A Pressing Topic for the Corporate Social Voice

The frightening deficiencies in U.S. public health preparedness are an appropriate, and pressing, topic to be addressed by the recently dormant corporate social voice.

One of the central tenets of the corporate social responsibility movement is a broader perspective on corporate purpose, focusing on the interests of all organizational stakeholders – including shareholders, employees, communities, suppliers, and customers. These stakeholders are increasingly challenging corporations to address sensitive social and political issues, particularly when they perceive government as unwilling or unable to do so.

And, over the last several years, portions of the business community have responded to this challenge, leveraging their public profile on issues ranging from presidential succession, to voting rights legislation, to LGBTQ controversies, and to abortion rights and the aftermath of the Supreme Court’s Dobbs decision. But more recently, that social voice has been somewhat muted by a combination of factors that include threats of punitive state reaction, antitrust allegations, rising congressional opposition to ESG regulation, and data suggesting that many consumers do not appreciate corporate intervention on societal concerns.

These factors have caused many corporate boards to be more conservative in guiding the public social profile of the corporation and particularly its CEO.

However, the widely perceived U.S. unpreparedness for the next pandemic may serve as a compelling prod to re-awaken the dormant corporate social voice. A diverse combination of medical researchers, public health officials, clinicians, legislators, and health industry leaders are raising important concerns with what they perceive as a lagging governmental response to a critical public health concern.

These concerns were comprehensively articulated in a recent The New York Times oped from Ezekiel Emanuel, David Michaels, Rick Bright, and Michael Osterholm, all former members of President Biden’s advisory board on COVID-19. While acknowledging public health improvements that emerged from the pandemic, the authors expressed “deep dismay with “how much more should and could have been done — and still needs to be done” from a preparedness perspective.

These concerns extend to what some leading researchers see as the lack of priority-based, coordinated national efforts to develop the next generation of vaccines necessary to block infection and drugs capable of replacing the monoclonal antibodies that no longer work or Paxlovid, should resistance arise to that treatment.

As the prominent scientist Eric Topol, M.D. opined in The Washington Post, “We’ve moved from complacency to frank capitulation at just the wrong time”. Dr. Topol’s particular concern is with the implications of the new XBB.1.5 variant and the potential that it may give rise to a family of variants that are distinct from the omicron family. “And we’re not ready for it,” says Topol, pointing to the 90 percent drop in genomic surveillance around the world.

The preparedness question is made worse by the precarious position of the public healthcare system. During the COVID-19 pandemic, that system experienced what many consider an almost complete fail. Public health organizations had been underfunded for years, so when the COVID pandemic arose, they lacked the resources, financial or otherwise, to cope with a true public health emergency.

So what happened? America’s hospitals stepped into the public health breach. Hospitals took care of the very sick COVID-19 patients and over time learned and communicated best-practice care procedures. In addition, hospitals assisted with case tracking and in many locations provided the tip of the spear for highly organized vaccination programs. All of this extra public health effort was funded by Cares Act money and hospital funds that had been carefully accumulated over many years.

Now, though, hospitals are suffering through their worst financial results since the 2008 financial crisis. A Kaufman Hall report prepared for the American Hospital Association predicts that 55 percent of all hospitals will lose money from operations in 2022. In fact, hospital margins have decreased by 31 percent when compared with pre-pandemic levels.

Further, because of COVID and related inflationary pressures, total hospital expenses increased in 2022 by 8 percent while overall inpatient revenue increased not at all. Finally the hospital labor market is seriously distressed. Many hospitals cannot find the nursing and technical help needed to keep critical services open and operating at pre-pandemic levels. In fact, from 2020 to 2022, hospitals experienced a 63 percent increase in the number of open and available positions.

So it is the “triple whammy” for society’s health care interests. The country is clearly unprepared for the next pathogen – the next pandemic. Our public health agencies are no better ready to help then they were in 2020. And American hospitals that jumped into the breach during COVID-19 are now financially and clinically disabled and unprepared for another pandemic.

These are challenges that will re-ignite all the corporate risks that arose from the COVID-19 pandemic: renewed business disruption, weak financial performance, productivity decline, supply chain breakdown, employee health and safety threats, workplace culture problems, and, employee and executive resignations. They affect the interests of all of a company’s stakeholders, and so it is in the best interest of those stakeholders for their company to respond in some public way.

Let’s be clear about one thing: Everyone’s sick of COVID-19, including corporate executives and board members. Certainly consumers. No one wants to talk about it. But as Emanuel, Topol, and their colleagues have suggested, the nation remains vulnerable to “new and deadly pathogens.” Indeed, it is unclear whether the public health system is effectively applying the lessons and understandings of the trauma of the last three years. The hospital sector is reeling under unprecedented financial losses.

All that should be a concern to corporate boards and their leadership teams.

But the responsibility for calling attention to the urgency of preparedness should not be left to the beleaguered health care industry. It is a message that can appropriately be underscored by corporate America more broadly, acting consistent with the value attributed to serving a social purpose on behalf of all their stakeholders.

After all, what could be more socially responsible than promoting enhanced public health preparedness?

This post comes to us from Michael W. Peregrine, a partner at the law firm of McDermott Will & Emery, and Kenneth Kaufman, chair of management consultants Kaufman Hall.

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