Bill George On The Ill Health Of Health Care

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Bill George On The Ill Health Of Health Care
Ethisphere staff 07.19.10, 11:08 AM ET

Ethisphere recently spoke with William W. George, a professor of management at Harvard Business School who is the former chairman and chief executive officer of Medtronic and a current director of both ExxonMobiland Goldman Sachs.

We talked about leadership, ethics and compliance in the health care industry and also–in the second part of this interview, to be published later–about his latest book, 7 Lessons for Leading in a Crisis, in which he gives concrete advice on how to be a strong leader in a challenging time. Here are highlights from the first part of our conversation.

You say that leaders should lead by following the compass of their “true north,” meaning their integrity and their values. Can you give an example of a leader in the health care industry who does that?

One person who I’ve served with on a board and who recently stepped down from his company is Dan Vasella, chief executive officer of Novartis, the Swiss pharmaceutical company. Novartis has a large generics business; they’ve got the H1N1 vaccine and a large vaccine business; and they have a consumer health business. But the significant thing about Dan is that he recognizes that all corporations exist first to serve society. If a corporation doesn’t serve society by using its strengths, then in the end it will have very difficult times.

If a corporation focuses only on maximizing shareholder value, as Milton Friedman erroneously recommended, it will probably eventually implode or self-destruct–as General Motors did, and as Sears Roebuck did–from not recognizing its job of serving the customer. I think part of that “serving the customer” is societal concern. For example, Vasella recognizes that not all patients have the wherewithal to pay, so Novartis has had a big focus on malaria in Africa, where they are giving away a drug called Coartem.

They also recognize the need to collaborate with nongovernmental organizations and to collaborate with governments, because Novartis cannot deliver the drug to Africa by itself. So it’s a whole team effort, a whole collaboration–and I think Dan Vasella recognizes that.

Are there ethical questions in the health care industry that you see requiring particular focus from industry leaders?

If you start with, broadly speaking, the provider side of health care, we have a huge issue in that the incentives are all misaligned, even with the health care reform bill. The current incentives encourage doing more procedures, giving more tests, seeing more people–but not keeping people healthy. So I think there is a huge ethical dilemma in health care in general.

But how do we get to a health care system designed to keep people healthy and not just treat them while they’re sick? That gets to the really tough ethical question of lifestyle. Seventy percent of all health care costs arise from people’s inappropriate lifestyles. Obesity is No. 1 and the most rapidly growing disease. Of course, you don’t hear of it as obesity. You hear of it as Type 2 diabetes. I think that is a real ethical question for providers of health care.

In terms of suppliers–the pharmaceutical and medical technology companies–it’s hard to think that over the long term they will be successful selling into an unhealthy system. So I think it incumbent upon the pharmaceutical, biotech and medical technology companies to start trying to create a healthy system.

Certainly insurance companies are a big contributor to an unhealthy system. They are not helpful right now. We need insurance companies to start insuring companies and people for staying well, rather than just insuring them for staying sick. We have to get upstream of the problem. I don’t see a lot being done there right now.

We need to look at the whole person, which is what my wife is talking about with our George Family Foundation. There are huge mind-body connections. Placebo effects are real. It’s a positive thing, even though most look at it as a negative thing. If you think you’re going to be healthy, your odds are better. How do we create that kind of sense of well-being, and how do we get people to honor their commitment to exercise and diet to stay healthy, and all those things?

John Mackey of Whole Foods is trying to do that. But who is doing that in the health care industry? Who is taking the lead on that and really trying to make a difference in people’s health? We did a lot of things atMedtronic, but Medtronic is just one player. What are other companies doing to make a difference in terms of the health of their employees? I think it’s essential that health care companies take a lead in creating a healthier health care system. That means a healthier population, not just promoting their own products, drugs or insurance plans.