The Rise of Corporatization

Until the 1960s, nonprofit or government agencies owned most hospitals and other health care institutions. With the initiation of Medicare and Medicaid, however, the potential for profits in health care expanded tremendously, leading many for-profit corporations to enter the field. This growth of corporate medicine is known as corporatization.

Corporatization has substantially affected the work lives of American doctors. As Americans increasingly have obtained their insurance through managed care organizations, doctors have increasingly found employment within those organizations. Passage of the Affordable Care Act has also led doctors to take salaried positions as a way to protect themselves financially from whatever changes that law may bring. In addition, many physicians now work for urgent care centers, which may be owned by insurers, drugstore chains such as CVS, and stores such as Walmart. Meanwhile, hospitals increasingly are buying up private medical practices to expand their posi- tion in the market, increase their bargaining power with insurers, and thus gener- ate more profits. Buying medical practices also increases hospitals’ profits because primary care doctors who work for a hospital are expected to refer their patients to surgeons who work for the same hospital and who typically conduct surgery only in that hospital. Currently, the majority of primary care doctors and around two-thirds of surgeons work as paid employees of hospitals or some other corporate institution, and most of the rest obtain their patients largely through contracts with managed care organizations.

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