Is corporatization the real problem in healthcare?

The recent New England Journal of Medicine article, “Defining Health Care Corporatization,” provides a valuable historical overview of the increasing corporatization of American healthcare. The authors argue that this trend has had growing negative effects on patients, caregivers, and overall costs. It’s hard to disagree: U.S. healthcare is at a low point for nearly all stakeholders, including taxpayers—just look at the contentious budget debates over Medicaid.

But is corporatization the root cause of these problems? I would argue it is not. Rather, corporatization is a response to the economic incentives embedded in our healthcare payment models. These models—characterized by complexity, fragmentation, and perverse incentives—encourage overtreatment, profit maximization, and even fraud.

While the article calls for process-based, bureaucratic reforms, it largely misses the central issue: the payment system itself. Fee-For-Service (FFS) payments drive overutilization. Layered on top of FFS is a baroque coding system used not only to determine reimbursement but also to set insurance premiums and capitation rates. The abuses of this system are clear in the case of Medicare Advantage plans and the private equity takeover of hospice care—both of which exploit coding to increase revenue rather than improve care.

What has all this complexity produced? A billing system that costs nearly $1 trillion annually, consuming 20% of all healthcare spending. Worse, it contributes almost nothing to patient outcomes and is a major source of caregiver burnout. It burdens clinicians with excessive documentation and discourages essential, non-billable activities like coordination of care and meaningful patient conversations.

The solution is not more regulation or more codes. It’s a fundamental redesign of how we pay caregivers. We need a simpler, value-aligned payment system. Insurers should move toward salary-based compensation, just like most sectors of the economy. Paying physicians fairly and predictably would reduce incentives for overtreatment, streamline administration, and support better care coordination.

Real reform begins with fixing the incentives. For a detailed proposal on how to implement this change, visit www.thejourneys-end.org.