COBRA Health Insurance: Strategies and the Stimulus Package

COBRA is another one of those things that sound much cooler than it really is. It's 1986 piece of legislation that allows you to continue coverage on your employer's health insurance for up to 18 months after leaving that employer. However, you pay the full premium. COBRA stands for Consolidated Omnibus Budget Reconciliation Act as it was actually a budget bill. The employer health insurance extension was just a small piece that has been named for the entire budget bill.

COBRA has made the news recently as part of the Obama administration economic stimulus package. First, let me digress by commenting does anyone else have to refrain from giggling whenever they see broadcasters talking about a "stimulus package" with a very serious tone? Whoever thought that all this talk about stimulating packages referred to economic policy and not a by the hour hotel rooms?

The article describes how the stimulus package (giggle giggle) would pay 65% of the employer premiums for people who are on COBRA for 9-12 months. The article mentions that only 9% of people who are eligible for COBRA sign up since it can be expensive. Subsidizing health insurance helps break the cycle of people losing their insurance when they lose their job and can make a government program work better.

At face value, it looks like a gift to the insurance companies and crowding out private options. However, when you look at the economics, it makes more sense as it is priced to benefit those who need it the most. Employer insurance policies are fairly comprehensive plans and average $600/month and the 35% that someone would pay is $210. My company's individual insurance premiums average around $195 so an individual option is still cheaper for someone who wants to pursue that option. The price of individual plans varies by age so a younger person can easily get a plan for under a $100.
Therefore, someone who would pay $210 when there are cheaper options available would probably 1) not qualify for the individual plan since they wouldn't pass the health screen or 2) really need the more comprehensive coverage. The 65% subsidy makes the plan affordable for those who need it and don't have other options in our dysfunctional individual insurance market.

There is the question of what an insurance subsidy is doing in a stimulus package. Health care is being framed as an economic issue and on a basic level, if someone has to spend all their money on health care, they are not spending in other areas or saving money. For those who argue that this is yet another step towards government taking over health care, I'll point out that the government is already involved in at least 20% of the health insurance industry with Medicaid and Medicare. Employers are looking to get out of the business of offering health care so the government's role will increase.

For those who don't need a comprehensive insurance plan, COBRA is a free 3.5 month option to buy the comprehensive insurance when you need it. United Health care offered a $40 per month option to buy insurance when you needed it. For someone who would be without insurance for a summer in between graduation and starting work and doesn't plan to go to the doctor or have regular prescriptions that are usually covered, they can hold on to this option to buy whenever they need it. Here's how it works.

You have 60 days to tell your employer (or whoever administers their COBRA) that you want COBRA or not. Once you tell the employer that you want COBRA, you have 45 days to pay the first premium. So you can wait 59 days, tell the employer you want COBRA and than wait 45 days to pay for it. That's the 104 day or 3.5 month option. You can also activate your COBRA at anytime. If you haven't notified your employer within the first 60 days but get trampled by a herd of yaks on day 30, you can notify the COBRA administrator while you're in the hospital and get coverage. But once you start using COBRA you have to pay the premiums or then you can look for a cheaper plan.

Anyone who just needs an emergency option for insurance can do that with COBRA. This works best for folks who are leaving work and taking a few months off before starting school.

Competitive Intelligence (CI): Think like your Competitor and War Gaming

This morning, I attended a quarterly breakfast meeting of the Oregon Chapter of the Society of Competitive Intelligence. Competitive Intelligence has become one of my default job responsibilities and it's also one of the cooler sounding parts of my job. When I say that I work in product development for health insurance, people always wonder what a health insurance product is. In case anyone is curious, a product is any type of health insurance plan such as an individual plan with a $1000 deductible and a buy one colonoscopy get another one free option. I really think the idea of a 2 for 1 colonoscopy has traction.

Back to the post at hand, my competitive intelligence responsibilities include reviewing the quarterly financial filings of other insurance carriers, analyzing market share by product line, and working with the sales teams on gathering market buzz. I also test our competitors by applying to their plans and attending their presentations. However, SCIP has provided a structured way for me to think about my intelligence gathering and also how to use cool terms like "War Gaming". This was explained at the breakfast meeting today and other topics such as:

War Gaming: is term used by Mark Chussil, who is the founder of Advanced Competitive Strategies, Inc. It is an approach where rather than thinking about how you would respond to competitors, you put yourself in a competitors position and think about their approach or what they would do. As Mark describes it, it can be as simple as sitting around and asking, "What do you think they would do?", "I don't know what do you think?" For me, the beauty of it is that it can be a simple change of perspective to gain new insight. Rather than look at past data to see what happened, you guess what you think someone will do in the future.

One of our Medicare competitors had some very successful high end plans (or products) and if we had put ourselves in their position, we would have realized their next logical step would be to launch a low priced product to reach a new segment and hedge for any economic down turns. That's exactly what they did. This approach breaks down insular thinking and it's fun to pretend you're someone else and role play, especially for us former Dungeons and Dragons players.

Job Descriptions: This is an even simpler tool but looking at what job positions your competitor is posting is a way to look at their future strategies. Are they hiring construction project managers? Probably building something new. Hiring a new VP? Someone probably left or they are adding a new department. Some companies will even detail the business objectives in a position with beauties like, "Hiring new position to launch a $x strategic initiative that will launch product line Y."

The Business Case for Competitive Intelligence: Cool terms like War Gaming, Competitive Intelligence, and Hit Points (sorry lapsing into Dungeons and Dragons again) will get you at least 6 months but eventually someone is going to ask for the ROI on your CI. The best calculation that I heard was that competitive intelligence improves your odds of successful product launches, getting new accounts, maintaining business, or other strategic initiatives. Improving the odds of a successful $1 million product launch by 10% is worth $100,000.

Two Non Insurance Parts of Health Care Reform

Bob Laszewski had an excellent blog post about some of the aspects of health care reform that we don't think about. They don't require transforming the system but rather are important adjustments that are needed regardless of what kind of health system we have. These are not easy adjustments or really "shovel ready" as he describes but compared to universal health coverage, they are more like the 80 pound primates. Two adjustments that I want to address are making primary care sexier and data.

Primary Care: making it sexier
I'm not talking about making primary care appointments like Thai massage with an option for a "happy ending". Right now, primary care physicians are only 30% of practicing physicians while specialty care makes up 70%. These numbers are the reverse in other countries. Our local medical school, Oregon Health and Sciences only graduated 10 primary care physicians last year. While we can give everyone health insurance, if there are not sufficient primary care physicians, we cannot give everyone efficient health care.
From remembering conversations with our pre-med classmates, we can all imagine why those who enter primary care are only the ones who are really passionate about it. Doctors are smart and follow the data. They see hours, lifestyle, prestige, and earnings and primary care doesn't pencil out compared to some specialty care. That's why so many people become urologists or opthamologists. The penis and eyeballs are not that exciting, well the first one cannot really be called unexciting, but that's a different topic. Instead, rather than deep passions for those parts of the bodies, classmates see lucrative careers with manageable hours.
The residency programs will follow supply and demand so if the health care industry makes primary care exciting where primary care physicians are every mother's nightmare but every school boy's dream, the medical students will follow. Costs for primary care visits have not increased more than the cost of inflation which makes them an efficient method of managing health. Give primary care physicians more control over the health care dollar and specialists less. When I present this proposal, I get asked if someone really needs to go to a primary care physician when they know that their throbbing shoulder should really be seen by a specialist. It befuddles me that someone thinks they know better than someone who studied the body for 7 years and that someone thinks they can bypass a general physicians because they can identify the specialist most appropriate for them. To me, it's like telling a teacher that they will not come to school on Fridays since they have identified a curriculum that they think is better suited to their educational needs.

Data: this is the Highlander's Sword
While in the classic movie series, "The Highlander" in the end there can only be one, there will be multiple winners in the roller derby of health care reform. I'm going to stop with the 80's culture references now. As I have posted before, health insurance companies have the best data which is why despite being as popular as plantars warts in a yoga class, the insurance industry will not disappear. Health insurance companies have the population data to measure the outcomes, the holy grail of health care reform and the cost data to know how to operate their business. Physicians don't staff for this kind of data. Hospitals have become too complicated and their charge master work around billed charges to maximize insurance revenue has made their pricing as vague as a lot of Dennis Miller references. Billed charges for hospitals is unfortunately a meaningless number. The story of pharmaceutical and medical devices companies is low marginal costs but high prices in order to recoup research and development which is a tough cost structure to defend. Insurance companies know their administrative expenses well, their medical costs, and their revenue and have the data to defend it. Other players in the health care industry do not.
In the blog post that I linked to, Laszewski does ask why health insurance companies don't share that data as that would truly benefit the health system. Doctors would get reports on their patient care and hospitals could get a better feel for their cost data. It's a good point as that would benefit all. However, currently health insurance companies are refining their data capacities as a competitive advantage to show improved health outcomes and improve provider network outcomes by rewarding those providers who demonstrate good outcomes. The data is a potential revenue generator. If sharing data or reporting in a certain universal fashion becomes a mandate, than it is no longer a potential revenue generator but a cost of doing business. Goal of any business is to drive costs down which will limit the investment in data (except to reduce costs).

The One Job that I Truly Loved

In my last post, I drove over the TMI (Too Much Information) line and didn't really back up with my comments about Sperm Banks and Team 88 million during my first ascent of Mt Hood. In my humble opinion, one really can't casually mention sperm banks and specific sperm count (88 million) and not offer additional comments. Well, I am kind of begging for someone to ask for more comments almost like when someone casually mentions that they remember the late 60's. While being paid to give bodily fluids doesn't usually fall into the post-MBA experience category, the MBA career path can take many twists and turns. I am sure that I can't be the first MBA to do it and won't be the last.

Since you asked (or at least are still reading), I was a sperm donor for about 9 months. I did get a milestone payment so I was a professional but I never went on the market due to some silly FDA rule. The best response that I got about my profession was:

"Wow, you are the one person that I know who truly loves their job and you make money hand over fist. But after a hard day's work, what do you do to relax when you get home?"

Here are some other questions that I have been asked about being a sperm donor:

Is it hard- er I mean difficult to get selected? The tricky part is that your family history can change at any time which would eliminate you as a candidate. If anyone in your immediate family gets diagnosed with cancer or a chronic disease, your DNA changes. You also have to be appealing to someone selecting a donor. However, with my Ivy League educated background and especially being Jewish, I was fast tracked.

What are the donation rooms like? They are like the doctor offices where you have exams only one drawer is filled with some porn magazines. There is also a two way cabinet where you leave your donation. Otherwise, it's just like a doctor office. I was slightly concerned that an unintended consequence of my work would be that I would get aroused every time I went to the doctor.

Don't you have to abstain for a certain period of time before giving at the office? 48 hours but it varies based on how quickly you can replenish your supply. I had just started dating my wife around this time period so this was really tough. That's how I learned that 88 million was an acceptable sperm count because I didn't always meet that threshold.

Did you get to meet any of your co-workers? I did not and that's one thing that kind of disappointed me. Although we probably wouldn't shake hands with each other, there was ample opportunity for conversation topics and have some form of community.

What's this profile that people use to pick a donor? Marketing is important to help position brands of tooth paste so it's definitely important to position someone's future offspring. The sperm bank had a social worker interview me and we carefully reviewed my profile to emphasize talents and show my flattering side. This profile was posted on a website that recipients could peruse. It also had to be anonymous but this profile was so good that it could have been used for my on-line dating profile.

The toughest question that I had to answer was, "Why do you want to be a sperm donor?" Others had written some really heart felt responses about the importance of children or wanting to help other fulfill their dreams of starting a family. I realized that writing, "He heh heh heh, you said sperm, heh heh heh" wasn't going to cut it.

How many times can you be selected? There are rules around how many different parents can select a donor. If I remember, it was about 9 so there was no building of future empires. The rule was derived mainly to limit the number of times two kids would fall in love only to discover that they were related.

The Sperm bank used to be located right next to the medical school. That made it really easy to get donors and probably might have really distracted some students during lab (or maybe it relaxed them, either way I just hope that they washed their hands).

Fair readers (or any who are still left), anyone have bodily fluid donation experiences that you would like to share?

Our Fair City's Guardian: Mt Hood

You can see Mt Hood, an 11,235 foot peak, from a surprising number of spots around Portland. Mt St Helens also makes an appearance with it's distinct flat dome that's slowly rebuilding the top that was blown off in 1980. Those 2 peaks as well as Mt Adams make up the Guardian Peaks. The story that ties those peaks together is a Native American legend that has a few versions but essentially involves a love triangle with Mt Adams and Mt Hood competing for the affections of Mt St Helens. It did not end well for the lovers were smitten in place for eternity. The symbol of a smoldering, lava-spewing volcano is a very appropriate for a star crossed lover.

I took this photo above which shows the east side of Mt Hood. The south side to the left is the most popular climbing route. The 3 climbers who received national media attention in December 2006 climbed up the steeper north route. With respect to the climbers, Mt Hood does have many faces, not just the inhospitable one.

We made it out to the Mt Hood area for the first time this season which is what got me thinking about the peak. We snow shoed around a popular area called Trillium Lake which has enough open areas to give a perfect view of the south side of Mt Hood with all of its features. I also see Mt Hood on most clear days when I leave the western suburb where I work. It looms behind one of the downtown towers and than shows up again when I cross the bridge on the way home. It's a comforting reminder that in the city, the mountains are never far away.

I consider myself to be a mountineer because it makes me sound tough and every guy wants some ability to claim that they haven't grown completely soft. The mountains nearby made mountineering really appealing so I don't have to start doing mixed martial arts or practice survival skills. The mountineering also gives me some training goals to always shoot for. For my Mt Baker climb, I used a work stair master while wearing a backpack with a 45 pound weight. It took my co-workers a month to muster the courage to ask me about this unusual exercise routine.

The picture to the right is both really spectacular and shows the south side climbing route that I've done twice. It reminds me of my 3 favorite experience with Mt Hood which were:

1. First Ascent: On my 31st birthday, a crew that I played Ultimate Frisbee and I headed out for most of our 1st climb. We knew just enough to be dangerous as only one of us had climbed it before. Our team was dubbed "88 million" after the typical sperm count that makes up one serving at a sperm bank (which is another story all together :). Two climbers who had done all 3 Guardian Peaks within 48 hours stormed past us on the way up. We almost got turned back by the fog but just as we had given up, we hiked through it and saw a clear sky which gave us the 2nd wind. It was my first ascent of Hood and you never forget your first.
2. Snow Climbing: Three years later, I had gotten more serious and took a climbing class with the Mazamas, a volunteer outdoor group. We had found a 20 foot wall of snow that had melted out where we practiced climbing, rappelling, using our ice axes, and setting anchors. One our teammate fell through the soft snow, blew out 3 anchors, and slammed into a rock wall on the bottom which ended the playful mood and made us realize that we had to be serious. He was all right and we resumed snow climbing up some pretty vertical walls. It made me realize that I had gotten pretty serious about climbing as I spent a Saturday simulating climbing. It was also a lot of fun, kind of an adult play ground.
3. Teaching how to fall: The lower part of the south side is often used by Mazamas for early trainings on how to travel in the snow which includes self-arrest for a rope team that falls. Luckily, the most spectacular falls that I have seen were only during this training. One involved a rope team of 4 Intro to climbing students. As the team hiked on the edge of a cornice close to a steep snow wall, a co-leader grabbed the rope and took a running leap off the cornice and dropped at least 10 feet to the snow below. It was an incredible self-sacrific for an authentic falling experience. Everyone dug their ice axes into the ice in time. The 2nd incredible fall was one that I created. We were hiking up a canyon below a parking lot (training areas weren't really great view but effective for the conditions) when a leader instructed me to fall. I took a running leap and flipped the person ahead of me onto his back. He caught himself with his ice axe but that was one of the few times this individual was speechless.
   
   
   
   

Segment Me: Even the Government is telling Health Plans about it

One of the biggest goals of a good product portfolio is a well-segmented product suite. If you're going to offer more than 1 widget, ideally it would appeal to a different type of purchaser that looks for different features. A goat herder who sells goat milk would appeal to more customers if they get chicken and sold eggs rather than getting yaks and selling more yak milk. In case any reader is curious, yaks do make milk and it tends to be higher in fat and creamier. Did you also know that yaks are called "grunting ox" and can climb as high as 20,000 feet? All right, I'll stop. I went over a month without any animal husbandry posts and as you can tell, that was too long.

My insurance company had previously been more rudimentary in its segmentation. We would offer an expensive HMO plan and a cheaper HMO plan and just focus on price. However, there are people who would rather lick an ash tray than join an HMO so that only broadened our appeal by so much. Even the federal government in the form of CMS is getting the idea of segmentation. They recently released a call letter for everyone involved in the private Medicare world that told us as much:

[Private Medicare Plans] must eliminate those Medicare Advantage (MA) and Prescript Drug plans that are substantially duplicative in terms of cost sharing, provider networks, and benefit design, including Part D offerings,” CMS said in the draft letter. “It is expected that the cooperation of private plans in this matter will help beneficiaries to select the MA plan that best suits their needs.”

In other words, don't flood the market with just different versions of the same animal by-product to make it seem like you have a lot of plans to choose from when it's all just the same sausage.

Other industries are farther ahead of health insurance in terms of segments and developing products that match segments. For Medicare, all we have essentially come up with so far is cheap/expensive and limited provider choice (HMO) and lots of provider choice (PPO).

For our individual commercial plans, we're a little better. Just in case you're trying to figure out why I only talk about individual or Medicare plans, it's because that's what I am in charge of. I get to ignore the whole employer group segment. For individual, we use age and figure what kind of benefits or features would each age band would want. We're trying to figure out what consumers value and would pay more money for in terms of plan features. State requirements for certain type of features get in the way but we still have a lot of opportunity. Here are some of the thoughts that we have for segmenting our individual plans:

1. Drugs and who needs them? Prescription drug coverage is a significant cost and for anyone who is not on regular prescriptions, they would not value drug coverage for the price that they would. I see a split by with and without drugs which is kind of how a lot of people view the world. Some things are just better with drugs but I digress.
   


2. Catastrophic coverage? Another significant part of the health plan price or premium is what we call the out of pocket maximum. That is the most that would ever have to pay for health care in a year and it can be anywhere from $2,500 to $10,000. For some, knowing that you won't ever have to pay more than $X is very re-assuring. For some, their only projected health care expenses are a doctor's visit, a bottle of Advil, and a packet of cue tips so this thousands of dollars of out of pocket maximum is meaningless. I do wonder how many people really even look at this.
3. Is is just the message? I wonder if the we'll reach different segments not with new features of insurance plans but more deciding what features we call out. Would we point out that for a $20 copay you can see any number of Ear, Nose, and Throat doctors in order to appeal to the musicians? Do we point out the accident benefit and Emergency Room copay for the extreme sports people? These are all pretty common features of health plans that aren't always obvious unless you look at the details. Do we just need to do a better job of pointing out relative information?

Would any readers let me know what they think would be the most valuable feature of health insurance for them? Or what do you think are some of the largest segments of individual health insurance purchasers?

Spare any change?

The Oregon Health Forum sponsored a summit recently and it's subsequent write up started with "The health care industry is outdated because it hasn’t kept pace with change."

I also met with a senior leader at my organization who noted that the health care industry has been just admiring the scope of the problem around our large aging population for about 2 years. However, we haven't moved past admiring the problem.

Both approaches were different ways of describing how health care organizations have not changed in terms of keeping up with trends or addressing chronic problems. Change is hard and someone has to really be motivated to change. The health care industry has had little incentive to change until recently. Everyone usually got pay increases above inflation. No new disruptive forces emerged as concierge medicine or retail clinics didn't really displace any large players. The market kept growing as demand showed no sign of abating. If I got continually rewarded for doing the same thing that I always did, I wouldn't change either. Health care was living in a world where marginal return hasn't change as the 82nd slice of pizza tasted just as good as the first slice.

Now we're fighting for pizza with other countries with medical tourism and realizing that our pizza buffet is no longer being paid for by someone else. Change will be coming and it won't be any easier.

Changing organizational behavior is one of those things that every MBA needs to know how to do but you really can't teach in a class. I've recently had some success in my organization with promoting change. After years of debating on whether or not to enter a new line of business that would change the nature of our health plan model, I pushed us over the edge and we made a decision to go forward with this change. The committee that I led which made the change recommendation celebrated with a bagel fest and I will further the celebration with my blog post of how I created change. We're going to need a lot of it soon.

If you don't get the answer you want first, ask at least 4 more times. Our provider contracting team was a key piece. They had heard about this idea for a while, they didn't see how it would work, and would repeatedly ask for answers to their questions. While their concerns were legitimate, a lot of change efforts have been stalled under the weight of endless questions. I answered all their questions, gave them numerous white papers to share with providers, and kept checking back with them. They realized that I wasn't going to stop asking until we drove the question to its final conclusion about whether or not providers would participate.

I saw answers to the provider contracting concerns. However, answering their concerns once or twice or even three times was not enough to address them and move down the change process. Four times was the magic number. I'll admit that four times was also my limit.

Bring in senior leadership early and involve them. Senior leaders need time to digest change because they will be on the front line if anything goes wrong. They need to be involved to be comfortable and your team needs to see that they are engaged to realize this is important. As I outlined above, they need to hear about it 4 times to be convinced.

Talk to the customer. Nothing trumps any concern like saying, "I talked with our end customer and here's what they said".

Set a schedule for milestones with a hard deadline. Nothing can delay change like having yet another meeting to double check with one more group of stakeholders or gather another piece of information. I made the milestone decision schedule clear and that deciding not to make a decision was in fact a No decision. Inaction was not a part of the process or part of the feasibility but another way of saying no. To help cut off the inactivity route, I answered all questions and also had a deadline for requesting new information.

Change is a humbling experience so this might be the last time that I can happily chronicle a successful change project. For any readers who care to comment, what have been your change success stories and what do you think the key factors were?

Understanding the focus of Health Care Reform

I've learned to be more careful about focusing on the true end goal of health care reform. Often, it's phrased as health insurance for all. However, the end goal should be health care for all and ultimately health for all. Focusing on the wrong end goal doesn't just happen in health care as a Penelope Trunk blog post demonstrated. The post called "High Income women get more oral sex" focused on how income and other characteristics should lead to wealthier women getting down (on) more, so to speak. I felt the post missed the point as it focused on the wrong end goal. With any kind of sex, the goal is to have an orgasm (or is for most I shouldn't generalize). However the orgasm is achieved is really besides the point. Picking oral sex as a goal was picking the means rather than the end.

A Health Affairs article (paid subscription required) article succinctly phrased this framing of the question as "the conflation of health, health care, and health insurance". They are connected but not the same. Health insurance is simply a mechanizing for paying for health care by pooling money upfront and paying it out to those who need health care. The ultimate goal is that everyone can get health care and be healthy. Massachusetts reform demonstrated this as more people had health insurance but there wasn't enough primary care physicians to give everyone health care.

An article by Scott Gottlieb, a former CMS official wrote a recent article that further demonstrated the difference between paying for health insurance and paying for health care. He critiqued the Obama administration's proposed stimulus plan of providing more funding to the states for Medicaid, the health insurance program for the poor. However, outcomes for recipients of Medicaid have been demonstrated through research to be much poorer than the general population due to byzantine rules and reimbursement that didn't reward quality care. With demographic variables controlled, Medicaid bought worse health outcomes than other insurance programs. The following quote summarizes the main point:

"Insurance coverage has become the end itself, with states spreading resources widely but thinly -- without enough attention to the quality of care, accessibility, or whether coverage was actually improving health. States have no obligation to rigorously measure health outcomes in order to qualify for more federal money."

I used to work in the county health department that mostly saw Medicaid recipients so this was a tough article to read. However, the point of not investing more in a program that produces worse health outcomes for the dollar is an important one. Rather than invest in more health insurance, there should be investment in better health care.

Hopefully, we will have a vigorous national health care debate this year so it's important to remember what the end goal is. The focus will be on paying for health care but insurance should be viewed as just a vehicle and not the end goal.

The Business Week Forum: A Community Remembered

I received some good news from my business school clients recently. I worked with 4 clients this year on their essays and this is the 2nd one to be accepted by one of their top choice in this difficult year. A 3rd client got an interview at his top school but I haven't heard the results and the 4th is still waiting for news.

This MBA news got me thinking about my early days as a new MBA. Shortly after graduation, I got involved my the first on-line community and you know how they say that you never forget your first. This on-line community was the rough and tumble world of the Business Week Forum (BWF) that funneled Type A personalities, the unbearable anxiety of the application process due to a lack of direct control, some very smart people, and some very twisted and strong personalities all of whom were in front of computers most of the day and either spilled their worlds into BWF or used BWF to build their own alternative worlds.

BWF was sponsored by BusinessWeek magazine and became the main message boards for MBA applicants, current students, admission consultants, groupies, and alumni. It's peak was probably around 1999-2001 when the Princeton Review's message board was undone by it's donkey powered technology platform. I joined the fun in 2003-2005 as a truth speaking quirky alumni that preached balance, humility, lots of animal husbandry jokes, and a more holistic approach to selecting schools or careers. As someone who had already graduated from a fancy MBA school, I got to be the nicer guy in the fraternity who made it through hazing unscathed enough to try to help the pledges rather than crushing their spirits.

Through about 2005, Business Week Forum had a strong sense of community. Enough of us realized that behind user names like Lawstudly, Maleinrebate, and Classynfun were real people that we would likely meet at school or out in the business world in our overcharged networking enthusiasm. Community norms and rules were set like not to ask people their GMAT scores as though that was the key data point to unlock mysteries of the admission process. New admissions consultants with yahoo or hot email addresses and questionable credentials were virtually poked and prodded (and I'm not talking about a Facebook poke). We also thought that we were really funny and clever. I mean really clever. We'd argue politics, whether Air America radio would survive, or whether Transformers would beat Gobots in a fight or post images of a wholesome 50's style mother preparing fresh vegetables for dinner under the post title "Tossing Salad". We also felt smarter as we learned from other posters what the Indian Institute of Technology (IIT) schools were and we even had a feel of which were the best IIT's or a graduate of those school was an IITian. Would also feel altruistic as occasionally, we would try to help someone weigh the pros and cons of their school choice, whether to take a job in a new field, or if their coworker was really attracted to them or not.

The only draw back of this community is others thought we like Dungeons and Dragon's geeks (of which I played until junior high) when we talked abour on-line friends or bragged about how clever we with our on-line posts. However, on BWF, we also questioned whether we were really a community or just all avoiding reality together.

I did meet quite a few of few of the BWF posters in real life and found that people pretty much are who they say they are on-line. Their on-line personalities might different. For example, Classyfun, who said she modeled, really looked like a model but Lawstudly, who had such an insanely different view of the world that some thought he was a hyperactive 16 year old who drank a gallon of Mountain Dew Code Red before posting, was really a very calm, unassuming guy.

Around 2006, the community notion started to disappear. BWF became more transactional with more posts about tell me what you know and don't waste time speculating where was the best school for late 20's MBA's to hook up with undergrads. Applicants started to spend more time on the school's message boards where they could get more factual information and audition for the admissions committee and school's students. The posters seemed to forget that the other posters were potential classmates or coworkers. There was less interest in anyone's personal life and harsher posts. There was still some banter but it was more about getting through the application process together and less about exploring interests, politics, or favorite childhood toys. The current BWF moderator tries to recreate the community by posting questions and creating discussion but response is very half-hearted.

Around this same time that the sense of community disipated, BWF did an overhaul of the message board's platform. The new version was slower, had no new functionality, and had more space for ads. Reception was comparable to the the New Coke rollout and the moderator tried to serve as a liason for posters between unininterested developers who did their best to avoid answering questions by answering every single request with a "What browser version are you using?" Corrections were slow, feedback was given the corporate equivalent of "Let's put that in the Parking Lot for later", and posting activity dropped. Attitudes were changing already but the technology switched accelerated the process.

BWF was very good to me as I made some real friends and got involved in the admission consultant business. As we search for communities, both physical and on-line, I did miss it and wondered why it declined when technology use was growing as well as interest in MBA programs. I think that the growth of other school message boards gave the outlet for advice on the business school application process and social networking sites gave an outlet for finding friends. A site that somewhat combined both got squeezed out.

I think that I also miss it because I was really really funny and clever on that site. Honest, I really was much funnier there than I am on this blog. I mean- like-people-sprayed-their-sodas-on-their-key-boards-out-of-their-nose funny. Realy, I mean it. Okay no one else who wasn't on the BWF believed me either.

US Health Care Industry: Picturing the Obituary

One safety technique that we use in climbing before deciding on a particular route, crevasse passage, or even whether or to head out at all is to picture your obituary if you had an accident. If it starts with "Completely unprepared climber heads right off a cliff" or "Meteorology-challenged climber decides to ascend despite typhoon-like conditions and horizontal snow fall", than that's generally a sign to save your climb for another day.

The Washington Post put together a very comprehensive article about AIG's near death experience that I found on The Health Care Blog. Not an obituary but definitely a post-postmortem. The story of how the credit default swap business led to AIG negotiating with death contained the following elements that have been a common thread in the recent demise of financial companies.

1. Experts built a computer program that could use decades of data to model financial instruments that were risk-free by hedging these instruments. However, the financial world changed and the existing data (corporate debt) did not account for the new instruments based on consumer debt.
2. These amount of dollars involved in these instruments (credit default swaps) started to resemble the GDP's of nations.
3. The company started to really think that these financial instruments were really risk free.

However, AIG's obituary wasn't the story of rogue employees or the climbing equivalent of deciding to descend a mountain by sledding down an icy glacier with numerous holes. They kept their controls in place but didn't recalibrate their assumptions as conditions changed.

This story led me to think about the postmortem or obituary of the US health care industry as it is streaking to an increasingly unsustainable position. Who are the rogue traders going to be, what assumptions is the industry going to miss, or what is going to be that moment that causes future business school students to giggle about the ineptitude when the case study is read? Is the industry going to look like climbers who got lost in the parking lot or like careful practitioners who just got hit by a surprise weather storm or freak piece of falling ice?

While letting risk or leverage get out of control was the financial firms downfall, the health care industry's downfall will likely be the increasing costs or the prices the industry charges. The obituary will be something like, "Did you really think that people were going to pay that much forever?" Here's the candidates for havnig that inscription on their tombstone.

Health Insurance Companies: Currently, it looks like health insurance companies would have their graves descreated as they are about as popular as a cold sore outbreak. However, the insurance premiums are just the lipstick on the pig as carriers have the data to show that the costs are from health care delivery. A local health reform group, called the Archimedes Movement recently blogged about the how health insurance companies spend 30% of premium dollars on administrative costs and profits, listing Ted Kennedy as a source. I recently pulled the financial filings from the Oregon Insurance Division for all local carriers through 2008 Q3 and saw that only 9.6% of premium dollars was spent on administrative costs. When you add in the total margin in operating dollars for all carriers, it's 0.6%. If you believe Teddy Kennedy's 30%, I've got a bridge for you to drive off.

We need health insurance companies to pay claims, figure out who gets paid what, enroll members, and answer questions that everyone has. While their role will probably be diminished in the afterlife of the US health care industry, they are not the rogue trader. Insurance companies administrative costs are not as exorbitant as claimed, someone needs to be the information intermediary, and they have the best data so they will be able to better tell the story.

Hospitals: The fees that hospitals charge are based on how much money they need to run their facilities not how much the market has valued their services. Since hospitals can't negotiate with government payers like Medicare, they negotiate with private insurance companies based on how much they need. There has been enough consolidation that the hospitals that are left can get paid what they ask for. However, if asked to demonstrate why they need to get paid what they do and why their services are worth the cost, a hospital would have little data. Without any data and costs that are receiving more and more public scrutiny, hospitals are not in a good position.

If some single payer enity, asked all of the hospitals what they should get paid for a service, that entity would get a wide range of prices, limited data to support those prices, and no explanation for the variation other than "we have sicker patients". That is what could make hospitals very vulnerable to an unflattering obituary.

Pharmaceutical Companies: There was a very interesting New York Times article a few months ago about how earlier generation, old school hypertension medication was just as effective as the new fancier, blinged out versions. A government study came to that conclusion and the pharmaceutical companies responded by ramping up their lobbying and marketing might to defend, discredit, and suppress the information. Well, that's according to the New York Times who can really sharpen their talons on any industry to claw out some choice pieces of meat. However, the response from the drug companies does sound logical to me. They are very good at marketing and spreading their message since they have to be in order to get providers and consumers to understand the differences between all the drugs in a various class.

Parmaceutical companies have a difficult cost structure to defend since it cost pennies to make their pills but they price has to pay back all the research and marketing over the life of its patent before revenue drops when drugs reach generic status. This structure makes it very beneficial to retain patent protection and stave off generics for as long as possible which may lead to some questionable practices. I think that there are some skeletons in the closet which would be very hard to defend if they came to light and could really dance around the tombstones of this industry.

Conclusion: I believe that the entities above are the prime candidates to be crucified for the current health care systematic deficiencies, issues, and other break downs. Overall, the hospital industry is the biggest and has the toughest sins around cost to defend which is why they may take fall and have the worst obituary written. Now, all these entities do play an important role in health care, have made some great contributions, and they will continue to play a role in some form. However, from reading the AIG article, when there is a collapse of any industry, an obituary will be written. The grave dancers will outnumber the givers of eulogies. None of us look very good laid out on a medical examiner table.

WHIVP Consulting to Capetown, South Africa: The Final Act and Other Thoughts

For New Year's day we ate nothing but simple carbohydrates and sugar until about 3:00 so 2009 started with a sugar rush and an afternoon nap. As you can tell, I didn't make any resolutions about eating better. In fact, the only New Year resolutions that I have made in the last few years are to back up my files on my computer. That resolution is now happily obsolete as I purchased an external hard drive in 2008.

I also had the most traffic ever (still a modest amount) driven by the fact that my blog had the #1 non-sponsored spot on the Google for the search of "US Health care 2009 predictions". My marketing department is never going to hear the end of my search optimization skills. This more than makes up for the fact that when I search for Deadhedge on Google, I don't appear until the 3rd page. I'm outranked by wizard recipes, stories of bankrupt hedge funds, deaths involving hedge funds, gardening tips, and a story about a male hustler and their relationship with a hedge fund manager.

While I enjoyed my 2009 predictions and apparently others did too, I noticed a trend away from doing predictions by some bloggers. There were proclamations that everyone sick of seeing prediction articles, the whole notion had jumped the shark, it was cliché, blasé, soufflé, creme brule, and best saved for another day. So everyone rebranded their "predictions" into "things that they would like to see happen in 2009". Still sounds like a dessert to me, only without the accountability of being wrong but also without the option to brag if you got one right.

Now that I got the navel gazing out of the way, I'll finish up my series on the work that we did as part of the South African consulting trip. The last Act described the work that my team did but there were 2 other teams who did work on Cost Analysis for a grant and their Information Technology systems. Here are their stories.

Cost Analysis Team: Last year, the Cost team had determined how much it cost to treat the common or treatments in the clinics such as TB, HIV/AIDS, STD's, Immunizations, and others. This information helped immensely with budgeting, resource allocation based on disease prevalence, and defend budgets by equating dollars in terms of conditions that won't be treated. This year that work was expanded for a grant application and general work to show the economic impact of some of these diseases and how to show improvements after treatment. This would frame health care treatment in economic terms (similar to what the Obama administration is doing) by showing how curing a disease could improve economic output. Participants would be tracked with their economic activity pre and post treatment to show improvement after a successful treatment.

Information Technology: Much of the data collection was manual tallies at the end of the month. The health department had identified a computer system as a need and was already contemplating a few systems. However, they didn't know how to assess what system they needed because they hadn't look at their processes, data collection, reporting, or their requirements. This team helped them with the planning process to better understand the requirements of any new computer system and how it would be incorporated into daily work. Some clinics had computers but they were underutilized due to lack of training and the fact that it was not incorporated into daily work flow. The health department better understood how to both assess and deploy a computer system by matching it to their operations rather than primarily looking at features.

End Result: Our workshops and final presentation got great reviews and we were invited back for a third year. We were able to build on the initial work of the first team and show the health department the potential for the project work. There were two follow-up teams after us in 2004 and 2005 before I lost touch with the work. Unfortunately the follow-up teams weren't as strong. There wasn't the same mission-driven culture in the teams or the emphasis on the importance of the development work. That made me realize the uniqueness of our team, our accomplishments, and the relationships that were built. I formed really strong bonds with my fellow students during the second year and with the alumni that still continue.