A Healthy System?

The Social Transformation of American Medicine, by Paul Starr, New York: Basic Books, 1983, 514 pp., $24.95.

The New York Times has billed Paul Starr's book "the definitive social history of the medical profession in America." Leaders in the profession are urging doctors to include it among their reading priorities. What is this hefty tome up to?

The Social Transformation of American Medicine comprises two books. Book I is a thoroughly researched and engaging account of long-past events that contributed to 20th-century physician sovereignty over American health care. Its account of 19th-century medical practice in America, much of it performed by family members in the home, is fascinating and believable.

Likewise, the author's account of battles for medical sovereignty by the American Medical Association fought long ago ring true and make lively reading, although Starr's criticisms of physicians' motives and conduct are plainly excessive. In general, the author is comfortable in dealing with the past, but as he seeks, in Book II, to assess the meaning of events not yet clearly defined by the passage of time, his results are decidedly mixed.

He attempts to rationalize the nation's health-care policy of the past 50 years and to speculate about the future, which he calls "the coming of the corporation." In a nutshell, his arguments are (1) that powerful physicians in pursuit of narrow self-interests prevented government control over health care, a result he views as bad, and (2) that this led to corporate control over health care, which he asserts is worse.

These arguments are deeply flawed. Starr undervalues the motives, energy, skill, and societal contributions of physicians, which continue to assure their central role in health-care delivery systems, however they evolve. And his preconceived viewpoint turns an otherwise entertaining and useful analysis into a one-dimensional and partisan argument against consumer choice. He recognizes only good guys (liberals) and bad guys (conservatives).

Nowhere does one find a representative of the world of finite resources, in which actions have consequences. "Good guys" propose expanded entitlements to access, quality, and quantity—never asking the cost, by whom paid, or what other worthy programs must be forgone.

Missing the key point that resources are finite and open to various potential uses, the author misinterprets the manner in which our political process is responding to past health-care initiatives. Their inadequacies, well-documented elsewhere, are tax subsidies that encourage overinsuring, open-ended entitlement programs that encourage overutilization, and cost-plus reimbursement that encourages waste and penalizes efficiency. The author then concludes, in a dizzying leap of faith, that evolving political responses to those inadequacies are necessarily bad.

Actually, patients and providers have been acting as prompted by public policy in overusing health resources. Now that there has arrived a general awareness of the mischief caused by promises unaccompanied by resources, it is natural and appropriate that public policy change in response to the overlooked reality of finite resources.

This book relies heavily on other published material, offering 975 footnotes. This approach seems to have limited the author's time spent with patients and providers learning what's happening in the world of consumer preference and political action. Also, reliance on so many sources, not surprisingly, produced at least a few serious errors.

For example, Starr asserts that hospitals can boost their Medicare reimbursement by "unbundling" profitable ancillary services into separate corporations. But this is untrue—related corporations are treated as one for purposes of Medicare reimbursement.

The assumption that tax-exempt private hospitals can and do provide "free" care is fanciful. All private hospitals, including tax-paying ones, provide care to nonpayers only by increasing their charges to those who pay (America's workers, who pay for all health care, public and private). Starr has apparently confused tax-exempt private hospitals with public hospitals, which appear to offer "free" care but actually receive payment from taxpayers.

The assertion, very important to Starr's argument, that tax-paying hospitals have higher costs is flatly contradicted by studies of certified Medicare cost reports (which are filed by each hospital, containing comparable data in identical format). One recent study showed that three tax-paying hospitals in a medium-sized city admitted 27 percent of all the city's patients last year, while receiving only 23 percent of net revenue. Eight tax-exempt hospitals cared for the other 73 percent, receiving 77 percent of net revenue.

In summary, the author's fixed viewpoint and overreliance on unverified sources lead him to the remarkable conclusion that greater public control will improve consumers' access to health care and the quality and quantity of care received. All evidence suggests otherwise.

David A. Jones is chairman of the board and chief executive officer of Humana Inc., one of the leading investor-owned hospital firms.