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Sunday, November 22, 2009

Response to Comments, November 17th Posting

In the "I've been meaning to do this" department, I've been wanting to respond to Father Bechtel's comment to my posting about For-Profit Healthcare (Link here), but haven't really had the mental energy. Well I can't claim to be filled with energy or motivation at the moment, but I do love a good discussion, so here goes.

For the record, I've posted Father Bechtel's comments verbatim, with my comments/responses in [larger dark red bold bracketed text]. I apologize in advance for any spelling errors, as I'm not going to do much editing. Also, I made my response text larger so that it was easier for me...someone who has relatively poor read more easily, not to in any way diminish Father Bechtel's comments, which stand out well on their own.


Hi Steve-

Actually I believe it is false that non-profit companies look out for you first. [For the record, I am not claiming that not-for-profits (NFP for sake of typing ease) are an ideal structure for healthcare delivery, but rather that they have a different set of motivators than for-profits (FP). Put anther way, as a private-sector guy, I recognize that the Private Sector is really, really good at some things, but really, really bad at others.] Look at the government. They are not for profit, yet what is their first goal? [Bad comparison Padre. Even the government itself recognizes in the tax code that there are really three types of organizational structures in the US economy...For Profit, Charitable, Governmental. For an example of what I mean, refer to section 400 of the Internal Revenue code, where section 401 deals with for-profit org. pensions, 403 deals with NFP/charitable org. pensions, and section 457 deals with governmental pensions. These different sections of the IRC exist in part because each type of organization has different drivers and goals.] Maintaining the establishment THEN looking out for you. You think congress will take a pay cut so that the government can provide more services? [No, but again there is a vast difference between a NFP and a governmental organization.] You think congress will give up their perks in order that taxes won't have to go up? [No, but again I think your comparison is flawed.] You think congress is going to subject themselves to the health care they want to give us? [In fact I agree with you about Congress. The US Federal government is (in)famous for exempting themselves from the rules the push on the rest of us. The is a classic example in the US Printing office, where wage/hour laws didn't apply. Again though, while I agree with your comments about the government, I disagree that you can draw a comparison between it and a NFP.]

Look at Ted Kennedy. He was a champion of government run health care- yet where was the first place he went for treatment? A private hospital with the best doctors available. Would WE be given that same preference under his plan, or would be stand in line behind everyone else and hope they get to us in time? I would like to ask Nancy Pelosi- if government run health care is supposed to be so wonderful- why won't you subject yourself to what you want to "give" us? The government wants to do everything "for us" yet the first place the government runs when it needs something is the PRIVATE SECTOR! [In point of fact, many Presidents (including Conservative icon Ronald Reagan) and members of Congress have, in fact, gotten healthcare treatment from Walter Reed Hospital. Now is Walter Reed some paragon of Private Sector healthcare success? No. It is run by the United States government. Does this make Walter Reed better than a private sector hospital? No, but it does point to the fact that the government can deliver healthcare...and I am not supportive of the government delivering healthcare.]

ANY Not for profit company first goal is ALWAYS maintenance of the establishment, THEN working on what it is set up for. That is the nature of things- that is how it is, because if the organization does not survive it cannot look out for you. As a result- not for profit companies like for profit companies look out for themselves first. [With all due respect Father, your point is a generalization. Some NFP do exist to maintain the status quo; others, such as St Jude Children's Research Hospital ( are actually quite innovative. The point of my post was simple: FP organizations MUST benefit shareholders FIRST. That's not a's a fact. That is, again, different than your generalization.]

I disagree that not for profit health care companies look out for you first. They look out for themselves first. They don't answer to shareholders, and granted they don't make money for anyone- but they still have to maintain the status quo. The FIRST goal of ANY organization, for profit or not is themselves. [The heart of my argument Father was that FP's have a legal obligation to shareholders first. Again, that is a LEGAL FACT. Your point is an educated opinion about the nature of NFP's...certainly based on your experience...but an opinion never the less. I'd say that my argument has slightly more weight.]

Not for profit companies just like for profit companies have to worry about the bottom line, which means they also want to do things "better, faster, cheaper" and they also want to decrease expenses while increasing revenue. [And many, many FPs decrease expenses not by the mantra of "faster, better, cheaper" but rather by the mantra of simply "cheaper". What's more, the profit motivation doesn't guarantee that the results of efficiency gains will go to fact, if you think about it, any efficiency gains actually go to shareholders.

By the way, look at the overhead rate for Medicare (about 3-8% I believe) vs the overhead rate in private-sector healthcare insurers (around 15% + I believe) who act as paying agents. The difference? Well FP companies, in order to satisfy investors, typically want a Return on Equity of around 10-12%+.]

Look at what they are doing at the not for profit public schools- more government funding- what do they do? Hire more administrators to "oversee" things, which creates more read tape, and thus less and less effeciency. [Father, I do think there is a substantial difference between NFP and the government. Schools are actually a great example...government run schools are in some measures much less efficient that the schools run by a little NFP organization you may be somewhat familiar know, the Roman Catholic Church. EVEN YOU would have to admit that there is a distinct difference between the government and NFP in the education example. If you admit that in example you brought up...that there is a substantial difference between an NFP and the government, then does that not taint your comparing NFPs to the government in other arenas?]

My approach to government, Steve, is I admit conservative. I believe less government control and more local involvement. I believe the government should stay out of our lives as much as possible and simply let us be. Don't "give" me anything if you have to raise my taxes to do it. Just let me live my life, and leave me alone. [I agree, which is why I don't want the government universally providing healthcare. But my distrust doesn't extend to just the government. I've worked in the private sector for 25 years, and one thing I've learned is that, at the end of the day, "the business of business is business" (to quote a famous person I don't recall at the moment)'s NOT in looking out for you or me Padre. I find it AMAZING that many conservatives distrust the government as too big, too intrusive, too impersonal, etc., but yet BLINDLY TRUST business.

What I seek in healthcare is a motivation that centers around patients, not maximizing profits. I realize that there is no perfect model out there, but all my experience tells me that the current system in the US will never deliver cost-effective healthcare, simply because the profit motivation is simply stronger than the patient care motivation.]

Care to comment on my rant? [Response concluded :-).]

Father Dave Bechtel

November 17, 2009 12:11 PM

1 comment:

Anonymous said...

Hi Steve,

Thanks for the discussion, though I must say I was surprized you dedicated a whole blog to it!

Father Dave Bechtel