Maybe We Can Split the Difference?

Recently, I have been discussing the business of healthcare. While everyone speaks of the preservation of life as being worth all possible effort, the painful reality is that we assign costs to others’ welfare and even our own well-being all the time.

If you wanted to, you could drive in a car that reduced your risk of serious injury, from a car accident, to nearly zero. But such a car would cost 100,000’s of dollars. Most people take “reasonable” precautions and buy a “reasonably” safe car, and are satisfied with this. Having said this, there are still a tremendous number of serious motor vehicle accidents every year. Perhaps, despite all of our “reasonable” decisions, we need to do more.

I recently had a long and emotionally difficult discussion with a friend over the issue of healthcare costs. Without being able to go into any serious detail, I can say that the basic issue was how much of a medical service’s profit should be reinvested in the company, versus paying out dividends and bonuses to the partners and staff. As much as the media and doctors themselves paint the world of medicine as one made up of altruistic and nearly angelic characters, the reality is that doctors are people like everybody else. They like to make money, they like to take vacations, they like to have a nice car, they want their children to have a good education and so on.

When the end of year comes and the numbers are finally tallied, one may be faced with the following scenario. It may be that quality of care stands at, say,, 70% [on some universal scale that does not yet exist].. The medical directors look at this number and tell the CEO and CFO that with “X” amount of money, they can achieve 85% or even more on the quality of care scale. Despite the often used argument that quality of care attracts more patients and thus generates more income, improvements in quality above a certain level often cost far more than they reap in return.

Nevertheless, from a pure medical point of view, there is a clear difference between 80% and 90% and 100% on the universal quality of care scale. Even if the patients don’t feel the difference, the doctors know that they have done a better job. Perhaps, the benefit is in terms of using less advanced antibiotics in order to reduce resistance to antibiotics in the general population. Perhaps, the benefit is in terms of lifestyle advice that will reduce the likelihood of a heart attack in the coming years. These benefits are very hard to measure. And arguing that they financially justify themselves is even more difficult.

So what are our options? The simplest option is to leave the medical care at 70% and to enjoy a vacation in the Bahamas from your bonus. The extreme opposite approach is to take the entire profit and reinvest it in better healthcare, in order to achieve that magical 100% score. Intuitively, the best choice will be a compromise between the two. With an open-minded and innovative group of C- level managers [CEO, CFO, etc.], it should be possible to jointly review budgets and find funds for the most important new medical projects, while still leaving a nice  sum for bonuses and dividends. This type of teamwork requires a level of trust and respect  for each other, which unfortunately is not common.

Throughout my years, I have come across CEOs who were convinced of their own absolute correctness in all matters of their business. Even in cases where the CEO was managing a company whose product he/or she did not fully understand, I have known CEOs that refused to consult and more so, to share (admittedly sensitive) information with senior professional staff. In the world of software development, it is not hard to imagine a very business oriented CEO trying to apply standard business practices to the writing of code. Sometimes though, the best laid programs of computer and man go awry and pressuring the IT department to work faster, simply does not work. Animosity develops between the head of the IT department and the CEO/CFO and negative repercussions follow.

Many people are aware of the history of Steve Jobs with Apple computers. One man with a unique vision proved to the “suits” that creativity and design and aspiring to perfection were fundamental to the success of Apple. This is not what was taught in business school. But Steve Jobs, like many innovative and visionary people, proved that quality can sometimes be even life-saving for a profit oriented company.

Late in Steve Jobs life, he was interviewed along with Bill Gates. Both he and Gates were asked a fascinating question: what did the other contribute to the world of computers. If you summarize their responses, there was a clear meeting of the minds, where it was agreed that vision and smart business and love and practicality all were fundamental to the success of a venture.I have watched the video of this interview 10’s of times in order to internalize the incredibly important messages that these two giants were sharing

I am naïve and I am a dreamer, as I have admitted in the past. Somewhere out there is a CEO who could work with someone like me and find a way to achieve great things while keeping an eye on the company’s bank account. But maybe, I am just too far down the rabbit hole for any CEO to reach.

Thanks for listening