McKinsey and How To Soak The Customers

It's hard to imagine exactly what an open market for education would really look like, but we can get a scary inkling sometimes by looking at the world of health care.

For instance, the hospital world is loaded with non-profit operations that make a giga-ton of money (that remains untaxed). A recent New York Time piece gives a picture of how hospitals can squeeze blood from stones, with some help from our old friends, the amoral giants of money-grabbing consulting, McKinsey. 

The article focuses on the big challenge of hospitals--patients without money--as it plays out at Providence, one of the nation's largest chains. The Times got ahold of the training materials for a program called Rev-Up, ordered by Providence executives and created by McKinsey.

Training materials instructed administrative staff to tell patients — no matter how poor — that “payment is expected,” according to documents included in Washington’s lawsuit and training materials obtained by The Times. Six current and former hospital employees said in interviews that they had been told not to mention the financial aid that states like Washington required Providence to provide.

One training document, titled “Don’t accept the first No,” led staff through a series of questions to ask patients. The first was “How would you like to pay that today?” If that did not work, employees were told to ask for half the balance. Failing that, staff could offer to set up a payment plan. Only as a last resort, the documents explained, should workers tell patients that they may be eligible for financial assistance.

Another training document explained what to do if patients expressed surprise that a charitable hospital was pressuring them to pay. The suggested response: “We are a nonprofit. However, we want to inform our patients of their balances as soon as possible and help the hospital invest in patient care by reducing billing costs.”

Staff members were then instructed to shift the conversation to “how would you like to take care of this today?”

The Times found that this approach was used even on patients who were entitled to free care. Providence collected a ton of COVID relief money and sits on $10 billion in investment money.  The whole story is pretty rage-inducing, particularly when you get to the parts about people who are ruined by their health care debts. Non-profits measure their charity care; the national average is 2% of expenses spent on charity; Providence currently sits at 1%.

It is not encouraging to imagine this model extended to education in a world in which folks have to come up with their own education for their kids, perhaps with a pittance of a voucher that will only allow them to purchase bare bones education care. Meanwhile, private and voucher schools would be coming up with new and better ways to hustle money out of the customer base. Charter and private schools would be consolidated, gathered into chains owned in some cases by hedge funds and private equity firms that would just squeeze and squeeze  They'd have the pile of money needed to hire world-class consulting firms like McKinsey to get every last drop out of the poorer families (unrestrained by any sort of ethical concerns). 

The future reflected in health care is an ugly one, in which an industry is shifted from serving the needs of human beings to enhancing its pile of money and paying its executives exorbitant amounts of money.

What will happen in a future in which families are required to purchase education on their own, and they don't have enough money to do it, or at least not enough to purchase more than a very basic substandard "product." It's a future I'd just as soon avoid.