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Tuesday, November 30, 2010

Wharton Admissions to use Behavior-based Interviewing aka Late 90's Human Resource Innovation

During my latest perusal of my Wharton alumni news, I noticed the following excited announcement:
"This year Wharton MBA Admissions will be taking an innovative new approach to our admissions interview by implementing a behavior-based interview."
It also included offers to train interested alumni on this technique. Behavior-based interview was a late 90's interview technique based on the theory that past behavior is a good predictor of future behavior. However, the whole premise that the past is an indicator of the future is what destroys a financial firm every 10 years.

Additionally, this provides another example of how social psychology studies tend to provide statistically significant proof of blindingly obvious human behavior. This behavior prediction model is on par with the study that stereotypes truly do impact our perception of others. Thus, the stereotype of the Fed Ex MBA is still appropriate. The reason that we have stereotypes is because they are usually true.

However, I digress. One applicant described their experience with Wharton's behavior-based interview and included specific questions. Generally, a behavior-based question asks about what you did in the past in response to difficult situations and what the results were. For example:

"Tell me about a time where a coworker told you that monkeys would fly out of their butt before they agreed with your idea. How did you respond, what did you do to get them to support your idea, what were the results, and did a monkey actually fly out of an orifice?"

I think that a behavior-based interview mainly measures how well someone answers interview questions. I have seen many an interviewee somewhat rightfully respond that they truly can't think of a time when coworkers told them that that their idea was on par with animals flying out of people's orifices. However, they would be happy to answer questions that were more directly related to the job that they were applying for, such as what is their experience developing a marketing plan.

Therefore, why did Wharton switch their admissions interviewing? This could create more conspiracy theories than Chemtrails. My ideas are:

1. They wanted to do it before Harvard or Stanford in order to not look like they just follow whatever those schools do. While intended to be a joke, this is actually probably a likely factor in the decision.

2. Their current interview technique was not yielding enough relevant new information.
This is probably the main answer. Wharton, and most school's current interviews, are conversational with the idea of gleaning personality behind the paper application and selling the school to the applicant. There's only so much you can learn from an interview that is more of a victory lap for the applicant and the 30 minutes interview has limited effectiveness with convincing an applicant to turn down Stanford for Wharton.

This is the same reason that schools tend to change essay questions. The "describe an ethical dilemma" essay did not root out future rogue traders or peddlers of now toxic assets but just produced standard responses. Thus, schools dropped that essay.

Harvard actually has a rigorous interview technique where they review the application and ask follow-up questions on the essays. For example, one of my friends described in an essay how they wanted to invest in businesses with a similar business model as our local organic grocery store chain that promotes living wages and sustainability. When the Harvard interviewer grilled him on the grocery stores' wage and benefit structure and ROI on sustainability, he almost caved and responded with, "I just like the grocery store and wanted to make it seem like I think about business models while trying to figure out if I should buy local carrots or organic ones that were shipped from developing nations." As a result, Harvard gets a lot of differentiating information from applicants during the interview.

3. Wharton is trying to figure out which applicants interview well which will help Wharton's job placement statistics and ranking in magazines. Since behavior-based interviews mainly measure how well someone interviews, Wharton can screen out candidates that are not as good at corporate interviews. Thus, they will create a class that is better at getting jobs.

This is more of a conspiracy theory since MBA programs spend a significant amount of time training its students on how to interview well. Students tend to be smart enough to figure out how to answer these behavior questions and prepare enough stories in advance. I am pretty sure there's a social psychology study somewhere that proves this.

Saturday, November 27, 2010

My Society of Insurance Research Presentation: The Business Opportunity that Health Reform Created

Some eager followers of Roll Away the Dew may remember that 2 weeks ago, I presented at the 40th Annual Society of Insurance Research (SIR) Conference in Jacksonville, FL. Other eager followers may still be recovering from Thanksgiving and that pumpkin cheese cake so everyone's mileage varies. Linked below for everyone's powerpoint pleasure is my presentation on the business opportunity that health reform created for Medicaid. I'm trying to figure out a catchier slogan that have the acronym of "SIR GALAHAD" or "TRON" but am having trouble.

For those who may not plan to peruse all 13 dense slides, the cliff notes are as follows:
  • Medicaid is going to become a larger insurance market. By 2016, almost 1 in 5 Americans will have Medicaid compared to 1 in 10 with individual commercial insurance or 1 in 8 with insurance through a small business.
  • Market impact varies by state much like the Thanksgiving stuffing.
  • States that are complaining about budget impact are not talking about how the federal government will pay for 100% of the new Medicaid eligibles from 2014-2016 and 90% of the cost for 10 more years.
  • These post 2014 Medicaid eligibles will be very different than the current Medicaid eligibles. New eligibles from reform will be mostly adults, be working poor, and have successful experience managing their own health. The main difference between this new pool of Medicaid eligibles and a blue collar service union group is the union membership.
  • Provider partnerships and financial arrangements will have to be different and no longer rely on the number of physician visits as the vehicle for payment. Reimbursement needs to focus on care teams, long-term partnerships, and reward medical management. Federally Qualified Health Centers (FQHC) provide an excellent opportunity.
At the end of my presentation, I had convinced a very Liberatarian crowd who had this view of government to give Medicaid a different look. My next step is convincing my employer to invest in these ideas.

As far as the rest of the Society of Insurance Research conference, it was a very interesting event with compelling speakers that had some great analysis of the segments of people who buy property and casualty insurance. Plus, at what other conference do you find yourself exclaiming how those property and casualty folks really know how to party?

Friday, November 19, 2010

The MBA Admissions Consulting Season in Review

About 7 posts or 2 months ago, I had threatened to hibernate due to the upcoming MBA admission consulting season. Round 1 deadlines have long ended and most applicants have some idea of their fate or at least the fate of their MBA applications.

Here is what I can share about the 2010 admissions seasons in review:
  • Clients are asking a lot more questions: I could no longer pass myself off as all knowing and all wise merely because I had successfully applied to business school during an era when AOL email addresses still had significant market share. Clients questioned my lack of focus on the importance of grammar or why one of their stories showed personality while another was just pontificating like a Harper's essay. While I would prefer that clients think I was wise and all knowing, I gave them a lot of credit for some of their questions. Since I was always very deliberate with my feedback, I usually satisfied them. For anyone considering working with an admissions consultant, I would invite questioning and scrutiny of the consultant's analysis up until a few days before the deadline. However, once you are that close to the deadline, the scrutiny looks like resistance to submit. There is also greater risk of rewriting your drafts in a late night flash of apparent brilliance that does not look as good in the morning light.
  • Admissions really has a holistic approach: Clients who work in more technical areas have projects where every line of code or test scenario matters . The admissions process is much more of a big picture with broad brush strokes. That's why grammar doesn't really matter since the admissions review won't get at that level of detail. Admissions truly uses an 80/20 review process where they glean 80% of the necessary information from 20% of the application. However, what that 20% of the application includes will always vary based on the applicant so there is no formula to capture it. Main takeaway is to focus on larger themes in essays and not ponder punctuation.
  • I now know how recommendations do not matter: In my previous posts, I have classified the recommendations as the most useless part of the application. Writers and applicants spend a disproportionate amount of time based on the value that they contribute. I would climb up on my bully pulpit (aka this blog) to urge schools to reduce the amount of effort it takes to complete them. However, from reviewing some recommendations, I now understand their role. They are supplementary to themes in the essay. Recommendations can really bring some of your characteristics to life and help admissions really see what an applicant is truly like. However, they will not add anything that's not already in the essay or they won't be be believed. They're basically like the movie version of the book. The book is always better and if the movie doesn't follow the book, we just assume excessive artistic license.

Friday, November 12, 2010

Relationship between Hospitals and Health Plans: Strange Bed Fellows are Getting Stranger

The relationships between hospitals and health plans has been fairly simple. It's all about exclusivity and the payment. Health plans would ideally like a discount for an exclusive relationship but may pay more for an exclusive relationship with the right hospital. That relationship can directly bring more business to the health plan because potential members may really want to be able to access care at that hospital. Additionally, a benefit design that provides limited or no out of network benefit can really accelerate membership growth for a health plan.

Hospitals tend to focus on payment first since they have higher fixed costs and don't have vehicles like a benefit design to drive business. Exclusivity or limited exclusivity is also a goal in hopes that their beds will be filled primarily with the members of well paying health plans. However, as I found with recent discussions with hospitals, it's secondary to payment. Their negotiating levers are limited. As a result, hospitals are mainly looking for the attractive partner first and if it turns into a beautiful relationship where they cook and remember each others birthday, that's a bonus.

Some hospitals and health plans work out a favored nation status with each other like the Michigan Blue Cross plan and area hospitals. Under this arrangement, the hospitals gave Blue Cross the guaranteed best price for any health plan. In relationship terms, that's like getting her agreeing to get together in the back seat of a Volkswagen. The Justice Department is calling that anti competitive behavior in its law suit against Blue Cross.

The result could shift the traditional health plan and hospital relationships. Both businesses have been growing so large in certain geographies that it's becoming hard to avoid anti competitive behavior. In 24 states, 2 or fewer insurance companies control 70% of the market. In some local markets, hospital systems like Sutter in Northern California or St Charles in Bend, OR can demand the best rates and don't have to worry about exclusive relationships (or using protection). AHIP, the health plan lobbying group, is continuing its bid to be the least effective lobbying organization by releasing statements over concerns of the anti-trust implications of Accountable Care Organizations (ACO's). Despite the logical and appropriate payment model of ACO's, AHIP is too concerned that it will give providers more market power.

As a result, the times are right for new thinking about the hospital and health plan relationship that doesn't mirror primal urges. With both industries teetering on the edge of an anti-trust law suit, the problem may be solved by others if hospitals and health plans don't come up with a solution. Personally, I think that focusing more on the exclusivity in the relationship could be the answer. ACO's create an opportunity for a long-term partnership and could (but not likely) be structured where there can be only one hospital or one health plan in this three way with primary care providers. Health plans and hospitals with similar market segments, philosophies or levels of quality might pair up and find more synergies pursuing common customers.

This is basically a model similar to Kaiser Permanente and closed systems only have historically had limited appeal. However, history is changing and it may be time to stop basing the relationship on how many dollar bills are required to be thrown on stage.
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