Arnold Kling  

Management without Responsibility

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In his latest podcast, Russ Roberts interviews Steven Lipstein the CEO of the large hospital that shunted my father around to 8 different units over a two-week period.

What strikes me about Lipstein is how little responsibility he wants to take. Roberts asks him to explain hospital pricing, and Lipstein describes the factors involved but takes no responsibility. When asked about co-ordination of care, Lipstein says that it is important for family remembers to be active, but again he takes no responsibility. Finally, when it comes to health care policy, he endorses the idea of a Federal board, which presumably would relieve him of whatever responsibility he might currently allow himself.

One of the most frustrating experiences you can have is dealing with a bureaucracy where no one has a sense of responsibility. Have you ever tried to deal with an organization in which no one can solve your problem? In which everyone says, "Sorry, that's the way it is. There's nothing I can do about it."

It starts at the top.


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CATEGORIES: Business Economics



COMMENTS (15 to date)
Superheater writes:

One of the most frustrating experiences you can have is dealing with a bureaucracy where no one has a sense of responsibility. Have you ever tried to deal with an organization in which no one can solve your problem? In which everyone says, "Sorry, that's the way it is. There's nothing I can do about it."

No pun intended, but this epidemic in government.

George writes:

This industry is removed from direct competition. Too much regulation and the insurance structure that we have now means that the customer (patient) doesn't pay directly enough to care about price and performance. If hospitals and doctors had to truly compete for patients, the price and customer service would reflect it. The nationalization of health care that is potentially ahead of us will only make matters worse.

dearieme writes:

Since he accepts no responsibility, I take it that he is paid at an appropriately low rate?

Gavin Andresen writes:

I was struck by how much Mr. Lipstein sounded like a politician, giving what sounded to my ear like sound-bites and sticking to talking points ("we're all about the well-being of patients and educating the next generation of Health Care Professionals") instead of having a real, substantive discussion about trade-offs and incentives.

ed writes:

Of course Lipstein's goal is not to make you happy, but to make money for his shareholders. That's where his responsibility lies.

In most industries, the way to make money for shareholders is to make your customers happy. This appears to be not so much the case in the health care industry. This is very unfortunate, but it's not Mr. Lipstein's fault.

Matt C writes:

> Have you ever tried to deal with ...

Yes, and the most common case is interacting with the health care "industry".

There's a lot of ideas out there on how to fix health care in America. Has anyone proposed the simple approach of making all medical insurance illegal?

Every time I go to the doctor this solution seems very attractive. Tell me someone out there is advocating for it.

David R. Henderson writes:

Have you ever tried to deal with an organization in which no one can solve your problem? In which everyone says, "Sorry, that's the way it is. There's nothing I can do about it."

Superheater said it well, but let me add a specific. When I was trying to immigrate to this country, I got that from the person who told me she was legally obligated to start deportation proceedings against me. So the next day I hired a lawyer who, that same day, got my Congressman to write a letter to INS asking them to lighten up because things had gone wrong because of a bureaucratic mistake not of my making. Suddenly and mysteriously, she was no longer obligated to try to deport me. Funny how that works.

After that lawyer, Jeff Chamberlain, was so effective, I decided not to tell lawyer jokes any more. As the guy said in the closing line of one of my favorite movies, "Bang the Drum Slowly," "from here on in, I rag nobody." Well, at least not people who don't deserve it.

Russ Roberts writes:

Ed,

You might want to listen to the podcast. Lipstein doesn't have shareholders. His hospital system is a non-profit and we discussed the strange implications that has for his operation.

Todd writes:

Russ,

I found the part where you discussed the nature of the for-profit, non-profit split to be the most interesting part of the podcast. In particular, your probing regarding to whom a non-profit must ultimately answer was well taken on my end. I didn't mind Mr. Lipstein's answer to convincing.

Caliban Darklock writes:

The problem with a society where technology improves faster than education is that uneducated people are forced into more and more unsuitable positions - or, alternately, that undesirable positions are forced to continually reduce expectations.

So you go somewhere that people would normally be expected to have authority, and you find that the employer has been forced to hire someone who is unqualified to exercise it appropriately. Now that person does not have any authority, because the dangers outweigh the convenience, and even if other people in the same position ARE qualified - the title itself has been stripped of authority. Because some few people are unqualified for the job WITH authority, that entire stratum of the company has been stripped of authority so enough "qualified" people can be found.

This is a Bad Idea in the long term, but nobody really thinks long term anymore.

John Alcorn writes:

Right on. I'm glad you'll have a chance to speak more truth to power tomorrow in your testimony before Congress - Good luck!

Marcus writes:

"In most industries, the way to make money for shareholders is to make your customers happy. This appears to be not so much the case in the health care industry. This is very unfortunate, but it's not Mr. Lipstein's fault."
-- ed, December 8, 2008 1:56 PM

If the 'customer' is the one paying the bill then wouldn't the 'customer' largely be the insurance companies?

The Snob writes:

@Caliban

What you describe sounds like "the Peter Principle," i.e., the idea that "in a hierarchy, every employee tends to rise to his level of incompetence."

http://en.wikipedia.org/wiki/Peter_principle

Peter writes:

Personally, I was struck by the sheer complexity of dealing with all the different prices from different companies. I would be interested if you interviewed a higher-up in the Group Health or Kaiser systems where the doctors all work for the same insurance company. Presumably this would be a much simpler process.

rpl writes:

Arnold,

I finally got around to listening to the podcast, and I have to say, it's not what I expected after reading your summary. By and large I found it to be in informative glimpse into how the health care payments system works, and I thought the comments about some of the unintended consequences of regulatory mandates was particularly enlightening. More people should hear this kind of inside story so they can see the role that government action has played in our health care crisis. I also wonder if projections of single-payer costs take into account the fact that without private payers to shift some of the burden to, the government will have to start paying actual costs for medical care.

The thing I found most troubling about Lipstein was that he seems to be a big proponent of command and control regulation. His idea for a national board of health policy modeled on the Federal Reserve is rather scary, and his belief that such a body would be immune to lobbying by "special interests" seems hopelessly naïve. I'd have thought you'd have more of a problem with Lipstein's vision for national health care policy than with how he sets the prices at his hospital.

What would you recommend Lipstein do to take more responsibility for hospital pricing? Should he refuse to accept Medicare patients to avoid shifting their excess costs onto other patients? (Can he even do that? Are hospitals required to accept Medicare?) Should he refuse to negotiate discounts with insurance companies? (Possibly causing them to take him off their list of allowable providers?) Similar questions apply to the issue of patient advocacy. What would he have to do to "take responsibility," in your opinion?

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