Surgeons Are Prioritizing Patients amid the Corporatization of Healthcare

In an ideal practice environment, the application of medicine and surgery takes place in a dyadic relationship between a physician and patient where leadership, staff, and care team members provide the clinician with every tool necessary to heal. All efforts should be perfectly aligned to do what is best for the patient.

However, as specialists practicing in a resource-intensive field, contemporary surgeons understand that the physician-patient relationship is not set in a vacuum. That essential dyad is influenced by other systems, including the overall economics of healthcare, which is a particular point of interest in the US with its disparate system of payers, providers, and financial stakeholders. In that space, the so-called “corporatization of healthcare” has seen increased attention.

As a dedicated term, the definition of corporatization in healthcare continues to evolve, but it is commonly understood to refer to both the consolidation of healthcare entities into ownership by a central corporate force that guides or supersedes local autonomy, but it also can refer to the shift in the behavior of hospitals and health systems to focus on profit rather than patient care.¹

The evidence for an increasingly corporatized health system is clear. In 2023 alone, 65 hospitals or health systems announced transactions regarding mergers or acquisitions, and the transacted revenue totaled more than $38 billion.² Set against a backdrop of nearly $5 trillion in health expenditures in the US,3 the business of medicine is a significant economic force.

Still, that ever-increasing financial element may give surgeons pause when considering if and how corporatization affects the practice of surgery, patients, and clinicians themselves.

Dyads, Triads, Tetrads

Even if the ideal dyad of the physician-patient relationship is understood to be subject to outside forces, the directness with which financial concerns impact how a surgeon interacts with a patient can present issues.

“What the key issue is for surgeons is the physician-patient relationship that is at the core of what we do every day,” said Ross F. Goldberg, MD, FACS, chief of perioperative services at Jackson Memorial Hospital in Miami, Florida. “When individuals outside a patient’s care team try to insert themselves into treatment, through whatever mechanism, it causes problems with the healthcare that we can deliver.”

Often, financial considerations from leadership who either direct corporate entities or corporatized health systems, health insurers, and beyond that turn the physician-patient dyad into a triad or a tetrad that can complicate patient care. It is inevitable in the current US health system for fiscal interests to affect healthcare overall, but Dr. Goldberg suggests that if it alters patient care decisions, the dynamic is significantly changed.

Although there is a necessary business side to healthcare, the productivity and efficiency “line in the sand” for corporatized medicine threatens to sideline surgical expertise.

“Medicine is not like other industries. We can try to be as efficient as we can, but if we have a complex patient with multiple medical issues that raise their risk profile, that also raises the complexity of what we need to do,” said Dr. Goldberg, who also is Past-Chair of the ACS Health Policy Advisory Council.

“No two gallbladders are the same. I could operate on a gallbladder with the same technique on two very different patients for very different medical issues on a different medical profile, and the case could be vastly different as far as efficiency, time, and instrument utilization. One could be an outpatient and one could be inpatient, and both could be noted as a lap chole,” Dr. Goldberg said.

In such a scenario, the resource expenditure for the more complex care could be seen as less efficient, and the surgeon less productive. In a corporatized system, the nuance and risk stratification that a surgeon or care expert provides could be lost as reimbursement, American Medical Association (AMA) Current Procedural Terminology codes, and insurance claims are applied to a case, which can undermine a surgeon’s value.

Perspectives on Value

The question of value is one that comes up regularly when considering the burdens of productivity, especially when considering the broader operational ownership or culture of a hospital.

In recent years, private-equity investors have entered the US healthcare sector in a significant way, owning more than 30% of hospitals in some markets and nearly 400 hospitals overall.^4,5 Private equity explicitly seeks to own businesses and create profit before selling them.⁶ While this transactional form of ownership comes with advantages and disadvantages in other financial sectors, in healthcare, there is concern that private equity creates a conflict of interest between leadership and patients that could lead to reduced quality of care.

This concern has started to bear out. A 2023 Journal of the American Medical Association article that examined changes in adverse events and patient outcomes in private equity-owned hospitals found an increased incidence of falls, central line-associated bloodstream infections, and surgical site infections, among others.⁵ Authors theorized that reduced staffing was a contributing factor to these increases.

Private-equity investments represent a small part of hospital and health system ownership, but their implicit or explicit directives to improve productivity and efficiency are alarming, according to Marshall Z. Schwartz, MD, FACS, professor of surgery and urology at the Wake Forest University College of Medicine and professor at the Institute for Regenerative Medicine in Winston-Salem, North Carolina.

“There are easy things to do as a hospital or system to cut costs that are less invisible and don’t really have a major impact on quality of care, but with corporate healthcare, if the hospital isn’t doing as well, they might start looking for other ways to save money. Cutting staff is a common way to do that,” Dr. Schwartz said.

Staffing reductions are a regular, if contentious, event in any hospital, “but there is a point when you reach a threshold where you are significantly impacting quality of care,” said Dr. Schwartz, who also is a past Vice-Chair of the ACS Board of Regents and a longtime contributor to the College’s health policy and advocacy efforts.

The problem in private equity or financially focused leadership is that the aftereffects of staff reduction may be less visible “because the people who are making these decisions are so far away from the needs and operations of any given hospital,” he said.

Growing Nonsurgical Burdens

As medicine has grown in complexity and reach, so too has the need to record patient care in a way that is useful and accessible across care teams. Enter the electronic health record (EHR), a core component of modern healthcare and surgery. The technology is ostensibly aimed at streamlining and improving care but is commonly maligned for its burdensome documentation requirements.

EHRs have become emblematic of the administrative burden that surgeons commonly face in daily practice, and in the US, EHRs present a unique issue.

“There are good data that show physicians in the US spend more time on the EHR than other equivalent countries because there’s so much documentation we have to do for the billing,” according to Mary L. Brandt, MD, FACS, professor emeritus of surgery, pediatrics, and medical ethics at Baylor College of Medicine in Houston, Texas.

If billing is the impetus to implement and use an EHR—a six-figure+ proposition for moderately sized hospitals and health systems⁷—it may represent an issue for its spoken purpose, which is to improve clinical documentation and patient care. A corporatized healthcare environment threatens to put an emphasis on the financial deliverables over a surgeon’s desire to deliver optimal care.

“If the baseline for an EHR is for billing and not clinical activities, you’re going to run into some frustration,” Dr. Goldberg said, noting that his institution allowed him the time needed to specifically work with their EHR provider to build out his desired documentation program.

This is not leeway that all surgeons can expect or will be granted. Even still, Dr. Goldberg said, he often is required to use his personal time away from the hospital to document his cases appropriately or to respond to inquiries regarding correct codes.

“There needs to be some system that we all use, but it should be easily accessible, readily understandable, and designed around the people who are using it,” he said.

It is the concept of designing the work environment, in all the forms that implies, for surgeons to do their best for their patients and themselves that can run up against a strictly financial focus. Most surgeons have personal preferences for the tools and instruments they use, but they can be flexible. The issue is when equipment is standardized to an extreme, which may hinder the ability to provide optimal surgical care.

“If an OR is streamlined for profit without respect for the wide variation in surgical technique needed for different patients, pathologies, and surgeons, then both surgeons and patients will suffer,” Dr. Brandt said. “The idea that we are a commodity, there to produce high-profit procedures, is a major root cause of the issues we face.”

Balancing the Ideal and the Pragmatic

As much as the ideal physician-patient relationship, organizational leadership, and workflow can and should be a part of any conversation regarding the intended purpose of healthcare, it is critical to recognize the practical realities that are inherent to modern medicine.

The flow of money into and out of a hospital or health system, whether it is considered corporatized or not, is something that also must be a priority as it supports patient care, according to Julie A. Freischlag, MD, FACS, DFSVS, chief executive officer and chief academic officer of Atrium Health Wake Forest Baptist in Winston-Salem, North Carolina, as well as the executive vice-president and chief academic officer of Advocate Health in Charlotte, North Carolina.

“There is a balance, where you do need to make money—there is no question of that—but at the same time, you always want to do the right thing by the patient,” said Dr. Freischlag, who also is ACS Past-President and Past-Chair of the ACS Board of Regents, among many other College leadership roles.

In her unique role as both an executive and an academic leader of a multistate healthcare system with $28.2 billion in revenue, as well as a vascular surgeon, Dr. Freischlag has seen how meeting financial obligations allows for care to be delivered in areas that are less economic powerhouses.

“When we set up systems, even for those that are nonprofit, we all talk about what service lines make money,” Dr. Freischlag said. “If you want to take care of trauma, if you want to take care of pediatrics, then you really do need cardiac surgery and cancer surgery service lines, and you need to take care of some patients who have insurance.”

A basic tenet of healthcare in the US is that those who can pay (usually through insurance) take care of those who cannot.

“Surgery is inarguably one of the areas where hospitals make the most money. So having many surgeons performing surgeries is key so you can afford to do other things, because not everything pays as well,” she said. “If there is no margin, there is no mission, including research and training.”

So, what can be considered a corporatized environment that merges hospitals under one banner can open opportunities to expand care. If the corporatization of healthcare is a current reality, then it is important to look to areas where it can be used advantageously such as a larger health system being able to increase access to healthcare either by addressing financial shortfalls in small institutions, building infrastructure, and so on, Dr. Freischlag suggested.

Dr. Freischlag explained that the goal of any hospital is to treat all patients who enter its doors. Purely profit-motivated institutions “that turn away, transfer, or discharge patients for any reason besides medical indication should look at their mission” and remember that patients always come first.

Outside Looking In

While the hallmarks of corporatized healthcare such as hospital mergers, consolidations, and private-equity investment continue to increase as stakeholders continue to work to determine the impact on healthcare quality, there is one area where the impact is immediately noticeable: on clinicians.

For surgeons, the corporatization of medicine can manifest challenges to internal career satisfaction and well-being, with one of the most glaring disruptions being the shift in “social location” within the hospital.

“For a long time, the center of healthcare decision-making, control of the money, decisions about directions, missions—all of that was really in the hands of the physicians and surgeons. Administrators were an important partner to operationalize the decisions made by physician leaders,” said Dr. Brandt, who also is Chair of the ACS Surgeon Well-Being Workgroup.

“Over the last 30 years, physicians and surgeons have lost their positions of power in the hospital. Not only has that resulted in the current disproportionate focus on the business of medicine, it has marginalized physicians, decreased their ability to effect change, and resulted in personal distress in the form of burnout,” she said.

A diminished decision-making authority can have implications for patient care, as treatment options are filtered through financial considerations or professional metrics. This can lead to moral injury for a surgeon because they know the “right thing to do” and yet find themselves unable to do it due to limitations placed on them by the systems they work in.

The challenges are not limited only to surgeons, however, as the essential support staff often face the brunt of a finance-focused environment.

“Everybody reaches a point where they will start to be affected by a cost-cutting measure, and I would say it impacts areas like the nursing staff more than it does the surgeons,” Dr. Schwartz said.

Extra shifts and lack of coverage “ultimately are going to affect their performance, and it’s not their fault,” he said. This is significant because as frontline workers, nurses often can be the first to see that quality is being affected in their hospitals.

Regardless of professional role, in a heavily corporatized environment, there is concern that speaking up to alert leadership about professional and personal well-being could lead to termination of employment, perpetuating the cycle, and some evidence suggests this is taking place.⁸

Course correcting such an environment requires a different perspective from hospital or health system leadership. Rather than intervene with patient-level initiatives, organizations should consider an “inverted pyramid” approach to management. With patients recognized as the most important element occupying the top of the pyramid, ownership—the “tip” of the pyramid, now at the bottom and the smallest element—should instead focus on helping clinicians as frontline workers.

“I would argue that organizations should be supporting that second layer—clinicians—to provide the care to that top layer, because without the clinicians you can’t provide that care at all,” Dr. Goldberg said.

“If you dismiss clinicians and act as if they are easily replaceable, that they can be swapped out for a younger, cheaper version that won’t say as much, you’ll run into issues. At any job, if you beat down the people who work for you, they’re not going to be as productive, and they’re not going to be as responsive,” he added.

Protecting the Physician-Patient Relationship

At a time when the market forces of healthcare are growing in strength, it is becoming increasingly clear that medical organizations have a role to play with regulatory bodies by asserting their authority as respected voices and patient advocates. At the 2023 AMA House of Delegates Interim Meeting, for example, the ACS delegation strongly supported a resolution to strengthen efforts against horizontal and vertical consolidation in healthcare.⁹

Horizontal consolidation is when two providers performing similar functions combine, and vertical consolidation is when a healthcare entity purchases another one in the supply chain, such as a hospital acquiring an outside laboratory.¹⁰

But for surgeons, there is no organization that more directly represents their concerns than the ACS.

Part of the College’s ability to blunt the potential deleterious effects of corporate medicine is through its Quality Programs, which each are predicated upon evidence-based standards that require hospitals to have the resources and infrastructure needed to improve patient care and achieve better outcomes. In that sense, a purely profit-driven organization is antithetical to being a Surgical Quality Partner (any hospital participating in a Quality Program), so the ACS’s role as an accrediting and credentialing body acts as a baseline level of patient-focused intent.

Equally as important, though, is the ACS serving as a voice for all surgeons in matters of advocacy and health policy at federal and state levels.

“The ACS is a big enough entity that it has a seat at the table, that it has the presence, the gravitas, the backing, and the clinical experience to be a part of conversations related to safeguarding healthcare against financial interests,” Dr. Goldberg said.

“It is met as an equal voice to counter these large groups. The insurance companies are massive. The private-equity groups are massive. We need to be heard as an important voice at the table to counter them,” he added.

Recently, ACS advocacy efforts have found success in key areas that will allow surgeons to practice in a manner consistent with their expertise and that underscores the influence of the College. The ACS and other stakeholders have persuaded a health insurer to roll back implementation of a policy that would deny coverage for monitored anesthesia for colorectal procedures,¹¹ and, beginning in 2026, the Centers for Medicare & Medicaid Services will ease prior authorization requirements after years of urging from the ACS.¹²

Continuing to support the mission of the organization also is critical for the ACS to maintaining its reputation as the House of Surgery and as a voice for surgeons.

“What’s really important is fighting for good pay, making sure that surgeons have well-supported credentials and are able to earn continuing medical education in a high-quality way, making sure that surgeons stay up to date on the field, and promoting camaraderie—so that we can best care for our patients,” Dr. Freischlag said.

Ultimately, the College’s aim aligns with surgeons’ desire to keep the practice of surgery centered on physicians and the patients they care for—and not allowing the corporatization of healthcare to interfere in that most defining dyad.

According to Dr. Goldberg, “It will take all of us working together to improve the quality of care provided in this country and taking back ownership—and at the middle of it all is that physician-patient relationship.” 

Matthew Fox is the Digital Managing Editor in the ACS Division of Integrated Communications in Chicago, IL.

References

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