How I Learned to Stop Worrying and Love For-Profit Medicine

flying cadeuciiWhen I started medical school, my South Asian immigrant parents quietly hoped I would find my way to cardiology or another glamorous specialty. Instead, I spent a decade — first as a medical student, then as an intern and resident in internal medicine — focused on advancing the right to health among poor people and others with little access to quality health care.

Through high-impact nonprofit organizations, political campaigns, and grassroots organizing in urban communities and among health professionals, I was part of an incredible community focused on making American medicine better, safer, and affordable to all.

So when it came time for me to find a “real job” after my residency, I assumed it would be in a nonprofit organization with a laser-like focus on transforming underserved health. Imagine my astonishment, then, to discover my life’s work in Iora Health — a private sector, venture-backed, for-profit primary care startup.

Profit and medicine

Critics have said that for-profit medicine makes money by finding ways to avoid caring for sick people “in their time of greatest need.” It’s also been pointed out that the Hippocratic oath doesn’t mention “money, financing, or making a profit.”

Such arguments are certainly persuasive — I used to cite them as evidence of the moral superiority of medical practice in nonprofit settings, such as teaching hospitals or publicly funded community health centers. Such institutions, so my thinking went, weren’t distracted by the almighty dollar.

That isn’t completely true. Leading nonprofit institutions have recently been criticized for dubious decisions seemingly driven by money:

  • New York-Presbyterian and Columbia University closed a family medicine residency training program and health center in working-class upper Manhattan to redirect resources to “high-margin subspecialty care.”
  • Massachusetts General Hospital’s practice of double-booking surgeries rewarded individual physicians for higher surgical volumes, which brought in more revenue for the hospital.
  • The University of Pittsburgh Medical Center refused to provide in-network care for members of an in-town rival health system, locking out many patients from cost-effective care at the medical center for almost a year.

Are these outlier cases, caused by a few bad actors? Perhaps. But when such things crop up in America’s most highly regarded (and highest grossing) medical centers, it’s hard to imagine that this is an isolated trend.

Making a difference, and a profit

There’s no question that some for-profit health care companies do what businesses are supposed to do: rack up revenue. In a study of hospital charges and costs, among the 50 with the highest ratios of charges to Medicare-allowable costs (known as the markup), 49 were for-profit hospitals.

But there’s a rising wave of private organizations at the frontier of health innovation that are in this for more than money.

I spent the last three years with an Iora team caring for incredibly sick casino union members in Las Vegas. Our “hot spotter” community health workers, physicians, nurses, and social workers reduced emergency department use and inpatient hospital care by nearly 50 percent and lowered the overall cost of care. Try telling my team — men and women willing to help a patient facing eviction pack up his or her belongings, or visit intensive care units on their free evenings to console families — that for-profit health care is destroying “the soul of medicine.

Iora is hardly alone as a for-profit aiming to effect social good. Qliance, ChenMed and CareMore focus much of their work on caring for our nation’s sickest and most vulnerable individuals. Through partnerships with Medicare and state Medicaid agencies, they’ve taken on hundreds of thousands of publicly insured individuals and have seen dramatic improvements in care coordination and health outcomes.

Even oft-maligned insurers are getting into the act, with Oscar, Collective Health, and Harken Health aiming to simplify and improve the health care experience for their enrollees. (Given astoundingly poor customer experience scores across the board in health care, we could all benefit from such private-sector ingenuity.) They’re also targeting newly insured individual subscribers on the state and federal health insurance exchanges — our nation’s former uninsured and underinsured.

These startups face a high proving bar. They grow and scale only if they demonstrate results, and die if they don’t. The societal payoff when they succeed, though, could be nothing short of dramatic.

When I look at the evidence, I wonder: Why did we ever think that tax status differentiates good and evil? A new narrative is emerging: profit and societal good need not live in opposition when considered thoughtfully — and driven by a robust social mission.

Let’s keep that in mind as we work to transform American medicine. Otherwise, trying to distinguish nonprofit and for-profit health organizations just becomes an exercise in legal fiction.

Ali Khan, MD, is a general internist in San Francisco, a clinical instructor of medicine at Yale School of Medicine, and a shareholder in Iora Health. He left Iora this year to pursue other opportunities in the delivery system innovation space across the public and private sectors.

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2 replies »

  1. Dr. Kahn, you’ve captured some great perspectives of professionalism at work independent of the business model. All business seeks to attain an accounting profit each year. And a normal profit that includes the business’s implicit costs of operating is necessary if the business is to survive in the long run. Non-profit tax exempt entities typically have a bit lower implicit cost (e.g. Investor return) which can help survive market pressure others cannot. And because these entities are quasi-governmental businesses, they often qualify for grant and tax revenue benefits unavailable to other business models. While operationalizing a successful business model can differ because of the model, most of the focus for a board and leadership is exactly the same.

  2. I hear great things about Iora from my dear friend, Vidar Jorgensen. Congrats on being part of that. Profits, if earned though a moral purpose, are a good thing.


    Tom Emerick