Value Systems

To generalize about these many and varied institutions— both secular and religious, for-profit and not-for-profit—is not a simple matter, but it is useful to explore certain issues relating to the value systems that undergird their several missions and roles in society. Many of the older institutions were launched on the bedrock principle of simply caring for the sick and suffering, and many in the public still, quite unrealistically, think of all healthcare institutions in this way. Because the United States as a nation has not yet realized the right of equal access to healthcare for all its citizens and embraced the concept of healthcare as a social good, there is no consistent underlying covenant between the society and these institutions. A social covenant would lead to some kind of centralized planning for healthcare needs, and institutional missions would flow from this. Instead, the United States relies on marketplace values combined with a variable and often unreliable "safety net" of public institutions. It has proven to be very difficult for any of these institutions to live up to their traditional charitable-based institutional values and at the same time survive the economic and social realities of U.S. culture. The one shared ethical principle that all would espouse is the commitment to competence and excellence, values that have permeated Western medicine through its physicians since the time of the Greek physician Hippocrates (c. 460-c. 377 b.c.e.). This principle is not purely altruistic, however, because a minimum of quality is required for accreditation, and because evidence of excellent quality gives some institutions a market edge in attracting paying patients.

The public institutions created by a county, city, or state for the purpose of delivering health services to a specific population have an unambiguous mission and foundational institutional ethic: to carry out the function for which they were created and for which they continue to receive operating funds from the public sector. The objective of these institutions is to provide care in an appropriate and highly competent fashion to the specified population, usually those who are poor and without access to other sources of care. Whereas, on paper, the goals and objectives of these institutions never change, the public's commitment wavers from year to year, with the obvious result that there is considerable variation in the level of financial support the public is willing to provide; serious underfunding for many public hospitals thus significantly compromises the quality of care in many places. So there remains the paradox, despite an unambiguously consistent mission statement: Compromised public commitment to provide services for the poor has translated to a serious loss of quality in some of these institutions. The profit motive seldom creates an untoward tension among workers at these institutions; the limits imposed by funding sources may, however, lead to the curtailing or closing of certain expensive services, perhaps to the detriment of the patients.

The private, not-for-profit institutions that were established for the purpose of serving the community may share a public-service vision with the public hospitals. Private, not-for-profit hospitals also, however, experience extreme pressures that run counter to their community-service mission. In the United States, since the early 1980s, these institutions have often thrived financially by maximizing income from insurance and philanthropy, both of which have supported the enormous growth of specialty medicine and heroic high-technology care. Governed by boards of directors made up of citizens of the community, these institutions can be expected to have an awareness of community needs. On the other hand, the charity care these hospitals may provide generally must be paid for in one of two ways: (1) by using available reserve funds, or (2) by shifting costs, overcharging those who can pay more, in order to make up for the losses in primary care, chronic care, and general care for the poor or uninsured.

The CEOs of the larger of these hospitals, especially those at the more prominent academic and tertiary-care institutions, are treated and paid as though they were corporate executives. This trend toward providing top-level management for these institutions came from the growing awareness beginning in the early 1970s that these institutions were administratively out of control or at the very least generally ill-prepared to fulfill their potential in a volatile marketplace. Few would argue that the majority of these institutions have become heavily bottom-line oriented. Balancing cross-subsidization among the various payers with issues of access for the poor is a fine art. Many of these hospitals, though losing money on every Medicaid and uninsured patient, manage to produce an overall surplus. They do this by increasing the volume of high-paying expensive procedures on insured patients. This goes far afield from a care mission of investing in prevention to foster healthier populations. Positive bottom lines are often then used to implement programs aimed at increasing "market share" for the hospital, rather than increasing services for the most needy.

Some not-for-profit institutions have extraordinarily idealistic community-service orientations, expressed through their written missions and goals. These orientations have sometimes become so consumed by the direction provided by bottom-line oriented, high-priced management teams that a variety of less-desirable and short-sighted practices have been implemented to produce a positive bottom line. These include the following:

(1) salary incentives to unit managers based primarily upon the financial performance of their cost centers;

(2) high-tech and manpower investment strategies determined primarily by their potential for high earnings;

(3) transfer policies that favor keeping patients whose care will add to the bottom line ("cream-skimming");

(4) policies to reduce existing teaching programs because of uncompensated expenses and negative impacts upon marketing strategies designed to reach more desirable clienteles; and

(5) different patterns of care based on whether or not patients possess ample insurance coverage or other financial resources.

Whether or not one finds these practices appropriate or inappropriate, whether they are more or less typical of not-for-profit as compared with for-profit institutions, the main lesson from these examples is that the pressures and forces inherent in the competitive market-oriented environment that has become dominant since the early 1980s have served to overtake the charitable values and philosophies that were central to the creation of many of these institutions. There is a tendency for healthcare institutions to believe that they are involved in a competitive fight for survival, and they all, in various ways, try to combine that pressure as best they can with the imperative to serve the sick.

Even institutions sponsored by religious organizations charge paying patients more than cost in order to cover the costs of nonpaying patients. Financial stability is the key to survival and thus to carrying out an altruistic mission. It is therefore more realistic to stop envisioning Saint Francis of Assisi when thinking about not-for-profit hospitals and begin thinking instead of "Saint Robin of Hood," robbing the rich to care for the poor.

Most observers see this behavior less as human frailty than as a system failure, the result of an environment that is filled with perverse incentives. In their detailed analysis of the ethics of for-profit as compared to not-for-profit healthcare institutions published in 1986, Dan W. Brock and Allen Buchanan concluded that there are no rationally compelling grounds upon which to find ethical fault with the profit motive in healthcare under the ground rules by which U.S. society now operates. Improvements can come only when the ground rules and societal expectations are altered; it is not enough simply to hope that institutions will take the lead in changing their behavior, in the face of existing incentives to the contrary.

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