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“Quality of Patient Care Cost Cutting Scheme”


People start their careers in social services or clinical care usually from having lived experience and wanting to help others or they have such a caring heart that helping people gives them meaning to their life. People do not enter the field to put their lives at danger and to have endless nights of sleep due to stress of cost cutting schemes harming patients.

When a clinical or social worker has dedicated their time, money in education, and especially when they are invested so deep to provide security for their family, they are being put into a position where their ethical values could be compromised because of cost cutting schemes harming patients.

To solve problems, we must first Acknowledge and Accept the problem for what it is.

This article highlights what a, “Quality of Patient Care Cost Cutting Scheme, “is in the healthcare market specifically behavioral health. It is quite simple.

“Quality of Patient Care Cost Cutting Scheme”

Sometimes a treatment facility is held at the mercy of shareholders seeking to create profits and increase profit margin every year. The problem with this is, if they are constantly trying to increase profits every year, then eventually the expected profit margin goal will not be reasonable if not managed realistically and ethically. Eventually, there will be a cap on how much profit margin can be earned and the more debt a company has, the more pressure they will have to,” buy more time,” or,” misrepresent financial earning reports.”

These facilities need to create a margin that shows profit increases. Specifically, publicly traded shares to satisfy current shareholders and to attract future investors. When these companies hit their true profit earning cap, instead of ethically readjusting the profit margin and business model to correlate with the true assessment, they continue to push profits and some major things happen decreasing the quality of care for patients:

1) Quality staff is fired for workers who are willing to be paid less or given more work with a pay DECREASE. This exposes facilities for vicarious liability. This type of working environment also creates mental stress for workers in the workplace effecting their quality of care to the patients.

2) The laying off of staff happens before the quarterly reports surface while pushing census higher. The quality of care decreases for patients and staff are put in situations where their safety is at risk. Symptoms of this could include runaway patients, bodily harm or hospitalizations, and even death. Once the quarterly earnings are out, then they hire back staff to try once again to push profit margin before the next quarter reports or worse, they keep pushing census without hiring back staff.

3) Pressure is put on front-line leaders to cover up and hide illegal activity such as patient accidents or deaths caused by the cost cutting scheme and settlement agreements are formed to keep the illegal activity from the public eye and from shareholders/investors. The larger the company, the more monetary power they have to force a settlement to cover up illegal activity.

4) The cost cutting scheme company takes the profits they earned or cashes out their shares from the scheme to invest in new companies with new names before the business model falls apart instead of reinvesting it back into the company they broke.

*** Another form of this scheme can include abusing non-profit treatment business models. This is where a for-profit company charges an administration fee to a non-profit that is outside the normal range of fees to manage the non-profits, “Administration Costs.” These types of fees are," Over Priced," when compared to actual cost of services. The for-profit then adds the,” Administration Fee,” into the non-profit's budget.

For example, the non- profit has to pay a building fee as an expense, as well as, the 50% Administration Fee as an expense. This causes the non-profit to NEVER be under budget and always in the red. What this does is decrease the funds the non-profit needs to operate a high quality facility by forcing them to limit workforce coverage, staff pay, and staff benefits while the, “For-Profit,” has very pleasing benefits and pay.

The big question is:

Even though there is no cap earning for a typical for-profit company…. Ethically, how big of a profit margin do treatment facilities really need to earn if the level of profit margin being taken is lessening the quality of care for the patients and workers?

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