GUEST BLOG: Ian Powell – Growing Corporate Power and General Practice
The increasing level of corporate ownership of general practices is a ‘below the radar’ growing concern within Aotearoa New Zealand’s health system, including many general practitioners and their professional bodies.
Broadly speaking there are four main forms of general practice ownership. The largest but declining is GP-owned practices.
Then there are the corporates (private for-profit companies) whose number of practices and enrolled patients are increasing. Community based not-for-profit ownership is the third form while Health New Zealand (Te Whatu Ora) is both the fourth and smallest
Who are the corporates
There are four corporate owners. Tamaki Health Ltd is described as the biggest with 50 general practices covering 230,000 enrolled patients. Adding to its size is its ownership of the White Cross urgent care clinics.
Tamaki Health began, in 1970, as a GP owned practice (initially called East Tamaki Healthcare). Dr Kantilal Patel and his wife Ranjna Patel focussed on high-needs patients in Auckland.
Over the years the number of practices gradually expanded but its founding focus remained as its mantra. It did not become corporate owned until 2017.
Today it is the only corporate which is owned by a private equity firm (Sydney based Mercury Medical Holdings). This ownership makes it permanently vulnerable because private equity owners are in for a shorter-term profit through on-sale.
On the other hand, Tamaki Health retains much of the operational cooperative patient focus that prevailed for over 40 years prior to corporate ownership.
Green Cross Health is the oldest corporate
Green Cross Health Ltd is the oldest corporate owning 66 general practices covering 423,000 enrolled patients.
Although the company was formed in 1981, until 2014 it was only involved in pharmacy ownership (currently Unichem and Life Pharmacy). From 2014 it began purchasing general practices.
Tend Health Ltd is the newest corporate. Formed in 2020 it currently owns 13 general practices covering 80,000 enrolled patients. It is also starting to branch out into urgent care clinics.
Formed in 2010, Third Age Health Services Ltd has a narrower focus than the other corporates. It provides healthcare services to older adults residing in aged residential care facilities along with private hospitals and secure dementia units. Based in Hawke’s Bay it has 20,350 enrolled patients and owns six practices.
All the corporates are driven by the imperative to be profitable. They all promote telehealth with Tend Health arguably having the biggest profile.
Tend Health and Green Cross have the most in common as they both started as corporates from their inception.
In contrast Tamaki Health has only been corporate owned for the last eight years of its 55-year history. This does have a contrasting impact on its operating culture.
It is also reflected in its average practice size. Whereas Green Cross and Tend Health practices have on average noticeably larger enrolled populations (6,409 and 6,154 averages respectively), Tamaki Health has an average 4,600 enrolled patients per practice. [Third Age Health’s average is 3,392.]
Alarm bells over corporate ownership power
For over two years I have been ringing alarm bells over the increasing corporate ownership of the health system’s general practices.
On 12 June 2023 BusinessDesk published an opinion piece by me reporting on the results of a College of General Practitioners workforce survey: GP ownership declines; corporate ownership increases.
The survey identified that general practice owners were a declining minority of GPs falling from nearly 40% in 2014 to 31% in 2022.
Further, the number of GPs reporting that they worked in a GP-owned practice was 73% in 2015. By 2022 the number has dropped to 64%.
On the other hand, the number of GPs reporting they worked in a fully or partially corporate-owned practice has doubled since 2015. By 2022 it was 14%.
This led me to conclude that:
Whether the decline accelerates or not, the indications are that the winner will eventually be corporate ownership. Unless something of significance changes, much of general practice will be provided by relatively big, rather than small businesses. Further, it will happen by drift, in the absence of debate over whether this is a good thing.
Corporate expansion by stealth
On 29 February 2024 Newsroom published my opinion piece on expanding corporate general ownership: Corporate expansion by stealth.
Newsroom opinion piece
Much of my focus was on Tamaki Health and Green Cross Health in the context of corporate expansion into general practice ownership within a policy vacuum. I concluded that:
Whether GP-ownership’s decline accelerates or not, the indications are that the winner will eventually be corporate ownership. Unless something of significance changes, much of general practice will be provided by relatively big, rather than small businesses. Green Cross’ endeavours to concentrate its general practices in the only primary health organisation with a national mandate suggests a shift from drift to stealth.
Whether increased corporate control of general practice eventuates by either means, the absence of debate over whether this is a good thing and the presence of a policy vacuum is a bad thing.
Policy vacuum
On 2 May 2024 I posted in Otaihanga Second Opinion my concerns about how this policy vacuum enabled corporate general practice ownership by stealth: Profit-driven corporate ownership expansion is enabled.
Profiteering from health drives corporates
This stealth enabling policy vacuum led me to issue the following call:
It is time the leadership of the health system stepped up. Failure to do so is likely to lead to increasing corporate driven profit extraction dominating general practice. It would mark a transition from healthcare being a public good to a commodity.
Perverse outcome
Consequential perversity
On 6 July 2024 Otaihanga Second Opinion discussed, in the context of the experience of a Green Cross Health owned practice in Lower Hutt, a perverse outcome linked to the misuse of the capitation funding formula: Perverse outcome.
My main observation was as follows:
This leads to the critical question: why has corporate ownership led to the crisis at its latest Lower Hutt practice with its mass loss of doctors and nurses. At the heart of it is the drive of corporates for profit-maximisation.
One means of achieving this overriding objective is the use of the capitation funding formula for general practice in a way that was not contemplated by its designers.
Further:
In essence, capitation is per capita funding of practice enrolled patients supplemented by age and gender factors.
The more the number of enrolled patients, the greater the funding revenue to the corporate owner. The big variable is the length of patient consultations.
The shorter the consultation, the greater the patient throughput, the greater the number of enrolled patients, the greater the ring of the metaphoric cash register, and the greater the work pressures and dissatisfaction of the GPs and nurses.
And now we have corporates positioning to extend their influence on Primary Health Organisations. But that is another post. Look out for it; just saying!
Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Otaihanga Second Opinion
Can vouch that Tamaki Health is bad for the consumer. Took over both Leabank and Manurewa clinics here in South Auckland (6 doctors), closed Leabank and transferred all those patients to Manurewa Health Care. But with only 3 doctors. Wait time for an appointment is now 3 weeks. Quality of doctors has gone down (well trained and earnest but not empathic – strict 15 minute consultation time).
Corporate bloated entity with a lot of self congratulation on their Facebook page but very little on customer satisfaction. Urgent appointments done by video link. Or hours upon hours wait at urgent medical clinics.
Tamaki Health seems more interested in patient turnover (and get a higher rte of government funding per hour in a poor area). Hence they take over surgeries in the areas where health subsidies are in place and people choice to pay for a doctor is limited. Monopoly practice by purchasing clinics in subsidised health care areas and closing clinics to minimise costs yet gather a greater slice of the state health subsidy in poorer areas.
Hence why I have been campaigning for this for the last 11 years
https://www.facebook.com/groups/171564126882442/permalink/1706466090058897
In the absence of simple nationalization, if we had a left-wing party in this country they’d at least push for health cooperatives jointly owned by the primary care physicians involved, instead of these dangerous corporate clinics leaching off the public purse and the goodwill of doctors and nurses alike.
Those nations that support cooperative organization like Iran have had some good successes with such a public-private partnership model, which let individual clinics control the things that they needed to, while not burdening primary care doctors with the need to micromanage every single management and accounting decision which might better be dealt with by more specialized managers.
A very interesting article. Ian is absolutely right when he points to “increasing corporate driven profit extraction dominating general practice,” marking “a transition from healthcare being a public good to a commodity.” The rapidity with which this is happening is indeed alarming.
But general practices run by the doctors themselves as small businesses or partnerships, while infinitely preferable to the corporate model, is not the answer either. In fact it because they have existed legally as private enterprises that the door was left open to traditional general practices being taken over by corporate raiders. The working of the basic law of the concentration and centralization of capital is inexorable. The big fish swallow the smaller ones. As the general rate of profit falls and opportunities for profit-making diminish, big capital looks to invade more and more spheres that in the past it might have been content to leave to small or family businesses – or to the state.
The real answer is to abolish private medicine altogether. Really make it into “a public good.” Let all doctors be employed by the community at a decent salary commensurate with their training and experience. That way they could follow their calling without having to count the takings.
But that has been thought of before. And doctors felt that they didn’t really want to become government stooges. They found it better to work under requirements that they had agreed to be reasonable.
They were wise, now that we find the depth of dismissiveness that government can apply to its supposed role and tasks, they would have been further ground down and their individual ideas less able to be applied than now. For instance the Christchurch Hospital CeO 2009-20202 now back in UK:
https://newsroom.co.nz/2022/01/12/ex-dhb-boss-breaks-silence/
…After Meates took over in 2009, there were the Christchurch earthquakes, the terror attack at two city mosques in 2019, and, perhaps a little under the radar, Whakaari/White Island.
“Canterbury and Waikato ended up with the biggest or the largest burden of burns from Whakaari/White Island.”
The DHB lost 44 buildings in the quakes, and did “not miss a beat”. Canterbury has, Meates says, what is internationally recognised as one of the most integrated health systems – with general practice and the hospital acting together in the same system – anywhere in the world….
n those tense final months – like clashes with Hansen and Levy at a meeting in March 2020 – did personalities come into it?
“That’s probably something not worth me commenting,” he says, diplomatically.
Perhaps comments on Meates’ performance are best left to others.
Tā Mark Solomon (Ngāi Tahu, Ngāti Kurī), a former DHB acting chair, addressed Meates directly at his farewell.
“David Meates: I’ve spent 25 years in governance, you by far would be the best chief executive officer I’ve ever worked with.”
Many people talk about values but few act on them, said Solomon, a former Ngāi Tahu kaiwhakahaere. “You’re a man of mana. You’re a man that carries your heart on your sleeve, and people respond to that because that’s what they see – they see the true man; the heart.”
(Sounds pretty good, can’t have been 100% approval by those on the spot but nearly!)
Theory driven, bean-counters are ruining our country. I now understand the dour statement often quoted from USA people about disliked government experts, that they were wary of ‘The government is here to help you’. And though in the UK efficiency and cost saving was effective when started in 1967-1978 by Leslie Chapman,* of whom one hears no mention now, it has been taken up to irrational levels.
*https://www.thetimes.com/travel/destinations/uk-travel/england/london-travel/leslie-chapman-v7mwgz0md3q Aug.28/13
…In 1967 Chapman became its director in the Southern Region, with a £10 million budget and a workforce of 5,600.
He launched a review which concluded that he could cut costs by 30 per cent by rationalisation of manpower. Some of the facts revealed in his review were bizarre: for instance, an army depot that stored enough mule shoes to refight the Crimean war and kept them in a shed that was heated….
Chapman remained convinced of inbred opposition to his ideas from the Civil Service hierarchy. He retired early and wrote his book, recounting his experience and complaining about Whitehall methods…
In 1981 he founded the Campaign to Stop Waste in Public Expenditure, but his books were his lasting monument.
He married, in 1947, Beryl Edith England who survives him. They had one son who predeceased him.
Leslie Chapman, civil servant and campaigner against bureaucracy, was born on September 14, 1919. He died on August 24, 2013, aged 93
Just to add something beside the main point but it may be healthily useful to have on record to think about now:
https://anthrosource.onlinelibrary.wiley.com/doi/10.1525/maq.1987.1.1.02a00020
Abstract –
Conceptions of the body are central not only to substantive work in medical anthropology, but also to the philosophical underpinnings of the entire discipline of anthropology, where Western assumptions about the mind and body, the individual and society, affect both theoretical viewpoints and research paradigms.
These same conceptions also influence ways in which health care is planned and delivered in Western societies. In this article we advocate the deconstruction of received concepts about the body and begin this process by examining three perspectives from which the body may be viewed:
(1) as a phenomenally experienced individual body-self;
(2) as a social body, a natural symbol for thinking about relationships among nature, society, and culture; and
(3) as a body politic, an artifact of social and political control. After discussing ways in which anthropologists, other social scientists, and people from various cultures have conceptualized the body, we propose the study of emotions as an area of inquiry that holds promise for providing a new approach to the subject.
The Mindful Body: A Prolegomenon to Future Work in Medical Anthropology
Nancy Scheper-Hughes, Margaret M. Lock
First published: March 1987 https://doi.org/10.1525/maq.1987.1.1.02a00020
Citations: 1,538
MEDICAL ANTHROPOLOGY QUARTERLY
International Journal for the Analysis of Health
Note: ‘we propose the study of emotions as an area of inquiry that holds promise for providing a new approach to the subject.’
(Maybe that is the nexus of what drives us (not rationality) and why all this information and findings that I can access on my computer going back to the dawn of cognition seem to make no lasting impression on societies and their leaders.)