The absurd in pediatrics: profits overtaking populations in need

The Perilous Intersection of Money and Medicine

In an ideal world, the practice of pediatrics would be guided solely by the principles of care, compassion, and the well-being of children. However, as the healthcare landscape continues to evolve, there’s an unsettling trend emerging—profit is increasingly being placed above care, even in the realm of pediatrics. From private equity firms seeking astronomical returns on their investments to hospital CEOs raking in multimillion-dollar salaries, the business of pediatric care is becoming disturbingly focused on financial gain.

The Rise of Private Equity in Pediatrics

Private equity has made aggressive inroads into various sectors of healthcare, and pediatrics is no exception. These firms are buying up pediatric practices, urgent care centers, and even entire hospital systems, with the goal of maximizing profits in a relatively short period. Their playbook is straightforward: cut costs, streamline operations, and increase revenue. The ultimate goal is to achieve profit margins of 30% or more and sell the investment at five to ten times the original purchase price within just a few years.

But what does this mean for pediatric care?

The answer is troubling. Private equity ownership often leads to decisions that prioritize financial performance over patient care. Practices might be pressured to see more patients in less time, reducing the quality of care each child receives. Investments in essential but less profitable services—like mental health support or complex care management—might be minimized or cut altogether. The focus shifts from caring for children to satisfying investors, with pediatricians caught in the middle, struggling to uphold their commitment to their patients in an increasingly profit-driven environment.

The Skyrocketing Salaries of Hospital CEOs

It’s not just private equity that’s distorting the landscape of pediatric care. The leadership of many children's hospitals has also become increasingly focused on financial gain, often at the expense of the very mission these institutions were founded to uphold. Some CEOs of children's hospitals now earn salaries in the seven- or even eight-figure range, far removed from the day-to-day realities of patient care.

These eye-popping salaries are often justified by the need to attract top executive talent capable of navigating the complex world of healthcare finance. But this raises a critical question: when the CEO’s paycheck dwarfs the hospital’s budget for essential services like community outreach, charity care, or mental health programs, what message does that send about the institution’s priorities?

Children’s hospitals, once seen as bastions of compassionate care, are increasingly being run like corporations, where financial performance metrics often outweigh the core mission of providing high-quality care to all children, regardless of their financial status. The consequences of this shift are felt most acutely by the children and families who rely on these institutions for care.

The Fee-for-Service (FFS) Dilemma

Compounding these issues is the fee-for-service (FFS) model that dominates much of the U.S. healthcare system. Under FFS, healthcare providers are paid for each service they perform, whether it's an office visit, a diagnostic test, or a procedure. This model incentivizes volume over value, encouraging more services, more tests, and more procedures—whether or not they are in the best interest of the patient.

In pediatrics, this means that a "good business" decision is often to do more services, particularly those that reimburse at higher rates. The focus can shift from assessing and addressing the actual needs of children to maximizing billable services. This can lead to over-testing, unnecessary treatments, and a fragmented approach to care that benefits neither the child nor the pediatrician truly committed to their patients' well-being.

Moreover, under the FFS model, private practices can maximize their revenue by prioritizing well-child visits and routine care over more time-consuming, complex cases. For instance, a practice can see a higher number of healthy children for 20-minute appointments, vaccinations, and other well-care services, which are easier to manage and provide steady, predictable income. Meanwhile, children with chronic conditions or complex medical needs, who require more time and attention, are increasingly referred to specialists.

While this strategy might make good business sense, it comes at a significant cost to the continuity and quality of care. By offloading sick children to specialists, primary care pediatricians lose the opportunity to manage and follow the full spectrum of a child’s health. This not only fragments care but also undermines the trusted relationships that are foundational to effective pediatric practice. It also shifts more revenue and patient volume to the referral network, which may thrive financially from the increased demand, but at the expense of comprehensive, coordinated care for the child.

The Commercial Pay Trap in Private Practices

Even at the level of individual pediatric practices, the influence of profit over care is evident. Many private practices are limiting their acceptance of insurance plans, particularly those that reimburse at lower rates, such as Medicaid. Instead, they focus on serving patients with commercial insurance, which offers higher payouts. This trend, while financially beneficial for the practice, creates significant disparities in access to care.

Children from low-income families, who are often covered by Medicaid, are increasingly being shut out from accessing care at many private practices. This not only exacerbates existing health disparities but also places additional strain on the public and nonprofit providers who continue to serve these populations, often with limited resources.

While it’s understandable that practices need to be financially sustainable, this trend highlights a broader issue: when profit becomes the primary driver, the needs of vulnerable populations are too often sidelined. The very nature of pediatrics should be about providing care to all children, not just those whose insurance plans offer the highest reimbursement rates.

A Call for Rebalancing Priorities

The encroachment of profit-driven motives into pediatrics is a concerning trend that threatens to undermine the fundamental principles of the field. Children’s healthcare should be about more than just the bottom line. It should be about providing comprehensive, compassionate care to all children, regardless of their financial status or the profitability of the services they need.

We must ask ourselves: What kind of healthcare system do we want for our children? One where decisions are made based on what’s best for the child and their family, or one where financial gain takes precedence? The answer should be clear.

It’s time to rebalance our priorities. Policymakers, healthcare leaders, and practitioners need to work together to ensure that the drive for profit does not overshadow the core mission of pediatrics. This could mean imposing stricter regulations on private equity ownership in healthcare, capping excessive executive compensation in nonprofit hospitals, or providing better reimbursement rates for essential services like Medicaid.

Moreover, we need to rethink the fee-for-service model, which often drives over-utilization of services and distorts the focus of pediatric care. Moving toward value-based care models, which reward outcomes rather than the quantity of services provided, could help realign incentives with the true needs of children.

Finally, private practices must recognize the importance of continuity in care. By prioritizing long-term relationships with patients and managing both well and sick visits, practices can offer comprehensive, holistic care that truly meets the needs of children. This approach, while perhaps less immediately profitable, ultimately benefits the health and well-being of the pediatric population—something that should always be our primary goal.

In the end, we must remember that the true measure of success in pediatrics isn’t found on a balance sheet—it’s found in the health and well-being of the children we serve.