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  • 10.21.11

Bad Medicine: The Health-Care Industry Is Failing At Corporate Social Responsibility

Almost every other industry has figured out a way to give back while still making a profit. But health-care providers, insurance companies, and big pharma still are trying to squeeze every last dollar out of patients, with bad results.

Of all the industries in the world, you might expect that the health care industry would be taking the lead
in corporate social responsibility. After all, every healthcare-related corporation, whether hospital
or manufacturer or services company, markets itself as promoting health and well being. Yet because
the health care sector has lagged compared to other sectors in terms of being resonsible corporate citizens, the long-term viability of many
health care entities is at risk.

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One such example within healthcare is the pharmaceutical industry, which has made a business of
marketing the use of drugs for off-label purposes, misleading doctors and the public about safety
concerns, and falsifying evidence regarding the efficacy of drugs.

And now the pharmaceutical industry is suffering. Generic drugs are
increasing in quantity and popularity, the government and insurers are pressuring pharmaceutical
companies to avoid price hikes, and increased regulatory vigilance and government investigations
have wreaked havoc for many drug makers. To make matters worse, there are few new drugs in
the pipeline.

Hospitals and physicians are guilty of similar behaviors. Overutilization of profitable procedures and tests on well-insured
patients is common. On the flipside, underinsured and uninsured patients often struggle to get basic
tests and procedures performed.

Many of these problems stem from a short-term focus on quarterly profits and shareholder pressure.

At the same time, pharmaceutical companies have increased marketing budgets, ridden the coattails of patents as long as
possible to exploit profits, and then proceeded to lay off R&D personnel to manipulate quarterly reports
to appear favorable. Hospitals, which generally run on a very small margin, feel they are not incentivized
to improve proper utilization.

Not only does society pay financially for these actions, but patients individually suffer the consequences
of inappropriate and excessive therapies.

Companies outside the healthcare industry have illustrated how to achieve a strategic balance among
social, environmental, and commercial goals. At the heart of these strategic decisions is long-term
sustainability, not only for the company but for the environment and society. These companies have
shown that foregoing certain short-term opportunities and profits in exchange for larger societal value
goals and long-term sustainability can be done without hurting the bottom line.

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Examples from outside the health care industry abound:

Walmart reduced packaging and rerouted trucks to cut 100 million miles from delivery routes
in 2009, saving $200 million even as it shipped more products.

Nestlé invests in local farmers by sharing new farming practices, guaranteeing bank loans, and
helping secure inputs, which ultimately increases quality production, decreases environmental
impact, insures Nestlé’s long-term supply, and improves the lives of many farmers.

Patagonia created the Common Threads Garment Recycling program, a partnership with Teijin,
which virtuously recycles certain Patagonia clothing into second-generation polyester fibers that
Patagonia then reuses in the following season’s clothing. Patagonia’s energy costs to recycle the
materials are 76 percent below those for virgin sourcing.

iTunes, Kindle, and Google Scholar all focus on profitable distribution models that also
dramatically reduce paper and plastic usage.

The health care industry needs to ditch the archaic assumption that what is good for patients or society
cannot be good for business. In fact, doing the right thing for patients and society is doing the right
thing for the industry’s long-term health. With some innovation and new ways of thinking, we can put the patient–not the
quarterly reports–first.

Brian Jackson , MD, MS, is an assistant professor of clinical pathology at the University of Utah and
medical director of informatics at ARUP Laboratories in Salt Lake City. Co-author Sarah Watts-Justice, MHA, MPA is
a business research and development analyst at ARUP Laboratories. Both are the editors of the Future of
Diagnostics (Dx) Blog
.

About the author

Brian Jackson, MD, MS, is an assistant professor of clinical pathology at the University of Utah and medical director of informatics at ARUP Laboratories in Salt Lake City.

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