Corporate social responsibility as well as profit motivates executives

Research Activities, December 2012, No. 388

What drives executives of for-profit health care organizations? Not just profits, suggests a new study. New Mexico and Colorado researchers conducted interviews with four chief executive officers (CEOs) of for-profit managed care organizations that had received major State contracts for Medicaid managed care. Eight State government officials charged with oversight of Medicaid managed care also were interviewed. All of the executives interviewed cited social responsibility as a major motivator when making decisions. Several mentioned a belief in the Medicaid system and making it their mission to serve the State. They also cited a responsibility to their employees, many of whom were new and hired in large numbers to address the requirements of Medicaid managed care. The executives viewed the experience gained with the Medicaid contracts as an opportunity to enhance their market share for private managed care products.

On the economic side, CEOs were more motivated by the predictability of financial performance than actual profitability. A predictable rate of profit, which comprised a major concern for investors in the for-profit managed care corporations, trumped the rate of profit itself in CEOs' decisionmaking. Among the State government officials interviewed, cost control in Medicaid was a primary motivator, with for-profit managed care organizations seen as an important part of this strategy. The officials generally defended the CEOs and felt that some criticisms they faced from patients and advocacy organizations were not justified. The study was supported in part by the Agency for Healthcare Research and Quality (HS13251 and HS09703).

See "Advancing the business creed? The framing of decisions about public sector managed care," by Howard Waitzkin, Ph.D., M.D., Joel Yager, M.D., and Richard Santos, Ph.D., in Sociology of Health & Illness 34(1), pp. 31-48, 2012.

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Internet Citation: Corporate social responsibility as well as profit motivates executives: Research Activities, December 2012, No. 388. December 2012. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/newsletters/research-activities/12dec/1212RA34.html