The (sometimes) unholy pursuit of healthcare profit

No margin, no mission.

The phrase is generally attributed to Irene Kraus, the nun who ran the national Daughters of Charity health system, who used it to explain that her hospitals could not rely solely on charitable donations.

The phrase is frequently uttered in healthcare organizations today to justify for-profit, revenue-maximizing behavior. The person who utters it usually recognizes the natural tension that exists between service to others and sustainability. Indeed, almost immediately after those words are spoken – in executive team meetings, in boardrooms, at conferences – everyone seems to nod knowingly and walk away from it all. moral dilemma being discussed.

“No slack, no mission” is the ultimate health care conversation stopper.

It is also a form of signaling the virtues of healthcare companies. Margin, we are told, is the defender of the mission. And without that, there can be no mission. Therefore, margin, i.e. profit, becomes the highest of all organizational virtues.

But what if the mission itself is fundamentally unfair or inadequate – or just plain wrong?

What if the margin is badly generated?

And can it be taken to extremes?

In health service organizations, managed care companies, pharmaceutical companies, not-for-profit and for-profit organizations, these issues are insufficiently debated and discussed, and insufficiently challenged.

And perhaps our inability to debate and discuss it has led to the proliferation of segments of the health sector; price gouging and predatory billing practices; and a failure to stay focused on the social good.

Service delivery or health?

Many hospitals and health systems are simply there to provide services.

Take for example a mid-Atlantic non-profit hospital that I will call XXX: “The mission of XXX Hospital is to provide competent, innovative and accessible emergency and acute care services to the residents of XXX .”

At first glance, this seems rather benign and reasonable. One could conclude that the hospital should make as large a margin as possible so that it can better provide hospital services to as many patients as possible.

But is there a higher or better mission for XXX Hospital? For example, to keep people healthy? Or work to avoid the need for their health services in the first place?

Hospital XXX’s margin – achieved through the provision of services, some of which are the result of poor upstream primary health care – may not be a margin we should all be proud of or be proud. After all, volume or margin growth can only come at the expense of finances and the health of patients and their families. If a hospital is good at providing dialysis services, but the need for dialysis was avoidable in the first place, should we feel good? And seek to expand in order to provide as many dialysis services as possible to as many patients who need them? I’m not so sure.

Change the goal posts

Most pharmaceutical companies have mission statements that balance patient access, research and discovery, and shareholder value. Pfizer’s mission, for example, is “to become the world’s most loved company for patients, customers, colleagues, investors, business partners and the communities where we work and live.”

Statements such as these ignore the inherent tensions that exist between patient value and shareholder value. Additionally, “No Slack, No Mission” can be shaped to suit a variety of purposes depending on the situation and, more importantly, the interpretation of the word “mission”. One day, Pfizer’s mission may be to maximize patient health through innovative medicines. On the other hand, it may be to maximize shareholder value.

When the mission is interpreted with flexibility, so are the tactics employed to accomplish it. This is how companies whose mission is to cure disease can justify pricing their products beyond the reach of patients who need them.

The same flexibility of interpretation has led health services and managed care organizations to pursue At first glance offensive business practices such as surprise billing and aggressive usage management. After all, while the stated mission of these organizations may be to improve health, their unstated mission is organizational self-perpetuation at all costs, no matter what. No wonder, then, that other aspects of the mission always seem to take a back seat.

How much is too much?

Then there’s the case of healthcare organizations that have been so good at making big margins for so long that they almost don’t know what to do with it. On the surface, these reserves represent “bad weather” bottoms. They are meant to be used in times of disaster, allowing the organization to be prepared and sustain itself through that inevitable storm.

A worthy concern.

But could some of these funds be used to refocus the organization on deeper engagement with the intractable issues facing communities and society as a whole? For example, to expand access to mental health, to reduce health inequalities or to enable scientific research into incurable diseases?

In other words, could these reserves be used to take high-risk, high-reward bets in service of the mission?

If only. Too many organizations develop reserves so large that the statement “no margin, no mission” begins to seem extreme and disconnected. For organizations with the market power to extract it, no margin ever seems to be enough. Caution is replaced by risk aversion. There is such a thing as too much of a good thing and we should all be asking, “how much is too much?”

Just words on a page?

Don’t let these concerns turn you into a cynic. For my part, I am inspired by some very visible mission statements that call for making their organizations obsolete.

The mission of the Houston-based MD Anderson Cancer Center is “to eradicate cancer…through exceptional programs that integrate patient care, research and prevention, and through education…” Of course, the achievement of this mission is difficult both practically and scientifically. Some might say this is more ambitious than practical. And it still lends itself to “no margin, no mission” distortions.

Also, some readers of this article might say that it is too focused on the literal interpretation of mission statements and the notion of “no margin, no mission” and divorced from the realities of long-term organizational management. In other words, all organizations must support themselves.

But my belief is that the job of organizational leadership is to bridge the gap between the mission statement on the wall and its realization in the real world.

Simply put, slack should be a means of accomplishing an organization’s mission, not the mission itself.