best based on typical quantitative indicators of effectiveness and quality of care, such as mortality rates in connection with various procedures, as all of the hospitals were strong in some areas and weak in others. Furthermore, patient satisfaction rates were similar across the three hospitals. However, given his analysis of the different organizational practices, he leans towards the GroupCare model, claiming it is the model that will mark the future of hospital care. In fact, across the world and within the US, hospitals are shifting towards this model, emphasizing standardized diagnostic and treatment practices based on evidence-based medicine and a prepaid system of health financing. We also know that, with the Affordable Care Act, there is increased incentive for the hospital sector to provide care in a model similar to GroupCare, as its main intention is to eliminate the problem of uninsurance, by covering the maximum number of individuals, even if for a limited level of service.

But, as a point of critique, isn’t the high level of professional subordination to large-scale organizational forces potentially problematic? If physician discretion is lost, physicians could be forced to primarily serve organizational and governmental interests, as opposed to public interests. Physician discretion in a weakly regulated system has arguably failed to serve the public interest, so it is not to say that physician discretion guarantees public concern, but it is still worth questioning if this organizational model might lead to a centralization of power, outside of the public interest. Lastly, while Reich believes that GroupCare is the model for the future, in a context of increasing income stratification, it is worth questioning whether the future of health care is somewhat more stratified than suggested by Reich. While the GroupCare model expands in many hospital settings, much has also been written about the rise in boutique medicine and luxury hospital care. Thus, is GroupCare, and its potential to rationalize care, the future for most, with the future for the wealthy being more in line with a HolyCare model, with increasing personalization and luxury in care?

Both books reviewed here demonstrate the challenges and hardships for surviving, as moral institutions, in today’s commercialized health care field. But there is reason for hope. The no-patent MNI model described by Light and Maturo has actually already been implemented in the US by a few institutions, such as the Vaccine Research Center or National Cancer Institute. And as we see in Reich’s work, even in a problematic structural context, physicians can still retain a great deal of their service ethos and professional mission. But it seems a universal health care system is a must to realize the goals both declared and implied by both authors. After all, the Mario Negri Institute was made possible due to the coordinated, single-payer system in Italy, which made it easier to motivate the scientific community and health care providers to collaborate with one another. Furthermore, in its current state, GroupCare only caters to its membership clientele; with a universal health care system, that could be enlarged to include the whole population.

We followed up with Don Light and Adam Reich on some of these questions, as well as on the broader issues of morality and markets and the possible useful synergies between economic and medical sociology. This interview is featured in the next post.


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