CSR Gerontological Society - Term Paper Example

Corporate Social Responsibility In modern Economics the term Corporate Social Responsibility (CSR) has increasingly become important to organizations. CSR is the continual commitment by businesses to the improvement of the quality of life of their employees, the local community and the government. Corporate Social Responsibility can be viewed under two different models: the shareholder model and the stakeholder model. According to Johnston (2005) the shareholder model of corporate responsibility postulates that the main duty of managers is to act solely on behalf of the owners and not to creditors, employees or others. Shareholders invest in businesses with the expectation that they will obtain profits. This is what Nobel laureate Milton Friedman referred to as the sole social responsibility of business (Condit, 2007). With regards to health care economics, the shareholder model advocates for corporate survival through legally maximizing profits which could be at the expense of reducing employee health care benefits if need be. The increasing burden of health care expenses on US businesses has become a source of competitive disadvantage in the wake of globalization. According to Condit (2007) in 2005 General Motors spent $1,525 on health care for every vehicle built in the US while its major competitor Toyota spent $97 per vehicle in Japan. Even though providing benefits such as health care is necessary to obtain and retain employees, which is consistent with shareholder model, we cannot ignore the competitive disadvantage such as the one facing the manufacturing industry in the US. This is one of the major conflicts between health care and corporate economics in the US. In fact the escalating health care cost burden in American companies is among the reasons why employers are moving factories abroad (Condit, 2007). Critics of the shareholder model argue that businesses have a bigger duty than that to shareholders. This is where the stakeholder model of CSR comes in. It proposes that firms have moral obligations to all its stakeholders i.e. its employees, customers, suppliers, managers, the community and the government. The proponents of the stakeholder model believe in a triple bottom line which caters for profits, environmental objectives and social obligations. The stakeholder model therefore could be construed to indirectly advocate for firms to offer health care benefits to their employees. In an effort to do this at lower cost companies have become more and more distracted from their core business by performing employee health screenings, blood testing etc. According to Johnston (2005) this brings about conflict of interest because managers are forced to serve many masters. Not all firms are in such a competitively favorable position that they can afford to provide such generous benefits to their employees. When firms commit their few resources to research, development, improving operations, sales, and services they create new wealth, which in turn provides for increase in wages that serves to elevate workers out of poverty. They are also able to satisfy their customers and investors more, create new jobs, opportunities for upward mobility and progress (Condit, 2007). Demand Demand, like supply is among the most basic concepts of economics. It is defined as the quantity of a commodity that consumers are willing and able to buy at a given price over a given time period other factors held constant. When a want is backed by buying power it becomes demand. In Economics, the law of demand generally states that the higher the price of a good the less the demand for that good with all factors remaining constant. This is because the higher the price is the greater the opportunity cost of purchasing that good. In health care economics this law is not generally held because most health care commodities demonstrate an inelastic demand curve. Health care commodities have a high degree of necessity in comparison to most products and services in the market economy. To help us illustrate this point further we shall look at the looming baby boomer crisis in the United States (US) and its impact on demand and health care economics. According to the Gerontological Society of America (2008) America is going to face a crisis as the Baby Boom generation is aging in combination with an increase in life expectancy. The US will be faced with high numbers of the over-65 population and a paradoxical reduction in the number of geriatricians. This reduction can be attributed to the fact that the vast bulk of nurses working in healthcare are from the baby boom generation. The health care industry will therefore have to find a way to increase the number of geriatric health specialists to provide care for the medical problems of old age that are bound to go up. The demand for better health care (and increased profits in this inelastic commodity industry) has led to advancements in medical technology that have enabled people to live much longer. This has directly translated to having older people under longer-term care at their homes or in long-term care facilities. The problems anticipated will be due to inadequate health insurance coverage, increasing medical costs and high debt problems in the US. The market economy cannot be encouraged to dominate this industry. Government intervention through an overhaul or reform of the current US health care system would be needed to create an efficient, safe, affordable and patient-centered health system. Technology According to Boskin and Lau (1991) capital, labor, and technology are the three main sources of a nation’s economic growth. They argue that labor is restrained by the population growth rate which for industrialized nations is quite low even when we include the effect of international migration. This has left capital (physical and human) growth rate and technology progress as the significant factors for economic growth in the developed world. To achieve its economic goals the U.S. has therefore depended on technological advancements to increase productivity, develop new products and services and become more competitive in the globalized economy. Whereas the U.S. is continually losing its manufacturing might to cheap labor economies such as China, India, etc it has been able to maintain its economic might through optimal utility of technology especially Information Technology (IT) and the Internet. Thus we can see companies such as Wal-Mart using technology to enhance their supply chain systems such that they can have factories in China and yet have low priced products on the shelves of its U.S. stores. While we see how technology has been used to mostly increase profitability for the firms and affordability of goods in Economics, on the contrary, it has been accused of increasing the cost of health care especially in the U.S. However, with proper analysis, planning and implementation we are of the opinion that technology could transform the health care industry just like it has been able to transform other industries, even in the area of cost reduction for both providers and patients. When we talk about specifically IT in health care we shall often come across the following terms: Electronic health records (EHR), Clinical decision support systems (CDSS), and Computerized provider order entry (CPOE). EHRs have enabled automated order-entry, patient-tracking systems and provision of real-time access to patient data, as well as a continuous longitudinal record of their care. IT provides a tool to store, integrate, and update the information base required by physicians, nurses, patients and their families thus enabling them to have the right information at the right time for urgent decision making. The types of computer-based clinical decision support systems (CDSS) vary widely from preventive care reminders to notification of potential drug interactions. Here again, we see IT being able to aid in timely decision making for critical health care provision. References Boskin, M. J & Lau, L. J. (1991). Capital Formation and Economic Growth. In National Academy Press (Ed.), Technology & Economics (pp 47 – 56). Washington, D.C: National Academy Press. Condit, D.P. (2007). Should Business Be Responsible for Employee Health Care? Journal of Markets & Morality, 10 (2), 299 – 319. Johnston Jr., J. F. (2005). Natural Law and the Fiduciary Duties of Business Managers. Journal of Markets & Morality, 8 (1), 27–51. The Gerontological Society of America (2008, April 25). Baby Boomer Health Care Crisis Looms. ScienceDaily. Retrieved March 19, 2010, from http://www.sciencedaily.com/releases/2008/04/080417111300.htm Read More