It is not just individual corporations that can threaten the entire health system.  This has nothing to do with whether they perform ethically and well or badly.  Just having a large number of them can create havoc if the market does not perform well.

An example from the UK

I will start by quoting a pro-market expert speaker from the UK, who is chief executive of Care England.  He spoke at a meeting in Sydney.  Care England is the leading representative body for independent care services in England.  Like our LASA (Leading Age Services Australia) body, it represents both for-profit and not-for-profit private nursing homes so we need to realise where he is coming from.  We don't have the opinion of all those criticising privatisation. He may be  right when he claims there is underfunding. The policies of the previous and current governments in the UK are very similar to those in Australia so they will be cutting costs to force increased "efficiencies".

The debate on rising aged care costs neglects the enormous social and economic contribution of the home care sector to society and to the sustainability of the health system, the head of the largest peak body for care services in the UK told a Sydney conference on Thursday.

Chief executive of Care England Professor Martin Green warned Australia against following the path of state-funded home care in the UK, in which chronic underfunding of home care has led to a “major crisis” in that country.

Professor Green said major players had chosen to exit the market or were on the brink of failure due to unsustainable funding from government. Just this week the UK’s largest home care provider had been put up for sale.

“And if you undermine your home care services and indeed your residential services, what you will find is that your already pressurised healthcare will be at the point of collapse. That is bad for citizens, and worse than that, it is bad for the economy,” he told the Future of the Home and Community Care conference.

“This skewing of resources to one bit of the system and not the other is one of the major challenges we in the UK face.”

Ageism within the system

- - the notion that older people have the same rights as everybody else in the system, and yet we see time and time again ageism at play and people who are older not getting the same level of support that young people get.”

There was also limited support from the medical community, which he said stemmed from ageist attitudes.

Professor Green cautioned against the widening gap between politic rhetoric and reality without appropriate resourcing.

“One of the things that we have to do is get much more connected to the people who use services and show them the value of what we do.”

 - - another major challenge in the UK was the low pay and recognition of the care workforce. - - -  it is absolutely scandalous that they are neither paid nor respected to be professionals delivering that level of service.

Source: Governments must realise value of care sector to economy, says UK expert  Australian Ageing Agenda 22 May 2015

Much of what he says is reasonable but there is another facet to the risk here - an elephant in the room.  All countries have economic downturns, and politicians in their wisdom will target almost anything to make savings and avoid raising taxes.  When this happens government and not-for-profit operators with an ethic of care struggle on, run at a loss and offer time voluntarily. 

But for-profit, particularly market listed companies have a primary responsibility to their shareholders and not the residents.  They close up shop and walk away if that is going to be less costly than hanging in there and hoping things will change. That is exactly what  the major players referred to here have decided to do.  So the consequences of the major crisis is infinitely worse than it would be if market listed corporations in particular were excluded from it.

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This is not theoretical - USA and Australia

Dave Lindorff in his book "Marketplace Medicine" describes a situation in the USA, I think in the early 1980's, where government was unable to act against multiple aged care providers because they would have closed up shop.  Again at the end of the 1990's there had been extensive rorting and when this was blocked the aged care providers profits plummeted and they could not service their loans.  To keep them viable they got off with token fraud settlements.

In Australia in 1993, a US company called NME (renamed Tenet Healthcare soon after) had purchased Markalinga an Australian company in financial difficulty.  Markalinga owned several private hospitals in Sydney.  Sources in the USA had supplied information about NME's conduct and I had supplied some more. A probity review had been initiated in NSW. 

When I met with the NSW Health Department they told me that if NME failed the probity review existing licences to operate would have to be withdrawn and they would have to organise to provide care for current and future patients from the closed hospitals across the rest of the system.  They had assessed the situation and were prepared to do it. 

They considered that the company lacked probity and advised that the licenses to operate be withdrawn.  Instead the government brought in a supreme court judge who had recently retired because he was at risk of improper influence.  He granted licenses. 

A probity review in Victoria made up their own minds and prevented the company from operating in that state on probity grounds.  In Western Australia the company owned some major hospitals.  Their health department did not have the power to withdraw licenses but asked the state government to pass legislation so that they could do so.  State government refused. The federal government eventually took action, blocking further investment and so forcing them to sell up and go back to the USA.

At the time this company owned only 4 or 5 smaller hospitals in NSW and they were making their first foray into Victoria. We can ask what would have happened if this company had a far larger stake, had for instance purchased Australia's current Ramsay Healthcare.  The consequences of withdrawing licences and forcing closure of large numbers of hospitals across the country would have been unmanageable.

A more recent example: One of the problems about a market in misfortune when contrasted with not-for-profit and government services is that it is driven by potential profitability and not the needs of the community. Potential profitability depends on multiple extraneous factors including the actions of government, the state of the market and general confidence. 

We live in an unstable and unsettled world where countries rise and fall.  What will the consequences be if a company that owns most of our nursing homes gets into trouble elsewhere.  What happens to residents and community services when a foreign owner's country is in trouble, or it gets into trouble with some other business and badly needs to make large savings across all of its other businesses to survive.  The market has winners and losers and big companies, particularly private equity have big ups and downs. What should the unsuspecting seniors who were tempted into these homes by glossy marketing think?

Below is an example where the paralysis in our Australian political system is creating market uncertainty.  This is discouraging the market from investing in needed nursing homes - but Judd is making a good point about alternatives too.  That suggestion would not have come from the for-profit sector because, while it would be cheaper, it would be less profitable.  The different in approach is illustrated.

More than 550 people in acute hospital beds who are fit to be discharged are waiting for placement in a nursing home on any given day in NSW, at vast cost to the taxpayer and considerable risk to their health.

 - - - nearly half of them had been in hospital longer than 35 days and 22 people had been there for longer than 400 days at the most recent census

The NSW chief executive of the peak industry body Leading Aged Services Australia Charles Wurf said industry uncertainty had resulted in NSW providers slowing or abandoning their building works, at a time that the ageing population was booming.

"It's a substantial problem because it takes us four years to put beds on the ground," Mr Wurf said

"The availability of appropriate nursing home beds is a Commonwealth responsibility but the impact of the lack of availability is felt by the NSW Health system," the statement said.

HammondCare chief executive Stephen Judd said the government would save money by funding rehabilitation programs in the community under Medicare, instead of putting them in aged care.

These could be done in a short-term stay environment or in people's own homes.

"They're cheap as chips," Mr Judd said.

"And people have got a strong motivation to improve because they're in their own homes and they probably want to stay there."

Source: Hundreds of elderly patients occupy NSW hospital beds in queue for aged care Sydney Morning Herald, 3 April 2015

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