Why MBA grads are rushing into healthcare


An article in last week's Financial Times made the point that a growing number of people with new MBAs are looking to launch their careers in one of the healthcare sectors. Given that governments at all levels, as well as employers and consumers, are actively trying to slow the growth of healthcare, this interest among newly minted MBAs seems puzzling. On one level it is reminiscent of 1973-75, when the Watergate hearings showed the thoroughgoing lack of ethics among lawyers. Applications to law schools at the time started to soar.

More fundamentally the FT article suggests an especially deluded bit of thinking among B-school grads -- the notion that corporate healthcare represents a way of contributing to society's welfare. Such a notion represents an educationally inculcated triumph of fantasy over reality.

The semi-psychosis among MBAs is part of a larger historical context consisting of the Right Wing's Reagan-Bush mythology that has reigned in this country for the past 30 years. One of the Right's fundamental axioms is that government is per se evil, even as untaxed, unregulated businesses embody virtue because the absence of government constraints allows them to make money by addressing the public's demands. A corollary to this core doctrine is that if any rough spots remain in the Right's halcyon of business domination, the good works of private volunteering and community service will smooth them over. The result is that two generations of business students have come to believe they are raising the country's moral level merely by working for business corporations, and more specifically, by volunteering a few hours every week with a community agency. That the latter activities may also enhance their resumés only illustrates for them the core belief of cowboy capitalism that public virtue necessarily emerges from private greed.

The approach of doing good by scoring big bucks and ladling soup receives explicit support from the country's business schools. Bear in mind that business colleges maintain an engineering approach to education. Just as an engineering college proceeds on the premise that one can learn to build a suspension bridge or a gas turbine engine in Pennsylvania and apply the same methods in South America or Asia, B-schools claim that their principles hold true in investment banking, automotives, pharma or any other enterprise. For this reason, according to the masters of mammon, the same analytic tools should apply across the board. In actual fact, this common denominator approach, as seen in the finance control of pharma operations, often makes the profit-above-all approach of big corporations harmful to community well being. Those actions that are needed to improve public health often contradict what enhances shareholder return.

 Now the application of rational business planning may have a beneficial place on the provider side of healthcare. Some economists claim that a triumph of business rationality on the provider side is required to prevent healthcare from eventually consuming 20% of America's GDP. To achieve such business efficiency, these economists claim that the economic power, the status and the political influence of organized medicine must be enormously reduced to the point where physicians, for example, will occupy the socio-economic niche of civil servants or white collar employees working in cubicles and bullpens.

Alas, business rationality is pounding the provider side of healthcare into shape, but the winner will be the predatory side of business. Hospital-based healthcare systems are voraciously buying up private medical practices to the point where approximately 50% of private practitioners in the US now work as their employees. The motivation behind their acquisition spree is not to improve public access to healthcare or its quality, but rather to gain leverage over third-party payors in negotiating reimbursement agreements. The oligopoly of hospital-based networks in every metropolitan area will be able to tell insurers, "If you don't want to pay our rates, try getting an interventional cardiologist in this town. They all work for us."

So perhaps deluded MBAs won't bring universal access, improved quality and fair-minded cost control to healthcare. They will cut off entitled physicians at the knees by reducing them to salaried employees, and that's a positive step, but bestowing those lordly prerogatives on the fiduciary officers of hospital mega-networks is a questionable price to pay for it.

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