From Michael Porter’s Competitive Strategy:
We usually think of suppliers as other firms, but labor must be recognized as a supplier as well, and one that exerts great power in many industries. There is substantial empirical evidence that scarce, highly skilled employees and/or tightly unionized labor can bargain away a significant fraction of potential profits in an industry.
This is one of the core tensions in modern healthcare. Healthcare workers are the key source of revenue, but—because they want to be paid pesky competitive wages—also erode the potential profits of their employers, and many of those companies (regardless of their technical nonprofit vs profit status) really, really want more profit.
Private practice is not a panacea, but as most healthcare workers are not unionized, plausible alternatives to large entity employment are critical to enable workers to bargain for fair compensation. I suspect this is an increasing tension we should continue to expect with the greater use of AI. Employed physicians should desperately want their private practice colleagues to succeed.
From Porter’s follow-up, Redefining Health Care: Creating Value-based Competition on Results:
The fundamental problem in the U.S. health care system is that the structure of health care delivery is broken. This is what all the data about rising costs and alarming quality are telling us. And the structure of health care delivery is broken because competition is broken. All of the well-intended reform movements have failed because they did not address the underlying nature of competition.
Things have gotten so, so much worse since that was published in 2006.