THE CORPORATE HEALTH AND AGED CARE MARKETPLACE

This page contains an overview with critical comment of 141 articles, the majority published in the 3-4 months before August 2000. There was a vast quantity of recent additional information confirming what had been happening in the health care marketplace. Included were a few older articles to create context.

This page and the "Analysis of corporate health culture" using Sun Healthcare as an example were written concurrently and relate to one another.

Main Points

A. INTRODUCTION

1. A FLAWED DEBATE
2. A MORAL QUESTION
3. THE CONSEQUENCES
4. SYSTEMS OF CARE
5. THE THRUST OF THE MATERIAL
6. THE DEBRIS OF THE 20TH CENTURY
7. NEW PERSPECTIVE'S
8. MEETING THE CHALLENGE
9. PERSONAL PREFERENCES
10. BUT THIS IS IRRELEVANT
11. THE SCOPE OF THE MATERIAL

B. THE COMPETITIVE HEALTH CARE MARKETPLACE COMPROMISES CARE
      THE US EXPERIENCE

C. CORPORATISING HEALTH CARE IN AUSTRALIA

1. MAYNE NICKLESS LOOKS FOR MORE AGGRESSIVE LEADERSHIP
2. ALPHA HEALTHCARE
3. THE CORPORATE JUGGERNAUT PRESSES ON IN AUSTRALIA
4. REVESCO THE NEW FORCE IN AUSTRALIAN HEALTH CARE
5. MONITORING AND CONTROLLING CORPORATE ACTIVITY IN AUSTRALIA
6. AGED CARE IN AUSTRALIA
7. TAKING STEPS TO IMPROVE CARE IN NURSING HOMES
8. POLITICIANS AND CORPORATE MANAGERS
9. ANOTHER HEALTH POLICY REVIEW
10. THE HARVARD STUDY OF COMMUNITY PERCEPTIONS

D. MANAGED CARE

1. FAILURE TO MEET THE PROMISE
2. AETNA - AN EXAMPLE
3. HMO DISHONESTY, RACKETEERING AND FRAUD
4. THE COST VERSUS CARE CRISIS
5. COMPETITION FOR WHOSE BENEFIT
6. ACADEMIC INSTITUTIONS
7. MARKETING
8. INTERNET SALE OF HEALTH CARE
9. WHEN IS CRIMINAL CONDUCT ETHICAL

E. PATIENTS RIGHTS LEGISLATION

F. FRAUD IN GENERAL HOSPITALS

G. THE COLLAPSE OF THE NURSING HOME INDUSTRY

1. INTRODUCTION
2. QUALITY OF CARE FALLING - STAFFING - CORRUPTION
3. ATTEMPTS TO ADDRESS THE PROBLEMS
4. CORPORATE DISHONESTY
5. THE NURSING SHORTAGE
6. THE MARKETPLACE FAILS IN ASSISTED LIVING
7 FLORIDA AND NURSING HOME LAW SUITS
8. AND THEN THERE IS VENCOR
9. INTEGRATED HEALTH SERVICES
10. SUN HEALTHCARE
11. OTHER NURSING HOME COMPANIES

H. POLITICAL DONATIONS/INFLUENCE

I. CANADA

J. SOME EXTRAS

K. LIST OF ARTICLES

1. Dramatic new investigations across the USA show that for profit hospitals are not only more expensive but provide inferior care. A new Federal investigation identifies understaffing as the major problem. For profit hospitals are shown to be understaffed when compared with not for profit hospitals. New investigations show the situation in nursing homes is far worse. This reinforces the Australian experience of profit driven nursing homes

2. The primary problem is shown to be the diversion of human and financial resources from the care of patients to the business of the market - ie care of the corporation. This is what Ron Williams predicted in his book "Remission Impossible" in 1992.

3. Almost every sector of the corporate marketplace is in serious financial trouble with actual or threatened bankruptcies, is facing or has faced major fraud investigations, and is being pursued through the courts by a vengeful and angry community. Market theory may be working itself out but at enormous financial and human cost.

4. The largest and previously most financially successful corporate chains are most at fault in all areas of concern. They are the subject of the community's anger.

5. In contrast the not for profit groups and the much larger number of "Mom and Pop" nursing homes which have simply got on with the business of looking after citizens who needed care, using the resources available to them have remained viable. They have not peppered the pages of newspapers with gruesome stories of misused humanity and financial failure.

6. New investigations show how severely oversight has failed and suggest that bribery and close relationships between health care businessmen and politicians are closely linked to this. This must make us ask questions about the close relations developing between corporations and politicians in Australia - and about the failures in aged care.

7. It is now clear that nursing homes were outside the restrictive DRG capitation system which operated in acute hospitals and could charge fee for service. This and not the claimed lower costs or improved patient care is what actually fuelled the boom in post acute and subacute care in the USA. As in the specialty hospitals in 1988-91 vast quantities of therapy was given, medicare was defrauded, staffing was cut and care compromised. Corporate chains rorted the system at the expense of the welfare of citizens.

8. In Australia Mayne Nickless has appointed an aggressive new CEO with a reputation for cutting the fat. Revesco, a new company is embarking on an acquisitive policy not dissimilar to the failed US chains - even promoting the same corporate version of integrated care which so successfully manipulated patients for profit. The parallels are easy to draw.

9 Revesco and other groups have set out to corporatise general practice in order to generate a network of referring centres for the pathology, radiology and ancillary medical service empires they are building. The motive is profit and profit only.

10. Sun Healthcare the dominant owner of Alpha Healthcare is selling its international operations.

11. Sun Healthcare's Andrew Turner has now been forced to resign from Sun Healthcare. He does not intend to retire from health care. There is a very strong belief in the USA that he will use his considerable financial reserves to join with others to buy and then run Sun's international operations. (My assessment is that there are few other buyers) We will get the full benefit of his disturbing operational skills in Australia.

12. Both Canadian and Australian governments seem to be deliberately running down their medicare and public hospital systems, promoting more expensive corporate care. Canadian citizens suspect a conspiracy. Could this have anything to do with commitments made by both governments to the WTO?

1. A FLAWED DEBATE:- The debate about health care in Australia centres on paying for services rather than the way services are provided. My argument is that while this is important it is peripheral to the critical problems in health care. One way or another we are going to have to find the money to pay for the care of our citizens - government funded or user pays, taking more from the those who have more for those who have less. How this is done and how much we pay is a procedural matter. Much more important is how we expend and stretch the money which society decides is appropriate so that we provide the best and most equitable care possible.

The belief systems of our market society lead us to automatically equate a user pays system with the marketplace, and the marketplace with the rights of other individuals to profit from providing health care. This makes the claimed benefits of the corporate marketplace appear legitimate. This is the "associative logic" of the marketplace (so well illustrated by Graham Samuel's health care model). It is fatally flawed. By failing to think logically we fail to confront a profound moral and ethical problem at the heart of modern society and modern thinking.

2. A MORAL QUESTION:- Is it morally acceptable for one group of citizens to build their wealth, (sometimes vast wealth) and well being on the misery and misfortune of other less fortunate sections of society, nationally and globally? A survey of our citizens would I hope generate a massive negative response.

Taking financial and personal control of our own well being and health when we are able to do so is quite different from paying for someone to make vast profits out of our misfortune - even when that is paid by government. Unfortunately the really big payments come when we are not in a position to control either the expenditure or the care. In an aggressively acquisitive system we become helpless victims of the sort of corporate predators and the distorted thinking described in the articles I am reviewing.

3. THE CONSEQUENCES:-- This logical error results in a second problem in the Australian debate. The debate ignores powerful forces which impact on the care given to citizens. The debate about the provision of care in Australia is in terms of public versus private health care. This sidesteps the critical issues - issues which our establishment is reluctant to confront. The critical issue is not whether the care is provided privately or by government but whether it is provided primarily for profit and particularly for the profit of shareholders.

Television debates about health care include corporate providers and a failure to do so would draw the criticism that "key players" were being excluded. Great care is taken to protect their sensibilities and to pussy foot around this issue. To do otherwise would be considered unbalanced. They would refuse to appear and cry bias.

4. SYSTEMS OF CARE:-- There are critical differences between public national health systems, private not for profit systems, privately owned for profit systems and systems based on publicly listed companies and a corporate marketplace. I include in this material extracts from material I have placed on the www which explains the differences and the forces which are generated towards and away from care in each system. ⁴

That commercial pressures, particularly the corporate priorities of profit and growth , together with the pressures of commercial competition lie at the root of the major problems in providing health care can no longer be disputed. The evidence is in.

Human and economic resources are diverted from the care of citizens to the business activities involved in being competitive and generating profits for shareholders. It is not only the most costly system and the most inefficient but it is the most immoral system and seriously compromises care. When funds are limited then care (eg nursing) is rationed for the economic benefit of distant shareholders. Their personal interests are not involved and they do not know what is being done in their name.

5. THE THRUST OF THE MATERIAL:- Most of the material in the attached file addresses the critical difference between market based profit driven corporate systems of care and non corporate care driven systems. The articles reveal the consequences of a system in which market listed corporations play a dominant and controlling role. The material reveals a failure to confront and grasp fundamental problems in the provision of care in this way. Instead of identifying the powerful forces creating the problems and addressing them, attempts in the USA and Australia concentrate on regulation, monitoring, accreditation, and punishment; measures which have demonstrably failed on multiple occasions. The reasons for this lie in the dominance of economic ideology and in the close nexus between a powerful corporate establishment and a pliant political system.

6. THE DEBRIS OF THE 20TH CENTURY:- The underlying thinking which underpins the thoughtless application of broad social theories to all sectors of society has been described as the debris of the 20th century. The fallacies in this thinking are illustrated by what is happening in health care. This approach "litters" the 21st century and it will take time to collect it for garbage disposal. The irrelevance of these ideologies to individual situations and the consequent social disruption creates ever increasing discontent. This is reflected in ever stronger grass roots revolt - One Nation - the demonstrations in Alberta Canada -- the frustrated demonstrations in Seattle and at every international economic meeting. This discontent, often manifested violently and illogically is being articulated and focussed by new more rational thinkers with a deeper understanding of social process and human behaviour.

7. NEW PERSPECTIVE'S:- There is an increasing realisation that meanings, solutions and compromises lie within the context of individual situations and not in overarching social theories. Sensible thinking examines broad theory in terms of domains of relevance, limits of applicability, alternate perspective's, and the insights provided by individual situations. This line of thinking underlies a move towards a more community based system for the provision of social services and a far greater involvement of the community in the running of the country and its affairs - a devolution of decision making and implementation. It is on a collision course with current establishment theories and with the concepts which underpin current thinking about globalisation. Modern technology provides an opportunity for the community to "take back" functions which it has in the past delegated to government and in doing so make them more directly relevant to its activities.

8. MEETING THE CHALLENGE:- I see this as an evolutionary step in the see-saw democratisation of society. It is threatening to the corporate establishment and to a political system in which power is retained by marketing plausible all encompassing solutions to the electorate. A 20th century establishment which has used "fear of change" to loudly criticise those who have failed to embrace its corporate solutions is increasingly faced with mounting pressures to confront the logical deficiencies in the thinking which underpins the changes which it advocates. If globalisation is to serve humanity then there is an urgent need for change but it is the thinking in the establishment and the political system which must change, and there is no sign of this. The articles in the attached file reveal profound deficiencies in the "solutions" being offered and underscore the need for changed thinking.

9. PERSONAL PREFERENCES:- My personal preferences for a health care system is the bringing together of the public system, the not for profit system, the professional colleges and the community to develop a cooperative, non competitive community organised and based system of health and aged care. This would eliminate the adverse forces giving rise to the situations described in these articles. It would create a context directly related to health within which the applicability of theories developed elsewhere could be evaluated.

It would provide a forum within which health care integration and monitoring can be safely developed. It would allow society to address "need" and ration care equitably, while responding to reasonable "demand" for additional services and comforts. For profit care would be marginalised. Society has to decide how much it will spend on the needs of its members. A community based system would stretch this to maximum benefit, rationing equitably when required. We already have well established equitable systems for rationing scarce resources like kidneys, livers and hearts. Any profit from meeting additional demand would be returned to the community.

I favour a continuation of medicare to pay for basic need. Next to a national health system this is the most equitable and economical way to pay for care. Personal payments, medical saving accounts and insurance can be used to cover additional demand. There would be no need for the economic coercion used by the government to force younger Australians to take out private health care insurance.

10. BUT THIS IS IRRELEVANT:- My preferences and my views are not relevant to my arguments, and I do not want to be accused of criticising in order to push a personal model of care. I am not trying to promote or impose my solutions or challenge those with other insights. There are many viable alternatives. Others have equally reasonable positions and they may be more practical. I am looking at what is actually happening as a result of the current solutions and why it is happening.

The important issue is to debate health care issues with words and ideas linked directly to real events and the context of health care, rather than to imprecise and illogical abstractions from other domains such as the corporate marketplace. What is clear is that we are travelling on the wrong road and the sooner we turn back and try another the better. Once we realise this then we can debate alternatives.

11. THE SCOPE OF THE MATERIAL:- Most of the material is from the USA but I have included articles from Australia to show how relevant the events in the USA are. I have also included articles from Canada to illustrate the global nature of the issues and discredit Dr Wooldridge's recent rationalisation. He used what he claimed was the failure of the Canadian system to support his policies. We need to understand the similarity between what is happening in the USA, Canada and Australia and the role which ideology plays. The strategy is driven by multinational corporate interests operating through governments and the World Trade Organisation. I have previously supplied documents.

THE US EXPERIENCE

An editorial in the Journal of General Internal Medicine reviews the evidence showing that the marketplace seriously compromises care. It reports on the latest carefully carried out study which "found significant advantages for patients in not-for-profit and teaching institutions." This article is very important and I have placed it at the top of the file. ¹ Some paragraphs are worth quoting.

"Something is wrong in our nation's hospitals. While we are fatally injuring more people than are killed by automobiles and firearms, at a cost that is as large as caring for people with HIV/AIDS (10), hospital managers and even medical staffs appear more preoccupied with survival in the marketplace than the survival of their patients. This is a marketplace where hospitals and health plans would supposedly compete based on quality; where report cards would stimulate zealous efforts to enhance quality. Yet, the signs abound, that such report cards have failed and that the market is blind to all but the financial outcomes. (references given)"

Corporate interests continue to threaten our health system in Australia and they do so with the full support and encouragement of our governments and the international business community. The reasons why care is compromised are obvious . I quote

"Consider nurses. We need look no farther for one possible explanation of Thomas' study findings than the nurses' station down the hall. Largely invisible to researchers (I could find not a single article about the role of inpatient staff nurses in JGIM, other than deploying them to help evaluatephysicians!), nurses play a pivotal role in error detection and prevention-intercepting erroneous orders, recognizing subtle changes in patients' mental status, uncovering critical allergies, transcribing orders and administering increasingly potent medications, minute-to-minute communication with patient and family, not to mention hands-on care of every wound and orifice of increasingly sick frail patients.

One well-documented characteristic of for-profit hospitals is lower staffing and expenditures for nursing. Unfortunately, this distinction is eroding as non-for-profits and academic centers increasingly emulate the for-profits, hiring management consultants whose first job is often to implement schemesfor the down-sizing and deskilling of nursing. Absent from their financial spreadsheets are indicators of the impact of fewer experienced nurses at the bedside."

Nurses and doctors are complaining bitterly about the same thing in Australia. Our not for profit charitable institutions are also emulating the for-profits. They are corporatising, hiring management consultants, instituting similar management practices, and setting up marketing divisions.

The editorial is well referenced and it describes the difficulties in effectively monitoring standards by external methods, particularly in the marketplace - a point I have made ad nauseam. It reviews the much publicised institute of medicine study and concludes

 "To paraphrase the title of the IOM report -- to care is human. To-profit is not -- if it comes at the expense of suffering, or reaps reward from the denial of care, or even merely distracts us from our patient care improvement mission, it should be considered malpractice."

Another article from a group of physicians pressing for a National Health program similar to that in Canada is titled "Medical Errors Higher at For-Profit than Not-for-Profit Hospitals". This gives more details from the latest study. I quote " --- patients at for-profit hospitals are two to four times more likely than patients at not-for-profit hospitals to suffer adverse events --- " ²

This article states

"Previous research has found death rates 25 percent higher at for-profit hospitals than at teaching hospitals and 6 to 7 percent higher than at non-profit, non-teaching hospitals. In addition, for-profit hospitals employ fewer nurses, charge higher prices (costing Medicare an additional $5.2 billion annually) and spend a higher percentage of their budgets on overhead.

A study published last year in the Journal of the American Medical Association also found that for-profit HMOs are lower quality than not-for-profit HMOs on 14 quality measures."

Australia's Dr Wooldridge has made political capital and criticised the health care profession on the basis of a study of adverse events similar to that by the Institute of Medicine. At the same time he has promoted "marketplace reforms" in the Australian health care system -- exactly the system which is so dramatically shown to increase adverse events and deaths in the US system.

I will review articles which reveal an even more startling situation in the Nursing Home marketplace later. 

Legislative patching again

An article "U.S. Senators Draft Medical Errors Bill" describes the bills which congress are debating to deal with the problems. ³ The emphasis of this remedial legislation is on confidentiality and voluntary reporting. The representatives understand that oversight and punitive measures cannot and have not worked. However they carefully avoid the critical problem of market pressures. There is little likelihood that what they propose would work in a corporate health care marketplace. The pressures, stresses and threats to which staff are subjected will make this impossible. Once again the causes of the problem and the actual context in which the problems are occurring are ignored.

It was exactly this problem of monitoring and personal support which led me to suggest an integrated cooperative health system, built around "services", each supported and coordinated by the full resources and know how of teaching institutions. (about 25-30 years ago!) The figures above show that this teaching hospital expertise results in death rates 25% less than in for profit hospitals. Shouldn't we seek to spread this expertise?

Because Australians do not understand the significance of the forces generated by "for profit" medicine I have put an extract from an April 2000 www page I wrote into the accompanying file.⁴ This describes how the different pressures operate in the for profit and not for profit systems with particular emphasis on the impact of capped systems and other forms of cost containment on the corporate marketplace when contrasted with not for profit systems. The way in which health care corporations under financial pressure respond is well illustrated by aged care in the USA and Riverside in Australia.

1. MAYNE NICKLESS LOOKS FOR MORE AGGRESSIVE LEADERSHIP

Two articles "Mayne role to test Smedley" ⁶ and "Mayne chance for full recovery" ⁷ describe the latest development in the Mayne Nickless saga. It seems that corporatised health care is not flourishing and a ruthless hit man has been brought in to fix the problem. It seems that Barry Catchlove and the pugnacious Bob Dalziel were not aggressive enough in pursuing their health care objectives and cutting costs. Mayne Nickless has dumped them and gone head hunting for someone more able to cut costs and downsize the company and its health division. They have found Smedley whose reputation dates back to his role in Shell Healthcare, the company which half the world boycotted because of its dealings with the oppressive Nigerian government.

The only information I have about Smedley comes from these articles. Smedley's likely character is reflected in the claim "Smedley, the cigar-smoking, sports-loving ex-oilman who left the top job at Shell to turn around Colonial has topped the pin-up list of headhunters nationwide ----. ---he has proved he is capable of building worth, wealth in a business --- " Mayne are paying him $2 million to do it. "It's clear high energy is a Smedley trademark." He richly rewards senior staff but it "does not filter down much further". Smedley is known for his gruff approach and it's clear staff either love him or hate him. And if they hate him, they leave. He is idealised and admired in the business world because of his success. I quote "THERE'S a man out there who walks on water. He wears a white gown, he multiplies loaves and fishes, he makes the sick well and the lame run."

There are only two ways to make more money from health care in a system under financial pressure. The first is to defraud the system and the second is to cut staff and compromise care. The articles in the file show the consequences. Under the same sort of financial pressure Sun Healthcare reduced its staff from 80,700 employees in Feb. 20, 1999, to 57,100 currently. ¹⁰⁸ The consequences for care are reflected in the articles I will review later.

The description of Smedley is remarkably similar to that of the high energy corporate giants who founded the great health care empires. Each was a "character", aggressive and ruthlessly focussed on the corporate process of making money - or as Andrew Turner put it "cutting the fat". Each chose to ignore the consequences for care. Each developed a system of thinking which allowed them to exploit the vulnerable, capitalise on the difficulties in monitoring care, take advantage of the inadequacies of accrediting and monitoring processes, and take advantage of the inability of the consumer to act as an effective customer. They were entrepreneurs in every sense of the word. David Malouf in his Boyer lectures describes this ruthlessness, an ability to see and seize opportunities, and having an "eye for the weakness of others" as characteristic.

The comparisons with not dissimilar reports about Richard Eamer (National Medical Enterprises), Richard Scott (Columbia/HCA), Andrew Turner (Sun Healthcare), Lunsford (Vencor) and Elkins (IHS) are easily made, but we will have to wait and see if he behaves similarly.

I have included recent and a few older articles describing Andrew Turner and Elkins corporate conduct in the file as examples so that the comparisons can be made and the risks of similar conduct in Australia evaluated. ^{107, 106, 112, 114, 115, 97, 98} I have written a separate analysis of Turner and Sun Healthcare. Turner too was hated or loved. He surrounded himself with those who would go along with his practices and beliefs. They worshiped him and were richly rewarded, but those rewards did not extend beyond the opulent corporate office. All those listed above received massive personal salaries and were greatly admired in the marketplace and in political circles. I have used the concepts of "extreme closed mindedness" and "successful sociopathy" to analyse this sort of behaviour and show how the financial pressures of the marketplace select for these people - the sort of aggressive opportunistic people least suited to the task of fulfilling society's obligations to care for its members when they are unable to care for themselves. They are interested in financial opportunities and not the welfare of fellow citizens.

The articles try to soften the harsh image they present of Smedley. I quote "He may be a corporate bastard but there is a big welfare streak in his personality,"--- . They describe his involvement in Care Australia and his donations to charity. A search for a philanthropic "do good" personal image has been a characteristic in the personalities I describe. I suspect that this identification with a projected positive image helps them compartmentalise and wall off the less palatable side of their activities. Eamer donated large sums to charity. He was lauded for his philanthropy. The money he gave away was generated by needlessly admitting thousands of children to psychiatric hospitals, keeping them there for the duration of their insurance cover and maximising profits by providing them with vast quantities of treatment which they did not need. His company paid a US $379 million criminal fine and over US $100 million to compensate insurers and the children who had been severely misused. He was forced to resign but received a US $9 million termination reward for his efforts. I have written a separate analysis of Sun Healthcare and Turner.

2. ALPHA HEALTHCARE:- The bankrupt Sun Healthcare is the dominant and controlling share holder in Alpha Healthcare which is not doing well in Australia. ⁸ Alpha is no longer trumpeting the advantages of Sun's support and its expertise. The profitability margin in its core business of private hospitals has fallen from 9.8% to 6.6% and its net operating loss was $2.103 million. It is not paying a dividend. Its senior manager Paul Hopper has fallen on his sword and resigned and staff are being culled. It has sold its pathology businesses to Sonic Healthcare and Mayne Nickless. It has sold its General Practice centres and other facilities in West Australia to Revesco. One of its subsidiaries has been in voluntary administration and Alpha has had to bail it out. It has reduced costs in its remaining core business - hospitals - and this should be interpreted as cutting staff, probably nursing care.

Alpha has also raised $30 million by selling and then leasing back four of its hospitals to an unnamed group. ⁹ This has allowed it to pay off some of its creditors including the bankrupt Sun Healthcare. It is important to understand that this is also a strategy used by US nursing homes and their corporate creditors to protect assets when threatened by bankruptcy. Vencor in 1998 split off its hospitals into a renting REIT with the same directors and corporate investors calling it Ventas. As I understand it when the company collapses the banks and corporate investors are protected. Ordinary shareholders lose their money and a new provider is formed to rent the homes and carry on the business. This is happening in the USA. A large number of Sun's homes are rented from REITs particularly Omega Healthcare.

What will happen to Alpha's hospitals if it goes under? Are its creditors protecting their investment by moving the facilities to a REIT which they own? Will government be forced to bail it out as is happening in the USA? Has NSW Dept Health got the resources to take over and run these hospitals?

Sun's chairman Andrew Turner has been forced to resign from the US company but we should not assume that we have seen the last of him. He has sacrificed a termination bonus in return for an agreement which allows him to continue operating in health care. That Turner and others from Sun plan to form another company to buy Sun's international operations and continue their practices in the international arena is suggested by the reports and comments in the Albuquerque Journal - Sun's home town. ¹¹¹ I was also aware of this rumour and understood that the name being considered for the new company was appropriate -- Intrepid Healthcare. A recent article hints at Ballantrae Healthcare LLC from Atlanta as the vehicle for Turner's international ambitions.

3. THE CORPORATE JUGGERNAUT PRESSES ON IN AUSTRALIA:- While Alpha and Mayne Nickless struggle other aggressive business groups have adopted the same patterns of thinking and are rushing to capitalise on the opportunities which they see in health care. They may be aware of the pressures being generated by the world economic community at the WTO for global health care markets.

An article in the Courier Mail "Dangerous PRACTICE" describes the way in which general practice is being taken over by new corporate groups in Western Australia and Queensland. ¹⁰ These groups have adopted the same model of vertical integration used so successfully by Columbia/HCA and other US corporations. This enabled them to move patients through the system for maximum profit rather than patient benefit, and to offer inducements to doctors to do so. Mayne Nickless also paid service to this model. It has nothing to do with the sort of integration needed in the care of patients. It is integration in order to control referral practices and increase market share. In this instance they want the pathology and the radiology referrals of the doctors - what they call "cross-referencing downstream services"

This system is ripe for exploitation and for fraudulent practices. It required an enormous investigative effort in the USA - operation labscam - to expose and penalise those indulging in unethical and illegal practices including paying kickbacks. An article -- Doctors accept BMW bribes in "kickback culture of creative fraud" -- describes how this is already occurring in the increasingly competitive corporatised pathology marketplace in Australia. ¹¹ I quote " -- its just too easy to sidestep the penalties, or too onerous to provide the level of proof required to put someone in jail" . This is one of the reasons why fraud has flourished in the USA, - but this is Australia! The article alleges that the companies indulging in these practices are prepared to "increase their market share through illegal activity". Once they capture the lions share of general practice there will be no stopping them.

General practice now faces large overheads and increasingly onerous administrative distractions from care in order to meet regulatory needs and supply more sophisticated equipment. This places great pressure on practitioners and gives these corporations a lever to bring them into the system. Corporations tempt them with up front payments of up to $400,000. They clearly believe that they can recoup this by securing their referrals. As the article also shows it is possible to provide this sort of backup using integrated systems which do not have profit as a priority and control of the market as an objective.

Three groups - Westpoint Corporation, Foundation HealthCare and Revesco T/A Total Care Australia have embraced this policy. Westpoint as I recall runs shopping malls and is likely to be influenced by the MacMedicine model.

4. REVESCO THE NEW FORCE IN AUSTRALIAN HEALTH CARE:- Revesco is a New Zealand mining company which , rather like Alpha Healthcare did not prosper. It tried to make money out of technology before turning to health care. One wonders what and who induced it to transfer its operations to Australia and to health care - where others have not prospered. One wonders if the failure of the government's plans to bring in multinationals to carry out its policies for Australian health care has led it to encourage any corporation without a criminal history to fill the void. The reality is that this rules out almost all established health care multinationals. That groups like Revesco have no experience in health care becomes irrelevant.

Revesco's Corporate Strategy and its motivation are quite clearly set out. ¹² It introduces its strategy with "The company's key objective is to maximise returns to its shareholders.". The report documents its history and entry into health care. Its market capitation jumped from $42.39 million in June 1999 to $207.34 million in December 1999 during which period it switched all of its activities to health care, embarked on an acquisition spree and shifted to Australia. Someone must have invested very heavily in this effort. To justify this it must have had strong support from corporate and establishment Australia. It has no prior health care experience.

The breadth of its activities is revealed in Revesco's half yearly report on 15 March 2000.¹³ It is interested in any sort of medical activity which can be used to generate profit by referral from its general practice clinics. It is even targeting paramedical services. That its prime objective is to make money by securing referrals from the doctors in its clinics is revealed in a November 1999 report. ¹⁴ I quote

"The acquisition of the Perth Surgicentre further compliments the Company's move towards offering a total service to general practitioners and specialists, who provide services to patients through the Company's network of medical centres. The Company looks forward to working closely with the existing users of the facility and envisages no material changes to the existing operations."

The March 16, 2000 half yearly directors report (not included in the file) expresses it this way.

"The company is continually examining ways to expand its interest in the medical arena and a great amount of time, effort and cost is being focussed on the identification of add-on services that can be supplied to medical practitioners and the general public."

Can we doubt that it expects to get these referrals and that if it does not then it will take such steps as necessary to secure them. I have not seen a single word in Revesco's reports suggesting that it has any interest in the welfare of the sick, vulnerable and trusting citizens who are likely to become the bodies manipulated for profit. The reports reflect a total corporate focus on profit and only on profit. As John Ralston Saul indicated this is not a conspiracy. One simply has to listen to what they are saying. This is the way they think. It is real and the elected representatives of the people have no problems with this! They have come to think the same way.

In my separate analysis I have explained how Sun Healthcare saw the financial opportunities and then exploited the fee per service system to build its vast empire on post acute care.

It is perhaps no coincidence that Ian Trahar, the CEO of Revesco and Smedley, the new CEO of Mayne Nickless have been selected for health care by the market. I have indicated in the past that the health care marketplace selects for the sort of profit focussed person who is competitive and ruthless enough to make money out of health care. These are the sort of people who have generated great wealth for shareholders in the US marketplace. Both these Australian leaders received their grounding with Shell, the petrol company which was so focussed on profit that it happily went along with the abuse of human rights in Nigeria --

I can only ask how appropriate is it that these two should be the driving forces in an area where the business practices of companies with similar attitudes have resulted in the misuse, neglect and exploitation of vulnerable citizens? The information available from the USA suggests that they do have the qualities which make for financial success in the health care marketplace. What will happen to sick Australians when these two forces go head to head in our newly competitive corporate health care system remains to be seen?

5. MONITORING AND CONTROLLING CORPORATE ACTIVITY IN AUSTRALIA:- A report in the Australian - Outsourcing falls 'outside scrutiny' ¹⁵ - reports that Irene Moss from the ICAC in NSW is disturbed that the ICAC is unable to fulfil its functions when government contracts services to outside groups. The state of Maryland has experienced exactly this problem in health care when prosecuting HMO misconduct. ³⁵ This is also the concern which I expressed when responding to the claims that the terms of contracts with health care groups would protect citizens from exploitation. The reports from the USA which I will address later show that oversight and accreditation processes have not worked. They have simply provided a reassuring facade behind which corporate interests could get on with the business of making money out of sick people.

6. AGED CARE IN AUSTRALIA:- Recent television reports document that a number of nursing homes are still providing substandard care and that attempts are being made to force them to comply. Experience in the USA shows that those homes which default, correct the problems temporarily but soon default again. Their profit priorities cause them to skate close to the regulatory requirements and get away with as much as they can

An article - Chelmsford group's record defended - documents that some of the nursing homes providing substandard care are owned by the same company which owned the infamous Chelmsford deep sleep therapy hospital. ¹⁶ In 1994 a member of the Commonwealth aged care department boasted to me of the steps which the department took to check on the probity of nursing home owners. In 1996 the government removed the probity provisions from the regulations. In 1999 I was assured by the minister's department that they were concerned about the probity of owners. They did not explain how this would be enforced. One can only ask how people like this were allowed to own nursing homes. These elderly citizens are even more vulnerable than those in Chelmsford.

An article in the Sydney Morning Herald -- Damning verdict on nursing homes - reports the findings of the Commonwealth Ombudsman. ¹⁷ This is highly critical of the governments response to information which suggested that residents in nursing homes were being neglected and misused to generate profits. It seems that people who persisted in reporting disturbing situations were written off as "serial complainants". The consequences of similar approaches in the USA are reported extensively in the articles I include here and I will deal with them later. I had drawn the problems in effective oversight of corporate facilities to the attention of Australian governments including the ministers department. I was given assurances from the ministers department at the time.

As I see it the real problem is not in the commitment to monitoring but in the forces introduced into the system by the government's policy of privatisation and corporatisation. The government also has a major conflict of interest. If it successfully detects and prosecutes mistreatment in nursing homes its policy will be discredited and it will be heavily criticised. Experience and reason suggests that such an oversight system will not work.

7. TAKING STEPS TO IMPROVE CARE IN NURSING HOMES:- Leon Flicker from Royal Perth hospital writing in the Medical Journal of Australia (17 July page 77) asks "Healthcare for older people in residential care -- who cares?" ¹⁸ He describes a number of steps to "improve health care for people in residential facilities". One wonders how well these measures will work in a nursing home system driven by pressures for profit and the demands of the share market. I have not included this article in the file.

8. POLITICIANS AND CORPORATE MANAGERS:- Their is something horribly familiar about the article "Business leaders pay $5000 a head for the inside track on Labor". ²²

Almost every email I get from groups in the USA stresses the close personal and financial links between corporations and politicians - the large contributions they make to political campaigns, the money spent on lobbying and the vast expenditure spent marketing positive perceptions to the community. They believe that this is at the heart of the problems in health care and the failure of regulatory structures.

There are now hard facts to support these complaints in the USA and I include reports. ^{125, 126, 127} There is a close correlation between donations to politicians and the way they vote. Some of the articles in the file address this problem. It is commonly believed and reported on television that Clinton's last election was won on marketing and that he secured the funds for this by selling interviews and so influence to corporate groups including health care providers. ⁹⁷

The Australian article reports that the banks, mining companies and the health industry are all paying for access to Australian politicians. ²² As in the USA former politicians and staffers are being employed to lobby on behalf of corporations. The report also reveals the extent to which former politicians are welcomed into the corporate fold. The electorate can only wonder whether this is a reward for a pro-corporate stance while in power - for being a good boy. It is clear that exactly those situations which have caused so much angst and problems in the health system in the USA are alive and well in Australia.

9. ANOTHER HEALTH POLICY REVIEW PREPARED BY STEPHEN DUCKETT and LUCY HUNTER. ²³ This review was commissioned by the Kennet government in Victoria to review Victorian health services to bring them into line with commonwealth competition policies and regulations. The guidelines were therefore set within the economic ideology of both governments. It was consequently not an open ended inquiry but to some extent a "Yes Minister" railway line from A to B. Only the methods for getting there were at issue. I have not yet read the reports and the governments response so cannot comment on the arguments used. I include the covering letter and the summary of the governments response to the report for your information. The full report and the response can be downloaded from --- http://www.dhs.vic.gov.au

Some experiences from the USA do seem to be relevant to matters addressed in this summary and I comment only on these.

Item 4 recommends that the department " --- should no longer be able to take into account adequacy of health services in an area -- " and "The Department should remove the bed cap ---" The government accepts this recommendation.

In the 1980's certificates of need were required in the USA to protect citizens from exploitation by unscrupulous people. New economic policy at this time favoured market forces which were thought to be self regulatory. They would control quality and cost. The requirements for "certificates of need" before granting bed licences were therefore abolished for "specialty hospitals" including psychiatry in the mid 1980's

The corporate chains responded by building vast numbers of specialty hospitals. They mounted a massive marketing campaign to fuel citizens anxiety and induce trusting and anxious parents to admit themselves or their powerless children to hospital. This was regardless of the need to do so. Intense competition resulted as corporations paid large sums to bounty hunters for each head on a bed. These bounty hunters scoured the community to persuade people into hospital, and some adolescents were even kidnapped. Canadians were lured to US hospitals by bounty hunters and free flights in order to defraud their insurers. Deceptive practices were developed to hold people in hospital for as long as possible. 

Thousands of children and adults were admitted needlessly to hospital where they were held for the duration of their insurance, subjected to vast quantities of useless therapy, and so misused and exploited that many were later able to claim millions is compensation (over $US $135 million for one company).

I note from a recent article that certificates of need are still used in US states and attempts to abolish them are being resisted. Restrictions on bed numbers such as "Certificates of need" would be viewed by multinationals and the World Trade Organisation as obstructions to legitimate business activity and the effective operation of market forces. These groups will insist that this restriction be "liberalised" under free trade agreements. The Australian government is a strong supporter. I am consequently very suspicious that there is a hidden agenda behind this item..

Item 5 advises that probity requirements be retained. The USA does not have probity requirements. When the federal government revised the aged care regulations in 1996 they abolished the probity requirements and turned aged care into a competitive marketplace. The recent scandal about standards of care was predictable but government refuses to accept that their policies were contributory!

It is therefore very reassuring that the fitness and propriety requirements are to be retained but the recommendation that this be the only requirement is more problematic. All of the largest corporations in the USA and their directors were highly credible and admired in the marketplace - many were philanthropists. Until they committed fraud or were proven to have misused patients their propriety could not be questioned. To do so would have been ludicrous. Imagine Andrew Turner's reaction!

Examination of their policy documents and public statements would have revealed that these were lacking in real health care experience and in true humanitarian insight. Their philanthropy was form and image rather than care. They were totally unsuited to the health system. Their business strategies were self interested, irresponsible and exceedingly venturesome. This exposed them and consequently their patients to unacceptable risks in the event of any economic downturn. As can be seen from the articles I am sending as well as from previous material the consequences for the health system and for ill citizens have been disastrous. The same conclusions can be drawn from the recent information about Revesco and Mayne Nickless.

Australian Governments and the National Competition Council are promoting corporatisation and marketplace competition as a means of "reforming" health care. The US experience of this sort of reform is reflected in the articles. This suggests that staffing levels and quality of staff will also become critical issues in Australia. We already have problems in nursing homes. A US federal investigation recommends that minimum staffing levels be specified in law and some states have already passed such laws. The new nursing home regulations in Arkansas maintain the certificate of need. Minimum staffing levels are a condition of holding a licence.

In Item 6 and some other items an attempt is made to meet the requirement in the terms of reference that the public hospital system be competitive and compete with the private sector. In the USA government hospitals and not for profit groups primarily concerned about and focussed on care have not been able to compete in a commercial marketplace with corporations focussed primarily on profit and prepared to short change care. As Robert Kuttner indicated in his exposure of Columbia/HCA in June/July 1996 (N Eng J Med.) corporations set the rules for the "level playing field" and these are all economic. Government supports them in this while making much of quality, oversight, and penalties.

Experience shows unequivocally that corporate for profit chains cannot be trusted, that competition is not about care, and that both government and market oversight of care are ineffective in the health care marketplace. Throughout the 20th century regulatory structures and processes (eg law and police under apartheid) have bent to the prevailing ideology and failed to protect citizens. It is citizens themselves who have acted to address injustice and inequity often at great personal cost. In health care in the USA only the dedicated actions and personal sacrifice of individual patients, their relatives, community groups and whistle blowers have had any impact. Corporations have employed every strategy available to them to limit the rights and effectiveness of these groups in exposing corporate misconduct.

10. THE HARVARD STUDY OF COMMUNITY PERCEPTIONS:- A recent article - Elderly Worry About Future Healthcare Costs ⁵ - reports the findings of the Harvard medical school's international survey of attitudes to health care. It found that citizens in those countries which had followed the economic rationalist path, the USA and New Zealand were far more anxious about the future of health care than other developed countries. The sick are vulnerable and experienced citizens wisely do not trust the marketplace. The market only works when citizens have power, are able to exert real influence, and are alert and distrustful. The sick elderly do not qualify on any count and intelligent citizens know this.

This distrust and anxiety has been one of the reasons for the election of the Labor government in New Zealand and their pledge to change the system and humanise care. The validity of the citizens perceptions is reflected in the articles I include. As long ago as the 1960's the sociologist Peter Berger studied the history of establishment structures in society. He found that establishment solutions and prescriptions were seldom in the interests of the majority of citizens, even when they were accepted as plausible and legitimate by those citizens.

The Harvard study supports the importance of medicare and stresses the deficiencies in the US system compared with countries like Australia. Citizens in Canada which has a universal health care system were less anxious. They valued this system highly. As the articles included show Canada has been even more deceptive to it citizens than Australia in running down their national health system and corporatising services^128-130. A press report recently quoted our health minister as describing the Canadian medicare system as one which had failed. He did so in order to support his marketplace solutions.

1. FAILURE TO MEET THE PROMISE:- Two articles - Managed care in the international context ¹⁹ - and - Managed care -- managed ethics ²⁰ - both in the Medical Journal of Australia review managed care in the international context. They describe its failure to fulfil its expectations and realise the claimed benefits. They describe the way in which it has moved the focus of health care from the doctor-patient relationship to the doctor-payer relationship. The second articles indicates that the " key change has involved clinical control being wrested from physicians and conferred on HMO's ---- " The authors are critical of the way in which Australian governments have "In spite of the US experience --- made vigorous attempts to introduce policies to intensify the operation of market forces in this country" A pro-managed care conference in Washington also describes some of managed care's failures. ³⁸

2. AETNA - AN EXAMPLE:- Included in the file are more articles which reveal the consequences of managed care in the USA. Managed care's role model, Aetna, the largest and greediest of the HMO's has fallen on its sword and done a mea culpa. ^24-30 This is in response to the public outrage sweeping across the nation, to intense pressure for legislation to control HMO practices, to a series of multimillion dollar class actions, and to court actions by state governments charging HMO's with unethical and illegal conduct. More than other HMO's Aetna's share price has plummeted.

Shareholders have forced the resignation of senior staff, and forced the company to consider take over offers should they be made. The company is being split up. It is selling its international operations. It is terminating some of its US operations and dumping the patients in those regions where it has been unprofitable. Shareholders may be unhappy but it is these patients who are paying the highest price, a price compounded by shareholders discontent at falling profits. Is this market theory at work?

Aetna will stop offering HMO coverage to seniors in several cities. ³⁰ These are the seniors who are covered by medicare. Medicare pays less well and seniors, many from less affluent sections of society are more often ill and so unprofitable. The disruption of care for the patients who have entrusted their well being to Aetna will be considerable. The government once hailed their policy of moving medicare recipients from direct medicare reimbursements to contracts with corporate HMO's claiming this would be less costly and offer greater benefits. It has been a disaster and the article claims that "the exodus of health plans from Medicare has affected more than 700,000 Medicare beneficiaries" in the first 4 month of this year.

What Aetna is really frightened of and is fighting is patient rights legislation which would allow a rash of law suits by individuals. People are angry and Aetna's conduct has been so reprehensible that in the few cases successfully prosecuted, using loopholes in the ERISA laws judges have awarded massive punitive damages, some over US $100 million. ²⁶

Aetna has reached a face saving agreement to settle an action taken by the Texas government in which it claims that it has promised to abandon its business practices; those critical HMO practices on which their financial success depended. The company and the Texas government have hailed this as a sea change and a blue print for the future. ^24-26

Those more familiar with corporate behaviour and corporate relationships with politicians have examined the agreement more critically and are far from convinced that it will fulfil its promises. ²⁷ They believe it is full of holes. The savings made by HMO's, and their ability to squeeze profits from health care are based on their control of the medical profession and their use of incentives and disincentives to control and restrict care. They will not readily abandon this. The agreement does not really prohibit this.

Politicians are unwilling to address fundamental problems as this would force them to challenge ideology and strongly held beliefs based on this ideology. If effective controls had been included in the agreement these would cut into profits and costs would rise to maintain profit levels. It is not realistic to expect politicians to introduce controls on HMO's which are likely to work.

The Texas settlement does not forbid financial incentives to doctors, but the wording gives it a sugar coating claiming that "--- any financial incentives to doctors do not affect the quality of care received by patients." The HMO's all hotly deny that their practices compromise quality of care. One can only wonder how this will be enforced. Health care corporations have shown themselves to be totally dishonest whenever they think they can get away with it. The reports of its conduct indicate that Aetna has been one of the most ruthless and dishonest. Richard Blumenthal, the attorney general of Connecticut, who is investigating certain practices of Aetna, said the Texas agreement "perpetuates and disguises two central failings endemic to the industry, undisclosed financial incentives for doctors to limit care and undisclosed criteria for discouraging claims."

Neither New York nor Connecticut, which has sued other HMO's and also successfully prosecuted Sun Healthcare for a US $8.4 million fraud have accepted the Texas settlement. Both are still investigating Aetna with a view to prosecution.

The politics behind the Texas decision should also be understood. ²⁷ The attorney general Dan Morales who has been a fearless prosecutor of health care since he initiated the first multimillion dollar health care fraud action against Tenet/NME in 1991 commenced the action against Aetna with the clear intention of holding it accountable for its practices. He was recently replaced by Mr. Cornyn whom one article links to a political group which solicits donations to the republican party from corporations including HMO's. Aetna, despite its financial problems has donated US $65,000 to the republican party since December 1999. As I recall the action was commenced before this but neither Aetna nor Cornyn will disclose whether it was made through the attorneys general association which solicited the donations. Cornyn denies a conflict of interest.

A different and more positive slant to the undertakings given by HMO's is taken in an article - Quality is now a factor in HMO care ³¹ - This article in the LA Times is by two authors who have written a book critical of managed care. The article provides brief insights into the problems in managed care. They refer to United Health's recent claim to a radical change in policy and the sharemarkets positive response to this. They attribute this change to a change in the country's laws which allow citizens to seek redress when they are harmed by HMO decisions. HMO's have spent millions in lobbying and donations trying to prevent these laws from being passed.

The authors do not challenge the HMO's claims to be more focussed on quality. The sad reality is that HMO's must be financially competitive in generating profits. To compete successfully they will skate as close to the boundaries as they can. Only those quality considerations which can be measured and prosecuted in court will be addressed. The solution, while it may help is based on increasing the conflict between care and profit to give care a slight advantage. Competition with profit is actually the problem and not a solution at all. The HMO's must make a bigger profit than competitors to survive. The requirement that more money be spent on care will simply push up costs.

The authors' views strongly support the similar claim by nursing home advocates that the only thing which has improved care in corporate nursing homes is the litigation which they have initiated. Nursing home chains are lobbying frantically for laws to stop this litigation.

3. HMO DISHONESTY, RACKETEERING AND FRAUD:- An article -- Cost-cutting guide used by HMOs called 'dangerous' ³² -- illustrates how untrustworthy and dishonest these corporate groups are. A treatment guide for HMO's used as the reference standard when overriding doctors decisions about care is written by a firm of lawyers. The University of Texas-Houston Medical School is paid a considerable sum of money to review and rubber stamp the guide. It is alleged that the lawyers bought legitimacy for their guidelines by giving the paediatric department US $100,000. Dr Cleary, a paediatrician's response to the guide, when he was asked to review it by the faculty was that "Kids might die because of these guidelines, they're dangerous."

Imagine Dr Cleary's surprise when he found that his comments had been ignored and worse still he was listed as a contributing author approving the recommendations. His experience is not unique. Large numbers of reports indicate that medical, research and educational institutions across the world including Australia are prostituting themselves in the drive to obtain money from corporate groups.

Research institutions are pressured by government and government policy to do so. The ARG (the Australian 9 August ) stresses that "Research must be linked to industry" and urges stronger links between universities and industry. The ARC urges the sharing of staff and is positive that the cultural gap is decreasing. This is the cultural gap which protects the integrity of research from commercial self interest. The ARC approach is being embraced by universities now that money managers rather than people managers control our academic institutions. In the process well validated social principles of openness, ethics, community responsibility and patient primacy are likely to be thrown out of the window.

Six class actions have been filed in Florida federal court against Humana Inc alleging racketeering and " -- for failure to disclose financial incentives and misrepresenting the quality of care provided by the company's various health plans". ³³ The actions claim "systematic and intentional concealment of accurate information -- ". Humana promised that decisions would be based on "medical necessity" while concealing incentive agreements with doctors to limit treatments.

Humana has also recently paid the US government US $0.5 million and entered into an integrity agreement to settle fraud charges that it provided inaccurate information when making medicare claims. ³⁴

In Maryland more than a dozen health plans, including Aetna and United Health care have been fined a total of $1.6 million for failing to comply with a variety of state consumer and provider protections. ³⁵ Some have been required to undo the harm they have done by funding consumer education programs

The same article refers to the problem of "downstream risk" arrangements, whereby patient care and other responsibilities are shifted to a contractor. The state does not have direct regulatory oversight of these contracted organizations - exactly the problems identified by the ICAC in NSW, Australia. ¹⁵ Regulatory bodies are unable to protect the public interest.

The problem of denial of needed care by HMO's is US wide. Wisconsin has now joined more than a dozen other states is setting up an independent review mechanism to which patients can appeal when their HMO's deny them care. ³⁶ All these regulations result in an increasingly more complex and more costly system. They fail to address the cause of the problem.

4. THE COST VERSUS CARE CRISIS:- A group the National Coalition on Health Care has carried out a study which finds that the break on rising costs is over and that health care costs are rising. ³⁷ Premiums are rising and it predicts that there will be a massive drop off in insurance cover and increased cost shifting to patients pockets. It calls for a national debate to solve the problems of rising costs, decreasing coverage and poor care.

It is obvious that the problem cannot be solved and that compromises involving rationing will be needed. The marketplace cannot address this problem. It is simply not acceptable to ration care to generate profit for shareholders. It will require a great deal of corporate econobabble to argue around that moral issue. The likelihood is that economic decision makers will simply look indignant and claim that a moral problem does not exist.

A report -- HMO Promise Not Realized for Chronically Ill ³⁸ -- from a conference supporting managed care and evaluating new managed care projects in Washington indicates that "The one-time promise that managed care would help coordinate and integrate medical and social services for chronically ill Americans has not lived up to its potential". I remind you that managed care commenced in the 1960's as a not for profit community endeavour but has been hijacked by for profit groups and for profit business practices. One speaker describes the impact of increased competition on an HMO which attempted to focus on services for doctors and patients rather than profits. It went under. The report suggests that while some managed care principles are worth holding on to HMO's may not exist in 10 years time.

A press release by a non profit university group called University Affiliates -- University Affiliates Proving Success of Patient-Centered Health-Care Delivery ³⁹ -- trumpets its financial success in pursuing a policy of patients before profits. In the past projects like this have been unable to compete. At the present time there is a massive swing against managed care and projects like this have a window of opportunity. This group seems to be seizing it. One wonders how they will fare when the present outcry against managed care blows over and large profit oriented corporate groups once again increase the competitive pressures. The appropriateness of evaluating patient care in terms of marketplace success is not considered.

An article in The Australian - Fix own ailments, minister tells aged ²¹ - reports that Australia's Dr Wooldridge is pushing and funding the "Chronic Diseases Self Management program" in which patients take over from doctors in understanding and assuming responsibility for their care. The idea of involving patients more closely in their own care is a sound one and would be easily incorporated into an integrated not for profit community service. One wonders how such a program will fare in the competitive for profit, corporatised, managed care based system which Dr Wooldridge has so strongly supported. How will corporations make money from this?

5. COMPETITION FOR WHOSE BENEFIT:- A letter to the Bangor News - HMO executives ⁴⁰ - casts an interesting light on HMO's demands for more competition and the "for profit" versus "not for profit" debate. In Boston where health care is competitive and HMO's dominate costs are high and profits low. In the countryside non competing not for profits dominate, costs are lower and as the material shows services are probably better. The HMO's are calling on government to force the rural health system to be more competitive. The writer asks "Competitive for whose benefit?"

6. ACADEMIC INSTITUTIONS:- There have been a large number of articles backed by data which show that institutions which provide important ethical, humanitarian and other non income generating services to the community cannot both survive and maintain those services in a competitive marketplace. There is a vast literature describing the rape of community health care resources (PACMAN activity) and the destruction of university teaching systems. I include one more addressing the impact of managed care on university hospital systems. ⁴¹ While these organisations can become competitive businesses they cannot do so and also maintain their important roles in society - including the training of future doctors.

7. MARKETING:- A press release "Managed Care Leaders Name - - ⁴² " gives an insight into corporate thinking and pharmaceutical managed care practices. The success of the largest and most successful health care corporations has been built on marketing, much of it inaccurate and deceptive. These are the same companies which have paid massive fines for fraud and misusing patients. They have considered marketing, and not care as the prime recipe for success. The pharmaceutical managed care leaders have run a marketing competition and SmithKline Beecham was one of the winners. Only a few years ago it reached a US $325 million settlement with the US government because of allegations of deceptive and fraudulent practices including paying kickbacks to doctors.

8. INTERNET SALE OF HEALTH CARE:- Economists will welcome the latest internet projects. Sites are selling surgical procedures. ⁴³ Surgeons bid to provide the services and supply their qualifications, their results and other information so that customers can buy. Some customers welcome it as the "wave of the future" - others are more concerned about trust. To test the site's ethics and trustworthiness one doctor joined as a psychiatrist and then successfully bid to perform a breast implant.

9. WHEN IS CRIMINAL CONDUCT ETHICAL? In the hospital where I worked in South Africa we systematically manipulated the apartheid system for the benefit of our disadvantaged black patients. No doubt the apartheid government and its supporters would have considered this fraud but few would criticise us now. An article "Docs Admit Falsifying Insurance Info" reveals that US doctors who put the care of patients above economic ideology are doing the same. ⁴⁴ Most doctors would approve and I like to think that the courage of these doctors in running risks for their patients will one day be acknowledged. An imposed health system which sets itself on a collision course with the fundamental principles of health care cannot work.

The bitter battle for legislation to protect patients and give them the right to seek redress from HMO's continues across the USA. It is bogged down in dispute federally. The Republicans in Michigan have bowed to the public backlash and are passing legislation to allow citizens to appeal denial of care. ⁴⁵

Republicans who receive most funding from corporate groups have acceded to the intense pressure of the entire corporate community who pay the insurance premiums of workers in the USA. Corporate groups have convinced politicians that allowing patients to obtain redress from HMO's through the courts will push up the cost of insurance and so care.

When one examines the extent of the problems which have resulted in the public outcry and the responses of the judges who have addressed these problems then it is clear that this is exactly what will happen. Once again government are not prepared to confront the fundamental problem in the health system and correct it. To prop up the system US citizens are denied one of the basic rights of every citizen in a democracy.

An increasing number of states have passed or are planning to pass legislation which restores the right of individuals to obtain redress through the courts. ⁴⁶ Democrats who are pressing this receive far less money from corporate donors.

The long running investigation of Columbia/HCA is slowly drawing to a close. ⁴⁷ It seems that some sort of settlement with the government has been reached but the sum to be paid and the conditions which will be imposed on the company have not been disclosed. No doubt it will be welcomed back into the fold and shareholders will rush to support it! It has an established track record for working the system for their advantage.

HealthSouth is the only giant US health care group which as far as I am aware has not yet been tainted by allegations of fraud and/or misuse of patients. It seems to have kept its nose clean. Now there is a report that it has been fined US $ 1 million for fraud in Alaska. ⁴⁸ In fairness the fraud was set up by previous owners but it sounds as though HealthSouth did nothing to address the problem when it took over.

There has been a court case challenging Whistleblower legislation and their right to act on behalf of US citizens and the US government. ⁴⁹ The judge upheld the rights of individuals to act in this way and lodge Qui Tam lawsuits on behalf of government, but not their right to act against US states on behalf of the federal government.

1. INTRODUCTION:- To understand the significance of these articles and the reported finding by government departments in the USA of truly appalling and progressively deteriorating standards of care in nursing homes it is necessary to understand the way the nursing home market has behaved in the past.

Nursing homes were originally founded by charitable groups for the long term care of citizens who were unable to look after themselves. A relatively low level of nursing skill was required. With increasing wealth and government funding the potential for profit arose. Corporations moved in and profit became a legitimate objective. Marketplace thinking replaced the humanitarian ethic and every opportunity for profit was exploited. Corporate chains soon dominated the marketplace.

Hospitals were under pressure from the DRG system and nursing homes saw the opportunity to provide what they called "subacute care" to patients who still needed high levels of skilled care.

In nursing homes therapy was provided as an item of service outside the DRG system. By shunting patients to nursing homes and giving them plenty of therapy vast profits could be developed. This was greeted enthusiastically and business prospered. These homes were also now outside the ambit of critical hospital auditing. This allowed chains to increase profits by cutting nursing staff who provided essential care and replacing them with staff who provided add on care which generated a fee.

On the pretext that bigger was better and that there were enormous economies of size chains went on massive buying sprees. It was a case of take over or be taken over. The rationalisation that nursing homes were overstaffed and over skilled, and that there were inefficiencies and plenty of fat in the system was music to shareholders and politicians.

Care was seriously compromised as essential staff were cut and deskilled. Salaries were kept low and the dregs of society, many of them with criminal convictions for violence were dragged into the homes after some token training. Staff who provided non essential services paid per item of service and which were profitable replaced trained nurses. The medicare system was worked to the limits and beyond. Fraudulent conduct became the rule rather than the exception.

Many millions of dollars intended for the care of patients were taken from the system. Aggressive people with sociopathic tendencies and enormous drive came to dominate the marketplace - financial success was its own validation and they were worshipped by those around them and by the marketplace. (see analysis of Sun Healthcare and Andrew Turner)

This large income stream was used to raise increasingly large loans to fund growth in the USA and overseas. In the drive to grow caution and financial responsibility became passe. The chains built up huge debts and became dangerously vulnerable to any economic downturn.

While the nursing homes were starved and patients suffered central administration was richly rewarded. Directors enjoyed a lavish lifestyle with multimillion dollar salaries and bonuses, including private jets. Information revealing what was happening to patients was simply ignored. Not for profit groups found it increasingly difficult to operate in this environment and were forced into similar practices. Those who did not do so were taken over. They nevertheless maintained somewhat higher standards than the corporate chains.

The bubble finally burst dramatically and with sad consequences for the elderly. A number of factors contributed to this.

1. The government, frustrated by what was happening altered the payment system removing the incentive to provide unneeded item of service care and putting these services on the same footing as essential care - a cost to the business. Funding was cut, probably too severely as all nursing homes are now struggling.

2. Groups of citizens became angry at the treatment of the elderly. Ila Swan collected hard data in California and persuaded the federal government to investigate. The flow on of public anger resulted in investigation after investigation in California and across the nation. Dreadful standards were revealed and the failure of the regulatory agencies to do anything about it was exposed.

3. The federal agency responsible for oversight was heavily criticised by investigators and intense pressure was applied to state departments which had failed to regulate. With such close public scrutiny oversight practices were strengthened so that understaffed facilities were actually found wanting. Penalties were enforced. and the press published accounts of deficiencies.

4. The public took to the courts with devastating consequences. The descriptions and documentation of unconscionable neglect caused the courts to award massive punitive damages. Insurance premiums increased dramatically and in some states insurers refused to insure the homes.

5. The justice department had by now completed its investigation of Columbia/HCA. It turned its attention back to nursing chains and the majority of the largest were soon accused of defrauding taxpayers of hundreds of millions of dollars.

6. At the same time the economy flourished and unemployment fell. The working poor who had staffed the homes could now get much less onerous work at a better salary. The trained staff who had been fired during previous years had gone elsewhere. Nursing homes previously cutting staff were now unable to obtain the staff needed to address standards. The reduced medicare and medicaid funding made it difficult for them to increase salaries and so attract staff back.

The myths of economy of size and of fat in the system which were used to justify what was happening have been dramatically exploded. The larger the company the more likely that it had committed fraud, that scandalous patient conditions existed, and that it was financially unstable. ⁵⁰ The largest companies were soon in trouble and the majority were soon in voluntary liquidation. They responded with massive staff cuts. The reports in this file show that this resulted in further deterioration in care.

Not for profit groups and smaller companies which have not been driven by the growth imperative have suffered but not as severely. Most have been able to maintain reasonable care and financial viability.

The corporate monster has many heads. Many of these companies shield their nursing home operations by using REIT's. The nursing home operator leases the homes from the REIT. When the nursing home operator goes under there are few assets and the mums and dads who have invested their savings get nothing. The founding directors receive handsome termination bonuses. New corporations with new names and no debts are seizing the opportunity. They are leasing or buying the homes. It will soon be back to business as usual. One can only wonder how many of the old faces will reappear. Sun Healthcare's Andrew Turner has no intention of hanging up his hat.

The recent articles about nursing homes which I have included in the file flesh out the story and describe what is happening in greater depth.

2. QUALITY OF CARE FALLING - STAFFING - CORRUPTION:- -- contents

An article - Bigger isn't better; ⁵⁰ - in the business journal Modern Healthcare makes the point I have made above. It is the large corporate chains and their driving irresponsible executives which are in serious trouble on all counts. Smaller groups and not for profit homes are weathering the storm.

A report from South Carolina - Medicare cuts hurt nursing facilities - enlarges on this and offers explanations. ⁵¹ It discusses the claims made by industry and sets this against the opinions of critics who believe that the big chains have dug their own graves. The article discusses the way in which the companies made their money by concentrating on medicare paid services, even though the majority of residents are covered only by medicaid. Only 9.3 per cent of beds are paid for by medicare. The government dare not allow such a large proportion of the countries nursing homes to go bankrupt. As one critic reluctantly explained government would have to give relief because "They're holding the federal government hostage"

The Wall Street Journal reports that President Clinton has developed some plausible justifications for doing this. ⁵² I quote:-

"President Clinton will propose boosting payments to hospitals, nursing homes and other health-care providers by $21 billion over five years --. ----- Mr. Clinton 's plan is likely to promote congressional efforts, fuelled by intense industry lobbying, to raise Medicare payments."

The New York Times reports that this money to support the profit hungry corporations (whose greed has created most of the problems) and their shareholders will be taken from money which has been set aside to actually help those who really need help. ⁵³ Medicare benefits do not cover the large drug costs incurred by the elderly. Forty million has been set aside by congress to give them relief but the corporations want to get at it first. As Representative Pete Stark puts it "The money all has to come out of the same pot". I quote further:-

"Health care providers who feel they were wronged by the Balanced Budget Act in 1997 are all going after this pot of money. They hope that the money will become available to them if Medicare prescription drug legislation is stalled because of philosophical disagreements between Republicans and Democrats."

Corporate supporters will ensure that there are disagreements. The criticism is expressed like this:- "Some members of Congress say the struggle pits the needs of beneficiaries against the greed of providers." The corporations see it differently but are worried. I quote:-

'The Federation of American Health Systems trumpeted the findings as confirmation of its concerns. "May Day, May Day!" it said in a statement issued by Mr. Scully, its president. "America's hospitals have been pushed to the brink by the Balanced Budget Act."

Representative Pete Stark. says "Hospital lobbying is the most intense I've witnessed in a long time." The article gives details of the vast sums of money being spent on lobbying and other promotional activities. The track record of American politics is that the interests of those with the money to buy political support receive priority over the interests of the citizens who vote. Marketing strategies can be used to divert their attention. This is modern democracy at work. Australia is following.

The nursing home chains have repeatedly claimed that they are committed to patient care and that their financial plight will not affect patient care. State regulators have also assured the public that they have discussed the issue with chains and are satisfied that care will not suffer. They will monitor care.

Nursing home owners have used this as a public relations facade behind which they could drastically cut staff and increase their profits. An article in the Daily News gives the lie to these claims. ⁵⁴ Complaints about the abuse of patients in New York nursing homes have increased 45% in the last 6 months. Their financial track record reveals that

" --- city nursing home owners paid themselves a combined $24 million in 1998 - most of that funded by Medicaid. The same owners made $140 million in profits. Five of them drew more than $1 million each in salary."

A new study by the Clinton administration has confirmed that nursing homes are seriously understaffed and that a large number of preventable life threatening complications are occurring. ^55-57 More than half the nursing homes fell below what will be considered minimum standards. Staffing levels at non-profit institutions were much higher that staffing at for-profit homes.

The New York Times states

" - - - understaffing has contributed to an increase in the incidence of severe bedsores, malnutrition and abnormal weight loss among nursing home residents. Many of the patients end up hospitalized for life-threatening infections, dehydration, congestive heart failure and other problems that could probably have been prevented if the homes had more employees, the report says." ⁵⁷

The report advises that minimum staff levels be required and set out "the minimum needed to prevent patients from being exposed to 'a substantially increased risk' of poor-quality care." The public has been clamouring for minimum staffing levels for years and they have been vigorously opposed by corporate chains. In California a citizens vote called for a law. The legislature drafted and passed the law but the governor who had close corporate ties simply refused to sign it into law claiming it would increase costs.

Additional information about this study is given by the San Francisco Examiner.⁵⁸ I quote

"At least a third of the 1.6 million nursing home residents in the United States may suffer from malnutrition or dehydration, according to a study by the Commonwealth Fund released this week.

The report, which also found that the problem could be eased by increasing the number of overall staff and trained professional nurses, found as many as 85 percent of the elderly living with malnutrition in more than 17,000 nursing homes."

The St Petersberg Times in Florida has written many articles documenting poor care and neglect in corporate homes in that state. ⁵⁹ They comment on the findings of the Clinton investigation and then go on to describe the sort of care consequent on understaffing for profit. They indicate that nursing homes have become "holding pens for the sick." where understaffing results in bedsores, malnutrition and injuries. With a huge backlog of work for nurse aides residents are "essentially force fed" stuffing "huge spoonfuls of food" into them. What chance is there that these residents will receive the small human touches from those around them - the social interaction which makes life livable.

Another report of an investigation by the General Accounting Office describes the failure of both state and federal oversight bodies and advises that they be strengthened. ⁶⁰

Representative Pete Stark and a number of other federal politicians have been behind an audit of 288 nursing homes in the Bay area in California. ⁵⁸ They have found that only 6 percent were in compliance with all federal standards. In addition:-

"41 percent of Bay Area nursing facilities -- 119 of the 288 homes -- cited with violations causing harm or placing residents at risk of death or injury received $141 million each year in federal and state funds."

The nursing home industry promptly attacked the credibility of the investigation claiming their figures showed that only 3% of Californian homes are deficient. The close relationships between state politicians and nursing home chains in California is extensively documented. These Congressmen have now introduced the "Nursing Home Staffing Accountability and Training Improvement Act."

The interesting thing about US and Australian investigations and reports is that all of them identify as problems only the symptoms of what is happening in health care. They all advise ways in which the practices can be detected, limited or penalised. None of them make any attempt to ask why the system is behaving in this way. The for profit mentality and the marketplace are all carefully shielded.

An article from Tulsa World addresses the issue of lax enforcement and then reviews some of the recent happenings in health care. ⁶¹ It addresses the relationships between oversight and these practices. I quote

"Every state has had its problems with lax enforcement, resident abuse and Medicaid and Medicare fraud. Not since a Louisiana scandal decades ago, however, have allegations this serious reached this high into official echelons."

An experienced lawyer who handles nursing home cases is quoted "I've never heard of corruption at this level,"

A second article in the Tulsa World reveals that what we are seeing is simply a recurrent event. ⁶² A nursing home operator and a government official in Oklahoma have recently been charged with giving and accepting bribes. Problems with nursing homes consequent on financial interest and a cosy relationship with government have been ongoing since the 1960's. Referring to Oklahoma the article says

"Through the past 40 years, similar themes and some of the same names have come up repeatedly: questionable campaign contributions by the industry, a cozy relationship between the state and nursing home operators, lax inspection standards and the Smart and Jiles family nursing home operations."

The article then describes some of the things which have happened, the financial relationships and the bribes.

Paul Labadie writing for USA Today - Notes from a tour of purgatory's barracks ⁶³ -- describes his experiences when he and his brother started inspecting nursing homes in order to find one for his mother. His comment "The first thing you notice is the smell.". Administrators explained that the ''importance of the nurse-to-patient ratio is really a myth.'' Apparently good nursing homes do exist but they are very hard to find. Of 11 homes toured only one was "marginally acceptable".

The New York Daily mail - DA SAYS NURSE WITHHELD PATIENTS' DRUGS - uses the case of a nurse who has been charged with neglecting patients to highlight the stark contrast between the poor care, consequent on substandard, subtrained and under paid staffing at nursing homes on the one hand and the high costs, massive profits and lavish life styles of nursing home owners. ⁶⁴ This article provides a graphic insight into the sort of people who are attracted to a competitive health and aged care marketplace. The Riverside scandal pales into insignificance by comparison. It may be no more than a pointer to the future.

All this has occurred despite the oversight of the New York state health officials. Public exposure has spurred them to some sort of action. The Associated Press reports their excuse - failing to act because they were understaffed. They have now issued "severe warnings" to 14 nursing homes but there is no mention of penalties or prosecution. ⁶⁵ The real problem of course is the close relationships between owners on the one hand and politicians and regulatory staff on the other. This may not be a genuine attempt to address the problems. The corrupt situation exposed in Oklahoma (see below) is only the tip of an iceberg and an extreme example of the culture of benefiting by "being on side" with the wealthy and credible.

In Oklahoma the government investigation has blamed the failure of the oversight problems rather than the corporations for what has happened. ⁶⁶ It is clear that oversight has not worked. There is the usual promise to "fix things". I quote.

"The Oklahoma Health Department's repeated "manipulation" of nursing home inspections and records caused untold numbers of patients to suffer from malnutrition, dehydration, accidents and physical abuse, state officials reported Wednesday. ----- many nursing home residents "received substandard care" because of department misdeeds. ------ inspection unit changed surveys to give nursing homes higher grades than merited. ------ Often, investigations of complaints are delayed for months --

The cause of the problem has been identified and charges have been laid because of :-

" --- bribery allegations against former Deputy Commissioner Brent VanMeter. Eight other department workers in nursing home supervision have been suspended with pay pending further investigations by law enforcement officials."

The scandal was only identified when federal authorities investigated complaints by frustrated patients' relatives.

It seems that the FBI have been investigating the health department in Oklahoma since 1996, and have now arrested the deputy state health commissioner and charged him with accepting bribes. ⁶⁷ This suggests that a whistle blower was involved.

In Missouri an investigation by the state auditor has shown that state surveillance has also failed to protect citizens. The federal department responsible for overseeing the states to ensure that they monitor care has failed to do so. One Missouri senator puts it this way ⁶⁸:-

"It defies reasonable explanation that an oversight system, whether it be state or federal, can so utterly fail to protect resident safety. We simply cannot turn a blind eye to life-threatening training and staffing failures. I firmly believe that the systemic problems in the MoDA are symptoms of inexcusable lapses by the federal as well as the state oversight programs."

Senator Bond is particularly distressed by the situation in one home where a patient was allegedly beaten to death. I quote

"A certified nurses assistant, who was formerly employed by the same nursing home, has provided deposition testimony under oath about the facility's hiring and training practices alleging that it began hiring workers "straight off the street" who "had never done the job ...didn't know the job...were put on halls by themselves, left to train each other..."

In response to corporate dysfunction and corporate influence layers of oversight have been developed up to the highest level in the land, each monitoring the sections below them. This is reminiscent of Graham Samuel's theoretical economic model of health care based on roles. It has not worked

To give the corporate side of the conflict I have included the text of the statement to a government committee on behalf of the American Health Care Association, by the chairman of Genesis Healthcare. ⁶⁹ Genesis recently entered chapter 11 bankruptcy. In fairness to Genesis it has not been featured as prominently in press reports of nursing home abuse and neglect as its peers Beverly, Vencor, IHS, and Sun Healthcare.

3. ATTEMPTS TO ADDRESS THE PROBLEMS:- The response of state politicians and regulators is interesting and it varies from real attempts to address the issues and penalise criminals, through a facade of reform while actually coming to the rescue of corporations, and even to making political capital out of reform using the actual corporations responsible for the problems as authorities.

Consumer groups and relatives who have examined the financial and personal links with politicians are mostly sceptical of what is happening. Most are scathing about the soft line taken by federal authorities against corporate chains which have neglected elders and committed fraud. Authorities claim that they are concerned that they will be faced with an insoluble problem should these chains go under. Politicians are receiving very large campaign contributions and intense lobbying from those chains crying poor.

One of the soft strategies is to require corporations to enter into compliance and integrity programs, on the assumption that this will generate a changed attitude. These are the same corporations which have indulged in fraud and shortchanged patients! The U.S. Department of Health and Human Services' Office of Inspector General (OIG) has issued the final compliance guidance for nursing facilities directed at the prevention of fraud and abuse. ⁷⁰ Predictably the American Health Care Association which represents nursing homes objected.

Arkansas has passed a law to require minimum staffing levels in nursing homes. I have included the synopsis. I quote

"This Act stipulates that the Department of Human Services shall not issue or renew a license of a nursing facility\nursing home unless that facility employs the nursing personnel needed to provide continuous 24-hour nursing care and service to meet the needs of each resident and the standard of care required by state and federal regulations." ⁷¹

Some new brooms in Indianapolis seems to have taken a strong stance and nursing homes are very apprehensive. Some administrators have been charged and the Indianopolis Star reports that "-- 68 nursing home administrators' licenses are in jeopardy and that another 40 administrators likely will face charges soon".⁷² The past failure of oversight is revealed. I quote

"Indiana Attorney General Karen Freeman-Wilson began filing charges against administrators recently after a backlog of complaints against them broke loose from the health professions bureau, where they had been piling up unattended for months."

Maryland was one of the states heavily criticised for failing to properly monitor care and prosecute offenders. There was plenty of publicity. Now Maryland has called a " -- national Elder Care Solutions Summit today, bringing together leaders and problem solvers from Maryland and across the nation to share solutions to the challenges of caregiving for our country's rapidly expanding elderly population." ⁷³

In opening the meeting the government called it America's "silent crisis". However sitting at the table and giving talks on the "latest trends in caregiving" were the same corporations that have been at the receiving end of the bankruptcies, state surveys and court actions. The summit was widely publicised and the press report makes no mention of Maryland's track record. This is how the system works. Without a jaundiced eye the public reading the report might think something was being done and that the underlying problems were being addressed. No wonder little is ever achieved.

In Nevada the governor has increased Medicaid funding by over 7% with the apparent intention of helping groups like Vencor and IHS recover from bankruptcy. ⁷⁴ Vencor is accused of a US $1,4 billion fraud and IHS is the company where in some homes only about 50% of the money paid for care is spent in that way. Vast sums are spent by IHS in political donations and I have previously sent information about this. The report makes no criticisms of the chains and does not mention all this.

Nevada is the state where in 1993 the Day One TV program mounted a sting operation. The attorney general was given clear evidence of fraud and the misuse of teenagers by HCA (now Columbia/HCA). He agreed it was fraud but explained that the company had so much political influence that he could not prosecute them.

4. CORPORATE DISHONESTY:- It is difficult to know whether corporations behave as deliberate criminals or whether social and psychological processes act in such a way that they actually see their conduct as legitimate. Undoubtedly both occur but I believe the latter is critical to understanding corporate conduct. Marketing is considered a fundamental and the most important activity. Marketing becomes the art of telling people what you want them to hear regardless of its accuracy. Once the claim is out there it is confused with the truth. Words become reality. Contradictions are simply not seen and it is perfectly acceptable to say contradictory things to different people. External appearance sold to the target audience need have no relationship to the truth and there need be no consistency.

A telling report in the Tampa Tribune - An industry on the brink of the truth? - exposes this process in the Florida Nursing Home Association and in Beverley Enterprises. ⁷⁵

In the drive to stampede Florida politicians and its citizens into stopping law suits and passing legislation favourable to the politicians they claim "disintegration of the nursing home industry" and that "Nursing homes at the brink". Also "Under-funding and over-suing have finally taken their toll -- ". In contrast in its report to shareholders Beverly trumpets "Promising Opportunities Ahead." and "very promising opportunities". It boasts of steady growth in its "target market, people 85 and older." Statements about patient care are also contradictory. I quote the final paragraph of the critical article:-.

"So nursing homes providing care to thousands of residents are on the brink of closure, but the future is bright and the quality of patient care is high? --- Does this make sense?"

I also include in the file a brief report of the annual stockholders meeting. ⁷⁶ Note the diplomatic way in which the corporate community deals with Beverly's recent guilty plea to fraud and its massive fine. That their company has perpetrated a massive fraud should not concern stockholders when there are "very promising opportunities" in the over 85 years customers. That these vulnerable and helpless people should be cared for by a company which indulges in fraud is not an issue. Even the Japanese who are privatising aged care have invited them in -- perhaps to show local companies how to make money out of the vulnerable aged.

5. THE NURSING SHORTAGE:- Corporate chains are blaming everything and everyone except themselves for the problems they are experiencing. The factors which precipitated the crisis and exposed what was happening receive all the blame. The funding cuts and the nursing shortage get all the blame for financial intemperance as well as for deficiencies and problems which developed during a period when the companies were making vast profits and downsizing staff. This allows the chains to sit on inquiries and promote a crisis which diverts attention away from their deficiencies and their disturbing conduct. They are able to claim victimisation and speak with authority, marketing their point of view. They direct attention to changes which will improve their bottom line. I have included a number of articles some of which reflect this bias.

A CBS news transcript gives a brief overview contrasting the corporate view and track record with that of the lawyers and citizens groups who are pursuing them. ⁷⁷ The sad part is that good nursing homes have been caught up in this and are struggling to maintain care.

A report from West Virginia also indicates that although the major chains have suffered the most, many smaller operators can no longer fund care properly and are threatened with bankruptcy. ⁷⁸ One third of the states nursing homes have filed for bankruptcy - primarily those owned by the big chains.

Nursing homes in Georgia are also bankrupt and there are a large number of vacancies for nurses. ⁷⁸ In this instance Sun Healthcare is claiming the high ground. Sun has over the last year deliberately divested itself of over 20,000 employees reducing from 80,700 to 57,100. It is bankrupt. It is being investigated for an alleged several hundred million dollar fraud. Its nursing homes across the country have been penalised for severely substandard care. It faces numerous actions by patients or their relatives, and a Qui Tam action for not providing the care it has promised. This company which was in bitter conflicts with unions because it paid substandard wages while making massive profits and paying directors massive bonuses now blames the funding cuts. It claims it can't afford to pay competitive wages. Without even blushing it claims that it is being forced to diminish "what was a great infrastructure of services"!

It seems that it is the big impersonal profit oriented chains which have problems in finding staff. Those homes where care is the primary motive, and where employee involvement and humanitarian considerations drive care do not have this problem. I quote from the same article:-

"I didn't pick this job, it picked me," said Cook, who became administrator of the 78-bed home in September. "The residents and staff, we're like a big extended family. We laugh together, cry together and love each other."

The Denver Rocky Mountain News reports that Colorado's governor has set up a committee to solve the problem of the lack of workers in direct health care jobs. ⁸⁰ That this may be a sop to the people and a public relations exercise is suggested by its name - "Blue Ribbon Panel on Workforce Issues in Long Term Care". Experience suggests that the committee is unlikely to address the underlying problem of profit priority and the corporate disregard for the motivational needs and well being of staff. While many of those on the panel look appropriate it also contains the president of Mariner Post Acute Network, one of the more unsavoury corporate chains in chapter 11 bankruptcy. It is unlikely that the members will be so insensitive as to attack him.

Nowhere has the support of corporations and the failure to prosecute been as blatant as in California. Ila Swan has been at the forefront in confronting their behaviour. Her efforts lead to a federal investigation and to television reports exposing financial links between corporations and politicians. Swan believes that this is why the federal investigation has had little impact on care. Swan says that "Politicians such as Davis and Lockyer take money from nursing home lobbyists and fail to protect the elderly inside nursing homes".

The Daily Republic reports on this and indicates that Swan will confront the state attorney general at a public meeting called by a community group two years after the local county took "steps to stop the abuse". ⁸¹ "I have a question for Lockyer," Swan said. "The Texas AG in one year prosecuted 100 nursing homes. What's the problem here?" It seems that in that time only one case has been prosecuted.

An interesting article from the Boston Herald puts a totally different slant on some issues. ¹³⁸ It deals with concerns about the closure of nursing nomes - specifically one of Sun's homes. State officials say they are not concerned that homes are closing. They release some interesting figures to show why. There is an oversupply of 5000 nursing home beds in the state. There is a "glut of beds". This glut has resulted from overbuilding since 1980. The flood of words from US corporate groups and our Dr Wooldridge in Australia has painted a spectre of an overwhelming demand!

We have had all this hype about the greying population, the enormous demand and the opportunities for profit in aged care. It is reminiscent of the vast boom in psychiatric care in the late 1980's. The opportunities for profit resulted in massive overbedding. To fill beds hospitals went out and bought patients from bounty hunters - even kidnapped them. Norm Zober, Tenet/NME's director of specialty hospitals boasted to analysts of the tremendous continuing demand for psychiatric care and the profit potential. Patients were kept for the duration of their insurance to milk their insurers. Most of those hospitals were forced to close when the misuse of patients for profit was stopped.

This article raises the interesting possibility that a similar thi