The Cost of Wokery in Healthcare

It is time we apply our genetically-ingrained Jewish talents and talk about money.

Is it worth it to invest in critical-race-theory (CRT) training? Does it make sense to spend money on diversity czars? Is there a downside to energetic corporate campaigns pushing chic ideas such as “equity?”

Let’s examine the cost in one American industry – hospitals.

Data concerning hospital Human Resources departments are not easily available, so we will have to make a few assumptions. Given my 15 years of experience in the hospital and healthcare industry, such assumptions are not completely far-fetched and are anchored in my daily business dealings.

Assumption 1: Every 400 inpatient beds are equal to one diversity officer. It may sound arbitrary but this is based on my observation that large hospitals (of 400 beds and above) would normally, nowadays, have a full-time diversity-dedicated officer. Smaller hospitals would assign such functions to an HR employee, consisting of less than full-time duties.

Assumption 2: The fully loaded cost of a full-time diversity officer (inclusive or benefits) is about $120,000.

Now for some simple arithmetic.

Based on CDC data for 2015, the US has 5564 hospitals with 897,961 beds. Thus, based on Assumption 1 we have 2245 diversity full-time-equivalents. Based on Assumption 1 the cost would be about $269.4M per annum.

Does that make sense? Let’s apply a quick smell test. It is a common assumption (see figure 2 in the referenced link) that American hospitals spend the equivalent of 20.9% of their revenue on administrative costs, or 12.2% if one excludes billing and insurance. Meaning, 58% of the total administrative costs go to non-billing expenses.

The same data source (figure 1) estimates the total administrative cost at $282B per annum, which means $163B for non-billing-related expenses. We estimated $269.4M that are spent on diversity initiatives, meaning something close to 0.2% of all non-billing administrative expenses. This passes my smell test.

But then diversity czars incur further costs. They do so mainly by engaging others in all sorts of mandatory activities (workshops, forced confessionals, training sessions, etc.). Based on personal experience, I estimate about four hours per healthcare employee.

Based on commonly available data for 2018, there are 6.18M hospital employees in America. Labor costs, per Fitch, represent 54.2% of hospital costs; hospital costs, per the AHA, amount to $1,161B per year.

So that means an annual labor cost of $629B. At the commonly assumed 2080 workhours per year, this means $302.5M per hour. Now, since we assume that each employee has to spend at least four hours per year on diversity training, we have a total cost of about $1.2B.

With the cost of the diversity czars themselves, we get a grand total of $1.47B as the annual cost incurred by US hospitals due to investment in Wokery. Based on the figures above, this represents 0.13% of all hospital costs. Meaning, about one dollar of every 1000 dollars will go towards diversity, equity, and that sort of thing.

Whether the funds could be put to better use – through medical research, the training of medical personnel or simply through charity care – is a judgment I shall leave the reader to make.

However, it is difficult to see how CRT advances patient care. Moreover, 80% of American hospitals are not-for-profits and granted their status through a commitment to focus on nothing but the well-being of the sick. As investment in equity, diversity and that sort of thing does not promote the core mission of US hospitals, this investment should be seen in more religious terms. Like the Saudi modesty police or the ideological apparatchiks installed within the Soviet armies, these positions seem to serve no purpose other than to assuage the religious awareness of their human creators.

Meaning, the question we opened with, whether there is business sense in Wokery, should be answered through the social sciences, not a business analysis.