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Healthy business and the business of health: views of a retired provider

By Miles Little - posted Monday, 16 December 2002

Hospitals survive in the late twentieth century by mysterious means. There is not enough money to finance them; staff morale is low; governments hate them; medical consumer groups attack them; patients sue them; the press denigrates them; and residents would rather work somewhere else. They survive because they provide something that Western communities need. Indeed, they can be seen as an essential part of the modern health system, which represents – however imperfectly – one of the bulwarks against the hazards of modern life. We can take little comfort from this, because the endless rounds of cutbacks, rationalisations, controls, criticism and litigation gather momentum like a bus without breaks down a mountain road.

How can we characterise the woes of health and medicine? As the public sees it, we’re greedy, inhumane and self-interested; in government’s eyes, we cost too much for what we produce and we’re too powerful; to the press, we’re newsworthy when there’s a scandal or a disaster; to the law, we’re there to be sued on every possible occasion; to business, we’re a mystery because we’re supposed to be clever but we break every rule in the business manual.

Perhaps that’s the problem! Perhaps we’re just not sufficiently business-like. If we were lean and efficient, had a mission statement, reformed our management structures, devolved responsibility, introduced benchmarking and best practice, got our information systems together, instituted quality control and peer review and introduced quality management, all our problems would disappear. But let us look at this claim in a little more detail.


Medicine and health are basically moral endeavours. They are brought into being and sustained by a deep and intuitive regard that humans have for their lives in both quantity and quality. If this was not so, communities would never endorse the expenditure that governments commit to health. The purpose of health, therefore, is to save and prolong life, and to improve its quality when illness is incurable. It concerns human security and flourishing. Attending to people’s health is not something that can be organised according to strict schedules. Illness happens out of hours; doctors and nurses are called to emergencies; peaks and troughs of illness occur unpredictably.

Modern technology is immensely expensive. Public health measures have produced great improvements in the life expectancy of populations in the last 100 years, and advanced technology (such as coronary artery surgery and transplantation) have added years and quality to individual lives. But we have reached a phase of diminishing returns. Life expectancy has stabilised at about 80 years, and further gains are likely to be relatively small, hard won and very expensive. Further prolongation of life also raises moral problems. How will we handle the increasing burden of aged care, when we can’t even manage it now? What will happen to population pressures? And what effect will the change in age ratios within the community have on social cohesion, work patterns and career opportunities?

The preoccupation we have with continued technological advance (including gene technology) goes hand in hand with the comfortable view that wealthy countries will always find money to fund the advances and make them available to those in need. This is the ideology that Marcus Peter Ford calls economism in his book Beyond the Modern University, the belief that growth can go on forever. It is an ideology that is backed by managerialism, the belief that commercial management principles have the answers to all organisational problems. That these ideologies have limitations in practice is demonstrated by the corporate collapses of the 1990s, by the fate of HIH and the bankruptcy of United Medical Defence.

Commercial principles have a different foundation to those of health and medicine. They are underpinned by the Theory of the Firm, the Theory of the Consumer and the Laws of Supply and Demand. Health and medicine depend on deeply held values relating to human life, human security and human flourishing. They have to provide services, even though resources may be constrained, and schedules impossible to maintain. We cannot shut down paediatric units, intensive care wards and Accident and Emergency Departments because they don’t make profits. We must, in short, ration, but ration in ways which attend to the deep fears and needs of ill and vulnerable people.

It is exciting to discover methods and principles in other disciplines which may improve our own. But commercial and management principles don’t tell us how to ration in an ethical way, nor how to cope with huge fluctuations in case load from week to week or month to month. They don’t tell us how to anticipate bushfires in New South Wales or bombings in Bali, with their attendant medical emergencies.

DRGs, Case Mix, Funder-Provider splits, Managed Care, Institutes of Clinical Excellence and all the other recent instruments of business and bureaucracy (most of them relatively short-lived) have less to do with our essential concerns for the welfare of the ill, and more to do with managerial ideology. They are registrations of a perfectly valid anxiety from outside the profession, and anxiety of this degree demands discourse between the various stakeholders. That would be good. It happens now, but I suspect we could do it better. Whatever happens, however, we need to keep on the agenda the essentially moral purposes and functions of medicine and health. Economic and commercial values do not account for all that we do.

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About the Author

Emeritus Professor Miles Little is Director and founder of the Centre for Values, Ethics and the Law in Medicine at the University of Sydney, which is a Cornerstone Member of National Forum.

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