At One Academic Medical Center: "Profitability" Trumps "Doing the Right Thing"

A post on the Health Care Blog opened a window into the thinking of top leaders of health care organizations. The post was written by Gary S Kaplan MD, the CEO of Virginia Mason Medical Center, a well reputed US academic medical center. It seemed generally well-intentioned, and was focused on the creation of an organization of US health care CEOs "dedicated to transforming health care and creating a more sustainable health system."

But my interest today is not this organization or its future plans.

Dr Kaplan's post included,

We, unfortunately, in the current payment system, reduce our profitability by doing the right thing. Despite my very supportive board of directors, they will not allow me to lead our organization into bankruptcy by doing the right thing. We need to change our payment system if we truly want to ensure universal coverage, improve quality and reduce cost.

I completely agree with Dr Kaplan about the need to change how we pay doctors and hospitals. But note his second sentence.

It implies that the leadership of Virginia Mason sees "profitability" as a goal of the organization that supersedes "doing the right thing." Furthermore, Dr Kaplan implies that his medical center's board of directors has prevented him from "doing the right thing," in order to avoid "bankruptcy."

Perhaps this was just a horribly written paragraph. But it does seem to say that at Virginia Mason Medical Center, the leadership thinks it is less important to uphold the organization's mission, that is, to do "the right thing," and more important to promote "profitability."

However, Virginia Mason Medical Center is a not-for-profit organization. (See this link.) A not-for-profit organization should not have "profitability," by definition.

Furthermore, the leadership of a not-for-profit organization is supposed to uphold the organization's mission, and to put this mission ahead of other concerns. This is called the duty of obedience, and is a fundamental duty of leaders of not-for-profit organizations (see this link). Failure to uphold the mission threatens the fundamental integrity of the organization.

Naturally, to fulfill the mission, the leadership of a not-for-profit should not let the organization go bankrupt. It should be concerned about raising and having sufficient funds to make an honest attempt to fulfill the mission. But bringing in money should be secondary to the mission, and "profitability" should not be a goal.

By the way, the current stated mission of Virginia Mason Medical Center is:

Our vision is to be the Quality Leader - Our aspiration is not to be the biggest, but to be the best. We will differentiate ourselves on the basis of quality.

Our mission is to improve the health and well being of the patients we serve - Healing illness is our first priority and is what gives our people the energy for our vision. We are also committed to providing a broad range of services that improve one's sense of well-being and which prevent illness.

We have previously discussed how a leader of another not-for-profit academic medical center revealed that his major criterion for evaluating faculty members was how much money they brought in, not how well they fulfilled their academic and clinical responsibilities. His goal was to make sure enough faculty were "taxpayers," people who brought in more money than they consumed (not that enough faculty were good clinicians, teachers, or researchers.) Again, it seemed that his organization put making money ahead of fulfilling its mission, ignoring their duty of obedience.

Now apparently another leader of a not-for-profit academic medical center has let slip that the leadership of his organization is thinking the same way, but on a more macro level.

By the way, I doubt that the thinking disclosed by these two leaders is anomalous. What is anomalous is that they made it public. Many academic medical institutions could be lead by people who put profits ahead of mission, thus shirking the duty of obedience, and hollowing out the integrity of their institutions.

Academic medical institutions, like most health care institutions, are now lead by business people who grew up in what now appears to have been the second gilded age. The global economic meltdown has made it clear that we just lived through an era in which business leadership was too often marked by arrogance, greed and corruption. Business leaders took ridiculous risks, deceptively marketed products, and manipulated financial instruments to generate short-term profits, and thus to generate fabulous payments to those same leaders. And we have seen how these practices nearly destroyed the global financial system and have lead the world to the brink of a new great depression.

At least the global financial meltdown has discredited the notion that markets not subject to any external regulation or policing will somehow police themselves. So maybe it is time to add a little regulation and policing to health care. One place to start would be the duties of the leaders of not-for-profit health care organizations.

These include

• the duty of obedience: they need to put their organizations' missions ahead of other concerns.
• the duty of loyalty: they need to give their organizations their undivided allegiance when making decisions.
• the duty of care: they need to exercise reasonable care when making decisions.
  

But as long as the leaders of not-for-profit health care organizations continue to put profitability ahead of mission, things will continue to get worse.