When the pandemic crashed into the U.S. and world economies, expectations were that the richer countries would cope better. That’s only natural, since countries with more money, more health infrastructure, and better-trained and educated medical staff should be able to handle an emergency.
But it quickly became clear that the U.S., which unlike developed economies in Europe and East Asia treats health care as a private good bought on markets, was far less ready than its peers (which have themselves struggled). The reason why was explored very clearly in a Wall Street Journal article that should be read by anyone wishing to understand how capitalism works—the headline read “Why Did Covid Overwhelm Hospitals? A Yearslong Drive for Efficiency.”
How the hell could “efficiency” make us less prepared for a health emergency? Wouldn’t a hospital that couldn’t cope with a health crisis be “inefficient” by definition? The answer of course has to do with the ludicrously loaded way investors, managers and economists conceive of “efficiency.”
The great thing about business journalism is it’s a lot less concerned about digging into the uglier failings of capitalism, covering subjects that might alarm the average reader. Since its audience is mostly executives, investors, managers, and other business people, its reporting tends to suggest what rich, powerful people are saying to one another–from cartoonish ruling-class mansions to giant companies smooshing potential competitors. Consider its reporting on Banner Health, the largest hospital and clinic chain in Arizona, which “had figured out how to get ahead in the modern health care industry.” The system:
“…relentlessly focused on costs…Last year, it carried 2.1% fewer employees for every bed filled, compared with the year before…The result was a financial powerhouse with $6.2 billion in cash and investments and a bond rating that is the envy of corporate financial officers. But when the pandemic hit, the strategies that had helped it become a model for other hospital systems suddenly became weaknesses.”
Hospitals stocking less surplus equipment, less personal protective equipment, fewer spare beds and fewer staff hours is part of the economy-wide trend of lean operations, more commonly known as “just-in-time” management. The idea is that keeping less inventory, fewer spare parts, and less staff helps to lower costs, so that rather than paying to store parts a manufacturer should expertly run its supply chains so that needed supplies arrive just in time. This helps please investors and meet Wall Street’s targets for corporate earnings growth. It also fits in nicely with the public sector-side of today’s neoliberal capitalism, based on austerity that cuts public services like park rangers and flu shot subsidies. But for all their belt-tightening and bottom line-boosting, this practice leaves any given enterprise far more vulnerable to anything going wrong, from a supply-chain hiccup to, say, a giant global pandemic.
This is how markets measure efficiency: producing as much value as possible at the lowest cost. And like many mainstream economic ideas, it seems sensible—producing goods and services with the lowest amount of inputs (like tools and worker hours) means we can produce more goods overall, so that we have more to go around. The capitalist idea of efficiency is one that incentivizes maximum production for given resources, which is reasonable up to the point of potentially bringing needed goods to everyone. But in practice, market incentives mean working with the thinnest amount of supplies possible, and of course wringing ever-more output from your workers. It reminds me of someone trying to get more miles per gallon out of their car by throwing out that heavy spare tire—it works great in terms of more efficient distance traveled, but if anything goes wrong, like running over a nail, you’re screwed.
But the pressure is systematic, as the Journal relates:
“The health-care system has faced pressure over decades to improve financial performance, even as per capita spending has soared. Hospitals are pushed by Medicare and insurance companies to trim waste, and by bondholders and shareholders to boost income. Health-care systems have spent the past decade tightly managing staff and pursuing scale through acquisitions to better negotiate terms with health-insurance companies.”
But crucially, while market-based health care companies won’t stockpile PPE, medicine and beds, they will stockpile one thing—money:
“To attract bond buyers and maintain high ratings, Banner expanded its cash reserve, which helps keep its cost of capital low. Banner Health finances about one-third of its investment in technology, property and equipment with debt, which now totals about $4.1 billion.”
Capitalism’s efficiency is public health preparation’s deficiency.
The cost-trimming practice certainly extends to labor, always treated as tools under capitalism, with short-term gig economy jobs or “flexible” shifts sprung on workers at the last minute. Anyone who personally knows a nurse, med tech or other health worker can tell you that they’re often among the most selfless, intensely hard-working people in the world, but the Journal will tell you just how much the the hospitals’ failure to adequately staff before the feverish heights of the pandemic have taxed them:
“Banner and other well-funded hospitals muddled through, but in doing so they overtaxed existing nurses, had to train others on the fly and relied heavily on rapidly hiring temporary staff, including more than 1,000 nurses and respiratory therapists on expensive short-term contracts.”
Now, the conservative in your family will be quick to point out that these nurses and support staff were handsomely compensated, thanks to the magic of the free market. Pay for intensive care specialists climbed from $85 an hour to $145, but the unintended consequences that conservatives often cite as dooming government policy do in fact also appear in the marketplace, as smaller and rural hospitals that carry less cash were soon unable hire these desperately-needed traveling nurses, leaving them “priced out of the market,” as we say in economics. This matters, because it’s well established in medical research that short-staffing leads to poorer health outcomes and higher mortality rates. So ultimately, “Hospitals by design were supposed to be lean and efficient, pushed that way by the market and government policies. But that left the U.S. dangerously unprepared.”
And it’s not just fewer staff and less equipment at hospitals—there are also fewer hospitals overall. The last few decades have seen a sweaty orgy of mergers in almost every industry, with numbers of companies falling as their size and market share grows. So the paper can calmly report that “The upshot is fewer hospitals, with less capacity for intensive services. There has been a 12% decrease in the number of hospitals between 1975 and 2018, American Hospital Association data show—even as the U.S. population has grown about 50%.”
Capitalism in 2020 turned to the same fall back as always: exploit labor harder. Quoted nurses recall many “Code Purple” announcements at their hospitals, meaning their unit had reached its full capacity. “Typically, an intensive-care nurse is assigned to one or two patients. That increased to three to four patients for each nurse as the surge took off, said Gail Galate, one of Yuma Regional’s intensive-care nurses who works overnight in the hospital.” Another told the Journal “I do feel like it has taken a toll, for sure. Physically. Mentally. Emotionally,” with the pro-business paper concluding “The global crisis exposed weaknesses in the ‘just-in-time inventory’ of nursing staff in the same way it did for personal protective equipment, ventilators and other vital supplies.”
Banner’s CEO put it plainly: “You’re never going to sit there with 500 more nurses if they don’t have the patients…It’s this balancing act that literally goes on in every health-care organization around the country, all the time, in projecting what their business activity is [and] what staffing they need to support that business activity.” That CEO made $10 million in 2018, while the nurses were sweating through their re-used masks on 12-hour shifts to keep poor people alive.
But to me, one of the most telling parts of this reportage is this remark from another manager of a large US hospital system: “You’re looking at a private-sector entity that suddenly has to take on the world’s largest public-sector response.” His point is that it’s hard to expect hospitals to cope with a large-scale public health emergency like Covid, which abruptly brought in waves of thousands of urgently sick people, well beyond the capacity of any one hospital system.
But of course, that’s the whole point of today’s debates about heath care—health is a public good, not a private good. As I’ve noted in these pages, a public good is an economic asset available to everyone, and therefore unlikely to be produced in markets where you need to charge people to cover costs and make money. Like firefighting, eradicating diseases like smallpox, and defending countries against US invasion, some services and goods benefit everyone whether they can afford to pay or not, and often act as a foundation for the enormous marketplace production that libertarians take credit for.
For most of the developed world, health care became a formal public good in the wave of social democratic demands and policy after World War II. But in the U.S., the public sphere was kept characteristically limited by encouraging employers to provide health insurance rather than government—keeping workers far more reliant on their continuing employment and thus handing business an extra, existential bargaining chip when negotiating with labor.
And of course, when capital most dramatically fumbles the ball in big health emergencies, the awful state has to step in to at least partially clean up the mess, as when Arizona’s “governor in late March ordered hospitals to be ready within a month to increase their available beds by as much as 50%, which Banner and other hospitals did. But they didn’t also ensure there would be enough skilled nurses to handle the possible crush of sick patients…In early July, the state health department…took the uncommon step of saying the state would hire traveling nurses on behalf of hospitals who could not, even with bonus offers.”
Luckily, even as capitalism is sapping their ability to prepare, doctors and nurses have learned a great deal about the new virus and have developed better practices, with some hospitals finding their percentage of Covid-19 patients admitted to ICUs has fallen by half since the spring, with similarly fewer patients needing ventilators. But our lives are still hostage to a ludicrous system that sees “efficient” use of resources in the slashing of emergency-related supplies and workers to the bone, so that slightly more revenue will be left to go the depravedly rich ruling class, which owns most of the shares of the world’s big corporations, including the cash-flush “nonprofit” hospitals.
Today our online lives include friends anger-sharing idiot posts from conservative dark money PAC interns trying to make funny anti-socialist memes. Typically Venezuela-based and abjectly unfunny, they nonetheless present us with a need for quick zingers deployed against capitalism, the system actually ruining our lives for no reason. Here’s a gag ready-made for whoever becomes the Yakov Smirnoff of neoliberalism:
“Have you heard the one about the neoliberal hospital? It was so efficient, everyone who went to it died! And their families were very sad! What a country! Thank you!”