Chapter

The Commercial Transformation

Marc A. Rodwin

in Conflicts of Interest and the Future of Medicine

Published in print January 2011 | ISBN: 9780199755486
Published online May 2011 | e-ISBN: 9780199894918 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199755486.003.0006
The Commercial Transformation

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This chapter discusses the changes in organized medicine, the market, and state policy between 1950 and 1980 which commercialized the American medical economy. The American Medical Association (AMA) relaxed its ethical code to allow more physician entrepreneurship. In a particularly important shift, it also stopped regulating drug marketing and forged closer ties with the pharmaceutical industry. State-subsidized private insurance boosted physician entrepreneurship, while the enactment of Medicare and Medicaid reinforced the trend. However, insurance also fueled spending and lured investor-owned firms into business. In response, the government tried to control spending, initially through rate regulation and control over hospital expansion, then by sponsoring prepaid group practices (PPGPs). Later, public policy promoted markets and courts prevented organized medicine from restraining competition. These changes upset the status quo. Physician entrepreneurship and its conflicts of interest expanded, but physician control over the medical economy eroded.

Keywords: medical economy; commercialization; physicians; medical practice; conflicts of interest; regulation; physician entrepreneurship

Chapter.  6606 words.  Illustrated.

Subjects: Comparative Politics

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