May 19, 2014
Public trust matters. It’s hard to build and easy to lose.
Of late, subpar performance has drawn public attention to a wide variety of industry notables—
- General Motors this week agreed to a fine for malfunctions resulting in 24 recalls in recent years including 2.6M most recently with faulty ignition switches (1).
- Security breaches in customer information at Target, Michaels and other retailers hurt sales and cost at least one CEO his job (2).
- The Department of Veterans’ Affairs has been exposed to questions about its safety record, notably delays in treating veterans in its hospitals in 9 states (3).
Entire industries have seen their public trust erode as a result of misdeeds or self-inflicted wounds—the investment banking industry’s mortgage loan debacle, venerable news organizations from lack of objectivity, industrial food manufacturers from unhealthy supply chain management and so on. And industries like higher education and others face tough questions about their value proposition, as if decades of good will no longer matter.
In most cases, leaders of the most prominent organizations in these industries accept responsibility, appoint task forces to investigate and address their issues with the media and investors head-on. Their trade groups, likewise, announce new initiatives to restore public confidence. They hire professionals to bolster their influence. and in some cases, rebuild their reputation.
Public trust in industries matters as much as confidence in the individual companies and organizations themselves. An industry’s reputation and good will is always buoyed by the reputation of the companies that are its marque market leaders, and always at risk as a result of the misdeeds of any member, known or unknown.
By and large, excepting occasional drug manufacturing scares or recent well-publicized safety issues in a few of the 3000U.S. compounding pharmacies, our industry has remained virtually unscathed from the ever-more-skeptical public’s thirst for muckraking. The U.S. health system enjoys the confidence of the majority, especially older adults for whom it is always top of mind.
But the reality is this: the US health industry is susceptible to erosion of its public trust, not as a result of the Affordable Care Act nor political infighting in Congress. There are three reasons:
1-Consumer trust in the health system is based on impressions and experiences over facts about its performance.
- Most consumers trust the doctors they use, but do little to validate that the accuracy of the treatment recommendations made or their costs.
- Most believe the drugs they use are efficacious and safe, and few take them as directed.
- Most think hospitals are expensive but pay little attention to costs and have no concept of the hospital’s safety record.
- Most think health insurance is important but distrust insurers.
- Most don’t have a clue about what the “US health system” is or how it operates, nor does more than a handful have a basis for comparing our system to others.
Personal experiences are important but substantive facts about the system's performance are more useful in gauging its results. Though media coverage about fraud and bad outcomes in a treatment episode gets attention, the lion’s share of the public’s trust in the U.S. system is built on subjective impressions rather than facts. The bright spotlight of public opinion coupled with laws that open access to sensitive data about the health system’s performance are exposing substantial flaws in the system—data about fraud, unnecessary tests and procedures, errors, misdiagnoses, customer experiences, profitability, conflicts of interest, the disconnect between costs and prices and so on. The data’s there. And it’s increasingly the focus of social media-fueled public interest and media attention. As the healthcare industry transitions to the digital age, hard data about its performance and malfunctions will be easily accessible and public trust in its performance in jeopardy. Personal impressions matter but data transparency matters more.
2-Our in-fighting compromises public trust. In the U.S. health system, we circle the wagons and shoot in: insurers blame drug companies, hospitals and doctors for the woes of the system. Hospitals despise plans that cut their payments. Drug and device manufacturers challenge insurers that cut their prices and force higher co-payments for their drugs. Primary care physicians, feeling abused and victimized, assail the system’s hypocrisy about preventive health even as specialists earn more and investors flock to the latest technologies. Device manufacturers have love-hate relationships with Group Purchasing Organizations (GPOs) and so on. The deep-seeded fragmentation of the industry lends to its lack of coordinated care, redundant costs and performance malfunctions. The public views the system’s fragmentation and infighting as a major contributor to higher costs and poor service. And it is chipping away at the industry’s reservoir of good will.
3-The U.S. healthcare industry has done a poor job in managing the public’s trust. The reason is simple: we think we are the best system in the world and beyond reproach. We shun transparency fearing it exposes secrets of our system. We invest in relationships that benefit our own specific link in the healthcare food chain and assume others do the same. As a result, overall trust in the U.S. system is subordinated to promoting specific parts instead of the whole. We expect our marketing and PR professionals to operate with hamburger budgets and deliver filet mignon results. But the market is changing: employers are the major catalysts prompting attention to how the system of health operates. Consumers are keen to understand their treatment options independent of a physician’s recommendation. Insurer determinations about treatment coverage and their premium-setting mechanics are ripe for public scrutiny as are hospital-physician financial relationships and inducements by drug and device manufacturers to gain a foothold in the $500B supply chain market. And the Affordable Care Act requires a level of transparency that’s certain to unsettle smugness even among the most confident. The U.S. healthcare industry is guilty of public trust neglect.
My father was an opera singer and quite introverted. His most stinging criticism of anyone would be a simple observation: ‘he believes his own publicity.’ Opera singers, like many in our industry, invest heavily in publicity to tout their skills and accomplishments. But hundreds of news releases touting our successes can be offset by one documented report of poor performance.
It’s time we get serious about building trust and managing our reputation within our sectors and for the overall industry that’s 17% of our GDP. Anecdotal impressions may be comfortable for some, but the factuality of our performance will be the public focus in the next phase of health reform.
Our industry, like others, has its malfunctions. We can’t afford to believe our own publicity. And we can ill afford to take public trust for granted.
1-James Healey “GM to pay $35M for recall delays” USA Today May 16, 2014
Jeff Bennett, Joseph White “US Says GM Hid Recall Failures” Wall Street Journal May 17-18, 2014; Matthew Wald, Danielle Ivory “GM is Fined over Safety and Called a Lawbreaker” New York Times may 17, 2014 National Highway Traffic Safety Administration ; Jeff Bennett, Joann Lubkin “GM Board Probing Informaiton Gap” Wall Street Journal May 15, 2014
2- Danielle Douglas, “Target CEO resigns after massive data breach,” Washington Post, May 5, 2014; Elizabeth A. Harris, “Michaels Stores’ Breach Involved 3 Million Customers,” New York Times, April 18, 2014
3-Richard Oppel “Veterans Secretary Ousts Health Care Official amid Criticism” New York Times May 17, 2014
For a complete recap of important news in the industry and governmental agencies, go to www.navigant.com/pulseweekly.