Mr. Stupid is the CEO of a major corporation. To generate profits, he saves money any way he can. He buys the cheapest materials and uses old equipment. He does no preventative maintenance. He drives the employees crazy with useless paperwork. They keep leaving and so Mr. Stupid CEO has to keep replacing them. Despite an automated phone tree that confuses the customers and despite numerous defects in his products, people keep buying them. Why? Because Mr. Stupid's company has no competition. His post-sales service stinks because Stupid CEO don't "waste" money on a service department. He loses money every year but he stays in business because the government keeps giving him subsidies.
The name of Mr. Stupid's company is US Healthcare, a division of the larger corporation called USA.
Imagine if you were the CEO of the corporation called USA (yes, the country). As a good manager, you would protect and optimize your assets. After all, they generate your profits and give your company (our nation) its competitive advantage. The primary asset of Corporation USA is called... people.
• The healthy child can stay in school to learn (and become productive in the future). The sick child cannot.
• The healthy 40-year old programmer or autoworker can directly and quantifiably contribute to GDP. The hospitalized worker cannot.
• The still-living elder citizen -- think George Schultz, Henry Kissinger or my 95-year old mother -- contributes archival memory as well as wisdom to both our families and to our nation. Dead people can't.
As a wise CEO, you would do everything to keep your assets productive -- for people, this means keeping them healthy. That costs money in the short term but healthy assets are the future of your company. You know that you can save money over the life of your assets by spending a little now, say for routine maintenance. You do this for your personal car: why not for your body and for those of your assets?
If you were the CEO of Corporation USA, would you burden your assets with non-productive work, waste their time, and frustrate them to the point that they give up and leave? I doubt it.
You are at a Board meeting of Corporation USA and the Chief Financial Officer (CFO) gave a report that only showed short-term expenses. There was no information about long-term costs, no calculation of avoided expenses, and most important, no determination of your revenues (you can also call them benefits). I bet you would find a new CFO.
How do we currently manage the healthcare division of Corporation USA? We try to reduce short-term costs with no thought for the long-term consequences and absolutely no quantification of benefits that we or the Corporation receive for the money we shell out.
Think about it!