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One: Healthcare Business Ethics
- Indiana University Press
- Chapter
- Additional Information
Case 1.1. It was an interesting, though unplanned, discussion at the Board meeting of the managed care plan. The next year’s budget was being presented for Board approval and the CFO was explaining some of the assumptions on which the projections were based. One expectation was that the organization would be successful in lowering the “medical loss ratio” by more than one full percent from the current number. (The medical loss ratio is the percentage of premium revenue used for medical expenses for members of the plan.) One Board member asked what the CFO thought the ideal MLR was and what the long-term goal was. Several others voiced their opinions in response and it immediately became evident that a wide range of opinions was represented around the table—everything from “as low as possible” to “as much of the revenue as possible should go to medical care.” The Chair suggested that this question be put on the agenda for a future meeting. One of Emily Friedman’s columns in Healthcare Forum Journal is entitled “What Business Did You Say We Were In?”1 In it, she discussed the practice of health insurers excluding certain high-risk individuals from coverage and pointed out some of the implications of adopting a commercial model, as differentiated from a service model, of healthcare. Identifying the appropriate or ideal medical loss ratio seems to require, ¤rst, understanding the kind of business healthcare is or should be. If the healthcare organization is modeled on a business devoted to a high return on investment, the cost of medical bene¤ts will be seen as an expense One Healthcare Business Ethics that should be kept as low as possible. If, on the other hand, the healthcare organization is modeled on a service organization devoted to humanitarian aims, the emphasis will be on using as much of every dollar as possible for the healthcare services that the organization is designed to provide. In fact, in an organization that de¤nes itself as a service organization, management may not even be comfortable with the term medical loss ratio, preferring a term like medical care ratio or medical cost ratio. Providing health bene¤ts is not a “loss” when it is the reason for which the organization exists. As individuals, we distinguish between investments and contributions. When making investments, we are interested in the potential gains or pro¤ts. When making contributions, many of us want to know the organization’s record in terms of what percentage of the money received actually is used to provide the services that we want to support; the higher the percentage the better. We tend to think of commercial enterprises as quite different from service organizations. Thinking of healthcare primarily according to the commercial model leads to different expectations from thinking of healthcare primarily according to the service model. Healthcare is no different from any other business in the sense that it cannot be managed successfully without attention to the bottom line. A focus on the practical business implications of decisions is essential. Nevertheless, how one thinks about the nature of the healthcare business sets the ethical tone. Healthcare Organizations as Service Organizations The ethical perspectives and guidelines expressed in this book are based on the belief that healthcare is fundamentally and essentially a service. Healthcare organizations have been, historically, humanitarian in nature, and they continue to be understood best as community service organizations. The basic purpose of healthcare organizations is to meet the healthcare needs of individuals and to promote the health of the community. Healthcare management has long been recognized as a profession unlike the management of most other types of business organizations. The codes of ethics of the American College of Healthcare Executives and the American College of Healthcare Administrators clearly recognize that healthcare managers are professionals whose primary responsibility is to patients and to the community, not to owners or investors. As stated in the Preamble to the ACHE Code of Ethics, The fundamental objectives of the healthcare management profession are to enhance the overall quality of life, dignity, and well-being of every individual needing healthcare services; and to create a more equitable, accessible, effective, and ef¤cient healthcare system.2 Healthcare management is a service profession. Business Ethics with a Difference 4 [54.210.126.232] Project MUSE (2024-03-28 16:26 GMT) Healthcare is best understood as a social or public good that should be managed to meet the healthcare needs of the community...