Should healthcare IT be 'low-profit'?

In my blog post last week, I discussed how tough it can be sometimes to meld capitalism and charity, primarily because businesses aren't charity organizations.It prompted a response from Rita Sully, corporate social responsibility manager for Hewlett-Packard Asia-Pacific and Japan, who queried my definition of "charity" and highlighted that business-led initiatives such as HP's recycling schemes, shouldn't be classified as charitable acts.

In my blog post last week, I discussed how tough it can be sometimes to meld capitalism and charity, primarily because businesses aren't charity organizations.

It prompted a response from Rita Sully, corporate social responsibility manager for Hewlett-Packard Asia-Pacific and Japan, who queried my definition of "charity" and highlighted that business-led initiatives such as HP's recycling schemes, shouldn't be classified as charitable acts.

My apologies, Rita, I should have explained more clearly that I had used "charity" in the broadest sense, and had meant for the term to encompass all forms of corporate responsibility and community or social awareness programs.

And, well, pitting the word "charity" against "capitalism" had a nicer ring and made for a better headline!

Jokes aside, though, the single most important point I would like to make clear is that corporations must continue to involve themselves in socially relevant activities, whether in the form of IT recycling or incorporating eco-friendly technology in their products.

Call it charity or corporate and social responsibility if you will, but the ultimate goal is the same: to create an environment in which business sustainability doesn't come at the expense--and detriment--of societal or environmental well-being.

Last weekend, I caught a rerun of an episode from The Oprah Winfrey Show, where the discussion revolved around the business of medical insurance and how it has created a healthcare crisis in the United States.

The episode featured various guests, including outspoken filmmaker Michael Moore--who was there to talk about his film Sicko --and Linda Peeno, a physician and former medical director for a U.S. health maintenance organization.

The doctor had presented a brutally honest testimony during a 1996 U.S. Congress meeting, confessing her role in denying a patient insurance coverage for a critical surgery which eventually resulted in his death.

Peeno said: "No person and no group has held me accountable for this because, in fact, what I did was I saved a company a half a million dollars for this... I had one primary duty, and that was to use my medical expertise for the financial benefit of the organization for which I worked."

Moore then posed a question: "Why should anybody profit from somebody who's sick? It doesn't seem moral."

Directing his query specifically to another guest at the show, Karen Ignagni, president of America's Health Insurance Plans, Moore noted that health insurance companies need to maximize profits for their shareholders and this is causing the country's healthcare crisis.

Ignagni, whose organization represents the majority of U.S. health insurance companies, responded that every clinic, hospital and healthcare system in the world needs to make a profit, or they will have to shut down and there'll be no healthcare to speak of.

To which, Moore retorted that taxpayers' money shouldn't contribute to healthcare profit.

Neither Ignagni nor Moore is wrong.

Even hospitals and clinics need to run on a profit, and ensure that they have the funds to maintain their daily operations and support medical research. The problem here is, when you put healthcare in the mix, this need to ensure profit complicates matters.

And as the role of IT in improving patient care becomes increasingly important, should healthcare technology providers be included in the debate?

Here's how I look at it...if the day-to-day cost of running a hospital or clinic is reduced, then healthcare service charges will also fall. If hospitals can implement technology and manage their IT infrastructure at a lower cost, this should reduce their overall operational cost. Down the line, that means patients will be charged less for healthcare services.

So, if healthcare technology providers charged less for their products and services, this would reduce overall healthcare cost.

I don't know the profit margins that IT vendors make from selling healthcare products--though I'd be interested to know--but let me state clearly now that I'm not saying IT vendors shouldn't make any profit from selling healthcare-related products. Like I mentioned in my previous post, businesses aren't charity organizations and are answerable to their shareholders.

But, I am suggesting that when it involves specifically healthcare products, organizations that provide such services need to ask themselves this: how much profit should they be contented with? 40 percent or 4 percent?

More importantly perhaps, how much profit is socially--or as Moore alluded to--"morally" reasonable...40 percent or 4 percent?

If a medical insurance provider denies a person coverage for a life-saving surgery, because doing so would mean the company's profit clocks at only 4 percent instead of 40 percent, then Moore is right, it just doesn't seem moral.

The business of providing healthcare IT services shouldn't be non-profit, but shouldn't it at least be "low-profit"?

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