eMJA     The Medical Journal of Australia

Home | Issues | eMJA shop | My account | Classifieds | Contact | More... | Topics | Search   

Abstract

• Ethically conducted medical treatment puts the healthcare needs of patients first, ahead of profit, but corporations may pressure GPs to act as their agents instead of the patient's agent.
  
• The medical profession requires an industrial code outlining the specific conditions needed to maintain high standards of medical practice. Health professional organisations also need a code of conduct.
  
• Recent legislation should limit the influence of corporations on doctors: non-medical directors of medical corporations can now be fined or disqualified if they are party to professional misconduct by medical practitioners, and GPs can be prosecuted for offering or accepting pecuniary benefits for referrals.
  
• Doctors need to act now to implement systems which protect the public interest and professional standards before the influence of corporatisation becomes pervasive, and leads to increased legislation and regulation of medical practice.

Doctors are sometimes criticised for glorifying the past and fearing the future, but there are lessons to be learnt from the past. Structures and patterns of medical practice have evolved over many years, and have contributed to the relative success of the Australian healthcare system.

Medical ethics evolved to protect the doctor-patient relationship,¹ and to support the role of GPs as brokers or advocates for their patients within the health system. These ethical principles ensure that GPs are free to act in their patients' best interests and to contract with their patients without hindrance from third parties.

Understanding the key role played by GPs, corporations, insurers, drug companies and governments are all keen to influence them, and thus exert influence in the health market. But this influence may not be in the public interest. As an example, directors of corporations have an ethical responsibility to protect the interests of their shareholders. Successful businesses focus on their customers, but only within the limits of their obligations to deliver security and profit to their shareholders. Ethically conducted medical treatment, on the other hand, puts the healthcare needs of patients ahead of profit.

Doctors and corporate influences

In New South Wales there have been several examples of doctors being induced to put profit first and disregard medical ethics, to their patients' detriment.

In the report of its inquiry into impotency treatment services,² the New South Wales Health Care Complaints Commission (HCCC) described how a corporation recruited men by advertising or telephone recruitment, and used doctors to sell them untested, unapproved penile injections, at a price mark-up of up to 10-fold. The inquiry revealed inadequate sterilisation and preparation standards, increased risk of phimosis and Peyronie's disease, and inadequate diagnostic and treatment procedures. Doctors received a share of the profits through direct payment and subsidisation of their overhead expenses.

According to the HCCC report, some of the doctors involved developed a form of ethical dissociation, justifying the clearly inadequate treatment and fraudulent prescribing as giving the patients what they wanted.

The report of a second inquiry by the HCCC, the Cosmetic Surgery Report,³ raised concerns about non-medical referral agents, such as beauty therapists, referring patients to doctors in return for payment of secret commissions. Cosmetic clinic staff received financial incentives for recruiting patients for therapeutic procedures and then subjecting them to sales tactics to purchase additional cosmetic treatments. The report also raised concerns about consumer helplines (conducted by product manufacturers) referring people to doctors, and doctors arranging loans for patients to pay for their cosmetic surgery.

Perhaps the most fertile field for corporations has been the operation of medical centres, with vertically integrated pathology and radiology services, as well as specialists and pharmacies. A recent report of the Professional Services Review Committee⁴ noted that some doctors in corporatised practices had been pressured to see as many patients as possible, and there were suspicions that pathology tests and diagnostic imaging requests were encouraged.

Doctors as agents for corporations

Common themes with these examples include:

• Corporations directly target healthcare consumers, promising to provide a product or service. In some cases, the service is as much a consumer product as a health service.

• The consumer is directed by the corporation to consult the corporation's doctor. This is a key point for the corporation, as consumers generally assume that doctors operate to a professional standard and in the best interests of patients.

• The doctor appears to be an agent of the patient, but is in fact an agent of the corporation.

• The consumer is misled and, on the recommendation of the doctor, agrees to purchase the product or to bill the health insurer for the service.

• The corporation rewards the doctor, either directly or indirectly, for inducing the consumer to purchase the additional goods or services.

Thus, the corporation induces the doctor to act not as the patient's agent, but as the agent of the corporation. This is an abrogation of the doctor's ethical responsibilities and a breach of the doctor-patient relationship. When costs are met by a third party, such as an insurer, the problem may be aggravated by an absence of a price signal.

Corporations may see this as successful marketing, but the profession and the public would be alarmed that doctors could be induced to betray their patients' trust.

The informed consumer

In an ideal market, this situation would not arise. The consumer would be sufficiently informed to choose from a range of options and purchase the most suitable product, based on performance, durability and price. However, the health system is not ideal. It is very complex, and there is considerable discrepancy between the information available to the consumer and that available to the provider. In fact, most people don't become sufficiently informed to make logical choices until well after they have become a consumer of health services.

The key to protecting consumers is deciding who the informed consumer really is. If we accept that the definition extends to a patient operating with the advice and assistance of his or her GP — a "single economic unit interacting with the rest of the health care system"⁵ — then it becomes imperative to ensure that GPs are always free to put their patients' interest first.

Professional response

The way doctors practise is largely determined by their training and ongoing professional education. Undergraduate, postgraduate and continuing education programs must emphasise ethics and professional standards.

In contrast to nurses, doctors in Australia have traditionally separated their professional and industrial representation. There is a need to review this arrangement, and to link professional standards with industrial representation. The medical profession requires an industrial code that also outlines the specific conditions needed to maintain high standards of medical practice. With linked industrial and professional representation, nurses have maintained and furthered their professional standards in work environments not dissimilar to those of GPs in corporations.

An industrial code for doctors could provide both a framework for corporations employing or contracting doctors, as well as guidelines for industrial, civil or disciplinary action. However, in view of recent conflict between the medical profession and the Australian Competition and Consumer Commission over industrial representation of doctors who are contractors rather than employees, industrial representation of GPs in corporatised practice could be a daunting prospect.

For GPs working in small practices, there is a real need for practice management expertise to be more accessible, and for there to be a range of models to meet this need — practice management consultancies, virtual or actual practice amalgamations and Division-based projects.⁶ With greater management assistance, GPs may be able to make their practices more viable so that corporatisation becomes a choice rather than a necessity.

A code of conduct is also required at the level of health professional organisations. These organisations are vulnerable to influence from both government and corporations, especially where funding grants are concerned. There is also the possibility of undue influence when an office bearer or senior employee of a health professional organisation is recruited from a corporate or government post, or takes such a position soon after leaving the organisation. A code of conduct for senior employees and office bearers of professional associations and colleges could assist in maintaining their independence as defenders of professional standards.

A more detailed description of the impact of corporatisation of medical practice and professional responses is available on the Australian Medical Association website.⁷

Government response

The Medical Practice Amendment Act 2000 (NSW) contains two initiatives which could change the environment for corporatised medicine, and assist GPs in both corporatised practices and managed-care environments.

These initiatives have come as a result of lobbying from doctors and consumers, and an analysis of the inquiries by the HCCC mentioned above.

Non-medical directors of corporations providing medical services can now be fined or disqualified if they are party to unsatisfactory professional conduct or professional misconduct by medical practitioners. These provisions also extend to provision of excessive or unnecessary medical services. The NSW Minister for Health has the power to make regulations to determine evidence of this sort of conduct. This power may be a world first, and deserves professional support. Although medical boards and tribunals are mostly able to deal with the outer limits of professional misconduct, this legislation could be used as a precedent for civil action by doctors, medical defence organisations, and for industrial initiatives.

Another provision prohibits doctors offering or accepting pecuniary benefits for patient referrals, and includes corporations providing medical services, as well as their directors and managers. If these provisions are enforced, they could have widespread implications for the operation and profitability of vertically integrated healthcare corporations in New South Wales. Other States are considering or enacting similar legislation. At a national level, there should also be consideration of parallel legislation covering eligibility for Medicare rebates under the Health Insurance Act 1973 (Cwlth).

As a result of consumer and government concern about the effects of "for profit" corporations on delivery of healthcare in the United States, federal laws have been enacted governing financial relationships between doctors and healthcare corporations.⁸ The attempts of legislators to direct and codify medical practice through the Stark laws has significantly disrupted normal patterns of medical practice.

Conclusions

In Australia, successive governments at State and federal level have encouraged the transition of the Australian health system to a "free market" model, with little understanding of the way the health market operates, or of the role GPs play in protecting the public interest.

Listed public companies have come to dominate some market segments, such as private pathology and imaging services, and now seek a significant segment of the general practice market. Corporations are set to become dominant players in all segments of the health system, including provision of specialist, private hospital and health insurance services.

Doctors have a narrow window of opportunity before the influence of corporations becomes pervasive. They must act now to put in place systems which protect the public interest and professional standards, or suffer the consequences of stockmarket control, and increased regulation of medical practice.

References

1. Australian Medical Association. Code of ethics. Canberra: AMA, 1996.
2. 1998 Report of the Ministerial Committee of Inquiry into Impotency Treatment Services in New South Wales. Sydney: New South Wales Health Care Complaints Commission, 1998. <http://www.hccc.nsw.gov.au/hccc/pdf/impotency_report.pdf> (accessed June 2001).
3. Cosmetic Surgery Report. Report to the New South Wales Minister for Health. Sydney: NSW Health Care Complaints Commission, October 1999.
4. Professional Services Review Annual Report 2000. Director's report. Canberra: Ausinfo, 2000: 8,9.
5. Risk and return in doctors Inc [editorial]. Australian Financial Review 2000; 30 May: 20.
6. Sprogis A. GP corporatisation of general practice: the divisional alternative. Med J Aust 2001; 175: 70-72.
7. Australian Medical Association website. General practice. <www.ama.com.au/ index.html> (accessed June 2001).
8. Ethics in Patient Referrals Act of 1989, HR 939 SC, The Stark II Law (42 USC 1395nn), HCFA releases phase 1 of the Stark II regulations, Latham & Watkins Health Care Practice Group Bulletin No 139 Feb 1: 2001 <http://lawcommerce.com> (accessed June 2001).

Authors' details

Reprints will not be available from the author.
Correspondence: Dr Paul D Fitzgerald, Suite 303, 83 Mount Street, North Sydney, NSW 2060.
docfitzATihug.com.au

©MJA 2001
Make a comment

Other articles have cited this article:

  Paul D Fitzgerald. General practice corporatisation: the half-time score Med J Aust 2002; 177 (2): 90-92. [GP Workforce — Viewpoint] <http://www.mja.com.au/public/issues/177_02_150702/fit10326_fm.html>