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Corporate medicine no cure for health system

Money-Driven Medicine: The Real Reason Health Care Costs So Much
by Maggie Mahar
Collins, 480 pages, $27.95

Competition may be the tonic that drives most sectors of the economy, but it is bad medicine for the medical professions and their clients, financial journalist Maggie Mahar shows in this provocative diagnosis of what ails the US healthcare system.

``In theory, free market competition should reduce the cost of a product. But economics is as much a belief system as it is a science, and economists' theories do not always pan out in the material world. In practice, the scramble for healthcare dollars has proved extraordinarily expensive -- both in terms of the quality of care and in terms of its cost," Mahar writes in ``Money-Driven Medicine."

Mahar, who probed Wall Street in ``Bull! A History of Boom and Bust," offers a troubling picture of a healthcare system that is serving the American public poorly because of market-driven imperatives that pit doctor against doctor, hospital against hospital, doctor against hospital, insurer against insurer, insurer against hospital, medical device maker against medical device maker, and pharmaceutical company against pharmaceutical company.

Because of the competition, she points out, the big drug companies spend twice as much on marketing as on research and development. For the sake of short-term profits to please their shareholders, she maintains, they devote most of their R&D to making small-scale refinements instead of to long-term, pioneering research .

Mahar cites a report by the consumer-advocacy group Families USA that says in 2002 the pharmaceutical houses spent $45 billion on marketing, advertising, and administration and $19 billion on R&D.

Because of the competition, the rivals don't share research. Mahar says they waste millions of dollars and research hours turning out duplicate products . She cites a report showing that between 2002 and 2004, 395 cancer drugs were submitted for clinical trials.

Big pharma, however, is only one of the parts of the health system to come under Mahar's microscope. Others:

Excessive insurer and health maintenance administrative costs and bureaucratic rigidity that takes away the doctor's authority to decide what best serves the patient's need.

Doctors requiring unnecessary tests and procedures and declining to cooperate and collaborate with others or to put in voluntary hours at hospitals.

Unnecessary replication of services and equipment among neighboring hospitals, which results in wasteful warfare as hospitals woo consumers with expensive, unnecessary amenities.

The core message of ``Money-Driven Medicine" is that the quintessential doctor-patient relationship has been transformed by the requirements of corporate medicine into a retailer-consumer relationship, and every sector of the system is trying to sell its products and services to that consumer and reap profits for its stockholders.

This market-driven system, Mahar shows, turns the law of supply and demand on its head. The competition generates excess supply, but that does not lead to less costly medical care. It is the cost of replicated facilities, equipment, products, and services, along with millions spent on marketing and advertising, that keep the cost of medical care in this country soaring.

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