Tuesday, September 23, 2008

Henry Paulson and Health System Trust

The national debate about Secretary Paulson's bailout proposal offers some lessons for the health system. Here are three that jump out for me:

1. Trust in our institutions is supremely important. Economists tell us that the market is crashing not because of an intrinsically fatal illness but because investors have lost trust.

2. Whatever the merits of Secretary Paulson's $700 billion bailout proposal might be, the widespread loss of trust in the administration he is part of undermines the persuasiveness of the policy he recommends. As one of many examples, from today's New York Times:
"[Senator] Durbin, in a speech on the Senate floor, angrily recalled that the administration had similarly requested swift approval of its plan to attack Iraq. 'Just as we should have asked more questions about weapons of mass destruction six years ago before we found ourselves in this war,' Mr. Durbin said, 'we need to ask questions today about where this is leading.'"
We know that treatments are better adhered to when patients trust their physicians, and that trust adds to a medication's therapeutic impact. In psychiatry there is an old concept of "institutional transference" - when patients trust the institution where they receive their treatment, everything goes better.

Those of us in health care who work with organizations - and that's most of us now - are enhanced (and made more effective) or diminished (and made less effective) by the conduct of our colleagues and our organizations. I believe that Secretary Paulson is acting in good faith, but he is significantly less effective and persuasive than he might be because of the disgraceful behavior of the administration he is part of in the run-up to the Iraq war.

3. The reaction to Secretary Paulson's proposal tells us something about executive compensation. Even if the argument that the stratospheric compensation investment bankers receive (a) is needed to attract the best brains and (b) produces more value for investors and society, (c) that argument cannot be extended to health care. Those who make use of health institutions - hospitals, insurance, and even individual medical practices - experience those institutions as tainted by greed when they learn of the enormous bonuses executives receive. We want to see health care as a calling, not a cash cow. The economic argument about how markets set compensation fails to recognize the degree to which our institutions are more than market entities - they are organizations that must embody, in their own way, the virtues of a calling.

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