The Private Equity for Families Blog

First Do No Harm

Freakonomics has really interesting podcasts, and the last one of a three part series on August 20, entitled “Bad Medicine” did not disappoint.   The long standing view of the big three causes of death was Heart, Cancer and Respiratory.  According to The Center For Disease Control, here is the list for 2014 sorted by the number of deaths:

  • Heart disease: 633,842
  • Cancer: 595,930
  • Chronic lower respiratory diseases: 155,041
  • Accidents (unintentional injuries): 146,571
  • Stroke (cerebrovascular diseases): 140,323
  • Alzheimer’s disease: 110,561
  • Diabetes: 79,535
  • Influenza and pneumonia: 57,062
  • Nephritis, nephrotic syndrome, and nephrosis: 49,959
  • Intentional self-harm (suicide): 44,193

This was before researchers at Johns Hopkins actually began to question the data. It turns out that the third leading cause of death in the US is not respiratory related at all, but rather medical error. Think of the millions of decisions including NIH funding, charitable giving, medical school curriculum, hospital protocols, career choices, doctor reputation and malpractice insurance premiums that were all predicated on faulty data.

This occurred because the death certificate process has an international code that does not include medical error as a cause of death and the medical profession, medical examiners, and funeral directors often controlled the answer. For decades the medical person filling out the death certificate usually listed the problem you were being treated for rather than the proximate cause of death. So if you were being treated for a heart problem, but the surgeon nicked an artery during a heart valve repair and you died on the table, the cause of death was heart disease.

Medical error includes a spectrum of mistakes both passive and active, ranging from misdiagnosis to acts of negligence like a surgical mistake, or injecting the wrong dosage of insulin. Johns Hopkins research also showed that the more experienced the doctors were, the more likely to cause your death than the least experienced. As the number of procedures increase so does the possibility of medical error.

The analogy to the business world would be faulty reporting on 10Ks and 10Qs because management selected the accounting treatment they were using, without disclosing how it impacted the result and without oversight from auditors or SEC. I am sure there are thousands of CEOs who would have supported a reporting category called gross revenue that was selected by the sales team! In that case an investor, lacking the true information might lose money on his investment, but at least he would not have lost his life.

The greater issue raised by this massive misclassification is why did it take so long for someone to figure it out? I wonder how many times a week some medical person was aware that the Center For Disease Control classification codes did not allow truth to be told? I am also shocked that the tort industry did not figure this out but it is probably because the misclassification helped their chances at trial. If a medical expert had a choice of medical error and did not mark it, that evidence from an expert would be hard to rebut. The trial lawyers were actually benefitted by the conspiracy of silence.

Unfortunately, the Freakonomics podcast missed an opportunity to explode the myth of expertise. There is too much fake news, bad science and intentional deception based on shaky experts who want to promote a social or political point of view whose opinion also serves a financial interest. We should all bring a healthy dose of skepticism to any point of view that cannot be tested, debated or validated, and an even a more suspicious eye when a lot of money is involved.

The Hippocratic Oath is a wonderful aspiration for a group of experts and certainly worth being validated from time to time.


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Rob McCreary

Rob McCreary has more than 40 years of transactional experience as an attorney, investment banker and private equity fund manager, and has spent his career in building entrepreneurial organizations with successful track records Founder and chairman of CapitalWorks, he is responsible for developing and maintaining senior relationships with investors and portfolio governance.

This blog represents the views of Rob McCreary and do not reflect those of CapitalWorks or its employees. This blog is not intended as investment advice. Any discussion of a specific security is for illustrative purposes only and should not be relied upon as indicative of such security’s current or future value. Readers should consult with their own financial advisors before making an investment decision.

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