There is no shortage of greedy players in the healthcare industry. Recently, we have written about physician Medicare fraud, price gouging by drug companies, and health insurers’ with questionable profit motives, just to name a few. Can greed increase the risk of medical malpractice? Perhaps there are no empirical studies have examined this exact question, but when it comes to the profit driven ethos of insurance companies and corporate health care providers, the answer must undoubtedly be “yes.”
Health care executives receive more compensation than executives in any other market sector. More than investment bankers? That’s right according to the International Business Times. Here is a list of the highest paid health care executives from 2015.
What justifies such stratospheric compensation? Profit, of course. Shareholders want to see profit, they want to see it now and these executives have been very good at delivering it now. A significant component of profit maximization is cost containment. Costs must be kept low. This goal is not always compatible with the requirements of health care delivery and quite often may not be in a patient’s best interest. Pressuring health care providers to provide care in the cheapest way possible undoubtedly will increase patient risks and medical malpractice claims along with them.
At first blush that might be viewed as a problem by the health care industry. After all, aren’t lawsuits expensive? Relatively speaking, no. Medical malpractice claims are a very tiny fraction of overall heath care costs – less than 0.5%. This means the health care industry can save big time even if medical malpractice claims were to double, triple or more. It reminds me of the calculations automakers have been shown to do to decide whether the amount they would otherwise pay in wrongful death lawsuits justifies installing a cheap potentially life-saving part. So long as the savings on the part are cheaper, who cares how many people die. Fortunately, there are many good lawyers holding manufacturers’ feet to the fire with products liability claims that make everyone safer. Not so much when it comes to systemic issues in the delivery of healthcare.
Human life and well-being is not something that should be bought and sold like a share of stock on the open market. Yet, that is what healthcare executives are incentivized to do. Until we remove that incentive, don’t expect things to change for the better.
