For the past three or four weeks, new information and allegations continue to surface about health care or the lack there of for U.S. veterans. Although I never planned to write a post about the Veteran’s Administration (VA) scandal, there are some teachable moments and learning opportunities that are worth pointing out to anyone who works for a living – whether it be the self-employed entrepreneur, a faculty member at a university, or an employee of a multi-national firm.
While discussing some of the earlier details about the VA’s woes with a relative, she nearly fell out of her chair when she discovered that an incentive for fudging or keeping phony wait lists for patients was tied to employee bonuses. Who would do that? she said. My response, “Unfortunately, a lot of folks have done that or similar things!” “In government”, she said. I answered, “No, it happens in private industry as well, and a number of other places that you find human beings.”
In Glenn Harlan Reynolds’ USA Today article [Ref 1], he makes reference to another writer’s characterization of the VA health-care system as socialized medicine. As described, socialized medicine is a system that employs the doctors and nurses, and owns the hospitals.
Unfortunately, we have all heard about the phone wait lists at several VA hospitals across the country, and reports of some people dying because of treatment delays.
Last week, an audit revealed a systemic lack of integrity in the system. Reynolds quickly points out that some in the VA cooked the books. And this was done to ensure bigger performance bonuses. In other words, the performance may have been fake, but the bonuses were real.
To prove my point to my relative that this practice is more wide-spread than many suspect, I recalled my work experience with a large multi-national firm. While there were a number of good attributes of being employed with this organization, there was a particular annoying practice that bothered me. It was practiced by just about every member of the management team at this manufacturing location: Every decision that was made in that organization was tied to how large the manager’s expected annual bonus was going to be.
If you are still following me, you can quickly see that too many decisions were not made in the best interest of the company or the employee(s), but what would increase the management team’s annual bonus. Annually, those in the corporate office would allocate millions of dollars for new capital equipment purchases or replacements, and operations and maintenance of equipment at all of their facilities. However, there were too many years when the management team spent very little of these funds.
Why? Their strategy was to minimize spending any capital funds and claim a savings in cost avoidance. As one manager said on numerous occasions, “We looked like heroes to our leadership.” Really?
“In the case of the VA”, Reynolds argues, “the losses didn’t show up on the bottom line because, well, there isn’t one. Instead, the losses were diffused among the many patients who went without care – visible to them, but not to the people who ran the agency…”
In the case of the facility that I worked at, much of the aging or deteriorating equipment was out of sight of those who had allocated the funds. A lot of pipe was buried and corroding underground or in basements away from most people to see. After years of inefficient operating practices and less than strategic thinking, the facility was too old to modernize, and it was also not attractive to sell to anyone else. And the management had pocketed their bonuses each year despite this outcome.
I do agree with Reynolds that greed is a human characteristic that is present in any organization made up of humans. And as the title of this post states: When people are involved, you can get just about anything. Reynolds also argues that socialized greed is worst than a free-market system because there is no bottom line.
I beg to differ, and reserve my analysis of government vs. private operators on a case-by-case basis.
1. VA scandal exposes greedy socialism: Column, Glenn Harlan Reynolds 4:01 p.m. EDT June 2, 2014, http://www.usatoday.com/story/opinion/2014/06/02/shinseki-retire-va-scandal-veterans-health-care-obama-column/9838541/