"There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits…." – so said Milton Friedman, an influential interpreter of Adam Smith for American capitalism.i Although Friedman has now died, his influence in American business culture is ubiquitous. Profit motive inspires every corporation, every small business, every university business school, and yes, every hospital corporation in America. This is just as true of our Seventh-day Adventist schools and businesses as it is of secular institutions.
"I strongly disagree," wrote the co-founder and co-CEO of Whole Foods Market, John Mackey. "I'm a businessman and a free market libertarian, but I believe that the enlightened corporation should try to create value for all of its constituencies….In the profit-centered business, customer happiness is merely a means to an end: maximizing profits." In a more “enlightened” outlook, all persons in the society become relevant to the work of the company. One way to characterize the difference is for companies to serve “stakeholders” rather than “shareholders.”
A third interlocutor in this debate, T. J. Rodgers, founder of Cypress Semiconductor, chimes in as well: "A more accurate title for his (Mackey's) article is 'How Business and Profit-Making Fit Into My Overarching Philosophy of Altruism.'" Altruism indeed. Placing the needs of the Other over one's own needs. The idea that profit-oriented businesses would put the interests of their customers over their own interests is absurd to Rodgers and Friedman. But Friedman himself identified an exception to his profit-making, social responsibility model among free market capitalists. In The New York Times Magazine, in 1970, Friedman wrote: "A group of persons might establish a corporation for an eleemosynary purpose—for example, a hospital or a school. The manager of such a corporation will not have money profit as his objective but the rendering of certain services."ii
I wonder if Friedman's recognition of eleemosynary (relating to, or dependent on charity)iii business, one focused on the "rendering of certain services," is recognized these days. I am no economist, but I am willing to argue that there is a fundamental difference between a service orientation and a business orientation in American healthcare. American business culture appears to be moving toward a more socially conscious ethos. Stakeholder theory has taken root generally, and CEOs like Mackey of Whole Foods and Howard Schultz of Starbucks tout their social consciousness. Schultz, a couple weeks ago, announced his retirement as CEO of Starbucks in order to pursue, among other things, his deep love of social causes. A New York Times article notes "Schultz’s leadership includes many pioneering social and philanthropic programs: In 1988, the company introduced full health benefits for full- and part-time employees and their domestic partners; in 1991 it was the first privately owned American company to include part-time workers in its stock-option program; and so on, with efforts that have included the ‘ethical sourcing’ of ingredients, a college degree program for baristas, and cups that use recycled materials."iv
Within healthcare the growth of the American College of Healthcare Executives with its "Code of Ethics," indicates an increased awareness that healthcare is not a business like any other business. The Code notes in section V, "The Healthcare Executive's Responsibilities to Community and Society," that executives shall “work to support access to healthcare services for all people; encourage and participate in public dialogue on healthcare policy issues, and advocate solutions that will improve health status and promote quality healthcare…."v The American Hospital Association's mission statement also expands accountability of healthcare institutions beyond shareholders: “The AHA leads, represents and serves hospitals, health systems, and other related organizations that are accountable to the community and committed to health improvement.”vi
This column is a call for those of us in healthcare, in Adventist healthcare in particular, to cling to an altruistic form of ministry in the communities we serve. Is our ministry dependent upon making profit, as opposed to making enough money to remain in ministry? Is the patient/customer a means to our end, the end of making a profit? Or is the margin (profit) a means of providing care for patients/customers? Understandably, these two motives are interwoven in ways that make it difficult to clearly articulate the difference. Occasionally, business decisions and patient/customer decisions conflict and vigilance is essential.
Note the language of "patient" and "customer." Healthcare providers (medicine: doctors, and nurses) serve patients and are historically altruistic. Healthcare corporations sell goods (literal, physical goods and procedures) to customers and are historically egoistic. American society is trying to bring two social institutions, business and medicine, together in the same building to offer healthcare to its citizens. It is failing. It is failing in a number of ways, not least of which is overall outcomes in relation to the amount of money invested in it. Just this week, the CDC came out with data showing the first decline in American life expectancy in decades.vii
Measuring the mountains of data on healthcare is no small task, but the numbers coming out of the U.S. simply are not good in comparison with other developed countries.viii Ironically, elsewhere around the world, even in places where capitalism has already won the ideological battle over communism, socialized medicine is providing better outcomes and less volatile political battles than in the U. S. Here, "shareholders" and business culture is winning the battle. Agreeing with John Mackey, I want to urge the placement of stakeholders over shareholders when conflict arises because it necessarily broadens moral obligation beyond the making of profit.
The hackneyed phrase, "No Margin, No Mission" gets turned on its head when shareholder values put mission in the place of primacy. In such a climate, "Mission Modifies the Margin." Perhaps, for instance, in a healthcare corporation board meeting, the altruistic mission would insist that profit margin be removed from the top line of Board agenda items. Perhaps, for instance, the Chief Financial Officer would be held in higher esteem when she/he reported this: "Because our Mission is more important than our Margin, we are happy to report that we we served our community well, even if we failed to increase our financial margin."
Am I tilting at windmills? I do not think so. I am sure that the ideology of our Adventist healthcare ministries is altruistic. In our American economic context, however, the temptation to prioritize profit over patients is ever present. So I want to suggest three things in the hope of avoiding potential drift.
1. Stop using "customer" for "patient." Healthcare is now run by business people. Physicians are rarely, if ever, at the top of the healthcare corporation food chain, and when business people run the healthcare corporation, they are likely to insist upon caring for customers. It is the language they understand, and they will shape their corporation accordingly. Power within healthcare corporations is complex, and the dynamic of power between physician providers and business managers is doubly difficult to understand and navigate. I would encourage our physicians in this sub-culture to assert themselves within the healthcare corporations they work. I am not naive to the power of patient satisfaction scores from companies like Press-Ganey,ix but these measures can be put in the context of patients as stakeholders for whom we are accountable rather than customers to whom we cater as if we are offering some sort of healthcare all-you-can-eat smorgasbord.
2. Continue to conglomerate. Over the past ten years in America, healthcare corporations have undergone dramatic re-shaping through conglomeration, among other things. Business professionals are incredibly capable of managing the competitive climate within the American healthcare industry.x One truly accurate phrase in American healthcare business is this: “If you are not growing, you are dying.” One CEO recently affirmed the potential reality of present-day trends with me as we visited together; it may be that within the next 10-15 years, America will only have ten or so healthcare corporations. It strikes me that our Adventist healthcare corporations ought to unite. I am not sufficiently aware of the complexities to offer any specific recommendation, but the present size of our five systems is relatively small in comparison with the highest performing and most efficient systems in the country.
3. Invest in a system of leadership development. There are far too many young business professionals coming into the healthcare corporation ranks who know absolutely nothing of our faith, values, or motivation for offering altruistic, Adventist Christian care for patients. Some of our systems already have “leadership institutes” where such work is being done. But we could we work together and offer a centralized healthcare ministry leadership institute of a sort that would serve all five of our systems. Just this week Florida Hospital (Adventist Health System) announced its new CEO and, in doing so, reported that the former CEO will become a founding faculty member of a new Leadership Institute.xi Our leadership development work, if we were to come together on this project, could offer a unique perspective rich with Adventist heritage. Business leadership training is a huge business in itself, but how will our work in this realm be different? How will it prepare young Adventist business graduates to fill roles of leadership within Adventist healthcare corporations? I am certain that our Adventist business offices and executives cannot hire enough Adventists to fill positions of leadership. Last year at a meeting in one of our systems facilities, I was urging my colleagues along these lines, and one of the members of the audience introduced herself as a Baptist, recently hired, and anxious to learn more about Adventism and the values that compel us to offer healthcare with the passion that she routinely sees at work.
Regardless of the uncertainly we presently face in light of the recent election, Adventist health ministry is here to stay. Let us stay focused on altruistic care for patients and cling to a Mission that Modifies the Margin.
i Milton Friedman, Capitalism and Freedom, 1962, p. 133.
ii Friedman, "The Social Responsibility of Business is to Increase its Profits," The New York Times Magazine, Sept. 13, 1970.
viii There are many places to find data on this topic: https://www.healthypeople.gov/ ; http://www.who.int/en/ . Although it is now two years old, this Forbes Magazine article is indicative, http://www.forbes.com/sites/danmunro/2014/06/16/u-s-healthcare-ranked-dead-last-compared-to-10-other-countries/#18ac892a1b96
x One article from within medicine appeared in a special JAMA edition focused on the future of American Healthcare, Cutler and Morton, “Hospitals, Market Share, and Consolidation.” There are hundreds of articles from multiple disciplines identifying this trend in American healthcare.
Mark F. Carr is an ordained minister and theological ethicist with experience as a pastor, pilot, commercial fisherman, professor, and now clinical ethicist. He writes from his home town of Anchorage, Alaska.
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