Relentlessly pursuing profits can lead to unimaginable consequences. As the population ages, the demand for long-term care is increasing, and the quality of services is also rising. Quality and profit are not mutually exclusive; in fact, they complement each other. The author believes that a clear prioritization of values and management principles is essential.

The quality and profit of operating institutions should complement each other, with the key lying in whether the organization can achieve clear value management. Photo Credit: Shutterstock

Recently, France published a book titled Les Fossoyeurs: Révélations sur le système qui maltraite nos aînés, which exposes the scandal of France’s largest listed long-term care group, Orpéa, sacrificing quality for profits. With operations in over 20 countries and more than 1,000 long-term care facilities and clinics, Orpéa has faced issues such as manpower shortages (phantom caregivers with fake rosters), poor care quality, overcrowding, and embezzlement of government funds. Shockingly, these problems involved directives from management and internal regulations, leading to widespread public concern and government investigation in France.

The publication of Victor Castanet’s book has sparked widespread discussion in French society about the industrialization of long-term care, and globally, made people reflect on the potential quality sacrifices in the pursuit of profit: “The crisis that may arise from pursuing profit!”

The Challenges of Taiwan’s Long-term Care Market

Facing rapid aging, the Taiwanese government launched Long-term Care 2.0 in 2017, implementing the Long-term Care Services Act on June 3 of the same year. The market is now open beyond NPOs, allowing individuals, companies, and profit organizations to enter the long-term care market. Although the market is open, the government has established multiple audit mechanisms, including various inspections, evaluations, counseling, and assessments every four years. Thus, while individual problems may still occur, the overall care quality in Taiwan has improved significantly over the past decade in terms of system and structure.

As long-term care facilities rapidly emerge in the market, chaos is inevitable. A common concern is whether commercialization will harm care quality. In reality, quality and profit are not inherently at odds; they can even complement each other.

All organizations need surplus to sustain operations. The difference lies in that non-profit organizations use surplus as a tool for sustainability and quality maintenance without maximizing profits, while profit organizations, due to shareholder pressure, tend to maximize profits. When quality and profit are in a tug-of-war, which side will the scale tip towards? This requires clear prioritization of values and management principles. With clear value guidance, the organization can make stable decisions in balance.

Value-based Management Could Be the Solution

The late management guru Peter Drucker proposed “value-based management,” offering a solution. He believed that every organization must establish a “single most important value”. For example, we often simultaneously pursue goals like innovation, growth, quality, profit, and employee welfare. However, without a clear ranking, when conflicts arise, it becomes challenging for the organization to operate consistently. Once the “single value” is determined, strategies, systems, staffing, and organizational culture can all integrate and develop around this value, making management more stable and predictable.

One familiar example is Yamato Transport in Japan, originally a small company serving only the Kansai region in the 1980s, facing frequent accidents and financial difficulties, nearly bankrupt. They reformed to become the major logistics and parcel delivery group they are today. Their first step in reform was determining their single value: “Safety first, everything else second.”

The company’s original motto was “Efficiency first, safety prioritized,” but these coexisting priorities were impractical and merely slogans. By abolishing demands for speed and efficiency and re-establishing “safety first” as their operational value, they required all employees to prioritize safety. The results were a reduction in accident rates, lowered costs for handling errors, higher punctuality in deliveries, and improved service attitudes due to reduced pressure.

This case illustrates that when an organization has clear core values and manages its operations around them, quality, efficiency, and profits can coexist.

Establish the Company’s Value to Develop a Sustainable Culture

To implement value-driven management, the first step is to establish shared values endorsed by all employees. This is not merely a concept but forms the basis of internal systems, decision-making, and culture, which is the core idea of the “McKinsey 7S Framework”:

The 7 S’s include: Strategy, Structure, Style, Systems, Staff, Skills, and Shared Values. Shared values are central, serving as the core and soul of the entire operation.

McKinsey 7S Framework

These seven aspects interact with each other. As long as the central value is clear, all other management aspects can be effectively adjusted and integrated, thus achieving stability and growth.

The long-term care market in Taiwan is increasingly competitive. The “easy business” landscape of the past has disappeared. The market seems large, but is highly regulated and faces structural vulnerabilities with increasing demand, weaker supply capacity, and payment ability. In such an environment, organizations prioritizing profit will struggle to adapt to future challenges. Establishing a “single and highest shared value” to guide strategies and systems will enable the organization to balance quality and profit for sustainable management.