Nonprofit Hospitals Prove Profit is Not the Source of All ‘Evil’
The profit motive is often seen as a source of great evil — maybe as the source of evil. Many people believe that when organizations (and the people working within them) seek profits, all other values fall by the wayside.
But it doesn’t take much thought to realize that the pursuit of profit (or even of money more generally) is not the only thing that makes people act badly. And consequently, questionable behaviour is not going to be found exclusively at organizations whose main objective is to make a profit.
For an example, see this nice piece by Natasha Singer, writing for the NY Times: Cancer Center Ads Use Emotion More Than Fact
A print advertisement for prostate cancer surgery at Mount Sinai Medical Center in Manhattan is typical of the way many elite research and teaching hospitals sell hope to the public.
“Our newest prostate specialist… has pioneered a minimally invasive approach that allows him to retain the highest cancer cure rates with the lowest risk of side effects,” says the ad….
The ad’s claims are based on the successful results of Dr. Samadi’s operations and testimonials from his patients, said Jane Zimmerman, Mount Sinai’s chief marketing officer.
In medical science, such anecdotal data would not be considered statistically valid. But ads for nonprofit medical centers are not held to scientific standards of evidence….
This is basically a question of advertising ethics. Mount Sinai and other nonprofit hospitals are making dubious, perhaps misleading, claims in their ads. They’re making claims that, if made by a for-profit drug company, would be subject to serious legal restrictions.
The main lesson, here, is that profit is not the source of all questionable behaviour. In order to do bad things, you don’t need to be pursuing money. In order to find yourself playing fast-and-loose with the truth, for example, there just has be something (some value, or objective, or mission) that you think is more important than the truth. In some cases that might be profit. In others it might be power, or fame. In other cases it might be healing the sick.
Some people might object that minor ethical infractions like the ones in the NYT story are easy to forgive, given the good work such hospitals do. After all, we’re only talking about ads that might tend to mislead some potential patients. And these are non-profit organizations after all. They’re in the business of doing good. Doesn’t that mission mean we should cut them some slack? Well, no. In many ways, being a nonprofit organization is a pretty small difference. Technically, a nonprofit organization is just one that doesn’t distribute wealth to shareholders. And that certainly doesn’t mean money isn’t a driving concern. And nothing in nonprofit status certifies that an organization actually does good. So the main difference between, say, a nonprofit hospital and a for-profit hospital is that a nonprofit hospital needs “merely” to break even, whereas a for-profit hospital needs (on average) to break even plus a bit. Meeting those objectives is liable, I think, to strike managers in either kind of organization, as really important — probably sufficiently important, from time to time, to warrant behaviour that the rest of us would take as unethical.
Postscript: It’s worth considering that the organizations discussed in the NYT story are among the best hospitals on the planet. Anyone “misled” by their ads is nonetheless, if they end up being a patient, going to end up getting world-class care. So maybe not much harm is going to be done. It’s hard to imagine getting too cranky about being “tricked” into getting treated at Mount Sinai. But consider: these hospitals are likely ‘industry leaders’ in more ways than one. They set the tone for advertising by other hospitals, probably including ones providing a much, much lower standard of care. Now how do you feel about misleading advertising?
The Business Ethics Blog 
Congratulations on a job well done Professor MacDonald with respect to your Blog’s recent recognition and award.
Successful advertising appears to be almost always directed towards peoples’ emotions rather than their intelligence. Beer and alcohol commercials come readily to mind.
Personally, I feel offended and insulted when an advertiser uses misleading advertising and it doesn’t matter to me one iota whether the culprit has good intentions or not. After all, it strikes at the very heart of ethical behavior, and their actions are either ethical or their not.
I wish you and yours a very Merry X-Mass, a wonderful holiday season, and a Happy, Healthy and prosperous New Year.
Isn’t it the case that whenever the interests of the service provider and the served fail to align perfectly, there’s room for ‘evil’?
For example, if the interest of the service provider is fame, and the served is a new kidney, then wouldn’t the service provider have incentive to do something unethical to make up the gap between the humdrum of sticking a new kidney in there, and being famous?
Not the greatest example, I know, but I hope it illustrates my point that profit is profit, whether it is fame, power, accolades, etc. The whole point of profit is that one does better than break even – and so even if a hospital breaks even on the bottom line, there’s other avenues of profit that its workers might be pursuing.
-Rob
Interesting topic! I think it is important to consider what the for-profits do with their profits, for example, how salaries are distributed. All too often I see companies where salaries are overly generous for managers and directors and embarrasingly low for assistants and coordinators. Unfortunately, I think what these companies save on low level employees they invest in advertising (both social kind and the misleading kind)!