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Monday, March 30, 2009

Old problems haunt the new face of job searching

Job searching is not fun. Everyone tells you what you should be doing differently, you face rejection, instability, and you are too worried and/or broke to enjoy the free time that you have. Technology has promised to turn the job search process around, make it more efficient, and dare I say fun. Monster is now synonymous with a massive job board as opposed to truck rallies and both my wife and I have found jobs through http://www.indeed.com/. The job search has gotten somewhat more efficient but the basic vehicles of the job search are still in place despite changes in technology. A resume is used to give a summary of your relevant skills, a personal meeting or connection really helps, and a hiring manager will still ask you what your 3-5 year plan is.

Now that barriers to creating an on-line presence are so low that we trip over them and be immortalized forever, there seems to be a sentiment that the job search process will be changed again through technology. There is unfortunately a lot of job searching going right now which has produced some new on-line stunts. There is the wife who started a website for her husband, the boomer who wore a suit and a sandwich board, stalkers of specific companies, and a whole host of imitators.

These have all been techniques to get their resume, application, or candidacy noticed and have all worked. Standing out from other candidates is part of the hiring process and these were successful. While they mastered the 2.0 part of the job search, there was a lot of failure on the 1.0 part or having a decent resume. To be frank, the linked resumes were as effective as a one legged guy in a butt kicking contest. Getting an application to the front of the pile with a successful web presence does not make up for a resume that causes the reader to start thinking about what they need to pick up for dinner on their way home because they stopped consciously reading it. Social media, Web 2.0, or myfacetweeting don't make up for it. Of the links that I included twittershouldhireme.com was really more of a social media portfolio piece so is exempt from this growing rant.

Giving resume advice is nothing new or really that interesting. It's kind of like giving advice on what kind of flavor cake to get as it is fairly personal and everyone thinks that they ar right. However, it befuddles me how these job campaigns that couple a great web strategy to get attention with a poor resume that fails to close. It's like fumbling in the end zone or farting during the cab ride home from the night club.

Here is what frustrated me about the resumes linked to the job campaign sites. While resume advice has devalued faster than some the Zimbabwe dollar, my advice still has to be worth 2 cents somewhere.

  1. That opening 3-4 dense paragraph that people call a "summary", "objective", or whatever doesn't help. If it contains the words "extensive, highly, optimized, or dynamic" it's hyperbole and not credible. In general, paragraphs are hard to read in resumes and it's hard for the reader to glean information in this format. This section of the resume should really be removed.
  2. A reader will spend 1 minute on your resume. That's enough time to give it a good review. No links will be clicked, no references will be called, and unless you are applying for a position that calls for web and video skills presentations, those features won't be viewed. Despite the medium, a resume is still a large business card that needs to contain your key skills. While we have all accomplished a lot, we need to list only the top accomplishments.
  3. There is no need to include a line that describe the company that you work for. If the recruiter hasn't heard of it, it has no reputation and doesn't matter if it's the leading producer of yak milk in rural Cambodia. Space on your resume should be saved for you since you're applying for the job, not the merits of your former company.
  4. Bullet points should have an action verb to describe a skill, a result, and the impact of that result. Being responsible for something is not a skill but an outcome of adulthood.
  5. Outcomes need to be believable or they reduce credibility. Summer interns don't have major impacts on a company's 5 year strategic plan.
I wish all of these candidates the best in their search and apologize for piling on to the public scrutiny that they are receiving. However, that is the other end of using very public web sites to advertise your candidacy. No one can completely control the message and there is always going to be someone who has their 2 cents, francs, pesos, loons, or bolivanos to offer.

Friday, March 27, 2009

Health care reform: Share the responsibility, share the love

Two of the more significant health care financing reforms of the last few years happened in California and Massachusetts. Massachusetts successfuly passed requirements that all residents have insurance and provided vehicles and incentives. While the reform in California was not successful, it used similar principles and could be lessons for future efforts. A series of articles was released in Health Affairs that analyzed the results and lessons (no subscription required). They are fairly detailed and wonky as I had to read them twice to fully grasp what they did. This further underscored how complicated a grand compromise of US health care reform can be.

Some of the current buzz words to describe reform are "single payer", "get everyone under the tent", "Medicare E (for everyone) and "clusterf#ck (at least what some are thinking privately)". However, "shared responsibility" is the model that worked in Massachusetts and fell to California's legislative process which can be as cumbersome as a double pad locked chasity belt.

The principles of shared responsibility involve everyone giving up a little to get a little. In summary:
  1. Individuals are required to purchase health insurance in exchange for more affordable options
  2. Employers are required to contribute towards health insurance purchasing by either offering health insurance or paying for a government purchasing pool
  3. The government assumes responsibility for providing health care for those who could not afford it.

The steps that it took to achieve this were as follows:

Make the Individual purchasing market viable: I have previously commented on how the individual insurance market is deeply dysfunctional. The government required insurance companies to offer a variety of plans for each type of purchaser based on how much health care they wanted or how sick they were. This was similar to my proposal in a previous post. As part of making the individual market viable, an insurance plan couldn't have a deductible lower than $5000 for example. There were rules around what constituted a viable insurance plan so carriers wouldn't introduce plans that excluded coverage for entire body parts.

Low income pool and floor for insurance benefits: The government offers subsidized insurance for those who qualify usually based on an income of 250-300% of the Federal Poverty Level ($25,000-$30,000/year for a single person). There were also other participation requirements in place to ensure that groups wouldn't steer sicker individuals to this pool.

Keep the incentive for employers to offer insurance: This is a key part of the plan. If employers have to pay more for health insurance than dropping coverage, contributing a fixed amount towards a pool, and telling their employees to get insurance on their own could be an attractive option. Some of the rules to counter this involved workers not being able to participate in the low income pool. This is a very key and complicated part of any health care reform and I didn't understand all the details.

Demographics were a big difference with the California and Massachusetts approach as California had a higher number of low income residents who would need to access the government low income pool. Massachusetts also had very high individual insurance premiums as they required all insurance carriers to offer insurance to everyone. Finally, covering California's immigrant population proved to be a 3rd rail.

At the beginning of the post, I called this health care financing reform as the changes mainly involved who pays for health care and how to ensure that all contribute fairly and get a reasonably equal benefit. A true shared responsibility with shared love would involve the health care delivery system. The costs of Massachusetts health care program are not sustainable. For this model to work nationally, there must be shared responsibility for those who provide health care. For example:

  1. Providers: The gap in pay and reimbursement between specialists and primary care must be reduced. This will help shift more medical school graduates to primary care and reward more cost-effective care. Ideally, specialists pay would be lowered more than primary care pay would be raised.
  2. Hospitals: Hospitals purchase a lot of technology and build infrastructure to attract patients. They often overbuild so they won't have to turn patients away. Hospitals needs to shift their purchasing towards cost-effectiveness and away from consumer-effective. Services, such as colonoscopies with massage, color photos to take home, and anesthesia so cool that it could be an awsome street drug, are more for marketing than actual cost-effective care
  3. Medical Device and Pharmaceutical: The same principle above applies, too. Ultimately payments from insurance companies and payments in general are going to drop so these companies will have to figure out how to make new products with less revenue opportunity. This will require some cuts, possibly in marketing as well as research and development. However, if there is a clear target of what kind of treatments are needed and will be paid for, the innovation will follow the money.

Shared responsibility has potential as a platform for health care reform. It would start with sharing responsibility of how health care is paid for but needs to move towards how health care is delivered. This might be the next phrase that we hear thrown about by pundits but I would suggest an improvement. Sharing responsibility sounds like we all have to do more and reflects are proverbial national protestant work ethic. Let's try calling it sharing the love! I have been on a streak with MBA on MBA dating posts, comparing leadership training to sex acts, so let's keep the hedonism rolling!

Monday, March 23, 2009

The Arbitrage Opportunity with Knitting

The arrival of spring means many things, but for me, it also means the end of the knitting season. As the days are no longer filled with cold, rain, and snow, there’s not the same desire to hole up inside with the knitting. I’ve been working on what Kristin Spurkland, author of the Knitting (Man)ual calls a Helmet. It’s a ski hat with an open face that’s taken a surprising amount of time and yarn. However, given that I am doing a round of 170 stitches on size 4 needles, I shouldn’t be surprised.

With no knitting project stories to share, I will address the business of knitting and where the arbitrage opportunities lie. I learned in business school that you can use the phrase “arbitrage opportunity” endlessly. It has been defined as buying burgers for a $1 in upper Manhattan and selling them for a $1.10 in lower Manhattan. In business school, my classmates seemed to have a different interpretation. For example, someone asked me to bring them back a bottle of dessert wine from Capetown, South Africa when I was there for Spring Break. The bottle costs $25 but they gave me $40 and when I tried to give him back the change, he refused and told me to take advantage of the arbitrage opportunity. This individual had already graduated while I was still a student so I took the extra $15 but I felt more like a porter getting a tip than a slick hedge fund operator.

Here are the arbitrage opportunities in the knitting world that I learned while working a knitting store, teaching, and contemplating starting my own store. I did actually work as an hourly sales person on weekends and taught but here's what I learned what I would have to do in order to support myself.

Teaching classes: The best opportunities are teaching group classes. Teaching 8 people takes the same amount of time as teaching 2 people. Since I would get paid per person, it could really add up and was better than private lessons. My best class was called "My First Socks" which sold out. I advertised it as an easy sock class but it was atually the same sock pattern as everyone else. I got approach from working on one esoteric pattern that the author had promised was easy, I believed the author, and had a fun time knitting it. Later on, someone told me that pattern was actually really hard. If the author had told me that it was a hard pattern, it would have been a different experience.

Opening your own store: I had done a marketing analysis for a knitting colleague who was thinking of opening her own store. From doing that work, I realized that if you are the only knitting store in a few good zip codes, you can get enough business. Portland, OR had an incredible expansion of knitting stores including knitting cafes which made the neighborhood of your LYS (Local Yarn Store and this is an official term) a lot smaller. To be successful long-term, you needed enough space and be able to survive the summer dry season. The smaller yarn stores closed eventually since they didn't have enough inventory to be a one-stop yarn store. Yarn stores also had to contract during the summer and save enough cash to survive until the knitting season returns in the winter. I actually got laid off in the spring as the LYS where I worked only retained its core employees during the summer.

Needle and Yarn production: This is where the best arbitrage opportunity lies in the knitting business. Forget teaching, forget opening your own store. With knitting growing in popularity, there was a shortage of yarn and a severe shortage of knitting needles. We would get only half our orders filled by yarn and needle companies because they didn't produce enough. The yarn company that did best was Brown Sheep, the maker of Lamb's Pride 100% wool since it was so good for felting. Felting (which involves a 100% wool product that is than sent through a top loading washing machine a few times which makes a soft, felty knit good), especially felt bags had just taken over the knitting world a few years ago. If knitters would have ever been inclined to riot, the shortage of Lamb's Pride might have been a reason.

With regards to knitting needles, there were only a few good mid-cost knitting needles out there which mainly bamboo. Plastic needles are terrible to work with and hard wood needles were really expensive. Demand is huge as any new project requires a new set of a very specifically sized and shaped needle so every knitter is always buying new needles. I always figured that it couldn't be too hard to mass produce knitting needles but given supply, it must be difficult to mechanize.

Tuesday, March 17, 2009

Just like Screwing for Virginity: MBA's and Retraining

A NY Times article has been making the rounds called, "Is It Time to Retrain Business Schools". The article points out how most of the Financial Company CEO's have MBA's and their ability in terms of leaderships and strong ethics ranks along with a monkey's ability to refrain from flinging its own poop. There is a feeling that MBA programs focus too much on analytics and not on the big picture application. To balance the article out, it mentions some curriculum where business schools try to integrate analytics into the business context so students can better apply these principles or emphasize leadership and ethics.

With regards to CEO's Behaving Badly having MBA's, that's more of a consequence of finance being a lucrative and popular field recently. If yak breeding suddenly developed a huge arbitrage opportunity, MBA's would replace their financial calculators with the Farmer's Almanac.

Business schools have been placing big bets on becoming experts in teaching leadership and ethics ever since I graduated. However, their ability to accomplish this is under attack and rightfully so. I think that MBA programs need to admit they cannot teach leadership and ethics and give up this tactic. One notorious Wharton student essay in the leadership class compared practicing leadership in a classroom to masturbating in order to become a better lover. Teaching leadership and ethics is falling into the realm of fighting for world peace or screwing to keep your virginity.

Despite all these efforts around leadership and ethic development, business schools have nothing tangible to show for it. From my admissions essay reviewing, the leadership and ethics essays tend to be the easiest for applicants to write as they are cookie cutter with a blindingly obvious approach. Thus, the essays fail as far as being an effective tool for screening for leadership or ethical potential. Most leadership opportunities in business school essentially involve leading your peers in consulting projects, learning team assignments, or to strip clubs. However, business school students are remarkably homogeneous in terms of work style and motivations. In most situations, someone has to lead a diverse group of education, backgrounds, work style, incentives, etc. While MBA students are a diverse group ranging from citizens of former Soviet republics who work in oil fields to blue blooded bankers to Save the Whales non-profit gurus, their learning approach, incentives, and approach to problems is all very similar. Thus leadership exercises become a demonstration in self-pleasuring (okay I have to stop with the sexual references. I still think that I am writing a dating post).

With ethics, MBA programs introduce the topic, have a class, and there is often really fun philosophical discussions. However, implementing ethics into the business world is a larger more societal issue. I work in a non-profit Catholic health care system so my ethical direction from my organization is very clear. To make it even clearer, a nun works 50 feet away from me. Someone has to evaluate their ethical framework every day in a new situation. Therefore, a class 5 years ago is not going to provide the knowledge for each specific situation. For example, I will sometimes attend competitor sessions or use their applications to research their products and performance. Each time that I do it, I have to conduct a different ethical review based. I barely remember my ethics class let alone having any tools from it. I would rather just ask the nun.

It's time for an Exit Strategy. Human Resources bloggers are talking about what their industry is really good at in light of a recent critical article and it's time for MBA programs to take the same approach. I think that schools recent curriculum reforms are moving in the right direction but it's time to cut losses.

  1. Stop pretending to teach leadership: Teaching leadership is difficult. The military is most reknown for teaching leadership but that is in a very structured chain of command organization. Chain of command outside of the military would likely mean how most employees want to beat their bosses with chains. MBA programs have demonstrated no success and it's time to stop pretending.

  2. Start teaching Management: It became popular for MBA programs to claim, "We don't teach managers, we teach leaders!" It's worked as well as me claiming that knitting makes me really sexy. However, management skills are precisely what MBA's need to work well in large corporations. Decision-making committees, approval process, and organizational charts are management skills are underdeveloped. Every MBA will be involed in these aspects and there is almost always room for improvement. While not sexy, they can result in a cumbersome decision-making process or decisions that are not fully understood. The failures at financial companies were management organization failures in some way as bad decisions were made. I think that a class on how to change an organizational chart for a start-up as it grows would be remarkably practical and something that Business Schools could teach.
  3. Analytics within a bigger context: Schools are focusing on this with their curriculum reform and it's a great step. In the 70's, an MBA was a general management degree and that is still important. Understanding the data to drive decisions in marketing, finance, operations, etc are useful skills. No matter what department someone ultimately works in, having enough business understand to know what NPV stands for or not snicker when Marketing talks about the 4 P's is valuable. It's not all about financial returns but analytics in a larger context can help an organization.
  4. Certification: Business school is a trade school like law and medicine. Other trade schools have post-graduation certification or training programs or exams like the bar, residency, or fellowships. MBA programs should have the same certification programs. As it is, MBA's will seek out PMP's in Project Management or Belts in Six Sigma to demonstrate mastery. Business schools could set up additional programs to demonstrate mastery in different topics to meet demand for students who are looking to set themselves apart. With regards to the PMP, I keep looking at that certificate program to set me apart even though I know the material is of little value. However, a marketing certification from a business school could be a different story. There is definitely an opportunity.

MBA programs have evolved over time to focus on what's important. Usually, they follow the money (which is not necessarily a bad thing). In times of crisis, those are good opportunities to evaluate what they are really good at and what they are not.

I've also changed. I've stopped knitting at bars and making lewd jokes about the size of my needles.

Saturday, March 14, 2009

Love in the time of MBA's

At this point in the year, the MBA admissions cycle is starting to end. With the exception of the wait list, decisions have been sent out, scholarships have been decided, and those fortunate to be deciding between schools are finalizing those choices.

Job responsibilities for the next MBA class ranges from just a 5 month plan to finish everything to complete senioritis. As spring nears, thoughts can turn to love or in the case of the mostly single male MBA class, just plain getting it on (cue Barry White music).

At bars, cubicles, on the Daba Girls website, or on Business Week Forum, thoughts are turning to which MBA program has the best dating scene, hook up scene, where to get your MRS degree or whatever you are looking for in a conventional heterosexual love life. I spent a year in the 95% female School of Social Work before playing rugby at my MBA program so that gives me at least two perspectives. In my typical list fashion, here's what I learned about Love in the Time of MBA's.
  1. MBA on MBA: No one talks enthusiastically about dating their fellow MBA classmates despite how much all have in common. Women soon repeat the mantra of the "The odds are good but the goods are odd" and guys are too busy talking about undergrads or oggling someone else. There will be hook-ups, relationships, and marriages even though everyone pretends they would rather be an awkwardly developing 13 year old than get together with a classmate. Now one reason to not get together with a classmate is if it goes badly, it can be ugly and public. But that's never really stopped anyone from getting together with classmates, workmates, monastary-mates before so why would that change in an MBA program? Another MBA alumni blogger, Marquis, actually has a really elegant guide to MBA dating in the middle of this post. The one advice that I would offer is that when you are a first year, try to date a second year. You will feel like a sophomore dating a senior and second years are out of that awkward 1st year period and can really keep you sane.
  2. The Undergrad option or I get older but high school girls stay the same: MBA guys at Texas, Arizona State, or any of the schools with really attractive undergrads all see themselves as a future Hugh Hefner. The reality is what Michigan undergrads call the event when MBA guys show up, "Fat, balding Middle Aged Guy Night". Like communism, going after undergrads sounds great in theory but never works out in practice. Unless you have the same physique that you did in college, it's not an option because you're competing with college guys. You're a grad student so you're not going to look like a sugar daddy. You're talking to women who haven't entered the workforce yet so stories about closing that deal are boring.
  3. Other Graduate Schools are an Option: Or an option for guys. Graduate schools in education, social work, nursing, and veterinary medicine have much more women than men so the odds work. Of those schools, Social Work and Education never work out. My social work classmates and MBA classmates were not on the same planet in terms of views of the world and that's similar with Education. Nursing works out probably because they are used to working with physicians so MBA's don't seem that arrogant by comparison. The Vet School worked out the best probably because it's favorable male/female ratio is not that well-known so MBA's are still new and quaint. Bonus opening line for a Vet School student is "Excuse me, are you large or small?" Rather than getting slapped, you will get an enthusiastic answer as large or small refers to their course of study (large animals like horses or small animals like dogs and cats). Unfortunately grad programs that have more men, like engineering, are just not appealing for women for obvious reasons.
  4. Mingling with the Locals: This tends to be a better option for women for the simple fact that a guy will approach a woman at a bar/coffee shop/gym/rodeo for all the same reasons regardless of where she attends graduate school. Women tend to be better conversationalists than guys and will thus not talk about case studies, recruiting interviews, learning teams, etc. MBA men tend not to realize how unapproachable they look in a large group dressed up in the latest theme party gear and stories of how you really rocked the cold call question on discounted cash flows lost them at hello.

Tuesday, March 10, 2009

Coming to a DMV near you: the next chapter of health care reform

I had previously blogged about how the unions appear to have sacrificed personal interest for the greater good of health care reform and how the the threat of a government plan driving private plans out of business is yak droppings. Looks like I am 1 out of 2.

SEIU and AFscme left the bargaining table known as Health Reform Dialogue according to this NY Times article. The issue appeared to be industry opposition to a government plan (aka Medicare for All) and the requirement that employers pay for health care. These two unions are for both and it appears that the bargaining table was moving against both. It is unknown or uncertain why the unions withdrew but from the article it appears that they really want a government plan as an option so people can say no to private insurance plans. In some ways, I am technically right that the unions are not preserving their interests of being able to offer awesome health insurance. However, they are advancing a "punish the insurance companies" agenda as a reason for their support of the government plan. From comments, I have received, I can't really blame anyone for wanting to punish insurance companies.

By the way, the "Medicare for All" notion sound like those introductory cards that I get to join the AARP. If I had a Medicare plan before I'm 40, I couldn't help but feel old and I bet that my driving would get a lot worse.

The Threat of the Government Plan is the latest spectre that's being waved as the threat to the American way of health care as we know it. We're going to become like Canada but without the maple syrup. That's fine with me as I prefer Mrs Butterworth.

I had posted about it previously and Maggie Mahar eloquently dissected Missouri Senator Roy Blunt's argument. On the one hand, Senator Blunt argues that a government sponsored plan will drive private plans out of business. Mahar points out that this assumes that the government offers such a successful plan that people leave their current plans in droves. In other words, the government is able to do what tons of business people and trillions of dollars in market capitalization have not been able to accomplish by creating a health plan that people are so excited about that they all dump their current insurance. This leads into Blunt's second point as he does a U-turn and talks about how bad the government plan would be. This is where he is mean to the Department of Motor Vehicles (DMV). First, I have to comment on how the DMV gets a bad rep and I have always found them to be very friendly with wonderful senses of humor. They actually get me to smile every time they take my picture. However, to finish my point, Blunt points out the horror of a government bureaucracy health plan where we would all get our names mispronounced, stay on hold for days, and have to fill out 13 page forms to make an appointment. Scheduling a hospital stay would require a request from your senator.

Blunt's position of how a government plan will fail if it's so wildly successful since it will bankrupt the insurance business or fail if it's wildly awful reinforces this as pure fear mongering. I hate to see what happens when debate actually starts. I'm predicting headlines of:

  • Obama Plan will cause families to start kicking their pets!
  • Obama Plan will bankrupt the Ice Cream industry! Kids are already Crying!
  • Doctors to be replaced by Bored DMV Clerks in the Obama Plan!
  • Obama Plan will result in Bed Pan Shortage!

Sunday, March 8, 2009

Health Care Reform: Threading the Needle of a Private/Public Solution

Two questions have emerged from this week's health care reform discussions around the role of the private sector which are:
  1. Will employers still have a role in offering health insurance to their employees?
  2. Will a government sponsored health plan emerge that will take market share from private health plans?
With regards to the 1st question, I had previously blogged that employer-sponsored health insurance was approaching bicycles for fish territory. Employers were able to offer a benefit for less than the cost due to the tax breaks and lower the distribution costs. However, it was adding costs to their products, taking their attention away from their business, and was not universally valued by all employees at the same level as much as other benefits that could be offered. In short, if the responsibility for offering health insurance was removed from employers, the only advantage that would be lost was lower distribution costs.

However, Senator Max Baucus, who is a real force in health care reform, was recently quoted as supporting the employer health insurance system. On the private side, the CEO of General Mills was also quoted as supporting employer sponsored health care insurance because he felt that their health care plan attracted talented employees and they were good at managing health care costs.

Why the recent shift toward keeping the employer-sponsored health insurance system and what to do these two know that your humble narrator does not? With regards to Senator Baucus, I suspect that it's merely politics and a desire to assauge fears that people will lose their good insurance from their employer. It's part of Obama's statements about not fixing something that isn't broken by not disrupting the 62% below 65 who have insurance from their employer. With regards to General Mills, that's more surprising and interesting. However, it's economics. General Mills is located in Minnesota which is a bastion of health care experimentation so they have gotten good at this health care business. Since they're so good at it, it's a competitive advantage against companies that flounder with health insurance administration. Why take health insurance administration away from them when they've "won" that battle against other companies? These are the spoils of the free market and competition, right?

As I initially argued, this competitive advantage should be taken away from General Mills because health insurance administration should not be the core competency of a foods company. Companies should have not to spend resources on health insurance administration unless they are in that business. Companies don't build their own computers or phones so they shouldn't build their own health insurance.

The 2nd question about a government plan outcompeting the private health plans came up recently, too. While the issue of employer-sponsored health insurance is an interesting business issue to weight out, this is just pure propaganda in the category of Obama taking away our guns. There are already a few government sponsored plans out there, such as Medicare, Traditional Medicare, and state portability plans that companies are mandated to offer. The only goverment sponsored plans that do well in the market place are the ones that are free like Medicaid or Medicare Part A for hospital care (beneficiaries pay $96.40 per month for Part B for physician services). The government has a terrible track record of offering attractive health plans. The state-sponsored portability plans in Oregon are very expensive and only have 20,000 participants in the whole state. Traditional Medicare and Medicaid not only have low reimbursement and so slow at paying that 25%-30% of physicians in Oregon won't have anything to do with those plans.

The government is good at setting prices, like with Medicare DRG's and consistently sending someone a monthly check like with Social Security. They are not good at the health plan business of answering calls, contracting with physicians, or timeliness. If private health plans can't outcompete a government plan that isn't free, that's the private sector's problem.

In summary, the government knows better than to launch its own health plan. I think that this issue is raised for propaganda purposes to prevent the Obama administration from getting too involved in health care by making it appear like a takeover. Insurance companies should adjust to a world proposed by Ezekiel Emanuel, brother of Rahm Emanuel. Under his plan, the governmet would set the prices and insurance companies would compete on quality of provider network, medical management to lower costs, and service.

Thursday, March 5, 2009

The Impact of the Bolivian Transportation system on Non-profit seeking MBA's

When people ask me why I applied to an MBA program, I sometimes say that it's because I missed a bus in Bolivia. This makes me sound mysterious but it's actually true. I wound up spending the day with a Peace Corps Volunteer who was going to get a dual MBA-Masters in Social Work degree with plans to start an international adoption business. I personally want to run a psychiatric facility and thought that was a perfect degree combination for what I wanted to do.

I never finished the Masters in Social Work due to their unwillingness to view this degree as anything other than a competition with the business school. I also realized that the MBA would provide me with the opportunities that I needed. I never wound up running that psychiatric facility either as I realized that it's much better work in general health care setting but be comfortable working with the psychiatric department.

This Slate.com article discussed the combination of an MBA and non-profit work. The article pointed out that MBA program are very much in tune with corporate social responsibility and the non-profit world with resources like the Aspen Institute. Another commenter provided the following advice of 1) Non-profits are not inherently noble but just tax exempt, 2) For profits aren't necessarily models of efficiency and business virtue just because they pay taxes, 3) Skills and match are important. In general, the question of whether it is best to get an MBA to improve a non-profit or just work in the non-profit and skip the MBA is a case by case decision.

The people mentioned in the Slate article start in the business world and/or use the MBA to transition to non-profits but I actually went the reverse direction. I was a Peace Corps Volunteer and taught knitting in psychiatric facilities but wanted to get an MBA to improve the industry of international knitting in a mental health setting. Instead, I left that career path and the non-profit world to become an evil insurance guy. Here is what I learned along the way:
  1. There are some really incredible non-profit opportunities for MBA's: These opportunities are what drew me away from the Social Work program. There were just some incredible positions that took the non-profit work to a new level. There was international health development work with John Snow, Inc., social venture capital (it even sounds cool) with Roberts Enterprise Development Fund , foundation work like with Pew Charitable Trusts, non-profit consulting with Community Wealth Development and the list goes on. It made the institutional social work choices just pale by comparison to work to create, build, and fund organizations. The competition for these jobs was surprisingly intense. A track record with non-profit work and top MBA were minimal requirements as some pretty talented consultants and bankers would take these positions.

  2. An MBA is an octagon shaped peg in the non-profit world but it still fits: About 33% of MBA course work falls under finances that focus on the stock market in some form or another whether it be debt:equity ratios, P/E multiples, or valuation. None of these things will ever be used in the non-profit world. I made myself take Advanced Corporate Finance just so I knew the difference between a P/E multiple and a PE gym class but I could only sit still for 30 minutes stretches. With this coursework, many probably correctly wonder if they should pursue a Masters in Public Administration or other type of more publicly focused degree program. Ultimately, I would say an MBA is a better option because 1) at least you understand the financial sector and the mystique or lack there of it, 2) an MBA can work in the non-profit or for-profit world so you have more flexibility, and 3) non-profits are looking for someone who can understand a business framework as they understand a public administration framework. Sitting (or in my case not sitting) through a few finance courses is worth it. It does bring a new approach that you can adopt to suit the non-profit management challenges.

  3. Network: I am predisposed towards networking and am one of those people who really doesn't mind small talking nor working the room. With the new magic word being public/private partnerships, the MBA helps you reach out to the private sector.

  4. Culture Shock: You don't need to go to another country to experience culture shock. I had MBA classmates humbly ask me what poor people do and how they survive in the US. Likewise, I asked my classmates what the big deal was about this Private Equity stuff and if there were hedgehogs at hedge funds. There were also 1/3 of my classmates who were doing some kind of nuclear finance that I did not interact with. They didn't want to hear about how I wanted to funnel pharmaceutical company profits into clinics for the uninsured and I didn't appreciate how they were probably creating Credit Default swaps or other types of derivatives that got us into this financial mess.
In summary an MBA can be transitioned to an effective degree for the non-profit world, but there really is a cultural transition process. I do thank the Bolivian transportation system for helping me find this career path.

Tuesday, March 3, 2009

Whither the Individual and Family Insurance Market?

Today was a bit of a spreadsheet day as I was looking at the fourth quarter insurance market numbers that the Oregon Insurance Division thoughtfully provides. I pulled out the numbers, put them into my spreadsheets, and will spin them into power point graphs for everyone's bullet pointed enjoyment.

I like spreadsheet days. My biggest surprise is that more people like spreadsheet days (where you spend a few hours adding numbers, formula, and tables to an Excel spreadshhet) than I had thought judging by responses to my Facebook status updates. At the end of the day, there is a finished product that gives concise answers. Plus, I can geek out by changing model assumptions and watch the sensitivity run wild. Looking back at that sentence, it's really a shame that the models that I am talking about are on the computer.

My spreadsheets clearly told me that despite the fact that there are 12% fewer Oregonians who are getting health insurance from their employers at the end of 2008, there are not more people buying individual and family insurance. In fact, 5% fewer people are buying individual insurance. That means more uninsured people.

While I know that health insurance is as popular as a cold sore outbreak at a nudist colony, I didn't realize how unpopular it is until I saw these numbers. 180,000 people in the state of Oregon who lost their employer insurance decided not to buy an individual plan. Additionally, 5,000 people left their individual plan. These numbers are through the end of 2008 so they don't take the COBRA stimulus factor into account.

While my product manager colleague was forecasting a decline in the group insurance market that he works on, I thought that his loss would be my gain as the individual insurance market would grow. Instead it's shrinking as people are choosing not to spend $100-$200 per month on health insurance. The fact that pre existing condition has become a dirty word might be a factor as every plan has some restrictions around covering these conditions. Or what else could it be?

I can't turn back to my spreadsheets for an answer to why the individual insurance market is shrinking when its customer base should be growing. I know that everyone has less money but they are some cheaper plans available. Or is buying health insurance the last thing on their mind as they probably tried to stock up on medical work before their insurance expired at the end of the month. Some of my thoughts are:

  1. They think that they will find a job with health insurance soon. That's possible but I think that it's unlikely. Everyone hears about the severity of the recession and how it's even being called a depression now (which makes me think that now is a great time to put Prozac in the water supply). Unfortunately, I don't think that people are that optimistic.
  2. The Value Proposition is not there for Individual Insurance. Comprehensive plans have either gotten too expensive and/or people don't feel that the cheaper plans cover enough health care for the price. They do the math, think about the cost of services they use versus how much they would pay per month and it's not worth it. The market has been moving towards cheaper plans that cover less.
  3. They are buying short-term insurance policies or figuring out other options like negotiating for care. Short-term policies (which are temporary policies that typically cover major medical conditions) might be the interim step before spending more money on a full individual insurance plan. It does make sense because you can spend a lot less and put off the decision to have to buy health insurance for 6 months. I have also heard that people are starting to negotiate with their doctor or hospital. They will ask for the discounted rates that insurance companies will pay or they will just offer to pay in cash upfront in exchange for a 30% or take their business elsewhere. One unanticipated consequence of making consumers pay more for health care is that providers are facing individual negotiations for payment rather than having one negotiation with a health plan. Providers are starting to counter these negotiations with requiring upfront desposits for those without insurance.

Overall, I think that people are looking seriously at alternatives before buying individual health insurance so it's a combination of #2 and #3. Since the value proposition is not there and consumers are starting to negotiate for their health care on their own or look for alternatives, I've got to figure out a way to make individual insurance plans more attractive. I've been launching surveys and asking anyone who will listen about how easy it is to buy insurance from us. Our lower cost insurance plans have lots of extra features that we think are important but I think that their added cost dissuades people. It's difficult to experiment in the individual insurance market due to our own risk aversion and regulations but the market is talking to me loud and clear.

Sunday, March 1, 2009

I'm not trying to cause a big Sensation, just talked about the role of Generation X

My job involves trying to sell health insurance (Medicare) to the Baby Boomers or Generation Y (our individual plans). My blog reading and research of these generations has caused me to think more about my own Generation X.

With regards to generational differences, I don't think there's anything too unique about it. Each generation starts out idealistic and prone to running around naked completely wasted, then moves onto raising families and careers while smoking the occasional joint, before moving on retirement, grandchildren, great prescription drugs, and contemplation (fueled by those great prescription drugs). There are key events that shape each generation through various phases. Some generational writers have much more eloquent terms than I do to describe it but essentially we go from casual to monogamy to Viagra.

Website like the Brazen Careerist (where I am a prolific guest columnist) and GenXconnect (which I just joined and we'll see how it goes) give on-line opportunities for generational battles. This post by Jamie Varon entitled "Does Generation Y Need to Grow Up" was the latest brush fire. Gen Yers brashly talked about how they'll be the change that they see in the world while Gen Xers used all our cynicism that we have earned to douse the flames. This got me thinking about what role I want to play in the generational blogosphere.

To get this out of the way, Generation Yers can be really annoying. I mean really annoying in that way that the freshman talks about what kind of medical school he'll attend and what kind of doctor they will be while you're just trying to pass Organic Chemistry. Annoying in the way that new person at work asks why someone hasn't fixed that process issue already that you have spent the year trying to scope, build consensus, and solve. But that's okay because they can be really insightful with all the possibilities that they see.

Generation X can be really cynical. Not just cynical but as bitter as some of the darkest roast coffee that you'll ever fine. Bitterness that just oozes out of pores like a facial. But that's okay, too. I like being a Gen Xer as I feel like a survivor. I always have a Plan B and Plan C ready to go and will not be surprised by corporate america, parents, or my favorite rock star again. I won't get fooled again.

I figured out my role with the Generation Wars doesn't have anything to do with generational perspectives. As a member of the older generation, I want to be a mentor. I'll work on my mentoring skills and reach out to the younger generation. I'll encourage and let Generation Y learn for themselves and they will learn. I'll try to make sure they don't leave enough rope to hang themselves. For example, whenever I see a post about how social medid defies the conventional notion of an ROI, I'll remind them about solid business principles and following the money. I'll tell stories, too, just to share and relate. Everyone like stories. Finally and most importantly, I'll give respect. I think that's what any younger generation craves and is not always given. If I am to be a decent mentor, I need to give respect regardless of the response.

Another important aspect of mentorship is to have an ally against the Boomers. Now that's the real Generation War that needs to be waged.

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