Financialization of Health Care: What It Means for Doctors

Part I

Let’s talk about the administrator boom in healthcare. You know the one: the million people doing strange jobs that aren’t really healthcare but are somehow part of it, who harass you about how you practice from their 9 to 5 office jobs. It’s a real problem, and we’re going to get to it. In fact, the administrator boom is a symptom of something much larger. So is executive compensation. So is consolidation, the reason every city used to have a dozen hospitals and now has two or three major systems. So, in part, are hospital closures and how hard it has become to access care in rural settings. It’s all connected, and the larger issue has a name: financialization.

To put it in medical terms so we all feel safe here, financialization is a syndrome. Administrative bloat, CEO pay, hospital closures: these are symptoms across a lot of different organ systems with a common underlying cause. And we all know there are two ways to tackle a syndrome. You can treat the symptoms, or you can address the underlying cause, and the second is always going to be more effective.

Doctors are in a special position here, if we decide to use it. We are essential to how this system works. The whole thing is built on our backs. That’s why I know it’s possible for us to regain our authority in it. It’s just going to take collective action. But I’m getting ahead of myself.

Some definitions

Everything I’m drawing on here comes from our own literature. This is in the journals. If you want to go deeper, the papers are there.

For a definition of financialization, I’ll quote directly from a 2024 paper in the New England Journal of Medicine that breaks the concept down well. Financialization, the authors write, is “the transformation of healthcare entities into saleable and tradable assets from which the financial sector may accumulate capital.”

In plain English: it’s when a hospital or a practice stops being a place that takes care of people and becomes an asset instead, something you can buy, sell, borrow against, and squeeze for returns. It means financial-sector ownership and control of healthcare entities. And when financial-sector people own the healthcare system, they start acting like financial firms, because that’s who they are. That’s how you get hospitals with entire arms of the organization devoted to investing. That’s how, especially in big cities, hospitals have become major real estate companies that own huge swaths of the city around them.

Another piece I love, from JAMA, is called “The Vocabulary of Our Discontent,” and it helps to break down a few more terms. These words get thrown around by people at the top and the rest of us glaze over. But it isn’t that hard. We can understand it.

Financialization is the umbrella. Underneath it are the mechanisms.

Marketization is the act or process of introducing a free-market economy. If it sounds very 1980s, that’s because it is. In the eighties, it was in vogue in economics to think about everything in terms of competition and consumer price sensitivity, the basic supply-and-demand thinking you’d get in an intro class, and that became the dominant way people thought about actual businesses. In healthcare, marketization was the shift from “we are here to protect people’s health, this is a service, this is about taking care of patients” to “we’re going to do that in the context of a market and use market forces to drive profit through the system.”

I’ll be fair: these ideas aren’t all wrong. You may notice I romanticize earlier eras of medicine, when patient care was more clearly the core value, but I also know that when no one is making money on anything, the quality you get is lower. You get a different level of care at a free charity clinic than at the big fancy hospital. That’s just true. But knowing our profession’s history, we know this shift matters, because it’s the first time the priority went from a doctor and a patient making a decision together for that patient’s welfare to also asking: can we market this? Can this work as a corporate enterprise? And at this point it has happened almost everywhere. Marketization is pervasive. Nobody questions that this is how healthcare works now, and that’s a root cause of the problem.

Corporatization is a different concept, and this is where the terms start getting confusing. Corporatization is big organizations using their market power to maximize profit. If you work for a big hospital system, you know how they’re always buying things. We acquired this clinic, we acquired that small hospital, we have a new location over here. That’s corporatization, horizontally. It also works vertically: the hospital buys the pharmacy, the hospital buys the physician practice, the hospital tries to own every piece of the puzzle.

What’s scary about corporatization is that it’s happening in for-profit and nonprofit hospitals alike. I can hear some of you thinking, I work at a nonprofit, there’s no way this is happening at my place. Sorry to burst your bubble. At this point, for-profit and nonprofit hospitals behave almost identically. They are both corporatized. That’s not because the system is evil; it’s full of well-meaning people trying to make things work. But to survive as a nonprofit today, you have to stay profitable, and this is how they do it.

Privatization is the turning over of public programs to private industry. The best example is Medicare Advantage, which is private insurers administering Medicare. It’s less central to this discussion, but it’s another channel through which market forces enter the system and healthcare becomes tied less to health outcomes and more to financial outcomes.

Together, these are the mechanisms by which money has become the mission of healthcare. That phrase isn’t mine; I’m borrowing it from a 2025 article in the Lancet. But it’s exactly what has happened. The primary mission is to make money and stay afloat. Providing healthcare is secondary.

Think of it as nesting dolls. Financialization is the outer doll, and its logic is that growth and revenue are the point. Inside it sit corporatization and consolidation, which are how that logic actually gets carried out. And those are the things you start to feel at work: more administrators, hired to extract more money from the insurance industry; executives making forty or fifty times what your nurses make, because their incentives have nothing to do with what’s happening on the ground; hospitals merging and closing around you, because the biggest way to grow is to acquire.

No, I don’t hate free markets

I can hear you through the screen: Liz, do you hate America? Don’t you know we need to make money to do healthcare? I get it. I don’t hate any of these things. Markets are powerful forces that can be leveraged for good, including in healthcare.

The problem is that we have turned essentially all of the leadership and control of our industry over to pure business and financial interests. Only five percent of hospitals have a physician CEO. We have let these people take over our industry. And while those of us on the ground measure our success by how well our patients are doing, that is not the metric for the people at the top.

These hospitals that are out there vying to buy things aren’t competing over who provides the best care, over which place you go if you want the best chance of staying alive. They’re competing over who can grow biggest, block the others out, and charge more. It’s a competition in financial footwork: who can make the most competitive deals to ensure they make more money off healthcare than they spend on it.

In another industry, that’s fine. If you make clothing or sell services, these are the tools. My problem is that I don’t think they apply to healthcare the same way, and when we apply them anyway, we get what we’ve started to see in our society: people don’t trust doctors the way they used to, because we, as professionals, are at odds with how our industry is treating people in the real world.