Healthcare Efficiency

Given that all healthcare institutions make money, let’s look at what the do with it.  Here are some broad generalizations:

                                FOR PROFIT        NOT-FOR PROFIT
Investor dividends        yes                    no
Salaries & bonuses        yes                    yes
Waste                        little                    lots
Expand operations        yes                    yes
Taxes                        yes                    no
Uncompensated care      yes                   yes

Dividends run about 2% these days.  Increases in stock value  are fickle (want some Enron shares?  Independence air?) and come from expanding operations.  Salaries etc. are probably comparable, and both provide uncompensated care (under duress).  The not-for-profits (NP) are compensated for this lost revenue by not paying taxes.   Why do the  NPs excel in waste & inefficiency?  Well, they don’t always.  Mostly tho, I think it’s a lack of focus.  NPs are conscious of the bottom line.  They just don’t focus their attention there.  Such focus can be a handicap also.  I’ve seen For Profit (P) companies seek to advance profits by cutting costs and neglecting to provide value to their customers.  Works in the short term, but eventually, everyone loses.  On balance, tho, the NPs just can’t compete for efficiency.  The CEO frets over the budget, but no one else in the organization knows or cares.  In a well run P company, everyone knows how the company is doing and how their job contributes.  Employees are constantly producing innovative improvements.  Can happen in an NP,  but usually doesn’t (lack of incentives).  The point is that there are IRS reporting differences and management differences, but generally both see the same patients for the same problems.  So why are costs so high?  Next time . . . competition in healthcare.