Profit is not a four-letter word. After all, healthcare providers operate within the framework of the nation's free-enterprise system, where the achievement of a strong bottom line usually is cause for celebration.
Some folks make the distinction that healthcare should be judged by a different standard because it is a caring, service-oriented field, but the twin ideas of service and profit are not necessarily exclusive. In fact, organizations such as Daughters of Charity National Health System, St. Louis; Baptist Memorial Health Care System, Memphis; and Adventist Health System/Sunbelt, Orlando, Fla., have successfully balanced their charitable mission with robust financial results.
In an era obsessed with achieving cost-containment, some misguided hospital executives got the idea that they should be embarrassed by their ability to prosper. So they talk about surplus, excess revenue or similar euphemisms that obscure the fact that hospital profit margins have been increasing and fund balances have reached an all-time high.
As David Burda's article in our Aug. 8 issue (p. 115) made clear, however, the lack of forthrightness on profitability has made industry leaders vulnerable to criticism from lawmakers, business leaders and the general public. Undoubtedly, some of the problem is due to the fact that the bulk of today's executives earned their wings in a time when healthcare wasn't under the spotlight the way it is now. Today's executives are besieged with requests for mortality data, Medicare cost reports and comparative outcomes information from local business coalitions, state agencies and the media.
In addition, industry leaders appear to have painted themselves into a corner by adopting lobbying policies that focus much of the blame for the industry's problems on inadequate Medicare and Medicaid reimbursement policies. Moreover, national industry leaders have been timid about speaking out on the impact of reform proposals now under consideration for fear of offending the Clinton administration or members of Congress.
Healthcare executives have every right to express pride in their ability to offer an extraordinarily high level of quality medical care despite confusion and uncertainty caused by changing regulatory requirements, cuts in Medicare and Medicaid funding, the growth of managed care, and the move to capitation.
With the healthcare enterprise at the top of the nation's agenda, the public is superbly positioned to expand its awareness of industry efforts to achieve a more efficient and cost-effective delivery system. Such educational efforts can focus on the importance of having strong institutions providing excellent care, offering unique community services and acting as an employment base for the region. Executives also can highlight the dangers inherent in operating a financially shaky institution-especially one that runs the risk of becoming insolvent.
Whatever the approach, candor is essential to maintain the credibility the industry needs to withstand assaults from those who would throw out what progress has been made in exchange for ill-conceived reforms.