The Double Bottom Line in Health Care
Address to the Healthcare Forum, May 1998

by Daniel Yankelovich

The health care profession is struggling with an issue that every economic institution in America is also struggling with, except that it is posed in a sharper, far more extreme fashion. How health care resolves this issue will tell us a great deal about the kind of society and civilization we will have in the future. Health care is on the leading edge.

Some people have begun to call this issue the double bottom line.   It concerns how enterprises balance two sets of values that are not always easy to reconcile with one another.  The values of the conventional bottom line --the first set -- are obvious to everyone.  Every economic enterprise needs to control costs, with insure a stable flow of income, grow and with adapt to change. 

The other set of values, those of the second bottom line, are not as clearly labeled or codified.  I think of them as civil society values.  These are the ethical and cultural values that set the context within which the economy functions.  Civil society values are of particular concern to health care.  They include values unique to the health care profession such as the Hippocratic Oath and a special stewardship for safeguarding the sacredness of life.  It also covers values that health care shares with other enterprises, such as giving consumers the respect they demand, providing high quality services and good value for the money, and providing employees with a fair, safe and responsive organization which they can trust and in which they can take pride.

Every economic institution struggles to strike the right balance between these two sets of values, but they are not always comfortable with doing so or adept at it.  We know a lot about the term balance of power.   The balance of values is an unfamiliar term.  Leaders are familiar with the need to balance all sorts of things in conflict with one another, e.g., short-term interests of shareholders vs. interests of employees, cost reduction vs. service to customers.  But they are less familiar with the need to implement a double bottom line by balancing economic and civil society values.

The Pru and Orville Beal.  Some years ago I worked with the former Chairman of The Prudential Insurance Company, Orville Beal.  He was a prudent and cautious leader, he believed in insurance, he believed in hard work and in saving for a rainy day, and he had a deep sense of stewardship toward the community and the nation.  He was a man of honor and tradition, embodying in his person the social values that undergird the life insurance business in past years. 

For him, the life insurance business was a sacred trust,  and he ran the Prudential in accordance with this principle. Every time I read these days about the troubles of the Pru and the many lawsuits against it for cheating its customers and clients, I find it almost inconceivable that this is the same Pru that Orville Beal had managed with the highest possible standards of integrity.

After Mr. Beal retired, the new leadership of the company became infatuated with the idea of "leveraging the Rock" in order to diversify the business and create greater opportunities for growth. The "sacred trust" subculture proved no match for the aggressiveness of the business subculture that grew up in the 1980s among the merger and acquisition financial people and among certain segments of the marketing community.  The people who transformed the Pru thought they were simply enhancing shareholder value and advancing conventional business values.  They did not regard the Pru's civil society values as having anywhere near the same importance as its business values, and so they felt free to scant them. 

They did not realize that their task was to maintain the right balance between two conflicting sets of values.  They did not realize that while it might be appropriate and even necessary in a new business environment to shift the balance that Mr. Beal had struck, it was the worst kind of blindness to throw the civil society values into the ash can.  It would be an exaggeration to claim that they jeopardized the very survival of the business.  Let us be practical and realistic. I know many lopsided businesses that ignore civil society values and still manage to survive, but at a mediocre level.  They can never go beyond mediocrity, because they cannot win the trust of their employees and the loyalty of their customers.

The Scott Paper Company is an even more dramatic example outside the health care industry of an abrupt reversal in balance between the two sets of values.  You may recall that "Chainsaw Al  Dunlop" took over the ailing company that had been suffering from price fluctuations in the cost of paper. The very first thing Dunlop did was to cut Scott's ties to the city of Philadelphia.  By the time Dunlop was finished downsizing and cost-cutting, some shareholders and a handful of Scott executives had made a great deal of money, but a great American institution had been destroyed.

Dunlop and the executives who followed Beal at the Pru represent in an extreme form a perspective that many other business managers bring to their job, which is that market values are the only serious ones that need to be observed and that what I am calling civil society values are bullshit that any tough minded business person can and should dispense with in the name of maximizing shareholder value.  To them, the concept that a major task of leadership is to find the right balance between the two is laughable and naive.

In both instances, the changes the new leaders of the Pru and Scott brought about were made in the name of ordinary business objectives --cutting costs, achieving growth.  The executives involved were not at all conscious of the full consequences of changing the balance of values.

Society as a whole is going through a period of radical experimentation, rattling around, trying to find some new combinations-- government, private partnerships, organizations that blur the line between profit and not-for-profit.  That also is happening in healthcare.

Healthcare is living through a painful period of market triumphalism.  After all, what is managed care (or managed costs, as we should call is), except the view that we should take this public good, healthcare, and put it totally into the market?

Healthcare is what sociologists call a semi-sacred good.  Aspects of it are regarded as a right; it is not the same as buying pastry.  In the heady celebratory atmosphere of a market system we have gone from healthcare as a sacred right to healthcare as an opportunity to maximize profits.

Over the years, the healthcare professions have developed an ethic.  In the medical profession, it is expressed explicitly in the Hippocratic Oath, which includes the dictum:  "Above all, do no harm." The general healthcare ethic is essentially a civil society ethic, not a market ethic.  Now the managed care people come into the picture, bringing their market values, undermining the healthcare ethic, plunging physicians and other healthcare professionals into all kinds of internal conflict.  (From Healthcare Forum Journal, May/June 1998, p. 77.)

The double bottom line and the health care industry. And health care organizations cannot function at all.  If they do now they will not be permitted to do so in the future. Nothing is more fundamental than this point.  Health care is the archetype of what sociologists call a semi-sacred value.  Not like an automobile or even a telephone.  I think you can reliably sell short the stock of any profit-maximizing health care entity who sees no need to incorporate civil society values in its operations...

A new world view.   I would like to make just one more introductory point.  Our studies show that we are busy , not only in the United States but in other nations as well in developing a new world view.  It is an extraordinarily interesting prospect, and I regret not having the time to elaborate it.  But you will see signs of it in the next two presentations, for health care is on the front lines. I will quickly mention two consequences:

One of the defining characteristics of the new world view is a strong desire to replace the mounting number of impersonal transactions which consume most of our time and energy with relationships. But the health care industry is caught in a terrible bind.  It is moving in the very opposite direction: toward replacing relationships with transactions.

The second consequence.  In health care, three aspects of the emerging world view converge.  The first is the public s insistence on having a greater say in decisions that affect their lives. The second is a growing conviction that experts have a more limited perspective and a less privileged way of knowing than we used to assume. The third is the growing conviction that spirituality counts, and nowhere more than in health care.

As people in the United States and other countries grew less anxious about being able to meet their economic needs, they began to yearn for values sacrificed in the drive toward industrial growth at all costs.  They grew more concerned about protecting the environment.  They wanted more interesting work and more time for family life.  They groped their way toward a new conception of the self, one less isolated and more community minded.  Impatient with a world where impersonal transactions dominate, they began to give greater attention to personal relationships.  They experienced an aching hunger for spiritual satisfactions that organized religion was failing to provide.  They grew less judgmental of the private doings of others, accepting a greater relativity of cultural values. 

Increasingly, they came to reject institutional authority.  Indeed, Americans have grown suspicious of all forms of authority and hierarchy, insisting that ordinary people have a voice in the decisions that affect their lives. They have grown less tolerant of experts telling them how to run their life and government making decisions for them.

One can see these new tendencies at work in many spheres of American life.  The field of health care is a particularly good example.  To offset rising health care costs, increasing numbers of Americans find themselves enrolled in systems of managed care.  Inadvertently, however, the managed care industry finds itself in the unfortunate position of moving in one direction while the majority of Americans are moving in the opposite direction.

The industry is bucking powerful new trends.  HMOs and other forms of managed care are making health care transactions more impersonal and business-like at the very moment when Americans, fed up with impersonal transactions, crave for more personal relationships, especially in relation to their health.  Insurance companies make decisions for people (and physicians) they bitterly resent.  Health care consumers are becoming ever more knowledgeable and well-informed in order to second-guess managed care institutions on behalf of their own well-being.  Medical professionals are trained to think about the body in terms of its mechanics, at just the moment in history when such explanations strike the public as less authoritative than they once did.  Consumers have come to believe that these professionals cannot understand their bodies nearly as well as they themselves do. Also, people increasingly feel that health cannot be reduced to medicine and the absence of illness. It is something more positive &and more spiritual. People sense that spirituality is essential to the healing of body and soul, and so are powerfully drawn to alternative medicine. 

In concept and organization, managed care is an even more apt expression of the modernity mind set than skyscrapers and public housing.  In their dislike of managed care and their ingenuity in fighting against it -- an ingenuity that has barely begun to express itself -- the public is pitting its new post-modern values against the values of modernity.

Americans are not opposed to managed care simply because it is new.  People are prepared to accept even radical changes in the old fee-for-service doctor-patient relationship.  Part of the post-modern outlook is to be more accepting of new and creative ways of thinking and doing things.  In contrast to the conformity and moralism that had characterized the 1950s (the peak of modernization in the United States) they have embraced an ever expanding pluralism of groups, ways of thinking, points of view, subcultures and values.  They have come to accept pluralism of all sorts: pluralism of ethnic groups, races, ages, life styles, styles of music, styles of action, styles of thought. They are increasingly skeptical of the claims of fact-laden experts, and more open to varieties of interpretations of truth.  Average Americans have not traveled all the way toward the extreme relativism of academic post-modernity, but they are inching along that path.