Director's Statement

Working Papers

Research Awards


The Corporate Transformation of American Health Care

A Study in Institution Building

Laura Anne Schmidt

CCOP Working Paper #2000-08
January, 2000

In the last three decades, the American health care system has undergone revolutionary change. What was for much of the 20th century a cottage industry dominated by a monopolizing medical profession is now a sprawling, price-competitive market dominated by large, integrated health care firms. Medicine's traditional ethos of community service and fiduciary ethic seem to have given way to the unbridled spirit of corporate capitalism. And the organizations that now populate the landscape of the health care system seem radically unfamiliar. Gone are the autonomous community hospitals and solo medical practices that most Americans grew up with. Entrepreneurs and venture capitalists have replaced them with a whole menagerie of integrated delivery systems, managed care plans, provider networks and national health care chains.

Perhaps the most striking changes are in the medical profession. For much of the 20th century, medicine was an heroic exception to the otherwise waning tradition of independent professionalism in America. But in recent decades, much of the profession has succumbed to the iron rule of the large corporation and bureaucracy. The majority of young physicians today work in jobs as the employees of organizations. And most practicing physicians, young and old, work under contracts with firms that actively monitor and control what they do by making them accountable to outside standards of cost-effectiveness. Today, medical trade journals debate if and how physicians could "take back" medicine.


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