by Project Censored

One of the hottest new growth industries on Wall Street is the mushrooming medical-industrial complex — profiting from the sick and elderly. Net earnings of health-care corporations with public stock shares rose 30 to 35 percent in 1979, and were expected to grow by another 20 to 25 percent in 1980.

Services that were previously provided by non-profit institutions or individual practitioners are increasingly being taken over by a growing array of private corporations whose principal concern is supply health care services to patients for profit. Primary growth areas are proprietary hospitals, diagnostic laboratories, hemodialysis treatment centers, and proprietary nursing homes. Gross income for such industries has been estimated at approximately $35 to $40 billion in 1970.  Total health care expenditures now approach 10 percent of the gross national product.

Who are the beneficiaries of the new Wall Street wonder stocks?  Clearly, the stockholders. And physicians themselves often have direct financial interests in the new growth industries. They also serve on the boards of many major health­-care corporations and are well-represented among stockholders of these firms. This raises obvious conflict of interest questions. Can the physician remain an impartial trustee of his patient’s welfare while preoccupied with sustaining the profits of a new health center? This incursion of the private enterprise profit motive into a sector of vital public services has been virtually unheeded and uninvestigated to date. As the commercial health care sector has grown, it also has been accused of “cream-skimming.”  By concentrating on the most profit­able services for the best-paying patients, the new corporations have relegated the less-profitable table services and unprofitable patients to nonprofit hospitals. The for-profit institutions also have eliminated residency and educational programs, such as are offered by the non-profit hospitals.

Also debatable is the industry’s capitalization on publicly-funded research projects. Most medical research today is publicly funded through academic or individual research grants. For example, university scientists are the primary researchers in the DNA (biotechnology) field. The researcher often will have a direct link with one of the genetic engineering firms by sitting on its scientific board or holding stock.

The serious charges concerning the health profession came from an authori­tative source.  Arnold S. Relman, M.D., Editor of The New England Journal of Medicine, has deplored the dearth of information and statistics on the medical-industrial complex.  He has called on the American Medical Association to incorporate some restraints against economic conflicts of interest into the Medical Ethics code.

What does all this portend for the American consumer? Medical profits will grow fatter, medical bills will continue to skyrocket, insurance rates will rise, services will become increasingly specialized and fragmented, and your physician may be first a businessman and only secondarily a healer.

The failure of the media to inform the public of the ominous development of the medical-industrial complex qualifies this story for nomination as one of the “best censored” stories of 1980.


The New England Journal of Medicine. Oct. 23, 1980, “The New Medical-Industrial Complex,” by Arnold S. Relman; The Guardian, July 30, 1980, “Profit Motive Key to DNA Research,” by Kathy Yih.

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