May 24, 2020

From bean count to body count

Siddhartha Mukherjee reflects on what the pandemic can tell us about the state of American medicine – and the role of flawed economics in the nation’s vulnerability:

To what extent did the market-driven, efficiency-obsessed culture of hospital administration contribute to the crisis? Questions about “best practices” in management have become questions about best practices in public health. The numbers in the bean counter’s ledger are now body counts in a morgue.

For decades, consultants had taught the virtues of taut business practices. “Slack”—underutilized resources, inventory waiting to be put to use—was shunned. I spoke to David Simchi-Levi, an M.I.T. professor who studies supply-chain economics and how enterprises respond to disasters. “Cost is easy to measure,” he told me. “But resilience is much harder.” So we reward managers for efficiencies—and overlook any attendant fragilities. His view can be summarized simply: we’ve been overtaught to be overtaut.

“We’ve been teaching these finance guys how to squeeze,” Willy Shih, an operations expert at Harvard Business School, told me, emphasizing the word. “Squeeze more efficiency, squeeze cost, squeeze more products out at the same cost, squeeze out storage costs, squeeze out inventory. We really need to educate them about the value of slack.”

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