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Wednesday, August 25, 2010

Getting a Seat at the Executive Table

We all have stories about bad experiences with employment recruiters, traffic, and eating too much at In-N-Out burger after midnight. We love to tell the stories but have no interest in listening to others. That's why blogs are great tools for providing those needs that are only at the very tip of Maslow's Pyramid.

I have learned that I am an attractive candidate for jobs because I am currently employed. Online dating doesn't even produce as bizarre relationship dynamics as employment recruiters. They seems to covet most what they can't have (the currently employed) and doesn't want those who want them the most (the unemployed).

I habitually apply to jobs at other companies as a networking technique. It's part of the Generation X shark mentality where we need to keep swimming in order to stay alive. It keeps my resume fresh and my interview skills sharp, I meet people at other companies, and learn about opportunities. Some would argue that this is a terrible approach because the transaction always involves the word no. Either I say no to an opportunity or the company says no to me. However, I no longer become just another application to the recruiters and hiring manager for any future opportunity.

Therefore, I applied to a job at a company where I used to work to gauge my market worth and network with a new department. On Tuesday morning, I had an interview scheduled with a lead manager and vice president. On Tuesday afternoon, I talked with the recruiter. By Tuesday evening, I had no interviews, a fairly difficult questionnaire to complete, and the job requirements were changed. Not surprisingly, I considered this to be a fairly negative interaction with the recruiter. Here are the details:
  • The recruiter was waiting for the results of a questionnaire that she thought that she had sent me. But she had actually forgotten to send it which created a problem. If I did not complete the questionnaire before interviewing, then one could question the value of it. Therefore, she had to preserve the process and cancel the interviews.
  • One should question the value of her questionnaire. It combined the obvious details (Are you eligible to work in the United States) with the vague (Describe your experience in consulting, health care, project management, data analytics, and reporting. In other words, Tell me about yourself).
  • The recruiter's biggest concern was that I had not been fired from this employer previously. She was very good at zeroing in the obvious. To be fair, I've learned that people do like re-applying to companies where they exhibited the impulse control of a meth addict and the ethic of an Illinois governor. However, she had access to my file and could have easily answered the question.
  • Poor grasp of geography. The recruiter's concern was that I work in a region where they do business which could have been addressed with a compass and a road map. Actually, you don't even need the compass.
  • She closed by telling me that they had numerous qualified candidates already implying that she was doing me a favor by talking with me.
From reading Human Resource and employment blogs, I can even guess the defense from other recruiters. They could point that if they didn't need the information, they wouldn't have asked for it. All candidates have to follow directions and they won't go on a scavenger hunt looking for where we live or our employment files. It's their job posting so we follow their rules.

However, it was fairly clear to me that the recruiter was late to the game in the hiring process and had to stall or she would have lost control of the process. The recruiter's value-add would have been questioned. My blog is the one place in this world where I get to be judge, juror, and executioner (even when I babysit my 2 year old, I don't have that power). Which leads me to my main point that recruiting or human capital management has to have their basic operations in place before they can ask for the seat at the executive table. That step is still being skipped for those looking to transform Human Resources.

At my organization, I have watched responsibilities and budget steadily being stripped from Human Resources when they could not meet their objectives. When they lost applications, they were forced to focus on application management for basic positions and executive recruiting was removed. When they showed improvements, they were steadily given back responsibility. While basic blocking and tackling doesn't provide great fodder for recruitment and Human Resource transformation, it can prevent future business leaders from giving those assignments to the Human Resource department.

Wednesday, August 18, 2010

The Inmates are Running the Asylum: The 1st steps of Health Reform

The first parts of health insurance reform will start in a little over a month (Sept 23rd to be exact). One of the more significant pieces is that children under the age of 19 will no longer be denied coverage for an individual insurance plan due to pre-existing conditions. Overall, this is good and makes us a more compassionate and humane nation. This change also shows how tightly connected every piece of the health care system is as the details behind this change are getting really complicated. Just like the directions for assembling Ikea furniture, what seems simple is getting really difficult.

The Obama administration is turning the details over to the states who are in turn asking the insurance companies for guidance. This is how much of health reform will be implemented as the state insurance divisions, Medicaid offices, or other agencies will be making hard decisions based on a federal framework. To fully appreciate it, picture what would happen if the federal reserve turned interest rate setting and trade over to the states. Actually, that sounds too hard to visualize. Picture what would happen if parents turned the house hold management over to their 4 year old.

No longer denying children under 19 insurance seems simple to do. When someone who was born after 1991 applies for insurance, they get insurance. The only option is to say Yes, here's your insurance.

This is also called guaranteed issue. The difficult part is that in order for an insurance scheme to be viable in a world of guaranteed issue, individuals must be required to purchase insurance to eliminate what economists call the Free Ride. This is also called the individual mandate. If you want to sound like an insurance executive at your next cocktail party, you can say, "Without an individual mandate, you can't have guaranteed issue." Combine that statement with urinating in the ice bucket and you'll be the hit of the party.

As a result, children under 19 can just get insurance when they go to the doctor, then drop their insurance, and pick it up again when they need to go to the doctor again. Sounds great except that makes insurance more expensive and pretty soon unaffordable. This loophole is big enough to undermine the whole program. As a result, states are offering insurance companies concessions to avoid the collapse of the insurance market for children. Some include only allowing children guaranteed issue one month out of the year (called open enrollment) or requiring children under 19 to stay on an insurance plan for a certain period of time with penalties for leaving early.

Insurance companies are threatening to no longer allow only children to purchase insurance but requiring parents to be on the plan, too. Ultimately carriers could stop offering individual insurance to children under 19 at all so the states do have to offer possible concessions.

The Obama administration has allowed the states to offer concessions, mainly the open enrollment option, to address the situation. However, this puts the states in the awkward position of negotiating and trying to determine which concessions to offer. It gives insurance companies an opportunity to develop their own concessions. The final result of guaranteed issue for children could be very different than what everyone envisioned.

When I worked in previously worked in psychiatric facilities, I noticed that the only difference between the inmates and staff is who had the badge and keys. This may be the case with the future implementation of health reforms as the state divisions and insurance companies are being handed the keys and badges.

Friday, August 13, 2010

Olympic Penninsula: Marmot Pass and Buckhorn

Our most recent climb was near the Quilcene Ranger Station in the northeast part of the Olympic Penninsula. A friend recommended Buckhorn Mountain near the Marmot Pass as a good peak to scramble up to enjoy the views of Mt Constance, Deception, and Mystery and some potential wildlife. To the left is a picture of the Marmot Pass, a 6000 foot trail intersection.

When we arrived at the Big Quilcene trailhead (#833), there were quite a few day hikers that I would characterize as a good representation of the Medicare Advantage demographic that I have blogged about. When they talked about their day hike to the Marmot Pass, I started to wonder about my selection of an overnight backpacking trip or fear that these seniors were getting steroid prescriptions instead of Viagra.

The Big Quilcene trail is well-marked and follows the Quilcene River. After 4 miles and 5500 feet of elevation, I reached Camp Mystery which was my intended campsite. Camp Mystery is not marked but there are several obvious campsites with flattened areas, sitting logs and nearby water sources. According to the climbing guides, I could either scramble up the scree slope pictured below and to the left or hike towards Marmot Pass for a southwest ascent. Summit Post recommended the scree scramble so I followed that web site's advice.

The scree slopes were steep. I looked for an opening among the trees at around 5300 feet of elevation. I followed what I thought were other climbers' tracks through the scree but was probably goats. It was steep, like quick sand, and pretty painful. I moved towards the southwest corner since the slope looked more forgiving and I was hoping to find that trail to Buckhorn Mountain (pictured below to the right).

I happily took the trail the rest of the way up and was glad that I did not have to go down the scree slopes on a return trip. I told myself that the scree slopes were a good way to avoid the fierce marmots who surely must inhabit Marmot Pass. Luckily, there were no wildlife sightings in camp as I had heard that bears visit Camp Mystery. Only wildlife incident somehow involved the nuts that I left in the car being eaten and the bag being torn up. Next time, I'll take the path most traveled and leave the scree slopes to the goats.

Wednesday, August 4, 2010

Parallels between Peace Corps Training and Harvard Business School

The Peace Corps and Harvard Business School (HBS). One program is experiencing rapid growth and becoming increasingly relevant while the other program has been pronounced an outdated relic. Surprisingly (or not surprisingly), (HBS), the program with the $3+ billion endowment and its own gym is the one facing an inflection point (for some reason it's really hard to refrain from using HBS jargon when writing about HBS). The Economist's Schumpter's recent piece about HBS's programme was not coloured (hard to refrain from using British english when quoting the Economist) by recent times as much by the approach of the new dean, Nitin Nohria.

I generally agree with the Economist's analysis of the state of MBA affairs because they avoid taking a 2 year view of MBA's behaving badly and pronouncing them irrelevant. As long a masters degree is a requirement for certain levels of jobs, an MBA will continue to be a good masters degree to get. On a simple level, it really helps you get a job by teaching resume writing and interview skills, providing access to companies and internships, focusing on the job search, and providing all kinds of statistics to track this progress. A Masters in History also teaches students new material but nudges graduates towards PhD programs as opposed to business schools' approach of flinging its graduates into whatever employment target they can hit.

Back to the topic on hand, Nohria's new approach at HBS focuses on "competence and character" as well as getting its students' boots dirty. Competence and character is a general prerequisite when your graduates have been accused of behaving like a Viking hoard who pillaged and plundered the global economy. The only hint of an apology that followed the burning of the global village was preceded by a loud belch. Getting boots dirty refers to more hands on internships with companies as part of the classwork. Less theory, more application, and more real work. It's not about looking good in boots with stiletto heels but getting functional with Gore-tex boots.

The Peace Corps got its volunteers already dirty boots even dirtier with a change in its training programme (oops still using British) er program 10 years ago. The 3 month training prior to starting the 2 years of service was labeled as too theoretical with not enough application. Volunteers generally lived in close proximity to each other in comfortable suburbs near capital cities with classroom based training. At night, everyone got together and partied- I mean networked. There was a shock and adjustment period when volunteers started their 2 years of service in more isolated rural environments and their work was no longer in a controlled environment. Therefore, Peace Corps training got more hands on. Volunteers were more spread out in starker environments and their training involved working on existing projects. Their development worked started during the training period not after completion.

I don't have any data on the impact but as you can imagine from the logic and general movement of all Peace Corps country training programs, it was a successful model. It's fairly logical and makes sense that HBS would move in this direction.

The drawback to this approach is by spreading volunteers or business students in small groups with immediate work and deadline, there isn't enough time to bond as a group. My Peace Corps training involved all 25 of us in close proximity. The classroom schedule allowed for ample social time and adjustment which I frankly needed to prepare for my 2 years of Peace Corps service. I was not ready to get my boots as dirty as some of my fellow volunteers. The bonding as a group in business school forms the basis for the vaunted future HBS network and from learning from talented classmates.

My Peace Corps Volunteer group was incredibly close and we still stay in touch over 10 years later. I don't know if I would have that connection with the more applied hands on training model and time will tell if HBS and other business students have sufficient time to forge their bonds and future network. Since business school curriculum changes with every fluctuation in the MBA application cycle, I am confident that this will be evaluated and changed if necessary. Like a good pair of boots, the MBA philosophy and curriculum gets resoled at least every 10 years.

Monday, August 2, 2010

How will Hospitals Weather Health Reform?

The health insurance companies have been the low hanging fruit of early phase of health reform. However, the days of kicking insurance companies around are rapidly disappearing. While most see pharmaceutical companies as the next logical target, I see a bigger target on the hospital industry. Hospitals represent 1/3 of health care costs and the best news they can offer is that their costs have "only" increased 4.5% in 2008.

Despite my misgivings, the Economist was bullish (pronounced with a British accent) on the hospital industry. Hospital systems around the world are being bought and merged and even the private equity world is battling for elite foreign hospitals. This activity does make sense as hospitals needs the size to be able to invest in the new required IT systems or other technologies. Size also helps attract providers who are looking for shelter from this technology storm, more leverage with the negotiations with insurance companies, and good ole economies of scale. There will always be demand for services from hospitals with the best reputations. Finally, the aging of the population means that bed pans will stay full and need to be constantly emptied.

I am more bearish. If I have learned one thing from Steve Eisman and Meredith Whitney, it's to be a bear when you don't think that optimism is justified. If I could short the hospital industry, I would.

No new business model: Hospitals top metric for decades has been to keep their beds full to cover their mountains of fixed cost. I don't see anything that has indicated this metric has changed. The only change that I have seen is that hospitals are counting on the boomers to ride their Segways into the nearest hospital bed in their zip code as opposed to their SUV.

Hospital aren't positioned for the new business models: The new reimbursement that is available are for models are around medical homes, Accountable Care Organizations, or even home-based community care. All these focused on tight coordination of care around providers to keep people out of hospitals or discharged quickly. Hospitals serve as important backstops for primary care physicians rather than being referral sources for the latest surgeries.

Revenue is shrinking: The number of people covered by their employers and the better paying commercial insurance is forecasted to decrease by 2016. Medicaid, which pays an estimated 70% of every dollar, is projected to grow by 25%. A 3% cut in Medicare payments is on the horizon and Medicare payments are not expected to grow. New provisions in health reform take money away for readmissions and more could be on the horizon that penalize hospitals for not coordinating care with community partners. In order not to lose revenue completely, hospitals will have to share it with new community partners.

There are no new frontiers: The Economist noted that more efficient for profit hospitals are likely to buy their weakly managed non profit counterparts. From my experience, for profit hospitals are more efficient because they generally bought the dominant hospital in an isolated towns with few competitors and attractive payer mixes (ie few uninsured patients). These are not hard hospitals to run since they basically have a monopoly. The less efficient hospitals are often in low income rural communities or inner cities.

In Philadelphia, I watched numerous for profit hospital chains buy the #4 and #5 rank academic medical centers out of the 5 in that city without success. The efficiencies are not there for some hospitals but the need for that hospital is still very strong in these lower income communities. The management skills the larger for profit systems is more snake oil than secret sauce.
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