THE CRAZE FOR PRIVATIZATION
Lekachman, Robert
The drive for "privatization" first began to gain momentum, like such key elements of the Reagan agenda as deregulation and acceleration of weapons procurement (the infamous MX was a Carter...
...Ossified corporate bureaucracies wage phony war against their ossified government counterparts...
...It is comparatively easy to persuade employers to gamble on such people, many or most of whom would have found jobs for themselves...
...In pleasant contrast, one can stroll into a shopping mall medical office and secure quick treatment for a mild flu virus, a migraine headache, twisted ankle, minor burn, or stomach upset from lunching at one of the mall's fast food emporia...
...Buckingham Security, Ltd...
...There is more to be said...
...A governmentcorrections, a government-research, a governmenthealth care partnership seems fated to replicate the expensive history of the militaryindustrial complex, complete with conflicts of interest on the part of bureaucrats who plan to move into the very private sector with which they officially deal, much as generals, admirals, colonels, and commanders smoothly shrug out of their uniforms into corporate pinstripes as extravagantly rewarded vice presidents of General Dynamics, Martin Marrieta, General Electric, Rockwell, and smaller clients of the Department of Defense...
...Interns and residents will work even longer hours than is the barbarous medical tradition...
...Employment in hospitals nearly doubled between 1966 and 1979, but the rates of growth differed notably by type of ownership...
...Before the United States began to deindustrialize, major corporate and some public employers offered health coverage generous enough to pay almost all hospital room charges and physicians' fees...
...An even more rapidly expanding health specialty— nursing home facilities—now operates nearly 80 percent for profit...
...Its president proclaimed that "Our basic mission is to provide correctional services to government in an efficient, cost-effective manner...
...Those voluntary hospitals that survive will unavoidably cut costs in much the same fashion as their corporate rivals...
...There was no indication that patients received better medical care for their money...
...Invariably eligibility is restored just in time to qualify the contractor for still another lucrative helping of military appropriations...
...At least one jurist, Chief Judge John Singleton of the Federal District Court in Houston, has held that the Immigration and Naturalization Service could not constitutionally surrender to private contractors its responsibilities to aliens...
...Totally rational patients will change doctors if necessary to minimize costs...
...Nonprofits and for-profits will do their best to dump financially unrewarding patients upon chronically overcrowded and underfunded municipal facilities...
...As Dr...
...These are early days in a market almost daily transformed by political and corporate maneuver...
...5 success of Ohio Works, a private corporation which recruits and trains entry-level workers Job training for profit should also be on the suspect list...
...Corporate newcomers to the criminal justice market, for example, will no doubt pursue the successful strategy pioneered by space contractors: bid low on initial contracts and, once customers are locked into personal and business relationships convenient to all parties, raise prices sharply...
...Medicare was designed to relieve the elderly of the bulk of their health care costs...
...Why profit-making prisons...
...The Office of Management and Budget wants private insurance companies to manage, among other federal efforts, Medicare, Medicaid, and federal crop insurance...
...For all its obvious and potential failings, privatization is a spreading affliction...
...Privatization redefines health care...
...Wyoming County Community Hospital in Warsaw, N.Y., for example, terminated its contract with the Hospital Corporation of America because the financial problems that seemed to justify recourse to the private sector persisted...
...In the new order, customers choose health care products much as they shop for cars, refrigerators, and microwave 304 ovens...
...Out there of course are carping critics like Dr...
...of Jeffersonville, Ind., across the river...
...Even Adam Smith, the saint of minimal government, legitimized public administration of courts...
...I f our current festival of private enterprise continues, a thousand studies heaped high to the heavens will not slow privatization in the health sector, because its benefits are less financial than they are sociological...
...The patient was then sent to the Humana Hospital-University and died of smoke inhalation.' 302 The furor locally caused by the incident impelled Humana to open a burn unit, an action no doubt consoling to the victim's relatives and friends...
...Good luck to all of them...
...Pressure upon medically insured workers and their families to pay more of their own health care bills reinforces shopping by price...
...Strategies feature mandatory second opinions, channeling to outpatient surgery, limitations upon reimbursable hospital sojourns, and preferred provider plans that limit or penalize free choice of personal physicians...
...As President Reagan is fond of saying, America is back—to the era of public and private charity...
...Entrepreneurs run airport control towers...
...One fears that Dr...
...In 1984, Ohio's Democratic governor, Richard Celeste celebrated "the early success of Ohio Works, a private corporation which recruits and trains Ohio Works has expanded into other states...
...Can states delegate such protection to private entities...
...Zenith's Healthcare newsletter helpfully lists delivery prices in twenty-five hospitals...
...In Collin County, Texas, voters rejected a bond issue to raise funds for their county hospital...
...As market medicine dictates, indigent, elderly, and chronically ailing patients will get the care they merit—as little as possible...
...As chain spokespersons concede, hospital charges frequently rise in the wake of takeovers, particularly of rural county hospitals, populated mostly by paying patients...
...If he does not attract enough customers, he will rapidly discover that the folks in the front office, who tend to worry more about their money than Dr...
...In time of fiscal crisis, CETA funds were diverted from job training to support of ordinary police, fire protection, education, and sanitation municipal operations...
...It also saves money in the short run for employers and employees because cost conscious families will hesitate to consult doctors for seemingly minor ailments...
...Privatization is not confined to health services...
...At age 30, Dr...
...Bernard Corbett closed his private practice and enlisted in MedCenter, explaining that "It's becoming more competitive and it's become increasingly expensive for a young physician to set up his own practice...
...Nevertheless, until recently official rhetoric and, to some extent, actual public funding operated to check the sorting of patients by income...
...Group practices, let alone solo operators, keep bankers' rather than retailers' hours...
...Cost-benefit calculations are certain to deter corporate trainers and motivators from dipping very far down into the pool of the long-term jobless...
...Patients will be prematurely discharged when insurance or Medicare reimbursement threatens to run out...
...Employees freely chose their own doctors...
...Municipalities and states that consign construction and management of new prisons to corporate entrepreneurs will rapidly discover that they have as little alternative to private operation as the Pentagon does in dealing with a single source of a weapons system...
...A 1984 study conducted by the Hospital Research and Educational Trust, an American Hospital Associate affiliate, concluded that in the 272 hospitals studied there were no significant efficiency differences between public and for-profit units...
...If they heed the booklet's message, they can henceforth minimize their hospital charges by shopping around for the cheapest facilities and, unmentioned corollary, doctors who enjoy admitting privileges into them...
...She was picked up by an ambulance provided by Meic Inc...
...and a handful of drunk drivers drying out during mandatory 48-hour penalty sessions...
...Arnold S. Relman, editor of the New England Journal of Medicine, who asserts that The for-profit hospitals avoid services that are not profitable, even though they may be of use to the community...
...One of the immigrants tried to escape while their guard took a telephone call...
...There is excellent cause for skepticism...
...Corporations want quicker, cheaper, and more predictable results...
...Imaginative accounting is part of the game...
...The results already are impressive...
...Gerard Anderson of Johns Hopkins temperately observed, "You will find them in a Westport, a Stamford or a Greenwich but not necessarily in Harlem...
...The guards haven't been in the business that long, so they're not calloused...
...Like their hospital companions, immediate-care centers overtly appeal to the imperatives of efficiency and profit and covertly respond to the claims of class and status...
...Employed and retired blue-collar workers and their families shared physicians and hospital space with more affluent types...
...Nonetheless, for better or worse, more Reagan entails more privatization...
...Typical immediate-care centers are available for business seven days a week, 365 days a year, 12-16 hours daily...
...For young doctors, there are financial temptations...
...Numerous towns and cities have delegated fire protection and garbage collection to private operators...
...Its authors guess that the number will rise rapidly...
...If it comforts the inmates, nobody is called a guard...
...Corbett is naive...
...They're much more humane...
...Quaker Oats' 4,000 employees in and around Chicago have been presented with a booklet listing charges in 44 hospitals for such procedures as normal delivery of babies, tonsillectomies, and cardiac catheterization...
...They like short stays and a lot of diagnostic studies...
...Issues of law and equity aside, is the public getting a good bargain when government shrinks and private contractors assume new responsibilities...
...I in turn advised Unit 237 Norton's will not accept the patient," she wrote...
...Soon afterwards NortonKosair Children's Hospital, a nonprofit unit that for nine years had treated burn patients, announced that it could no longer afford to accept adult burn patients, on whom it had lost $400,000 during the preceding year...
...Competition is as inadequate a safeguard here as it has been in Pentagon procurement...
...erators, continue to acquire nonprofits, municipal hospitals, and even university-affiliated medical centers like that of George Washington University...
...Hospitals make money on short-term illness, preferably elective surgical procedures on otherwise healthy, relatively young people...
...In America, it is unwise to underestimate the entrepreneurial imagination...
...For various reasons, governmentsponsored programs have received mixed reviews...
...Privatization promises better company...
...Elsewhere all available corners will be cut...
...Resident counselors will shortly become as calloused as traditional guards...
...But the evidence of success is slender, anecdotal, and suspiciously subject to the familiar allegation of "creaming...
...Administration plans include shrinkage of the Veterans Administration hospital system and substitution of private alternatives, among them corporate hospitals...
...At fifteen of them average costs for normal deliveries exceeded the Zenith average maternity bill...
...As Douglas Bliss, the hospital board's chairman, unhappily conceded, "We had problems before they came, and they got worse when they were here...
...Along with his 46 subordinates, Bradby wears a camel-colored sweater bearing the insignia of the Corrections Corporation of America...
...Corbett's, will either replace him with a more enterprising healer or shut the office down...
...Prudential Insurance and an employers' organization, the Midwest Business Group on Health, compiled the information...
...Additional corporate trainers have entered the market...
...The men and women who administer punishment are state agents, responsible to elected public officials and elected or appointed judges...
...With these urgent-care centers you can go into practice, but you don't have to worry about money and the front office...
...Nurses will become more productive...
...Its advocates claim that privatization not only saves money by substituting flexible market structures for rigid bureaucracy, it also widens consumer choice...
...The state's Hospital Cost Containment Board study covering 1980-1984 recorded 11 percent higher charges in profitseeking hospitals and, belying efficiency claims, 4 percent higher operating costs.' Communities lured into deals with the forprofits often live to regret them...
...PRIVATE PRISONS AND PRIVATE JAILS threaten civil rights as well as state and local solvency...
...One-stop service...
...For the middle-class customers, the benefit is, above all, convenience...
...Quaker Oats toilers pay 15 percent of their hospital bills...
...Zenith challenges its 7,000 workers in Glenview, Illinois, to save on maternity costs: "Having a baby: can you beat the average...
...Private prisons, like private hospitals, are driven by profit maximization, not sensitivity to the needs of rights of prisoners or patients...
...They are trying...
...The comparable 1985 figure is $173 billion...
...Their education, jobs, income, and opinions are just like those you encounter in your car pool or on the commuter train...
...For those who can afford them, VIP suites and gourmet cuisine are available...
...Translation: the ratio of patients to nurses, aides, and attendants will rise...
...Hippocrates by the numbers in the esteem of thoroughly socialized MBAs is indistinguishable from other services and products...
...even now is constructing a $20 million, 715cell, maximum security penitentiary north of Pittsburgh...
...They impose heavier pressure upon public schools to meet stronger competition, a better thing...
...Reprinted by permission of Macmillan Publishing Company...
...Ron Anderson, administrator of Dallas's public Parkland Hospital, put it, "What the County Commissioners couldn't do, raise taxes, A. M. I. did with a hidden tax, by raising charges...
...On June 23, 1983, a 50-year-old woman was severely burned in an explosion on her houseboat in the Ohio River...
...Do their economies of scale and business school managerial skills really more than compensate for inflated executive salaries and generous stockholder dividends...
...Skeptics note how often privatization enthusiasts cite a New York City comparison of the costs of private and public garbage collection...
...They don't like patients who need labor-intensive care, like burn patients, or the chronically ill, or elderly patients...
...Tuition tax credits for the parents of children enrolled in private or religious schools increase the diversity of educational programs, a good thing...
...American Medical International bought the hospital and promptly hiked charges 20 percent...
...Humana, Hospital Corporation of America, and American Medical International, the largest for-profit hospital opExcerpted and adapted from Visions and Nightmares: America After Reagan,e 1987 by Robert Lekachman...
...Corporations avoid cumbersome state contractual procedures...
...When Humana opened its new Louisville hospital in May 1983, it announced that it would not include a burn unit...
...As in any other new industry, enterprises tend to be innovative, vigorous, and lean in managerial style...
...Some enterprises already in operation do not inspire confidence in wholesale privatization of the corrections system...
...4 Idem...
...It will specialize in child molesters, 305 individuals in protective custody, and hard cases menaced by members of the general prison population...
...Zenith does not evaluate hospitals, it prices them...
...The federal government bought $100 billion of private commercial services in 1980...
...The rule of law prescribes fair trial in open court before anyone can be deprived of personal freedom...
...In the ways just discussed, privatization enlarges the impact of income and wealth upon the quantity and quality of medical care...
...Who prefers skimmed milk to cream...
...It scarcely helps matters that the Reagan administration proposes to eliminate federal regulation of nursing homes...
...Can it be that other examples of private efficiency are scarce...
...The final and most powerful charge against corrections privatization is ethical...
...Critics of corporate hospitals justifiably complain that they cream the population, consigning difficult people and their complicated ailments to public and voluntary units...
...As in California, so in Florida...
...The alleged magic of the marketplace apparently diminishes neither the cost of patient care nor the soaring prices attached to ever more exotic advances in medical technology...
...3 Still another California survey, which compared charges by 53 chain hospitals, 78 independent proprietary hospitals, 114 voluntary nonprofits, and 35 public units, discovered that the chains' inpatient bills were 24 percent higher than those of the nonprofits...
...Prisoners will have even less protection against brutality and arbitrary discipline than they do now...
...Imprisonment punishes its human target...
...Private managers can freely hire and fire without sabotage from civil service rules or incompetent patronage hacks...
...In the 303 spirit of Adam Smith if not of Hippocrates, these operate as entrepreneurial ventures...
...Their advocates point to numerous virtues...
...WHERE IS THE LINE TO BE DRAWN between private and public operation...
...By 1984, private, profit-making enterprises owned or managed about two dozen major correctional facilities according to an American Correctional Association estimate...
...From one point of view, the Job Corps' 35 percent success rate is an inspiring outcome...
...At least one community has replaced its police force with a private security company...
...Do the cheaper hospitals offer inferior care...
...The latter sent patients to hospitals as their medical judgment directed...
...307...
...Is private enterprise that good...
...To the degree that purveyors of hospital care turn themselves into extensions of consumer culture, they attract customers attuned to the familiar arts of advertising and marketing...
...Favorable evidence is scanty but, such as it is, deserves attention...
...The inevitable happened...
...Thus a facility that would take four years to build if constructed by a state agency might open in six months under corporate inspiration...
...In his 306 blunt language, "Because both immigration and detention are traditionally the exclusive prerogative of the state, it is evident that the actions of all the defendants were state action within the purview of the public function doctrine...
...Treatment in a strategically located Humana hospital warrants continuation in sickness as in health of safe, middle-class suburban life...
...At the beginning of 1985, there were approximately 2,300 immediate-or-urgent care centers, conveniently located either in shopping malls or nearby freestanding buildings...
...In the next bed may restlessly toss someone of the wrong color, occupation, life style, or income...
...A California analysis echoed this judgment: "Given equal responsibility, accountability and amounts of money, government-operated public services have nearly always been shown to be equal to or better in quality than privately operated ones...
...Private Prisons I HAVE LINGERED UPON THE HEALTH SECTOR because of its life and death significance and its sheer size, some 11 percent of the Gross National Product, nearly twice the Pentagon's share...
...The Reverend Thomas Sheehy, who handles liaison for the diocese of Galveston-Houston with an immigration detention center managed by the Corrections Corporation of America, declared that "If I had my choice of this private organization, or it being run by the Immigration and Naturalization Service, I would take this private organization...
...Can the profit maximizers train workers at lower cost and guide them into more permanent jobs than public alternatives...
...It is too soon to evaluate the Reagan Job Partnership experiment...
...Operating on conventional business principles, profit-making hospitals grab for larger market shares in competition with nonprofits by segmenting their customers...
...As Dr...
...Is government really that bad...
...5 "At McPrison and Burglar King, It's Hold the Justice," The New Republic, April 8, 1985, pp 10-12...
...As Michael Walzer has asked, "Is this punishment or economic calculation, the law or the market...
...After all, an appointment usually is necessary with a physician in private practice...
...One of the tribulations of hospitalization is the sort of people one meets...
...The facility is located on the edge of Chattanooga, Tennessee...
...A second guard, untrained in the use of firearms, proceeded to kill one inmate and wound another...
...For this population, success rates are low and per capita expenditures high...
...As an impediment to economic efficiency, a single Pentagon— industrial complex is more than enough...
...All job training veterans know how to generate a flow of inspiring results...
...To no article of faith are economists more strongly attached than their utter certainty that monopoly any place, any time connotes inefficiency, sterile repetition of outmoded production and delivery techniques, and corresponding absence of innovation...
...In the not so long run, some of these ailments will turn serious, entail days or weeks of incapacity for work and much larger medical bills...
...He runs the Silverdale Detention Center, housing 325 prisoners serving long terms for felonies as serious as murder...
...Dun and Bradstreet and smaller credit agencies screen applicants for federal loans, grants, and contracts...
...Humana and its major rivals define instantcare centers as conduits into their hospitals, much as private physicians send patients to voluntary units...
...The sequel...
...A credit card is acceptable for quick settlement of the bill...
...Simply recruit welfare recipients who are newcomers to dependency, suffer the smallest educational deficits, possess reasonably good work histories, and, with morale reasonably intact, lust for new jobs...
...The drive for "privatization" first began to gain momentum, like such key elements of the Reagan agenda as deregulation and acceleration of weapons procurement (the infamous MX was a Carter favorite), in Jimmy's administration...
...Best of all, they dismantle local monopolies long enjoyed by public schools...
...Your fellow patients fit snugly into your own class niche...
...Are the hospital chains truly more efficient...
...They are all "resident supervisors...
...THE CORRELATION BETWEEN CASH AND THE quality of health care has always been uncomfortably high in America...
...Emergency room visits entail long delays in disagreeable environments, and pot-luck assignment to a doctor who happens to be on duty...
...The Corrections Corporation has rivals...
...Medicare pays a diminishing fraction of pensioners' medical expenses and propels rising percentages of the elderly into the Medicaid system after they exhaust assets during extended nursing home stays...
...There is someone else doing that...
...Of course...
...Nevertheless, none of the available inquiries reach conclusions inspiring to free-market zealots...
...Of the 2,300, 83 were Humana Medfirst Clinics, 29 Flashner Medical Partnership Doctors' Officenters, 23 Centra Units, 18 Instant Care centers managed by National Medical Enterprises, to give appropriate recognition to some of the more prominent operators...
...In his previous career as warden of the Lewisburg penitentiary in Pennsylvania, one of the brothers who founded Buckingham, another corporate operator, was among a group of prison officials charged with inflicting cruel and unusual punishment upon two inmates in their charge...
...A true challenge to prospective parents...
...3 "Public Hospitals Under Private Management" by William Shonick and Ruther Romer, cited in The New York Times, (Idem...
...Notes 1 See the New York Times, January 26, 1985, A 5 2 Idem...
...county offenders enjoying Silverdale hospitality for less than a year...
...Residential programs of the Job Corps variety are expensive—$15,000 or so for a year's training...
...Incarceration strikes the Nashville-based Corrections Corporation of America as an activity ripe for market discipline...
...No longer is it a basic human right—its status in other advanced societies...
...Fees usually compare favorably with conventional charges...
...Brenda K. Noon, the ambulance dispatcher, said in a memorandum that she called Norton-Kosair while the ambulance was on the way there...
...That's expensive.' And of course, as a price of progress toward market efficiency, an occasional patient dies...
...Private prisons may actually be more humane than public alternatives...
...Employment in public hospitals rose a mere 58 percent, in the nonprofit voluntaries 90 percent, but in the profitmaking sector a dramatic 130 percent...
...Illustrative of the ailment is the Pentagon's intermittent suspension of General Dynamics as recipient of new contracts...
...Are corporate managers willing or, if willing, able to protect the constitutional rights of their involuntary customers...
...It extends far beyond garbage and bill collection to the criminal justice system...
...Public hospitals in Greene County and the town of Cuba, also in conservative upstate New York, decided not to renew management contracts...
...Responding to competitive pressure, and taking advantage of union weakness, corporate America has launched a major offensive against employee health benefits...
...The Danner Corporation operates a Houston facility that lodged sixteen stowaways in a windowless twelve-by-twentyfoot cellar...
...Apparently not in the vast health industry...
...The critics have identified the major attraction of private hospitals to those creamed...
...Take Dennis E. Bradby as a corrections pioneer...
Vol. 34 • July 1987 • No. 3
