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Medicine and Public Policy |

The Corporate Compromise: A Marxist View of Health Maintenance Organizations and Prospective Payment

David U. Himmelstein, MD; and Steffie Woolhandler, MD, MPH
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Requests for Reprints: David U. Himmelstein, MD; Department of Medicine, The Cambridge Hospital, 1493 Cambridge Street, Cambridge, MA 02139.

Current Author Addresses: Drs. Himmelstein and Woolhandler: Department of Medicine, The Cambridge Hospital, 1493 Cambridge Street, Cambridge, MA 02139.


© 1988 American College of PhysiciansAmerican College of Physicians


Ann Intern Med. 1988;109(6):494-501. doi:10.7326/0003-4819-109-6-494
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Recent developments in health care are strikingly congruent with a Marxist paradigm. For many years small scale owner producers (physicians) dominated medicine, and the corporate class supported the expansion of services. As health care expanded, corporate involvement in the direct provision of services emerged. This involvement is reflected not only in the rise of for-profit providers, but also in the influence of hospital administrators, utilization review organizations, insurance bureaucrats, and other functionaries unfamiliar with the clinical encounter, but well versed on the bottom line. Corporate providers' quest for increasing revenues has brought them into conflict with corporate purchasers of care, whose employee benefit costs have skyrocketed. This intercorporate conflict powerfully shapes health policy and has caused the rapid proliferation of health maintenance organizations and other forms of prospective payment. Corporate purchasers of care favor the incentives under prospective payment for providers to curtail care and its costs. For corporate providers, prospective payment has allowed increased profits even in the face of constrained revenues, because reimbursement is disconnected from resource use. Unfortunately, this corporate compromise serves patients and physicians poorly. Alternative policy options that challenge corporate interests could save money while improving care.

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