Theater and Healthcare: Two Industries That Aren't Just About Money
Have you head the old joke about the theater business, the one that says you can make a killing, but you can’t make a living? I ran across it last week on the Freakonomic podcast, where Stephen Dubner used the Broadway smash hit Stereophonic as a springboard to an episode on the economics of the theater industry. It got me thinking about all the ways in which both healthcare and theater function as businesses, even though making money isn't the point of either one.
As an aside, I’ve seen more plays in the past two years of living in West London than in my 5+ decades of life before that. I’ve seen big, splashy Disney productions (Lion King, Frozen), small experimental pieces, and lots in between. Musical, mystery, comedy, drama, musical mystery comedy— all of which I’ve enjoyed. I might clarify that my spouse and I almost never pay full price. The TodayTix app offers daily lotteries for last minute tickets, usually around £25 for seats that normally sell for many times that amount. Plus, West End tickets are on average only about half the price of the same shows on Broadway. So if you like theater/theatre, and you’re not wealthy, London is your place.
Getting back to the heathcare comparison, here’s my list of similarities between the two industries.
- Most actors and directors, like doctors and nurses, picked this career in spite of the money, not because of it. Freakonomics’ Stephen Dubner interviewed an actor from Stereophonic who is making $5K/week pre-tax, which might sound like a lot until you add in the cost of living in NYC, paying 20% to his agent, and paying a publicist. So he’s actually just barely making enough to get by, even though he's a Tony-nominated actor in a Tony-winning play.
- Public and philanthropic funders play an important role alongside traditional investors. One podcast interviewee suggested that even traditional investors are motivated by more than the financial return (he called it “Commercial philanthropy”).
- Governments sometimes treat the arts — and healthcare — as if it should be a pure business, which isn’t helpful. Tony Moore is a musician we know here in London, an old-school rocker and a veteran of both Iron Maiden and Cutting Crew (“I just died in your arms tonight”). When COVID-19 hit in 2020, then-chancellor of the exchequer/former investment banker Rishi Sunak hinted that it was time for professional artists in the UK to look for “new opportunities.” Tony, to the benefit of his fans, rejected this advice and spent the next 9 months putting on free nightly Zoom concerts. Just as with healthcare, some parts of the industry can thrive in a free market, but not everything in the arts can or should be expected to make a profit.
- When you get the right mix of people and resources in one geographic location, like in NYC or London for theater, or Intermountain Healthcare’s Informatics Department of the 1980s (where I got my own start in healthcare), magic happens.
- Costs can spiral out of control if you’re not careful, though, and threaten to ruin that magic. One of the Freakonomics interviewees was a major producer of NYC and the West End plays, and she claimed that production costs are five times higher in New York versus London. The poster child for this was "Spiderman: Turn off the Dark" whose costs reportedly hit $75M before the first ticket was sold. You just can’t spend that kind of money when you’re dealing with live shows with fewer than 2000 audience members per show; the numbers won’t ever balance.
- Human labor makes up a huge part of the cost structure, which severely limits economies of scale. Silicon Valley is full of tech entrepreneurs looking to use AI and other tech to disrupt healthcare, but what these people don’t realise is that when you cut live humans (doctors, nurses) out of the loop, what you’ve achieved is something that isn’t a direct replacement. In the entertainment world, by analogy, Netflix is great, but it’s cable TV that Netflix is disrupting, not theater.
So, to summarise: Both healthcare and theater have to deal with business realities. Both have to spend less money than they bring in. At the same time, both industries are about much more than just money, and any attempts to reduce them to pure profit-maximising enterprises are ultimately doomed.