The Corporatization Deal – Health Care, Investors, and the Profit Priority, The NEW ENGLAND JOURNAL of MEDICINE, August 30, 2025, by Amitabh Chandra and Mark Shepard
Because of health care’s essential nature, many observers have viewed the growing influence of large companies in the industry, known as “corporatization,” as odious, akin to privatization of fire and police departments. The corporatization of health care often evokes images of rapacious companies that prioritize profits over patients, since corporations operate according to the logic of business, emphasizing efficiency and financial returns, whereas medical institutions have traditionally operated as professional or charitable enterprises.
Although some critics yearn for a return to a purely professional ethos in health care, such a reversal is impractical and potentially irresponsible.
Comment:
By Don McCanne, M.D.
In the current installment of NEJM’s series on the Corporatization of US Health Care (introduced in HJM here), the authors do us a favor. They start by characterizing a reversal of corporate health care in the US as impractical and potentially irresponsible. In so doing, the authors relieve us of the chore of needing to read any of the rest of the article. As a dear friend said, the rest of the article is mealy-mouthed. However, if you are curious as to why an astute observer would label this as “mealy-mouthed,” feel free to read the full article.
The article in its entirety represents how some in the academic community fail to realize precisely what is wrong with our current health care system, and fail to proffer meaningful solutions to its vast deficiencies.
This made me think about what our personal goals should be when we interact professionally with the community. In my interactions, I was able to view our responsibilities from two angles: as a primary care physician and as chairman of the board of a community bank.
As a physician, the primary mission should be to take care of the health care needs of patients and the community. Secondarily, the role should be to produce enough income to pay for the resources needed to fulfill the primary mission and to take care of the basic needs of my family with a modest amount to make life more comfortable.
As a banker with strong interests in the business of the community, the primary mission should be to make as much money as possible to create greater wealth for the investors in the bank. Secondarily the role should be to meet the operating expenses of the bank so that it can serve customers and the banking needs of the community.
These two roles suggest contrasting primary missions: fulfilling a societal need in medicine, versus providing a financially successful business in banking. But is this mission-inspired distinction really true? Let me give you a more nuanced perspective.
First, health care. In South Orange County, California, my brother and I practiced for decades with a mission of trying to meet the health needs of the patients and of the community at large. Being close to the Mexican border, we had a wide variety of patients, ranging from undocumented agricultural workers, gardeners, cooks, household employees for the very affluent, to members of the Western White House. We accepted all patients regardless of ability to pay. We included uncomplicated obstetrics in our practice and one of us was always available, 24 hours a day, for emergenceis. Needless to say, we worked very extended hours, with office hours six days a week and rotating office hours on Sundays. Our income? It was enough to meet the resource needs of our practice and to provide basic needs for our families with some extra to provide some modest comforts. But our basic mission was to meet the health care needs of our patients and the needs of the community.
What about banking? Was that to make a lot of money? Well, I was invited by a close friend, who was also a progressive like me, to serve on the board of a new bank that he was forming. Up front, I want to say that our primary mission was to meet the banking needs of our customers and the banking needs of the community. Our secondary mission was to meet the resource needs of the bank and to provide generous compensation for our employees. As far as compensation for the Board of Directors, we provided very modest directors’ fees that amounted to no more than token compensation. We made a deliberate decision to not declare dividends for the shareholders (who were the directors of the bank), but rather to keep all funds within the operations of the bank, specifically so that we could excel at meeting our mission of taking care of bank customers and the banking needs of the communities (eventually three branches).
This proved to be a very successful tactic. The bank rating organization gave our bank a special award for being the only bank in the US rated as a Premier Performing Bank for ten consecutive years. Needless to say, we became an acquisition target.
Sadly, my good friend, the Chairman, developed a lethal disorder. The vice president, who was destined to take his place, was the only member of the board who wanted to distribute the assets to the shareholders (I.e., himself). The Chairman led the board in creating a new position on the board, the Vice-Chairman, who would be the successor, and the board elected me.
By then the board members were aging, and we were ready to turn the bank over to another community bank with philosophies that matched ours. We were compensated with stock in their bank plus a large cash bonus. That bank was also an acquisition target and sold to a subsidiary of a highly respected national bank founded by a noted religious leader – for a cash buyout of the stock and another large cash bonus.
Thus we fulfilled our primary mission of meeting the needs of the bank customers and the community. But what about the secondary role – making a profit. Yes, we were successful in that as well, but wouldn’t it have been better if the bank were a community asset, provided to the community by public provisioning, as described by Hayden Rooke-Ley for health care? Then it would belong to all of us, whether by public ownership or through a non-profit.
The point is that we are making a mistake in lining up our various services and products as either a public good for serving individuals and society, or as a private profit-making entity to serve the very affluent. We can construct society to serve all individuals and the community whether a social service function like health care or a private business like banking. For us, that means that health care should be provided to take care of everyone. That can be best accomplished by establishing a well-designed, publicly funded and publicly administered single payer system, and not by some mealy-mouthed hodgepodge that operates under a primary mission of providing profits for the affluent, with a secondary mission of meeting only a portion of health care needs for only a portion of the community.
In a time of profound political turmoil, increasing corporate influence in government, and a public safety net under attack, please keep this pro-social perspective in mind.
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