Cost is Ruining the Patient/ Healthsystem Social Contract

It’s Summer in Boston and the annual migration of Bostonians leaving town (replaced by carloads of tourists headed in) is underway.

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I’ve been keenly observing the influx of out-of-state license plates because it brings a wider sample of cars  to support my theory that the number of people applying collegiate stickers to their car windows has fallen dramatically.  Today, based on poor sampling science (my counting cars at a downtown garage) fewer than 5% of cars proudly display a college sticker.  This number seemed far higher a decade ago.

It turns out that my anecdotal observation actually tracks with data in the academic literature.  “Advancement” offices recognize that engaged alumni (presumably those that would put a sticker on their car) are declining.

According to the Council for Aid to Education, in 1990, 18 percent of college and university alumni gave to their colleges.  By 2013, that number was less than 9 percent— a record low and a trend that has persisted for more than two decades.

What’s interesting is that a very small number of donors contribute the bulk of the dollars: The University of Waterloo analyzed their alumni donations and found that <1% of alumni gave 78% of the over $150M dollars raised.  Here is their breakdown:

 

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The data suggest that a handful of donors are stuffing the coffers while the bulk of alumni have tuned out.  The Waterloo authors noted:

[It’s] a classic example of the 80/20 rule, except in our case it’s more like an 80/1 rule.


What’s behind this disengagement?

In a 2014 article, author Dan Allenbee argues that the rising cost of college has alienated many alumni.

Back when the cost of [the college] experience was relatively low, alumni felt like they had gotten a deal and were more willing to give back after they graduated… In the last decade, the price index for U.S. college tuition rates grew by nearly 80 percent—almost twice as fast as growth in medical care and more than twice as fast as the overall consumer price index, according to U.S. Labor Department statistics. Although tuition increases have slowed recently, data from the College Board suggests that federal aid has not kept up with rising costs, resulting in students and families pay- ing more out-of-pocket expenses. 

How we expect alumni to give back when they haven’t fished paying the original bill?

A 2016 piece in The Yale News argues that changing social norms seem to be a cause:

Alumni participation rates in giving hit an all-time low of 33.7 percent this year after dropping 25.61 percent in the last decade — the biggest fall in the Ivy League. And this decrease has primarily been concentrated among the younger classes: In the past 10 years, there has been an 11 percent increase in the number of alumni solicited, but a 26 percent decrease in participation.

“There [used to be] a supposition that there were things that you did,” Acting AYA Executive Director Jenny Chavira ’89 said. “And you did them because you did them.”


At a minimum, this trend in higher education serves as a harbinger for healthcare.  With the colleges, what we’re witnessing is the breakdown of a long-standing social contract between organizations designed to serve the community, and the people that they serve.  There is a silent majority who used to proudly display their allegiance to organizations and who now feel less affiliated.

If we believe that the weakening of the bond between social mission organizations and individuals is due to citizen’s perceptions that they aren’t getting value for money, then healthcare has a brewing problem.

This won’t be an issue of declining philanthropy: A few massive donations from a handful of benefactors will make up the gap.  The bigger long term issue for healthcare systems is declining consumer loyalty.  The erosion of the organization/ patient social contract can only lead to a future with fewer brand-name consumers and more buyers shopping for deals while “interlining” between systems (a trend that I wrote about last year).  Cost (or the ability to save a couple of bucks in a high-deductible plan) drives point-of-care decisions, for sure.  More important (and more insidious ) is the way that high cost/low value care impacts how patients feel about the patient/healthsystem relationship.