Both sides of profit
There is a plus side and a minus side to the profit motive.
On the up side, it does motivate; it gets people going, doing things. On the down side, it sometimes leads to people doing things mainly or even exclusively to make a profit. And this can be destructive rather than constructive.
An example of this destructive side is all those brightest and best young people in the 1990s going into the hottest money-making field, investment banking, instead of medicine, scientific research, education, law, engineering, construction, retail, agriculture, architecture, or some profession doing something for the common good rather than making money per se.
With our lowered taxes on speculation, we have, according to Nobel laureate economist Joseph Stiglitz, “drawn our most talented young people into financial shenanigans, rather than into creating real businesses, making real discoveries, providing real services to others. More efforts go into getting a larger slice of the country’s economic pie than into enlarging the size of the pie.”
But why not focus narrowly on shuffling money around, and getting in on the giant electronic shell game of derivatives and other complex financial maneuvers, regardless of their risks to society, country and the common good?
Well, many did, and it didn’t take long for our society, country and the common good to take a major and almost fatal economic hit because of this reckless pursuit of profit per se.
But the profit motive is not always as blatant. It also exerts its influence more insidiously, even within professions whose main purpose is to serve the common good. Medicine, for example, particularly the McAllen, Texas model.
As reported by surgeon Atul Gawande in a 2009 New Yorker magazine article, McAllen was at the average annual Medicare spending level of $4,900 per patient in 1992. By 2006, this had increased to $15,000, almost twice the national average.
In comparison, El Paso, with similar demographics, charged Medicare $7,500 per patient in 2006. Yet El Paso hospitals and clinics, while charging Medicare half as much, outperformed McAllen medical facilities on 23 of 25 health indicators.?
Gawande looked into this and found the reason. McAllen physicians had become increasingly entrepreneurial, with part or whole ownership of hospitals, clinics, labs and their expensive equipment, hospices and nursing homes.
They were more invested in utilizing these facilities to their fullest. They did this, and made more money than El Paso physicians, but their patients received lower quality care. The profit motive interfered with, got in the way of, patient care.
Gawande wondered how long it would take El Paso physicians to adopt the McAllen model. He feared the profit motive was taking over health care.
In fact, a recent TV news show (that I saw but have been unable to track down on the Internet) reported that we have exactly the health care system you would expect if the profit motive were increasingly predominant, which it is. We have sicker people, with more serious life-threatening diseases, kept alive longer with expensive invasive treatments, thus keeping our hospitals and clinics and labs profitable.
And compared with many other countries, including Canada, our health indicators are embarrassingly low. They spend considerably less on health care with much better results. They are like 2006 El Paso and we are like 2006 McAllen.
The profit motive has performed a questionable type of miracle: it has worsened our health but it has kept us alive longer, thus making higher profits for the health care industry, but at an expense we can no longer afford: health care costs are breaking the national budget.
Contributing to this problem is our food industry, which helps keep us overweight and unhealthy, just what the for-profit health industry needs to keep up their supply of customers.
The food folks have found the sweet spot actually the sweet, salty and fatty spot that we consumers can’t resist. (Check out the book, “Salt Sugar Fat: How the Food Giants Hooked Us,” by Michael Moss.)
And our inability to resist Big Food’s pitch plays right into the health care industry’s business model of sicker people living longer and requiring more expensive care. Such a deal. Such a mess. Thanks to the profit motive.
It’s a triple whammy: harming our physical health, harming our pocket books, and harming the national economy.
(James Lein is a community columnist for The Minot Daily News)