Roll Away the Dew

What is your ideal Job and other Terrible Questions that Interviewers Ask

2011-12-20T21:06:00.000-08:00

I am letting this blog continue its descent into exploring the job interview process. That's probably better than a descent into animal husbandry, colonoscopies, Molly Ivins quotes, and other places this blog has descended to.

I have learned that there are some interview questions that are intended to be traps. They yield little to no useful information and are really intended to trap applicants into revealing information that will eliminate them. The question of "What is your ideal job?" almost trapped me in a recent interview. Therefore, I started using it on people that my department interviewed to see how others responded. Here are the results.

My ideal job is one where I can considered a subject matter expert and coworkers look to me for my expertise. Sounds like a good harmless answer to a bad question. However, the job was for a project manager who would work on such a range of projects that they would never become an expert in any area. In fact, the job called for someone who was comfortable not being a subject matter expert.

I want to be a in a position that uses my skills and provides opportunities to grow. That became my favorite answer to this question. It reveals nothing to trap someone but answers the question. It even adds just a hint of "Ask a stupid question and get a stupid answer," to get the interviewer to back off future bad questions.

I want to continue to work and grow in Field XYZ that I am interviewing for. That was my answer. My biggest problem was my delivery where I made it appear that I had just come to this revelation during the interview. Otherwise, it's not a bad answer.

For both readers, what's your favorite terrible interview questions and how do you respond? My other favorite was How do you like to be praised? My answer was with with a parade complete with clowns and a marching band.

Advice from an Interviewee

2011-11-18T10:25:00.001-08:00

After my scintillating series about how employers have no clue how to hire people, this post is from the other side of the desk. I believe in interviewing every 6 months whether you need to or not to keep skills and contacts fresh. This also helps me check out if my suit still fits.

The other reason for this Always Be Interviewing Approach is that the line between the employed and long-term chronically unemployed who are getting discriminated against by recruiters is as thin as the Kardashian's credibility. That is why I will march with and donate to Occupy Wall Street even if they are a little dirty, their message is a little muddled, or their positions are not that crisp. There is no longer a lot of difference in the backgrounds of someone who logs into a corporate version of Microsoft Outlook every morning compared to someone who is soaking their bandana with apple cider vinegar to protect themselves from pepper spray.

I interviewed for a provider strategy position at a large insurance company. I don't know if I got the job or not but wanted to write the post before I was tainted one way or the other when judgement is rendered. In this post, I will describe the three things I learned which were 1) the importance of answering why you want the position, 2) how career switchers can position themselves, and 3) uh, it's um, uh, Oops (bet none of you saw that one coming.)

Why do you want this position? Of course, I came up with 3 reasons for the job. My formula is a basic one of 1) this position will allow me to participate in market trend Y, 2) this position will support my career goal of doing Z, and 3) I really admire the company for reasons ABC. What I didn't do is reinforce the message constantly during the interview. An interviewee needs to hammer that message like a presidential candidate. The interviewer is always concerned that someone won't stay in the position and this is the best way to address that concern is talk about how perfect the position is for you.

With my interview, since this position represented a new functional area, I really needed to do more than come up with 3 reasons. I need to show excitement, industry knowledge, the opportunity, why I couldn't do it from my current position, and crank it up to 11. I don't think that I threaded it into enough answers to satisfy a skeptical interviewer. I used too much terminology from my current job and not enough of the new position's lingo.

What career switchers can do? I wasn't a career switcher but within health care this was definitely a switch. Employers are increasingly reluctant to hire anyone who doesn't done a job before. Training is not considered part of the onboarding process anymore which prevents employers from filling a lot of positions. I do fault the employers for not taking the time to determine what skills can be taught, what skills cannot, and how to assess how different experiences meet the skills that cannot be taught. That's half the story behind the belief that there aren't enough skilled workers for certain positions. However, we can't hate the player, just the game.

To address the lack of direct skills that I had, I drew clear parallels from other experiences. I hadn't negotiated with providers but I had negotiated with vendors. I hadn't done statistical analysis on bundled payments but I had done other statistical analysis. I pointed out that I learned indigenous South American languages in 3 months so I could learn skills. What I should have done is been more clear about career switching that I had done in the past and how I had been successful with projects where nothing in my resume indicated that I had the direct skills.

Fancy Graduate Degrees still matter. During the interview, my fancy MBA was referenced three times indirectly. One asked if I knew her former coworker who graduated from my program, one noted my major, one asked me if I had taken classes in a specific area. As in the past, my fancy degree got me the interview since the employer probably just wanted to see what fancy MBA's look like, just like folks from Appalachia want to see if Jews have horns. Of course, it won't get me the job but you also can't get a job if the employer doesn't have a reason to interview you.

For all those who criticize graduate degrees and promote alternatives like blogging or starting websites that one claims are a business, the evidence isn't there. This blog certainly wouldn't have gotten me an interview. It's more likely to get me on a federal no fly list than it is to get an interview scheduled.

The benefits that blogging provides are a way for me to require myself to take some time and think about the interview in a way that does not involve telling myself that the smell coming out of my butt is a rose. It forces me to explain the experience to a vaguely interested third party (my faithful readers) in a way that's relevant. Most importantly, I now have a better understanding of what I need to do better the next time that I interview. The third and final thing that I learned is uh, um, uh, oops (now I really bet that you didn't seen that one coming. Hey, if Nancy Pelosi can beat this horse to death why can't I give it a few kicks!).

Understanding what to Haul off the MBA admissions process

2011-11-14T14:42:00.000-08:00

Alex Fleming wrote a post about how "Business School Admissions needs an Overhaul" My joy increased as I read it since it gave me great material for a post of my own. There are various genre of blogger posts such as the List (i.e. Top 5 ways to give yourself a Colonoscopy), the Repost (look at this funny baby and animal video where someone makes them talk about colonoscopies), and this genre of the Disagree. With the Disagree, I simply disagree with Alex's post.

Alex's premise is that the MBA admissions process needs some innovative techniques to help schools better assess candidates and render MBA admissions consultants obsolete. He attacks the essays as being prone to ghost writing and whispering by admissions consultants His suggestions for new innovation are:

1) Group interviewing which the Wharton school is piloting
2) Stealth interviewing where everyone from the Security guard to the fellow who just clogged a toilet in the men's room is a potential interviewer
3) Personality evaluation

Personally, I think that the best approach is to combine all three and have stealth group interviewers evaluate personalities. To be able to assess Alex's approach, we need to break down the MBA evaluation process into its parts

Talent Level: This is the GMAT score, work experience, and grades. Admissions simply wants to gauge academic and professional capability. This has largely already been predetermined and there is little a candidate can do to change anything in this category other than taking a quantitative class to address a major in Comparative Scandinavian Skiing and no classes that involve numbers. The best thing that a candidate can do is use this determine their safety, sweet spot, and stretch school

Community Involvement: Extracurriculars are as much a part of the MBA experience as classes and the job search. A history of extracurricular involvement is a strong predictor of future extracurricular involvement. Blinding Case of the Obvious is the group that sponsored this research. It also is likely to indicate an engaged alumni. The insightful cultural comments that I get on the rugby team alumni list serve also give me fond memories. A candidate can't change a past history of extracurriculars that includes "It's Always Sunny in Philadelphia" TV marathons but it truly is never too late to start. This will separate an applicant from the candidate who never does start.

Is the Candidate Clueless: This is addressed by the variety of Why do you want an MBA and what will you do with it essays. No admission consultant can make up a reason to apply for an MBA if the candidate has no idea. I have worked with candidates who tried to pick noble MBA goals but we could never get their work experience and career choices to ever tie together. The candidate who develops a sudden passion for public health can't explain why they are not applying for a Masters in Public Health. The candidate who wants to start a non-profit can't explain how the passion started with only large corporate experience and a post MBA goal of investment banking. The candidate who can't decide if they want to work in consulting or investment banking but who really wants to work in private equity can't even meet the essay word limit in a coherent way.

Schools are moving away from this question because there are only about 6 different answers that they ever see. However, a candidate who can't come up with one of those 6 will eliminate themselves from consideration.

Does the candidate have a personality: This is where the essays and interview come in and where ghost writing is also less useful. From reading the essays, does the admissions committee want to risk running to them on campus? Will they be interesting learning teammates? Are their essays littered with passions, interests, or funny stories about their past or more mundane tales about leveraging project management resources to ensure that IT met its deliverables?

What part of the MBA application process do Alex's interventions target and what do they reveal?

Group Interviews: Some think this will produce the same environment as TV's Apprentice. However, that doesn't give a lot of credit to MBA candidates who will figure out that group interviews are intended to see if candidate can play nicely with each other in the sand box. Assholes will be easy to spot but wouldn't a 1:1 interview pick up the same trait? My main criticism is that it will reduce applicants contributions to sound bites. With less air time, there isn't time for thoughtful anecdotes about one's past, hopes, and dreams. It's speed dating rather than a candle lit dinner. How will creating an artificial social atmosphere provide new information to an admissions committee and help them figure out if they have a clue or personality?

Stealth Interviews: If someone has been promoted once in their lifetime, haven't they already figured out to be nice to everyone's administrative assistant? Unless the stealth interview involves tackling the applicant, this is about as innovative as emailing a thank you note to someone as a way to differentiate yourself. I don't see how this will answer the clue or personality question either.

Personality Test: Alex's theory is that admissions should look for the same personality traits that great leaders have in MBA candidates. My first reaction was to Google search "CEO psychopath personality test" which has 91,900 hits and links like this. This solution also addresses the Talent Level category of which there is ample information. Assessing the candidate's personality in terms of how well they get along with their classmates seems like a larger opportunity. Finally, this suggests that admissions have the data capabilities and bandwidth for social engineering which I have addressed previously in this post. In summary, this addresses a need where this is already plenty of information, there are unintended consequences, and there isn't even the infrastructure in place.

Alex's post seems to be guided on a notion that admissions consultants need to be removed from the system. However, admissions and consultants seem to be developing closer relationships. As an admissions consultant, I have a vested interest in the status quo but I also don't see a need for an internal ethical reflection. Most successful applicants use some kind of external review process since they think their own poop smells like roses. That external review can be a co-worker with an MBA, a former teacher (which is what I used), or an admissions consultant. Admissions consultants fill the same niche as mail order brides. Those who can't get the quality of service they want for free, have to pay for it.

Objecting to the Objective Statement

2011-11-08T21:29:00.000-08:00

Long-time readers might remember that this is the time of the year where I review the latest Wharton MBA Health Care Management class's objective statements on their resume book. Readers who do remember these posts are highly encouraged to get a life- er I mean commended for their loyalty but still highly encouraged to get a life.

By review objective statements, I mean make fun of them like a snarky hipster makes fun of anything that is not ironic. Now some readers might start thinking that my get-a-life comment was a little bit of a defense mechanism so here is the usual disclaimer:

I don't know the difference between a disclaimer or a disclosure.
I don't even really know what ironic means either.
The students who I am about to make fun of are a lot smarter and more talented me. By a lot, I kind of mean like trillion used to sound like a lot.
I made fun of my own classmates objective statements at our annual banquet so I would do this to the class of 2012 face-to-face. The main reason that I do not is because the class of 2012 has no interest in meeting me and playing Angry Birds is a better use of their free time.
Given that the students are ridiculously good-looking in their resume book photos in addition to being smarter and talented than me, no one's feeling should be hurt. While I am a cinnamon roll away from obesity on the BMI, most of these students look like they have chiseled abs in their head shots.

What did this year's objective statements bring us?

Leveraging is still the hottest activity on campus but others are catching up: Everyone is still leveraging their "business knowledge and their clinical experience", their "real estate banking and pharmaceutical experience" (which sounds like snorting cocaine off the granite counter tops of expensive condos to me), or peanut butter and jelly. However some have gone a different path and used words that actually still have their original meaning like "combining my experience." One was bold enough to announce that his experiences were already not only leveraged but "integrated". Well played, sir.

Hedging is back in fashion: The toughest thing about objective statements is narrowing it down to the one industry where you want to work. Therefore, objective statements sound like an elaborate list of qualities that guys look for in girlfriends where they are trying to not rule out anyone who might actually have sex with them. Last year some students got bold and placed a stake in the ground. This year, not so much. One student announced an interest in both "international and domestic public equities" and another was looking for opportunities in "new markets in the US or abroad". This meant they only eliminated Mars and 20,000 Leagues Under the Sea from their future plans. One announced they were seeking an opportunity in "commercial management in health care". Either that's really broad or they are being very specific about wanting to work in advertising with Don Draper.

Raising the stakes: This year's class was bold and I would expect nothing less than from these millennials who don't have to spend their time watching their hair line with the same level of scrutiny typically reserved for the Pakistan-Afghan border. Besides just wanting a job in either "venture capital, business development, or innovative start-ups", they talked about transforming the health care system. Soon to be graduates had plans to "improve efficiency and effectiveness", "access and quality", "identify and drive long-term value," and "improve health care quality and delivery." They weren't just looking for a job but they were going to make big changes. To these efforts, I will salute the class of 2012 as soon as they pass me my cinnamon roll.

The MBA Oath is just making me Swear

2011-10-24T14:11:00.000-07:00

The MBA Oath was started in May 2009 by Harvard Business School students. The Oath was intended to serve as a Hippocratic Oath for MBA's, encourage students to start local Oath or Oathian clubs on their campus, and promote the emphasis on greater societal good. I blogged twice about my assessment of the Oath's progress and this post represents the eagerly anticipated third installment of the series. This is probably similar to how the public eagerly waited the second Chronicles of Riddick since they had no idea that a first version was released.

How is the Oath doing? It might even be similar to the Chronicles of Riddick

Since 2009, 6,303 students have signed the oat and the MBA Oath states that it has been embraced by about 300 schools and institutions. 37 schools were highlighted as working on significant events which I guess is kind of like getting past first base. 17 schools were highlighted as significant contributors which I guess is second base. Either the MBA Oath doesn't put out or it's not getting any action. Given that hundreds of programs graduate 150,000 MBA's per year, this is looking like less than 5% market share. From a volume perspective, it's not looking like it's impactful, making impacts, having an impact, leveraging, optimizing, or transforming. Value is not being created but at least no value was harmed in this process.
In my first post, I praised it's slick website which is the equivalent of a corporate business card in this day and age (not saying that I consider corporations to be people since Occupy Wall Street clearly disagrees). That's good when your website is in good shape. When your website's blog and media page haven't been updated since the last World Series, that's a pretty clear out of business sign. To be fair, it looks like they moved their activity to their Facebook page which I guess is either really a savvy move or lazy move. Since moving to Facebook, most of the MBA Oath's activity has been from one very critical poster who is riding them harder then then headless horseman rode Ichabod Crane. Based on that, I don't think that it's working out too well.
The MBA Oath's best opportunity was to position itself as a requisite for MBA's as part of a hopeful movement to provide some form of license or ways to guarantee that all MBA's come with some minimal standards. If they chose to position themselves as a resource and driver for socially minded MBA students, they would compete with Net Impact. Net Impact has a long track record of providing resources and opportunities to this segment. They seem to be trying to compete with Net Impact which is duplication of services at best but really an example of a lack of clear goals.

The last bullet point is what made this post timely for me since Occupy Wall Street is being charged with a lack of focus and having no clear goals. I have no shortage of snarky posts about wellness, ACO's, resumes, and job interviewing so it's not like I needed to make fun of the Oath for material. The parallels between Occupy Wall Street and the MBA Oath became fairly clear to me as I got more interested in the Occupy movement.

Both are good examples of excellent marketing campaigns that captured a key movement of their times. They both are good shorthand for these movements with Occupy representing angry leftists trying to salvage the American middle class and the Oath representing socially minded MBA's trying to salvage the reputation of their schools.
Both had clear goals but no clear way to get there. Occupy is about the end of corporate personhood (note the foreshadowing), boycotting national banks in favor of local credit unions, and a "Robin Hood" tax on investment transactions. They are trying to get there with human microphones, face paint, and funny hand gestures. The Oath is about doing financially well while doing good, responsible corporate behavior, and encouraging their classmates to take an oath to do these things. They are trying to get there with a petition. I would recommend adding face paint.
Both face a backlash from those who should be their most ardent supporters for appearing to be a marketing campaign with no clear goals that is capitalizing on popular sentiment

From my visit to the Occupy Portland camp, I have to say the main difference between the two movements right now is their personal hygiene of their participants. However, I am rooting for Occupy Wall Street's legislative agenda and hoping that the rate of voting in the 18-29 segment rises above 50% in the next election.

The Wellness Industrial Complex

2011-10-18T06:33:00.000-07:00

My place of employment (no not this blog, luckily I have a real job), required us employees to do a biometric screening this year. They drew blood to measure our cholesterol and lipids, took our blood pressure, and weighed us. Opinions varied. I listened to one coworker ask what our insurance company was going to do when they got her results. She was assured that her results were just for her to better understand her health. Another coworker commented on how this screening was a great idea and she was really interested in seeing if behavior changed.

The coworker who was nervous about the insurance company probably got results that indicated she wasn't so healthy. The coworker who thought this was a great idea probably was perfectly healthy, knew it, and was acting smug about it. The coworker who was nervous about the insurance company was told a half truth. This first year, the results would be just for us to see if we improve our health on our own. However, in future years, our employer and insurance company will slowly but surely get more active. The first year is voluntary and a free service to show they care. Next year, a nurse will probably call us about our high BMI. The following year, it will be outcomes focused and there will be rewards for improving health. The next year, the carrot will be replaced by a stick and we will be beaten with it until we lose that weight.

I know that some of my coworkers who work for insurance companies refuse the reward to take biometric screenings for fear that their insurance company will no longer cover them if they have poor results. That's not true. The insurance company will just give them lesser coverage until they show improvement and have nurses harass them.

I am being a little apocalyptic since the scenarios above are probably unlikely. However, they are unlikely because of employers and insurance companies ability to make these hard decisions about when to start the more punative measures for poor employee decisions about their health. Employers don't really want to be in the health insurance business let alone run weight loss centers. These more draconian measures of hiring companies to make employees give them their candy in exchange for fruit (a company really does this) will result in hard conversations and distraction. Most employers don't want to deal this. However, their desperation to reduce medical costs have resulted in the Wellness Industrial Complex.

We have an endless choice of Health Risk Assessments from all kinds of company that ask about our health based on the theory that we will take these tests and suddenly discover that we have unhealthy behaviors and stop them. For example, "Oh I thought it was 5 servings of bacon a day not 5 servings of vegetables!" or "I will certainly stop snorting cocaine off my Iphone while driving in traffic and go back to snorting it off stripper's chests. That is much less risky." Thanks Health Risk Assessment for showing me the light.

The Health Risk Assessments are followed up by Health Coaches which are often non-clinical, non-licensed staff who talk with you on the phone about your bacon consumption. These Health Coaches are coupled with Incentive management programs who are solely dedicated to mailing gift cards or horse's heads for those who do well or do poorly on their health scores. This is all complemented with Wellness in a Box campaigns that include some lovely marketing material such as vegetable of the month of how to start a walking club at your work.

That sucking noise that you hear is the cost of the Health Risk Assessments, Health Coaches, Incentive programs, and material to celebrate National Pedometer Day. What's the ROI on that readers are probably all shouting like the Timbers Army at a Portland MISL soccer game.

The ROI in terms of medical costs saved is as elusive as a moderate Republican. It isn't really there and hard to find even it is. That's because the whole implementation of the Wellness Industrial Complex was foisted on health insurance companies. For insurance companies, the ROI is based on medical cost savings. Their business model does not reward them for improving wellness, productivity, or making employees happy. For an insurance company, the ideal customer is the one who dies in their sleep of a massive undetected heart attack after using no medical services for the year and not the client who manages their diabetes with monthly doctor visits and 3 prescription medications.

Provider groups or even unions are more logical candidates for hosting Wellness programs because they have different interests and are looking for different results. Both get rewarded for keeping workers happy and productive. That's where there is potential for ROI as opposed to the very indirect connection with medical costs.

Employers, in their insatiable desire for vendor consolidation, assigned Wellness programs to their health insurance companies because they thought incentives would be aligned and because they could. Insurance companies saw a market differentiation and revenue opportunity and grabbed it. However, the marriage of insurance companies and Wellness is proving to be as awkward as Bristol Palin on Dancing with the Stars. It's proving to be an added expense for insurance companies and the medical cost savings aren't there.

Since I like to offer solutions on this blog, I am pleased to say that I have one that should help all parties. Since employers are interested in vendor consolidation, they should have their Waste Management vendors run their Wellness programs. Given that most Waste Management companies can tell what employees are eating at work by going through their trash, they have the information. No need for a Health Risk Assessment. More importantly, since most Waste Management companies are mob run, they should be very successful in this endeavor. Their loan sharking and enforcement arms can easily handle the health coaching and incentive programs. The medical costs may rise in the first year due to some broken knee caps but I am confident, they would show a better ROI then health insurance companies.

Corporate Jargon, dead yet?

2011-10-13T06:56:00.000-07:00

The MBA admissions season is starting to tail off. As usual, I spent at least 25% of my time pulling corporate jargon out of client's essays. Words like "value extraction" or "create value" are replaced with what the person actually did. "Leverage" and "optimize" are replaced with real verbs rather than name of a TV show and a Transformer. "Tool kit" is replaced with an actual description of skills unless the person is describing a carpentry project. "Impactful" or "Impacts" is changed to the humble original word of impact. I also pull out the word unique, profound, and deeply because they are just another way of saying "very" and suggest that they use real adjectives instead.

Given that MBA admissions cracks down on corporate jargon, I wonder if this effort will eradicate impactful value streams from future MBA's vocabulary like the invasive species that it is? I had further hopes during a conference call with a vendor that was trying to cross sell us their products. Since we were on mute, we spent the call laughing at phrases like:

To be honest with you
As the risk of sound sales-y
I don't want to get into the weeds
In order to wrap your arms around this

We spent the time trying to use as many of those phrases in one sentence. The winner announced "At the risk of being honest with you, I really want to wrap my arms around this project while I am down in the weeds." These corporate jargon phrases caused the person's stock to plummet as fast as the actual stock market in August.

After these observations, I was feeling hopeful that standard English was making a come back at the expense of corporate jargon. Real words and adjectives were the new black. Or is it the new pink? My hopes were dashed after receiving this email from a current MBA student. I had expressed an interest in writing for their newsletter and this was the response that I got:

Thanks. Will be in touch. We are refining a plan based on the responses we have been getting so we can optimally leverage the talents and enthusiasm of all those interested in a high level of engagement. We would like to "share the wealth" such that the time commitment for any single individual is manageable and to have a full queue of content throughout the year to maintain momentum as each edition rolls out.

For readers who don't speak corporate jargon, the response was "We are trying to get a lot more writers so we have enough material to produce at least a few issues." FML. MBA student's writing ability is a lost cause just like Rick Santorum's hope of ever solving his Google problem.

Medicare Advantage took the next dance from ACO's

2011-09-16T13:25:00.000-07:00

Accountable Care Organizations (ACO's) were one of the more eagerly anticipated part of health reform. Well, they were eagerly anticipated by policy wonks and larger provider groups but the general community probably the ACO was a ligament in your knee.

ACO's were going to reward provider groups based on outcomes not volume of care. Provider groups would organize into ACO's, be assigned patients by the Center for Medicare (CMS), and receive additional payment if they managed costs well or penalities if they manged costs poorly. Providers responded since new revenue opportunities in a post-reform world are about as rare as moderate Republicans. They organized different provider structures, explored risk management software, and different techniques for population health management.

When the ACO rules were released by CMS, someone switched the dance music to the polka. Nothing's wrong with a good polka especially with my new lederhosen but it was the wrong dance beat. Providers were disappointed at the requirements and low likelihood of receiving additional revenue. What followed was like a hangover as providers were irritable and nauseous.

However, providers had already organized into structures that could manage population health and a global budget. They were also becoming successful at managing costs as Medicare increases were cut in half in 2010. Now they were looking for a payer partner to be compensated for their success. Although Molly Ivins says that you've got to dance with them that brung you, providers had a new dance partner. The much maligned, overpaid Medicare Advantage (MA) plans filled out that dance card.

Medicare Advantage plans typically pay providers more than Medicare or if they pay the same or less, they offer captive volume through networks that don't cover health care from providers that don't contract with them. MA plans are also accustomed to offering the same type of reimbursement methodology as ACO's without the additional requirements. As a result, large provider groups are starting to look for MA partners who can offer this type of reimbursement and starting to close their offices to patients with original Medicare and the ACO. Providers can negotiate with Medicare Advantage plans but not with CMS.

These relationship also reflect what is happening in the merger and acquisition world. MA plans are purchasing provider groups to build this arrangement. I guess that's an example of dance partners getting married. I hope the babies are cute. For provider groups who have a higher criteria for dance partners, may only want to dance with MA plans that receive a 4 or 5 star rating from CMS. Those plans get a 5% to 10% higher reimbursement from CMS and that bonus comes out of the pockets of 2 or 3 star MA plans. That's more revenue to share with providers. Since the star ratings are mainly driven by the better health outcomes for a plan's membership, this alignment makes a lot of sense.

This was the intended result of the ACO. Provider groups would be rewarded for moving from being paid on volume to being paid based on better outcomes. The surprise was that it's Medicare Advantage plans that are achieving this result while ACO's are still looking for dance partners.

The TV Show that Best Mirrors the MBA Admissions Process

2011-09-02T13:47:00.000-07:00

Some would guess the Apprentice or Survior are more reflective of the MBA admissions process given their cutthroat nature, latent sexual tension, and winner take all mentality. For those who are curious about that list, yes, despite a 2:1 male/female ratio, one can generally cut the sexual tension in an MBA classroom with a food processor. However, that's a common mistake MBA applicants make. For a guide to how to approach the MBA admissions process, there is no better show than the Glee Project.

The Glee Project is a singing, acting, and dancing competition where the cast member wins a spot on the TV show Glee. It is generally assumed that the winner will play a socially awkward, downtrodden character who is an underdog who dares to dream and fight for the dreams. While most MBA applicants would like to identify with the cooler kids in school, in truth they have a lot more in common with the members of the Glee club. Thus, it makes sense that the selection process for both is a parallel as opposed to a paradigm shift (One always gets a bonus in MBA school for using buzz words like paradigm shift). Here is an episode by episode example:

Vulnerability: In this episode, characters are expected to exhibit their vulnerability in one word. It requires introspection and brevity which are two things that are difficult for the average MBA applicant. The vulnerability is important because it shows the real side of the candidate (for both Glee and MBA programs) and allows both admissions committees a chance to understand more about them as a person. Everyone is vulnerable and has issues. The candidate who presents themselve as having never failed and expects the evaluation to be a victory lap is an incomplete candidate. The introspection that comes with identifying vulnerabilities also shows an ability to indentify true career passions and goals. This is an MBA candidate that will not have a herd mentality and truly take advantage of the program.

Pairability: In this episode, the Glee Project cast pair up to perform and in some cases, kiss. MBA programs involve teams or pairs to manage work and projects. This is not exactly a stretch nor should be a surprise. The message for MBA candidates is that better essays should demonstrate team work and ability to work in teams rather than a desire to work independently and be a lone wolf.

Believability: Characters were critiqued for trying to put on appearances and not being themselves and inviting the audience in. For the TV show, this was about connecting with the audience, creating believable characters, and not being one-dimensional. Diva-esqe characters were encouraged to show other sides, the scrappy underdog was encouraged to show that he can be a leading man, the cool, dread-locked cast member was encouraged to try using a different facial expression. The cast member who tried to be perfect was told that no one believed that she was perfect. That is an especially important message for MBA candidates as admissions will never believe that a candidate is perfect so no one should position themselves accordingly. Successful MBA candidates will show multiple sides of their personalities in their essays.

Damian: Damian is not an episode but a cast member from Ireland with a great Irish accent and incredibly mobile eye brows. When he was really nervous, his eye brows looked like they were going to jump off his face. He was clearly identifed as not the most talented and had to scrap to not be eliminated in the final song in almost every episode. Yet he was one of the two winners in the Lake Wobegone-esque season finale. His personality was very clear and enthralled everyone despite not having the same level of talents as others. This a key lesson for MBA applicants which is the importance of showing your personality in essays. A talented personable candidate will trump a more talented candidate who comes across as too perfect.

All the cast members of the Glee Project were very talented with resumes that included long histories of acting, singing, and dancing competitively. Some were also ridiculously good-looking. Some had really bright blue eyes that were kind of innerving. In summary, they mirrored the MBA admissions pool for top schools (except for the bright blue eyes).

Advice from a Hiring Manager: We still have no clue how to hire people

2011-08-08T20:24:00.001-07:00

The actual title should be "Advice from the some guy whose Boss got him involved in the hiring process because he looked like he has too much free time on his hands and the Boss wanted him to think that he could actually be trusted with a crumb of responsibility." However, readers should know that I try to avoid long titles. It could be shortened to "Advice from a Putz" but that wouldn't rank as high on Google searches.

Not surprisingly, I have digressed before writing the sequel to my previous post intended to assure job seekers that it is not you, it's us. The people that are interviewing you have the decision-making capabilities of a stoned teenager in a grocery story with the munchies and sense of reality is about the same. Here are the bullet points:

When we are looking for a right handed business analyst with 3 years experience with SQL servers in our industry, that is exactly what we want. We have no ability to gauge if a previous programming language is the same or if experience in another industry is relevant. Left handedness is an immediate disqualification. Some higher power needs to help career switchers because interviewer cannot.
Interviewers are also looking for someone who can help them with the project that they are working on that day. Doesn't matter if the position doesn't pay enough to attract anyone with experience in that project or if that's the responsibility of another position.
While you must meet all these qualifications, you also cannot be overqualified. That's because someone who is overqualified will leave for a better position as soon as they can. One candidate had the thought (in a private conversation) that it would be a good idea to hire overqualified individuals during a recession because one could stockpile talent. However, that talent won't be loyal. Anyone who's been laid off in a recession loses all sense of loyalty. I know that I did and I think it's a smart survival tactic in today's economy.
In summary, interviewers are Goldilocks only not as cute. Interviewees are probably like the bears who wanted to rip Goldilocks head off for messing with their house. However, job interviews like nursery rhymes don't allow physical violence.
Interviewers are also very anxious and look at every negative features about candidates. Limiting the interviewer anxiety levels is probably the most important thing to do.
It doesn't matter if you are unemployed right now. Most of the candidates that we interviewed were unemployed and the best way to address the question was with a quick and simple answer. The longer and interviewee talks about the unemployment, the more the interviewers start to realize that their own odds of future unemployment are pretty high too. That makes interviewers anxious which gets into the bullet point above. A recent New York Times article had the opposite point of view, that want ads were specifying that they only wanted currently employed candidates. That sounds like a human resource department who was looking for an easy way to screen resumes. In this day and age, it is highly likely that your interviewer had a bout of unemployment or knows how close they are.

June Mount Adams Climb in Winter Conditions

2011-07-23T21:05:00.000-07:00

At the end of this June, I led three friends up a south side route of Mt Adams. Only one of them had climbed a glaciated peak before and towards the end of our first day approach, I was worried that this climb might kill them and I would lose a few friends. Luckily, everyone adjusted on the 2nd day and we all made it to the false summit at 11,600 feet. Two of us summited. Their difficulties were probably driven by the fact that this was the first time they had backpacked up elevation in the snow. I think that our bodies have an initial defense mechanism to prevent us from doing that by creating extreme muscle fatigue.

Despite the end of June date, we had to do the winter route of the south side of Adams since there was that much snow on the ground. That included hiking an additional 3 miles to the parking lot which contributed to the excessive first day for all. It wasn't even a leisurely 3 additional miles as it involved some trail finding, setting compass points, and snow whacking.

Prior to leaving, we also had a lively discussion about whether to bring snow shoes or not due to soft snow in the late afternoon. We did and were very happy since we were on the soft snow in the late afternoon. If a group can make good time and get to their destinations while the snow is still firm, then snow shoes would not be necessary.

In the summer, the south side route typically is west of Crescent Glacier. However, from the photo below on the left, one can see how the enormous cornice (aka overhanging shelf of snow) made that route too dangerous. Therefore, we took the route from the photo on the right which was east of Crescent Glacier up the unfortunately named Suksorf Ridge.

The route up Suksdorf ridge was fairly straight forward and one can see the boot tracks in the photo. It ends at the Lunch Counter (9,000 feet elevation) just like the typical south side route. However, we camped at around 8,100 feet of elevation at a wonderful spot that had a flat area for 2 tents and 1 kitchen area. There were numerous quiet campsites on the way to the Lunch Counter which provided a rest from the additional 3 miles on the snow covered forest road.

The next day, we left camp at 6 am and headed up the south route. We were extremely fortunate that the snow conditions preserved a pristine set of steps all the way from the Lunch Counter to the False Summit. We made it to the False Summit by 10:30 and it then took two of us an hour to make it to the last 600 feet to the top (pictured below):

That's Mount Rainier in the background.

Building Customer Feedback Loops and Surveying Medicare members in a Non-Resource Intensive Way

2011-07-20T13:38:00.000-07:00

My longest blog title ever describes my presentation at the Medicare Market Innovations Conference. Although the title could have been "Speaking about Building Customer Feedback Loops and Surveying Medicare members in a Non-Resource Intensive Way while eating at In-N-Out Burger and getting Sunburned at the Beach." I get some points for brevity. It was a very enjoyable 2 days in Newport Beach, California and a great conference by Strategic Solutions Group. Now I see why Orange County, CA was the location of The OC as opposed to Oregon City, OR.

Below is a link to a presentation about how someone can create customer surveys and get good information without needing to do third party, double blind research with every Chi square dotted and every t test crossed. I also share the dramatic moments that this created in product development. Most readers are probably thinking, "Dramatic moments in product developments? Harry Potter fighting Voldemert creates dramatic moments. The only dramatic moments in product development are wondering if the finance folks are going to fall asleep during your meetings."

Medicare innovations conference customer feedback loop

View more presentations from dongrunt.

Here are the highlights from the rest of the conference:

Best quote: "According to John Hopkins, here is what people are thinking about during presentations like this. 10% of you are paying attention to what I say. 20% of you are surfing the web on your phone. 70% of you are thinking about sexual fantasies. That means, no matter what I say, 70% of you are going to have a great time during my talk."
Second best quote from the marketing director of a plan that serves Medicare and Medicaid: "According to state statistics, our company's customers represent 5 of the 10 poorest, unhealthiest, fattest, laziest, and least educated, people in America. But it's home."
If anyone in insurance is looking for a group to test the strategy of doing absolutely nothing to respond to external market changes, the Medicare Supplement or Medigap insurance business provides an excellent example. The speaker for Medicare Supplement shared all the times that industry analysts thought the Medicare Supplement business was over due to external changes. The business didn't change tactics and luckily, neither did its customers. When I asked how the speaker would respond to an external threat that I identified in the northwest (providers no longer accepting original Medicare), his response was, "Oh yeah? We'll see."
The average conference attendee composition is 66% vendors who are trying to sell services to 33% of the other attendees. As I learned previously, 70% of each groups are spending most of their time thinking about sexual fantasies.

Paradise Lost and Found and Lost Again: the Mission of Playgrounds

2011-06-24T14:20:00.000-07:00

As a parent of a young boy, I spend a lot of time on playgrounds. I like the rock climbing walls and appreciate a good fast slide. I also really like swings that have really long chains since you feel like you are flying.

My young boy likes the animals or cars that rock on large springs, a large sand box, and the dome jungle gyms. There are a lot of other features which are hit and miss. In general, if my little one can play on most of the equipment without getting frustrated, we're happy. It's a bonus, if I can spend some times swinging on monkey bars and refraining from looking too triumphant if I successfully swing across.

I thought that the societal role and social mission of playgrounds was fairly straight forward and transactional relationship. Until I went to New York City where I learned about the Rockwell Foundation and other architect's mission to transform society and create a future paradise through playgrounds.

Some of the quotes from the linked article (which require a subscription to see the full text) include the 1959 United Nations declaration about playgrounds as "as a place where children, by playing, learn to become non-playing adults." Alternative perspectives include playground development as a substitute for war training. On the other hand, playgrounds that introduce too many repetitive tasks like the 3 S's of swings, slides, and see saws are considered to tools of oppressors to stifle creativity in children.

Architects like Rockwell, Gehry, and others that we have never heard fought these pedestrian playground design and developed "Playgrounds in a Box" and "Loose parts." Children were entrusted with more control over pieces of the playgrounds to encourage the discovery and creativity process. Whacking each other with foam noodles is one example of this process.

Overally, their goals were best summed up with the following quote from the article:
Over the past century, the thinking about playgrounds has evolved from figuring out how play can instill youngsters with discipline to figuring out how play can build brains by fostering creativity and independent thinking. The hope of Rockwell's playground project is that children who have experimented with fitting together oversized blocks and cogs-and who have learned to navigate a place where the social challenges of sharing and collaboration are built into the experience-will be better equipped to handle the complexities of twenty-first-century life.

How did our experience with playgrounds changes through these carefully designed New York City playgrounds. Were my youngster and I transformed in anyway? I am going to answer in repetitive bullet points so you can clearly see that I am a lost cause for these playground architects:

We watched slightly older kids take over water sources or fountains and spray other kids who got too close. As the designers intended, kids learn at an early age that sharing is for the weak and they should dominate key resources.

A group of kids were digging an elaborate canal system in the sand. Two of them yelled at all the other kids to dig more and dig faster. It was inspiring to see their imagination settling on building their own sweat shops.

One two year old was very vigilant about tearing down any block or "Loose Parts" construction that any child built and left alone for more than 15 seconds. Clad in baggy back shorts, a medallion around his neck, and a pot belly, he looked like a little mob enforcer. Actually, he might have been.

It looks like the playgrounds do mimic the work environment quite well. This is New York City.

Be the Change that you can Abdicate to Others

2011-06-08T19:56:00.000-07:00

Not quite the snappiest title like "Be the change that you see in the world" which is both a popular bumper sticker and looks good on the back of graduation T-shirts from social work programs. However, I like the word "abdicate" as much as I like the word "colonoscopy" and it's easier to spell.

The fact that I completely digressed before I even started writing the post is completely impressive, too. I can't even use "But I digress" as a transition. My point is that local governments are running away from making any difficult decisions in designing health care systems. Their lack of boldness is making Wisconsin governor Scott Walker's decision to declare war on organized labor look good because at least he made a decision and stuck to it.

The state of Oregon has provided some very fine recent examples of such abdication with their Medicaid program. Rather than make difficult, thoughtful decisions to guide the program, they throw half baked ideas to health plans and providers. They are:

1. Charge copays for services. The state gave the option to charge a $1 to $3 copay to non-Native American adults for prescription drugs and primary care. This was intended to reduce the amount of money that the state paid for services by passing on the costs to the Medicaid beneficiaries. However, trips to the emergency room were still no cost to the Medicaid beneficiary. In an effort to save money, the state made an incredibly poor benefit design decision and and as a bonus, set up in a way that was difficult to administer. Providers would have to figure out who they could collect $1 to $3 from and what to do if that individual did not have any money (like send them to the Emergency Room rather than give them their $4 generic prescription drugs).

Almost all the carriers decided not to implement this copay scheme and just take less money from the state. This is an example of a bad idea to save money that the state floated to health plans and providers. It went over like a lead zeppelin. This was an opportunity to have a serious discuss about benefit designs and what Medicaid beneficiaries should pay for and what they should not pay for. Incentives could have been developed to guide positive behavior and punish negative behavior. Instead, an administratively unwieldy option was offered to punish positive behavior. The end result was a waste of time.

2. Ask health plans what the reduction in Medicaid costs should be: Oregon is facing a budget shortfall and has stated that it plans to reduce Medicaid spending by 19%. Another option is increase the provider tax in order to get more federal matching funds and face a 10% to 12% reduction. Oregon also has a rule that its Medicaid spending must be actuarial sound. That means if they want to cut costs by 10%, or 12%, or 19%, then the health care services used should also be projected to reduced by that same amount. This also provides yet another example of how actuaries are guaranteed employment forever.

Oregon has proposed some good ideas to redesign their Medicaid system to achieve those savings. However, they don't think that they can achieve the savings this year. They are squandering a perfectly good crisis and asking health plans to come up with their own actuarial sound analysis of the lowest cost to provide health care services for Medicaid beneficiaries. In other words, they are asking health plans what the cut in spending should be. This is a crucial decision in Oregon's Medicaid program and they asking health plans to do their homework for them.

A budget cut is just a loss of services but a budget cut and a health care system redesign is an opportunity. Under health reform, states have more options available to transform their health care system with Xxchanges that will allow them more control over the health insurance market. There are "pay or play" options where carriers must participate in Medicaid or providing guaranteed issue to children or face a financial penalty. This is the opportunity for bold and difficult decisions for states to make that will change the lives of their most vulnerable citizens.

This is not the time to buy a vowel.

Death's Door Bandit; A Sad Tale about the US Health Care System

2011-06-04T07:26:00.000-07:00

An elderly gentleman walked into a bank and indicated to the teller that he had a weapon. The teller was convinced enough about the danger or nauseated enough by his ear hair that they considered the threat to be serious. Before anyone handed him the money, the gentleman collapsed into a chair and had a heart attack.

This turned out to be an actual lucky turn of events for our ear haired protagonist because he had robbed the bank to get money to pay for health care. Due to a 1976 US Supreme Court decision, it is considered cruel and unusual punishment for a prison not to provide health care. Since the elderly gentleman was now in the prison system, he got the medical care that he needed.

However, there is a plot twist for the Death's Door bandit (This is a better term than the Ear Haired Bandit. I don't know if he had ear hair or not but if he is over 65, it's safe to assume that he did. The Bleeding Heart bandit is also an option). Readers may be wondering if the Death's Door bandit (DDB) was old enough to qualify for Medicare, the health insurance scheme for senior citizens. Not only was he eligible for Medicare but also Medicaid, the health insurance scheme for the low income! In case anyone is wondering, why I am calling Medicare and Medicaid a scheme, it is because I am imitating the Economist who uses that terminology. If you read it with a British accent, it sounds much more regal.

DDB is getting his health care paid for by the prison system but could also get his health care paid for by Medicare and Medicaid. He will no longer need to rob banks for health care so this story appears to have a happy ending. But wait, this scheme has a plot twist!

Heart attacks and medical care for senior citizens whose physical and mental status has decompensated to the point that they don't even realize that they qualify for basic government programs is not cheap. It's costly enough that administrators for the prison health system and Medicare and Medicaid started to pay attention. Both administrators took the high road and began to maneuver to try and stick the other one with DDB's medical bill. Medicare and Medicaid administrators want DDB to stay in jail so the prison will pay for his health care while the prison administrators wants to release DDB so Medicare and Medicaid will pay for his health care. The justice system is caught in the middle.

Only in America. Our health system must rank number one in something for this scenario.

Full disclosure: This is a true story. Names and details would have been changed to protect the innocent, except there are no innocent in this story.
Full disclaimer: I don't know the difference between disclosure or disclaimer.

So you want to be a Product Manager?

2011-05-16T19:17:00.000-07:00

No, you still want to be a rock star? Me, too but I'm tone deaf. Let's face it, if we didn't become astronauts, fire fighters, princesses, or vampire slayers, we all sold out our 8 year old selves. That's okay as long as you felt that you got a fair value for your soul. One relatively new career that provides fair value is product manager.

Product Manager has become a popular short-term career goal for MBA graduates to write about in their essays. I have recommended it to a few folks who are struggling with their career goals and they all seemed to like it. However, when you are struggling with the MBA career goal essays, if someone suggests being Colonel Mustard in the library with a candle stick, you consider it.

Digressions aside, product manager is a more savvy way of saying that you want to work in general management. Another option to the general management career track (which does not involve actually managing generals or even colonels) is management consulting. However, unless something in your background indicates that you can tolerate the rigor and demands of the lifestyle associated with a consulting career, it's not likely to make your essay look believable. In this example, managing even private first classes would be a rigorous enough background.

In the last five to ten years, product management departments have been created at companies, like health insurance, that did not previous have this functional area. Tech companies have used product managements since the industry was first created way back in 1991. Geek MBA 360 covers product management at tech companies very well while my knowledge is product management in health insurance. The product management position has become popular since it provides a clear accountable person or "one throat to choke" for a line of business. The fact that it's becoming a more common post-MBA destination shows how widespread it's become and how it may have peaked.

I hope that it won't go the direction of project management which is often confused with product management not only because the names sound very similar especially if you say them quickly. The demise of project management is the endless certificate options like PMP or PgMP. These certificates or license have proven to be very good predictors of tolerance for standardized tests and adult education classes and a very poor predictor of the level of quality of a project manager. They are also very good at creating an easy way for recruiters to screen out applications for positions that could attract a lot of candidates with every diverse backgrounds and many applicable skills. This type of certificate program is a significant risk for the demise of the product management position.

My tirade against project management served as an opportunity for me to both vent and juxtapose it with product management. At some companies, a product manager is very similar to a project manager as they tend to focus on implementation. These implementation product managers are more internally focused and implement new strategies, products, or decisions that someone else, usually the Sales department, made. In the case, they don't usually conduct market analysis except to validate specific decisions or build business cases since that work was already done.

What an implementation product manager will do is:

Use bullet points because product managers know that their implementation teams won't read anything they write unless they use bullet points
Work closely with IT or IS or Computer people Product Managers to define requirements and get sign off from business owners
Develop and maintain documentation on decisions
Resolve interpretations of different decisions or different documentations that may vary across departments or systems
Product training
Ensure that any annual processes are completed
Work closely with internal departments on new process development
Lots of project management

The work is very tangible, specific, and it's a great way to learn about how an industry works. This is a good way to enter a new industry or get training to become a strategy product manager.

A strategy product manager is definitely sexier. However, to put that in perspective, that's like saying one member of the Hell's Angels has better flossing habits than another one. The strategy product manager can generally get project managers to do the implementation work and is the one involved in the decisions for new products, geographies, or other strategies. The work includes:

Still has to use bullet points but communications are shorter and more like "We decided to do launch a new product that will appear to niche X. The project manager will actually implement it and I will pretend that I am the project manager's boss."
More external facing with lots of market assessment, developing market segments, forecasting market growth, and talking with customers
Presenting to customers. The Sales folks will generally trust you in front of clients to not talk about the difficulties that the latest request will create with the billing department's invoice batch process
Develop 3 year product plans called road maps
Assess new business opportunities.
Be the product expert and know how it should work but you will get to buy a vowel or use a lifeline with another functional area that knows the actual answer. The strategy product manager just has to know who to ask
Develop very good judgment on what projects really require the strategy product manager to manage in order to be successful but won't absolutely suck away too much time

Since the grass is always greener, strategy product managers strive to be budget product managers or work at a company where the product manages their budget and is responsible for profit. That is typically called "P and L" responsibilities which stands for Profit and Loss. However, I don't know why anyone would want to be responsible for the loss. Try to find someone else to take that on so I would describe it as being responsible for just the profit.

The main difference with strategy product managers is that budget product managers don't have to beg other functional areas to free up FTE time or hours to support their products. They already have an allocated FTE time that they can spend how they choose. In the corporate world, control of budget trumps all. Whenever someone tries to assign me a new responsibility, I demand the budget and resources to cover it. No one has called my bluff and given me both which shows how much people value their budget. Therefore, I am still a strategy product manager.

We need a Single Payer System like a Fish needs an XBox

2011-04-25T06:29:00.000-07:00

I used to wear T-shirt that I got from a thrift store that said "It's time for Peace, Jerry Brown '92" while I drank from a water bottle with a Dennis Kucinich sticker. Yet, I don't see how a single payer system can be viable.

Here are the reasons that I hear from proponents of a single payer system:

1. It will provide health insurance for everyone and cover all services.
2. Insurance companies will no longer make huge profits and the money saved will cover health insurance for everyone, the national debt, and an Xbox for every fish.
3. It will make the health care system simpler and more efficient and the money saved will provide Guitar Hero III for every non-vertebrae.
4. It's easy to do, just expand Medicare to cover everyone.

Here are the problems:
1. Health Reform has been working towards preventing the denial of health insurance which is necessary to have a humane society. However, access to health insurance won't solve health care costs that exceed inflation. It won't create more primary care physicians or more care providers. It also won't address the approximstely 33% of the uninsured who make more than $50,000/year and refuse to buy auto insurance, wear motorcycle helmets, and still probably try to smoke on airplanes.

2. With a little extrapolation from this data of the large publicly traded health insurance companies, I see about $12-$15 billion in profits that can be seized. That would cover about 50,000 hip replacements which will probably be needed by the 50 million Baby Boomers or 12,500 very premature babies. In today's health care dollars, that's actually not a lot of money. Health insurance plans have an average profit margin of 3%. Some might argue that we should include money spent on marketing and CEO salaries. However, a single payer system will have to market to explain its system and have expenses developing a large enough system to cover the whole US. If I was feeling really snarky, I would counter that the likely rich benefit packages from unionized government workers would be about the same as large CEO salaries. If I was feeling less snarky, I would point out that $10 million in salaries is 1% of a billion dollar in revenue company so that savings opportunities is closer to 40 more hip replacements.

While ending the existance of evil health plans creates the same delight that one gets when their favorite team beats the New England Patriots, the money would cover the cost increases for the next few years at the most.

3. One claims system, one billing system, one benefit package, and one coverage system is very appealing. I have heard that it would eliminate provider administrative costs by 30%. Oregon had made movements towards consolidating its Medicaid carriers into one carrier per geographic region with this same argument. However, they pulled away because there were not necessarily carriers that could serve all the Medicaid beneficiaries in that region. Some carriers and provider groups that did service a particular county would be eliminated. That approach would award a monopoly to one group. That's the danger of the Highlander (In the end, there can only be one) approach. If one company controls an entire market with no competitors, how do we expect them to behave?

Health care is also very local and segmented both geographically and demographically. The east coast features large academic medical centers while the west coast features the integrated delivery systems while the south has entrants as new as most of its latest round of carpet baggers. In Oregon, you have to cover naturopathic medicine to be competitive while in Boston, you have to include the Partners Health Group.

Some individuals want alternative care covered, some can't afford their diabetic medications unless there is no cost share, and some want the cheapest plan possible and would rather pay 50% when they have to use services. It's not possible to create one universal benefit plan that would meet the needs of everyone and be affordable. Segmentation is a hallmark of successful business ventures. Trying to be all things to all people is a recipe for failure. The banking system and telephone lines lends itself towards a national model. Most other services lend themselves to a state wide model at best.

Creating this simplicity would entail a lot of sacrifice of personal choice. We're not good at sacrificing choice in cell phone plans, let alone health care coverage. Part of growing up as a health care system is figuring out what we really want to be. One universal model is not something that appeals to any characteristic of our nation.

4. The biggest problem is that the only group that is really equipped to offer a universal health plan is Unitedhealth Group. They are the only ones who have the size and scale.

The Medicare program has no experience with any level of sophisticated claims processing, network management, or negotiating for medical services. Network management and even a rudimentery claims processing is necessary for any type of system that pays providers for offering the right level of services and not just lots of services. Their price negotiations involves setting a price and telling people to take it or leave it. The idea that they can negotiate with prescription drug companies on pricing will be undermined by the fact that they have no department that can do it. Currently, they rely on the same companies that private insuracne companies use for prescription drug negotiation. Medicare can barely prevent fraud and abuse let alone managing costs. It has driven disease management programs into bankruptcy.

Someone who provides universal coverage would also need to staff up on customer service and basic communications which are not Medicare's area of expertise. I would offer the image of the DMV running your health plan except that I don't like to drag in the poor DMV. They get picked on enough.

Since Medicare doesn't have the basic expertise, the other option is to contract with private health plans to offer universal coverage. This is called the Medicare Advantage program which has its critics, including President Obama.

The solution: Since I haven't come up with a colonoscopy joke, by my new rule, I have to come up with a solution. Personally, I like Germany's approach. A basic level of services is covered by the government and people can buy private insurance for more coverage. This is basically like our eduction system.

Are ACO's DOA?

2011-04-21T19:53:00.000-07:00

A lot of people have been staking the future of health care on the idea of Accountable Care Organizations (ACO's). President Obama thinks they will reduce health care costs, providers have been reorganizing to take advantage of the opportunity, and bloggers have praised them. Even the event planning industry loves them as it has spawned a whole new line of conference opportunities.

To those who have not been following the ACO's like fantasy league baseball owners follow spring training, an ACO is an old idea that aligns the financial incentives of providers and payers. It provides a global budget for managing the care for Medicare beneficiaries. This rewards providers for efficient health care or keeping patients healthy rather than lots of invasive procedures. Medicare projects that it will save $510 million over a 2 year period. However, the release of the proposed ACO rules by Center for Medicare and Medicaid (CMS) at the end of the March had the same effect on the party as urine in the punch bowl. Or as my blog title foreshadows, it's like Weekend at Bernie's 2 where providers realize that participating in an ACO is like partying with a dead guy. It's a lot of work, not a lot of fun, and starts to smell after a while. In summary:

Lots of work: To participate in an ACO, providers will need more reporting, IT systems, have to develop some insurance functions, and build up the infrastructure to better track patients health. This is not unexpected and was part of the ROI analysis. What pushes the amount of work over the edge is the governance requirement. There must be a separate Board of Directors that runs the ACO that includes patient representation. This is a common aspect of Federally Qualified Health Centers and also the most challenging requirement to meet. Creating a separate governance board with complete control removes a lot of control from the providers who are launching a new venture. It's not easy to give up control of something that requires this much investment.

Not a lot of fun: The fun in ACO's was the opportunity to get paid more treating Medicare beneficiaries through shared savings compared to a benchmark. However, CMS took away the fun or opportunity to make more money by doing the following:

The benchmark or cost target that providers have to beat to make additional money is the current Medicare benchmark for the geographic area. For providers in the Northwest where benchmarks are very low because they are historically low cost areas, that means limited opportunity. For providers in Texas and Florida, where the benchmarks are very high because these are expensive areas, there is opportunity. However, these providers get paid enough by Medicare already so there is not the incentive. In other words, providers that are well-organized and poised to form an ACO have little room to get additional money. The wide variation in geographic payment for Medicare has been a continual problem and removes a lot of incentive from the ACO.
CMS also keeps the first 2% of any savings. Therefore, providers have to lower costs by greater than 2% in order to get additional payment. Or yet another barrier to participation. That's like having to watch Weekend at Bernie's 2 before you get to watch the first one or just turn off the TV.

Smelling like a corpse: Given the current structure, there is a risk that no provider group will apply to the ACO's. The current rules went over like a fart in a spacesuit to the 10 provider groups that participated in the original Physician Group Practice demo. If those provider groups who are the most likely to be successful aka make additional money in this model don't participate, who will? This would be a large blow to the Obama administration's vision of designing a more efficient health care system.

Hope or Yes we Can: It's too easy to write a critical blog post about how a new idea in health care might not work. Any blogger who writes such a critical post should either balance it out with a solution or some really good colonoscopy or animal husbandry jokes. Since I don't have any new jokes, I'll pick the solution option.

Despite the fact that CMS has made participation in an ACO as appealing as a colonoscopy, this model represents the best solution to the US health care system. The fee for service model has proven to be unsustainable. Others besides CMS, like large employers or unions will start to demand this type of model from insurance companies and provider groups. While the revenue opportunities in an ACO are not good, there are not any better revenue opportunities elsewhere. Provider groups can no longer compare opportunities to today's payment but should compare it to the future payment opportunities. Provider groups who can organize under an ACO structure and lower health care costs will be more viable in the future. Those who cannot and expect to continue to be paid at today's levels will become just like the main character/corpse in Weekend at Bernie's.

Provider groups best option is still the ACO model. If CMS can't develop a good structure, that presents the opportunity for the health care industry to develop its own.

Ryan's Field of Dreams while Oregon is not just waiting for them to come after Building It

2011-04-11T19:39:00.001-07:00

Last week, representative Paul Ryan released a budget proposal that was called everything from "interesting" by Ezra Klein to "bold" and "game-changing" by Fox news. The popular sports analogy was how Ryan changed the playing field on the health reform debate with his hail merry. My mixed sports analogy would be that Ryan punted to the Field of Dreams where he thinks that if he builds it, they will come.

Ryan's proposal specifically "would provide Medicare beneficiaries with lump-sum vouchers to buy private insurance and turn Medicaid into a block-grant system." States would get $11,00 per Medicaid beneficiary and the federal government could cap its exposure to health care costs. In other words, the federal government is turning its health care programs from a defined benefit to a defined contribution program and getting out of the health insurance business.

I used to think that block grants were a good thing because the word block has positive connotations. It makes me think of a block party or playing with blocks. The idea that the government gives you a block of money and a lot of freedom also sounds appealing. However, I have realized that block grants should really be called blockhead grants because they are generally used for programs that the granter doesn't like. That's why block grants won't cover the actual costs of the programs. Calling the programs, "Hey blockhead, how much money do I have to give you to go away? That's it? Great!" would be too honest and the acronym would be too long.

Ryan's idea of vouchers and block grants for Medicare and Medicaid is nothing new. Democratic and Republican politicians have proposed these ideas since 1981. What would make this proposal interesting is if Ryan attempted to design a market that would create an incentive to participate in these programs and provide care. That is the challenging part and why this is just another example of Republicans punting on actually coming up with a solution for the health care system. It will shift costs to employers who will become a main source of health insurance for older workers or beneficiaries who won't be able to cover their health care costs. It does nothing to change a fee for service system that will respond to lower payments with higher volume and more invasive treatments that get higher reimbursement.

The state of Oregon is seeking federal waivers for its Medicare and Medicaid funding in order to design a real system of health care. Waivers doesn't have the same warm and fuzzy feel as block grants. However, it's better because with waivers you actually get the same amount of money as before. Oregon is taking the ball and running with it by designing a care delivery system to support it called Coordinated Care Organizations (CCO's). They are similar to the federal governments Accountable Care Organizations (ACO) with 2 key differences. Patients select their CCO in advance and have a relationship with the providers while patients are assigned to an ACO retrospectively and don't have the same provider relationship. The other difference is that one starts with C and the other stars with A. I really wish Oregon could come up with a BCO acronym since they skipped that letter but the only one that I could think of was Boring Care Organization.

The relationship aspect of the CCO gives the organizations an opportunity to attract patients to join. The CCO's will start by serving the growing Medicaid population (which will become 30% of Oregon's under 65 insurance market in 2015) but will have business steadily funneled to it by the state government bodies like the Oregon Healthcare Authority. For example, the state has indicated that they may only contract with CCO's for the lucrative public employees insurance. That is how the system creates incentives to participate in providing care to difficult populations like Medicaid and Medicare. This is very different from Ryan's plan to have these beneficiaries fend for themselves with a 50% off coupon.

This Oregon proposal is something that I would call bold and game changing.

Wrestling with the Individual Mandate or We still Don't Know what kind of Health System we Want

2011-03-30T09:14:00.000-07:00

As a nation, we do not know what we want our health system to be when it grows up. We are still using our health system as a source for our own fantasies and shortcomings. The fantasies are on such a grand scale that we expect our health system to be like James Bond with better abs when it grows up.

Allow me to step down from my somewhat random analogy. We still have the illusion that we can provide health coverage and access to care for everyone, keep it affordable, and not make any sacrifices like increased wait times for services, no longer offer the most invasive option possible, or not have an individual mandate. We have delayed tough decisions under the delusion that wellness, better chronic disease management, and Electronic Medical Records will result our health system being affordable, high quality, and with access for all. The reality is that health systems can usually only offer two of the three.

The sacrifice of the individual mandate is the topic of this blog post. Those who are still reading, probably realized that from the title and are now glad that I finally got to the point. Economists have explained that an individual mandate is required in order to have affordable universal health coverage. The healthy, like James Bond, has to pay into the pool to support the sick and those who are not really really really ridiculously good-looking. However, politicians continually look for a way to remove the watered down individual mandate that is included in health reform. This shows a continued inability to make tough decisions about what we want our future health system to look like. The current individual mandate is a $700 fine which should hardly dissuade the die hard libertarian from not buying insurance. That individual can continue to not buy auto insurance, not wear a helmet while riding a motorcycle, not pay taxes, or refrain from bringing samurai swords on a plane or any of those other things that individuals are currently mandated to do by law.

This post on the individual mandate is mainly driven by Senator Ben Nelson's request to the Government Accountability Office (GAO) to see alternatives to the individual mandate. Now, given Nelson's history with the Cornhusker Kickback, his request for this analysis could be driven by a desire to fry up some more pork for his state or campaign contributions. Nelson never seems to have a position that he doesn't use to gain some benefit for himself. However, I'll assume that Nelson's inability to make hard choices about our health care system matches others. The GAO alternatives to the individual mandates can fall into the following categories:

Just another form of an individual mandate that will maybe convince those who aren't paying attention that it's not an individual mandate. It's kind of like reducing the number of uninsured by just changing the definition of uninsured to those whose religion forbid accessing medical care.

Impose a tax to pay for uncompensated care (How is that different than the current $700 fine other than it's called a tax?)

Restrict access to some federal benefits to people with insurance (whose value might be around $700?)

Require or encourage credit-rating agencies to factor in insurance status in credit ratings (and the impact could be greater than $700 for those whose credit rating results in a higher interest rate for their loan)

General proclamations and principle like "We support preventive medicine and ice cream for kids on hot days" that don't really mean anything. The only thing they offer is something that everyone can agree on.

Conduct a public education and outreach campaign

Provide broad access to personalized help with health coverage enrollment by creating access points such as pharmacies, schools, and grocery stores (How about bars, shooting ranges, and casinos which is where those who won't buy insurance are more likely to hang out and be drunk enough to maybe sign up?)

Ideas that insurance companies really like but don't really help the public or solve the problem.

Modify open enrollment periods and impose penalties for late enrollment (Insurance companies love this provision because it creates an incentive for people to preemptively sign up for insurance and stay enrolled longer. However, it doesn't work for the average citizen because this would mean that all of us who have insurance through our employers should start thinking about enrolling in individual insurance just in case we lose coverage. Open enrollment works in Medicare because the market is static. Once someone has Medicare, they always have it. The individual market is much more fluid since people will switch between Medicaid, Employer, and Individual insurance.)

Allow greater variation in premium rates based on the enrollees' age to get more young and healthy people to sign up (Insurance companies would love to have lower prices for the young and healthy which means higher prices for the old, sick, and those who are not really really really really ridiculously good-looking. The problem is that it's hard to get the price low enough to be appealing to the young and healthy while keeping the price affordable for the old.)

Ideas that don't really have anything to do with the individual mandate but address other issues.

Facilitate auto-enrollment for employer-sponsored coverage (If employees are not signing up for their health insurance, it's probably because they can't afford it or don't want it and are the type that need an individual mandate.)

Pay insurance agents and brokers a flat fee rather than commissions to help people enroll (The Exchanges and brokers' inability to demonstrate their value proposition may eliminte the entire broker and producer industry. This provision is a life preserver for the industry. It is also duplicates the Exchange and doesn't address the core problem of individuals who don't want to enroll in insurance. The flat fee should be given to the young and healthy who enroll instead.)

Every country has struggled with balancing access, cost, and quality. The United States believes that it is exempt from those struggles which is why it wrestles with tough choices like an individual mandate. However, these 9 alternatives are not really alternatives at all. When we finally realize that we need to make sacrifices and tough decisions, the United States' health care system will be all growns up.

PS If anyone has been wondering where Roll Away the Dew has been in the month of February and March, I got hooked on the Office and spent my free time watching the series. I have watched 131 of the series 136 episodes so I am preparing myself for life after the Office. Thanks to those who are still reading.

We Have No Idea how to Hire People

2011-02-02T06:10:00.000-08:00

I participated in some recent interviews and the discussion to select the final candidate. We are a mid-sized health plan and were looking for someone with experience in a specific line of business and who preferably worked at a larger, more sophisticated health plan. During the process, it became clear that we have no idea how to hire someone and evaluate relevant skills. For those looking for work, I hope that this post will offer some comfort. If you are turned down for a job or not treated well during the process, don't worry it's not you. The potential employer is a moron. For some reason, when a company brings a bunch of folks together to try and hire someone, they act like Hansel and Zoolander trying to turn on a computer. It's like a bunch of monkey jumping around, flailing their arms, and hitting things. The only thing missing was throwing our own poop at each other.

The biggest problem was driven by completely unrealistic expectations. Our ideal candidate was someone from a larger health plan who had worked in this line of business but was humble and down to earth enough to take a pay cut and come work for a smaller health plan to build this line of business for a bunch of monkeys jumping around like ourselves. Here is what we specifically did during the hiring process:

We made things up about the candidates:

One candidate was labeled a job hopper by one of us because she had left her last two positions after 2 years. A closer look at her resume revealed that she had stayed at her early jobs for 5 years. Did we also want this person to stay at this job for 10 years and were scared off by anyone who showed some signs of mobility?

We decided one candidate who was currently managing people, would not be happy of they were not managing anyone at this new job. This is despite the fact that the candidate told us that not having to manage people and deal with performance issues was an appealing part of the job. This makes perfect sense since no one really likes managing people but you have to do it for your career progression. But we decided to make up that not managing people was an issue and make it a con.

We questioned motives and past history:

One of the candidates was from a smaller health plan so we assumed that anything that she did probably wasn't as sophisticated as what we would do ourselves. We had no basis other than our own egos. Given our inability to define job hopping, I question our own level of sophistication

We questioned why one of the candidates was interested in leaving their current job after being there for only a year. Someone pointed out it was because we recruited her and asked her to come interview. Luckily, that was satisfactory.

We questioned why someone truly wanted to come to the Pacific Northwest after they told us that they had family in the area and visited it often. Why do we need to question why someone would want to come to an inexpensive part of the country with great natural beauty and a strong local culture? If we were in Omaha, Nebraska, that's an issue.

We had no ability to understand trade-off's

One of the top candidates came from a larger plan and had the experience that we craved like a drug but came across as more egotistical. The other candidate came from a smaller plan and was scrappier but more humble and grounded. Those two profiles should make complete sense and it should be up to us to choose if we wanted the big league player who had the ego that is often required to make it into the big leagues or the role player with potential. However, folks really seemed to think that there was this humble down to earth person with the experience and skills of someone who fought their way up in a larger organization out there and we should wait for them.

One individual commented that we didn't have time for the person that we hired to learn the position and develop but needed someone who could start contributing immediately. However, we had spent the last 2 years getting this position approved and deciding if we needed it. We get to spend as much time a we want putzing around but the person we hire has deliverables right after they complete orientation.

It was also clear that we couldn't distinguish between skills and experience. A career switcher would have had no chance because we were only looking for someone who had specific experience in this line of business. Answers to interview questions that did not include examples from the specific line of business were discounted.

This rant is both cathartic for me but truly intended to provide some relief for those looking for work. The inmates are running the insane asylum. Employers have no ability to make tough decisions while hiring someone and have unrealistic expectations. It's not you, it's us.

Ask Not What your Mentor Can do for You

2011-01-30T06:24:00.000-08:00

For the last few years, I have signed up to be a mentor for my MBA program's Social Impact Movement club and Health Care Management program. The most surprising part is that when students were faced with lists of mentors who were venture capitalists, social venture capitalists, and other titans of industry, two were swayed enough by my credentials of working in a non-profits (including a commune), to select me. Unfortunately, being selected was the highlight of my mentor experience.

I had one conversation with each of them and they were eager, pleasant, and polite. I probably spent 5 minutes more than what was tolerable with my diatribes and philosophy of the world. One wanted to know how to connect to the non-profit community while working for a corporation. The other wanted to know how to transition into the payer/provider side of health care after her indentured servitude (or sponsorship from her consulting firm) ended. Like all mentees, they both wanted contacts so I dusted off my network to give them contacts. That was the end of the relationship. I never heard if they called my contacts, any results, or even a thank you when I sent additional information. It was about transactional as cutting in front of someone while boarding a plane.

I don't expect to get on my mentee's holiday card list or even be Facebook friends (although connecting through Linked In would be a nice touch and appropriate). I know that being 10 years older than them is practically the same as being a senior who eats dinner at 5:00 in Generation Y years. However, I do expect communication and acknowledgment that is on par with Amazon when I place an order. At least Amazon thanks me for my order and lets me know when it's about to arrive. With the importance of mentors becoming as popular an accessory as a case for your smart phone and Google search results on the importance of mentors returning 7.9 million hits, one should know how to be a good mentee.

Most mentees know about being respectful of time and being professional. What mentees do not do well is turn the mentorship into a relationship. Most who network are also too transactional. When given a contact by a mentor, let the mentor know the results of the interaction. It will help the mentor's network as they will know who to tap into or equally important, not to tap into in the future. Complete the deal and follow-up with mentors after completing a job search or graduation. It's about the relationship and not turning a mentor relationship into just a 20 minute phone call.

If mentees don't become better at being mentees, mentors like myself will lose interest. We would rather spend that 20 minutes with someone whom we have a relationship or at least the chance to build one.

A Ranking that Differentiates MBA programs for Employers

2011-01-24T20:03:00.000-08:00

I was reviewing the latest MBA ranking- no not the Business Week ranking. No not the US News and World Report MBA ranking. No, don't worry it's not the Wall Street Journal ranking which you hate because it ranked your school 57th. No, not the Financial Times ranking which yes ranked London Business School #1 and yes I know that you think that Insead is clearly the top European business school. No, not Jacksonville Jaguar running back Maurice Jones-Drew Fantasy Football and top MBA ranking. Yes, I'm glad that it's not the Jones-Drew ranking because no one trusts guys with hyphenated last names.

Let me start again. I was looking at some random MBA ranking published by QS. I don't know what QS stands for and I only found it because a student of Bainbridge Graduate Institute (BGI) complained about its Corporate Social Responsibility ranking. I only know what BGI is because a Facebook friend who sought my advice on MBA programs attends BGI and posted about it.

You also know that it's a very inauspicious start to a blog post when it's the 3rd paragraph and you are still rambling. And writing in the second person. The point that I was making was that while I don't know what QS stands for, their ranking unintentionally has some interesting results. The ranking is devised through surveying major employers of MBA's and scoring their responses on an curve. Based on the spread of the curve between the various places, one can tell which specialties provide significant differentiation for MBA programs.

I am applying the same methodology from a Net Promoter Survey that a market research firm did on the Medicare Advantage industry. Through their methodology, they can tell what features provide a health plan a true opportunity for differentiation. For example, most Medicare Advantage enrollees think that their health plan's customer service is top notch even those who hate their plan. The scores cluster very close together meaning there is little to no opportunity for a plan to differentiate themselves through customer service. However, few members really think their Medicare Advantage plan has a good dental offering which provides an opportunity for differentiation.

My analysis of the QS MBA rankings by specialty is not as statistically robust as the market research firm. I applied the same methodology to come up with some expected and counter intuitive results which is what one wants to make analysis interesting and probably accurate. If the results are all expected than the analysis isn't very interesting. This is like most social psychology experiments that reveal gems like people tend to get angrier at football games when their favorite team is losing and reduced to playing its 3rd string quarterback whose name sounds like the the newest character in Glee. If the results are counter all counter intuitive, then they are probably wrong due to an incompetent research assistant.

After 5 mostly rambling paragraphs, here are the results. My methodology is that I looked at the number of schools that received a score of 100 and score of the top 10 schools and top 20 schools to see the spread. The number of schools that received a score of 100 was clustered closely around 4 or 5 programs. Average ranking of the 10th ranked school was 76 and average ranking of the 20th ranked school was 49. This is all done by specialization which are:

Entrepreneurship: Five programs received a score of 100, the 10th ranked school received a score of 77, and 20th ranked school received a score of 38. This distribution pretty much matches the average scores so there is only an average amount of differentiation a program can achieve by focusing on entrepreneurship. Entrepreneurship is a fairly nebulous field so is this expected.

Information Management: Two programs received a score of 100, the 10th ranked school received a score of 80, and 20th ranked school received a score of 37. Another average distribution except the fewest schools received a perfect score. Unless, you are a Harvard or MIT graduate which achieved the perfect score, there is an average opportunity for differentiation.

Finance: Five programs received a score of 100, the 10th ranked school received a score of 48, and 20th ranked school received a score of 31. This is more interesting as there is a clear opportunity for differentiation in Finance. There are only 7 schools that received a score above 58 (Wharton, Chicago, LBS, Stern, Harvard, Columbia, and Insead). Graduates of those schools will separate themselves from the hordes of other MBA's in the field of finance (with the fin in finance pronounced like a fish's fin instead of fine by graduates of those elite programs.)

International Management: Four programs received a score of 100, the 10th ranked school received a score of 79, and 20th ranked school received a score of 51. The distribution is above average in terms of how tightly it is clustered. This shows little differentiation opportunity and a cautionary tale. International Management used to be an area of focus for schools like Thunderbird as they hung their hats on breaking into the elite circles of MBA programs through International management. While Thunderbird was one of the four programs that received a 100, USC, Cambridge, and SDA Barconi were examples of schools with just an average reputation that were close behind. All of Thunderbird's focus still results it the school having a similar reputation as the fortified Thunderbird wine.

Strategy: Four programs received a score of 100, the 10th ranked school received a score of 73, and 20th ranked school received a score of 36. Considering that strategy is thought to be as nebulous as entrepreneurship only with more buzz words, I was surprised that there was this much opportunity for differentiation. This was the most counter intuitive example as George W Bush has almost destroyed this specialization by calling it stratergery.

Operations Management: Three programs received a score of 100, the 10th ranked school received a score of 89, and 20th ranked school received a score of 60. Operations management had the opposite story of strategy with a very tight distribution all the way to the 20th ranked program. There is little opportunity for differentiation probably became most employers have only met one MBA who majored in Operations management.

Innovation: Three programs received a score of 100, the 10th ranked school received a score of only 62, and 20th ranked school received a score of 42. While innovation is more buzz word than an actual specialization, it looks like employer believe a few schools do it well (MIT, Stanford, Harvard, Wharton, IE in Spain, London Business School, and NYU Stern).

Corporate Social Responsibility/Ethics: Fourteen programs received a score of 100, the 10th ranked school received a score of 100, and 20th ranked school received a score of 97. Despite all the talk, the MBA Oath, and general interest in the area, employers believe all the schools have the same capabilities. There is no current opportunity for differentiation which should be cause for concern for BGI or other programs which are trying to use this as a point of differentiation. Currently, employers believe there is a larger difference in students skills with a financial calculator then there skills in resolving an ethical dilemma. A BGI student blogs that the recent MBA's dubious role in the financial crisis should lower their schools' scores. However, the Notorious BGI student fails to explain what their program's students would do any differently. Would they get jobs at the SEC and better regulate the financial industry? Would they become CEO's and require their bankers to submit essays on their ethics? Would they even get jobs in the financial industry by touting their ethical skills? This survey suggests these skills would not impress future employers.

The results of this survey show the a stratergery of differentiating in Corporate Social Responsibility would have even a worse outcome than schools that placed all their chips on international management. There is little differentiation and what difference there is easy to replicate.

The Rise and Fall and Mostly the Fall of the For Profit Hospital Industry

2011-01-20T20:14:00.000-08:00

The For Profit Hospital industry, led by Hospital Corporation of America (HCA) and Tenet (which I liked to call Tenant based on how it treader providers), was the poster child for health care efficiency in the 1990's. HCA owned by former Senator Bill Frist and led by current Florida governor, Rick Scott, gobbled up as many hospitals in the mostly Southeast, California, and Great Plains as they could. Tenet was close behind. They boasted of their management talent, market clout, and economies of scale that would shake up the sleepy non-profit hospital industry and turn it into a real business.

The first experience with becoming a real business involved HCA being charged with the largest Medicare fraud case in US history and Tenet was charged with milking the Medicare Outlier Pool like a cow on growth hormones. Basically these foundations of capitalism figured out how to suck money out of government programs like a collapsed supernova sucks light or the Green Bay Packers just plain suck.

The For Profit Hospital industry has made the news again which underscores the lack of change in the health care system. First, the Federation of American Hospitals, which is the association for the For Profit Hospital Industry, wrote a letter to Medicare about their position on the new Accountable Care Organizations (ACO). A principle of ACO's is that provider groups are assigned both patients and the dollars associated with managing their care. This provides incentives to provide the right care rather than the most profitable. The Federation of American Hospitals likes being assigned the dollars but wants to pick the patients that are assigned to them. This is cherry picking or called being "neither accountable, nor caring, nor organized". This creates the images of the same Redding, CA Tenet hospital that did open heart surgeries on anyone that they could sedate long enough, assigning themselves all the wealthy retirees who need a knee surgery for the spring ski season. The chronically ill lower income patients can be assigned to the non-profit hospitals who lack their managerial talent to completely game the system.

It's gotten so bad for Tenet, that they made the news because they were the target of a takeover from another for profit hospital group called Community Health Systems, Inc. (CHS). CHS has accused the Tenet Board of Directors of not taking their shareholder interests into account but their own personal interests. That's kind of like a Hell's Angel accusing another biker of poor flossing habits.

The reason that the For Profit Hospital industry has such a poor track record was that their management talent and ability to turn around hospitals was mostly a myth. They were successful because they bought hospitals that had a monopoly in their current suburban or rural town or located in a wealthy area where everyone had great insurance. They successfully ran hospitals in one-hospital towns where they had no competition. They had to run them 20% more efficiently than their non-profit predecessors in order to make up for new taxes and required shareholder return. When they could not, that's when they started milking Medicare or forcing unnecessary psychiatric hospitalizations on patients. Whenever Tenet entered a competitive market as they did in Philadelphia with the purchase of 2 of the city's 5 academic medical centers, they did as poorly as everyone else.

The For Profit Industry has nowhere to go but go procreate with itself. All the lucrative hospitals with a local monopoly have been bought so there are no real new expansion opportunities. Which is probably why the latest For Profit hospital news stories provide better material for John Stewart and Stephen Colbert than for Harvard Business School case studies.

The Balance between ideal health reform solutions for the Insurance Industry and Consumers

2011-01-12T19:22:00.001-08:00

A health reform solution that consumers and the insurance industry could agree on is as precarious and unstable as straddling 2 sides of a canyon. Everyone's groin starts to hurt after a while. Former insurance industry executive and blogging curmudgeon, Bob Laszewski, wrote a piece on what he saw as reform that could truly receive bipartisan support. What I saw is an example what best meets the needs of insurance companies and not those who purchase the plans. Here are Mr. Laszewki's arguments in contrast with my thoughts on actual consumer need. The reason that I am contrasting with consumer need is that the insurance company that figures out how to truly meet it will gain market share at the expense of others. Even the insurance industry needs to focus on its customers every once in a while.

1. Replace the individual mandate with a one-time open enrollment period: The individual mandate or requirement that individuals buy insurance is a contentious part of reform. However, if no one can be denied insurance, it's necessary to have everyone buy insurance in order to keep it affordable. Laszewski's solution is a one-time opportunity to buy insurance otherwise that individual could be denied insurance in the future. He calls it "freedom of choice and responsibility." I call it the status quo. Insurance companies love one time enrollment periods because they both bring in new customers as the same folks who always change their oil every 3 months will jump on the one time opportunity. Those folks who are too disorganized to maintain their health let alone their cars are more likely to miss the opportunity and be denied if they don't pass a health screen when they get around to applying for insurance.

The individual insurance market is very fluid. Most stay on a individual plan for a year at most before getting an opportunity for public or employer insurance. Therefore, a one-time opportunity will not be relevant to the vast majority who don't need individual insurance at that time period. For the average consumer, they want to be able to purchase health insurance when they need it not when insurance companies are willing to offer it. Health insurance has become the one industry that will refuse to sell their product to someone who has the money to buy it. That is not sustainable and needs to change or a new entrant will change it for the industry.

There is no real solution to balance affordability and access other than an individual mandate. United Healthcare developed the best alternative with an option, like a stock option, to buy insurance in the future without a health screen. While there probably isn't a true solution that consumers would embrace, Laszewski's solution mainly appeals to the insurance industry. The insurance industry's lobbying group, AHIP, has pretty effectively destroyed its reputation as a voice of reason or good ideas in health reform with ill-timed reports on cost or attacking ACO's to prevent the entrant of new competitors.

Eliminating mandated plans: Health Reform will limit insurance carriers to only 4 plan designs that are sold in formal health care exchanges. These plan designs are cleverly named platinum, gold, silver, and bronze because calling them Tweedledee, Tweedledumb, Tweedledumber, and TweedleAngryInsuranceExecutive was probably too obvious. Laszewski wants their to be only one mandated design (the silver or Tweedledumber option) and allow insurance companies the latitude to design other plans to provide more consumer choice. Again, this is the status quo as most states already require an insurance company to offer one basic plan design.

When I talk to consumers, they do not want the current level of choice because it's overwhelming and confusing. They have to study the plans to figure out what features are included, what are not, and conduct a personal conjoint analysis to figure out what they should buy. Most just want to be able to buy one standardized health insurance and not need an owner's manual to figure out how to use it. Offering 4 designs gives this ability to buy a health insurance at 4 different prices. This "choice" that Laszewski reference is really insurance speak for benefit eliminations of services not widely used by the public (but heavily used by a few) to lower the price. However, the price can be lowered by making universal changes to all 4 plans that are clear and transparent to the consumer.

In closing: The rest of Lasewski's points were improvements in subsidies to buy insurance and change in tax policy that don't really divide insurance companies and consumers like those other 2 issues. The gap in consumer vs health insurance industry appeal of those 2 issues is why the first wave of health reform focused on the insurance industry. Subsequent waves will continue to focus on the insurance industry until we learn how to better listen to consumers. At least half of my assumptions on consumer interests are overturned when I survey them or talk with them on the phone. Talking with consumers is not nearly as painful as dealing with fall-out from getting it wrong. It's also much easier on the groin.

Generation X or Y, Do or Die

2011-01-12T13:20:00.000-08:00

The blog title is inspired by Loudon Wainwright III's song from the album Strange Weirdos. However, Wainwright is a Boomer. When I first started blogging, I ran into Generation Y like a crash test dummy runs into a car windshield. Generation Y runs most of the blogging world like Hugo Chavez runs Venezuela. Dogmatically and the courts or rule of law are not needed to change rules.

Generation X lurks on the outside with occasional rushes towards the forefront. Results are often comparable to Chavez's opposition party tactics. Therefore, when I interacted with the blogging community, I did it sparingly and specifically.

These generation musings were triggered by the book The Ask by Sam Lipsyte. The reviews declared that this was the latest voice of Generation X. Since the main character was a recent father, I almost too strongly identified with him. Combined with a recent perusing of Generation Y blogs, this led to my further think about Generation X and Y and the generational rivalry.

I am not including the Boomers in this generational musing because enough has been written about the boomers. Even USA Today wrote a series about the Boomers and a probling, controversial story for them is generally, "US still eats more hamburgers than India." This boomer series was inspired by the first wave of boomers turning 65. Boomers turning 65 strikes me more as an Outlook calendar reminder than the trigger of a generational examination.

This Boomer retirement wave may be the assassination of the archduke that triggers the full fledged generational rivalry as X and Y compete for the corporate and business spoils that are left behind. Some write that there is a closer alliance between Generation Y and the Boomers since they are more team oriented and optimistic. Generation X's response is that it's on like Donkey Kong as we don't intend to be passed over again. However, this may all be irrelevant as Boomers may figure out a way to take the spoils with them to their graves and hold their positions and power for life just like Hugo Chavez.

Generation X and Y's philosophical leanings also place them on a collision course for rivalry. From reading Generation Y blogs, I see their gurus are Tim Ferris and writers of self-improvement books. They look to Seth Godin about following their passion. They love writing lists of what they plan to accomplish.

Generation X looks to the book/movie Fight Club and wishes to subvert the mainstream or John Hughes movie about nerdy underdogs finally receiving societal acceptance through unconventional methods. We're too cynical for failed cycles of self-improvement. Our New Years resolutions are snarky vows to update our hard drives or use fewer cue tips. We don't understand Generation Y's preacher-esque zeal for self-improvement and accomplishment and find their efforts come across, as well, too much preaching.

The rivalry is probably most intense among the older Y's and younger X's due to the freshman/sophomore dynamic. Sophomores feel their extra year warrants respect from freshman and that they should be treated differently by elders. However, sophomores are often really just older freshman who are still trying to figure out the same issues.

As an older Generation Xer, my contemplation through this post has made me realize that I am mainly just annoyed that Y's are littering on the internet and are terrible writers. Their web businesses that fill the internet like spores are typically affiliate marketing arrangements or "lifestyle design" which seems to be a way to justify writing about your navel gazing as a business. The true lack of any business model once traffic was achieved disillusioned me the about Generation Y's contributions to the internet.

Furthermore, their affiliate marketing or lifestyle design business models need to be driven by compelling content since they are mainly just writing about themselves. However, they kill their content with overusing awsome, awesomeness, sweet awesome goodness, or other words that don't really lend any descriptive value. I am waiting for awsomeful to catch on next. They declare ninja or rock star status for various abilities like networking or nose hair trimming. Unless it involves a throwing star or actual musical instruments, ninja or rock star are just another way of saying awesomeful. The Generation Y twitter driven writing style creates short blog entries with lots of ideas but no substance behind them. Titles of articles declare, "Everything that you know is wrong!" when the title should be: "I would like to suggest a slight shift in how we think about a new social media tool."

My Generation X co-workers and I talk about the challenges and how it's different working with Generation Y. One of my coworkers is managing 2 Y's and had the difficult experience of having to fire one of them. As we get older, the rivalry will fade and our different philosophies will complement work styles rather than be divisive. Until then, I will be more welcoming of Generation Y when they learn how to write awesomfuller and stops littering the internet with Amway schemes.

What Bloggers Really Hear

2010-12-27T06:08:00.000-08:00

When bloggers hit submit on their first post, we all hope for comments about how thoughtful and introspective we are, how clever our animal husbandry and colonoscopy imagery is, and that the Huffington Post begs us to be their new featured writer. Actually, we really hope that we just meet some like minded folks who also think that colonoscopy jokes are hilarious and perhaps find a community. Instead what we usually get are messages like this:

Hello, This is Shiela from bestdogfoods dot org dot uk. We stumbled on your blog while searching for Best Dog Foods related information. We operate the largest Best Dog Foods website featuring more than 30,000+ blogs. Our site averages 200,000+ unique visitors per month. Based on your blog's popularity and other factors, we have featured your blog at bestdogfoods dot org dot uk dot bogus link. We would be grateful if you could add the following details to your blogs main page. Looking forward for your confirmation. Thanks Shiela bestdogfoods dot org dot uk P.S. If You Have More Quality Blog We Can Feature Those.

Contrary to Shiela's claim, my blog was not featured on that page. I also am completely convinced that Shiela repeatedly spelled her own first name wrong. However, Shiela did inspire me to provide insight into the blogging world by sharing the utter garbage that people email me. Since I have no other ideas for a post and really want to have 4 posts this month, I'll subject readers to a true blogger navel gazing post. There is nothing that bloggers like more than to write about the thoughts behind their thoughts. Like Lebron James, once you start uncensoring yourself, it's really hard to stop (I mean, Lebron, you really thought that your league contraction idea as a solution to oppressed super stars who have to play in Minnesota wouldn't make you look like even a bigger dick?).

Here are some of the really bad short-sighted ways that people interact with other bloggers (like me):

The disingenuous link offer: One of the easiest things to do is ask someone to link to each other's blogs. You express some genuine interest, demonstrate that you read their blog, and offer to exchange links. Having a first name that seems real and spelled correctly is an added bonus. The part that turns a simple exchange into a really low stake scam is when the soliciting blogger never links the other blog. Hospital dot com is the biggest offender as they repeatedly offered me the link exchange but have no obvious place on their site for links.

The comment disguised as an excuse to link: Masters Dissertation dot co dot uk has left flattering comments under the name "Marketing dissertation" and "MBA dissertation" with links back to their website in the comment. My post was "informative" and they had "not found any proper resource for their research" until they read my post about how MBA guys should try to score at the Veterinarian Graduate Programs due to the favorable female:male ratio. I published the first comments as I was properly flattered but after the 4th or 5th time, I just felt like the girl at the bar who was hearing a bad pick up line.

Teeth Whitening is also guilty of this approach but even more guilty because they don't even try to use a name that remotely disguises their intent.

The urgency to link or write about comment: There's nothing like getting a request to link or provide some publicity that accuses you of ignoring their previous multiple attempts to get your attention. I supposed some might feel guilted into acting but I figured that if I ignored them and couldn't even remember ignoring them, it couldn't have been that important. The oddest part was that Team USA was using this approach during the last Winter Olympics to raise awareness for athletes. I guess that's what people mean about organizations that don't understand social media.

The crappy guest post offer: I've received a few emails from the writer of accredited college online dot com for guest post services. However, the sample articles that the writer sent included "100 tips on how to raise a brilliant bilingual baby" with a first tip of "Speak another language at home." I had visions of a guest post on "100 tips on raising a goat" with a first tip of "Find a male goat and a female goat and get them horny". Get it, the goats are horny? Horns and horny? Get it? Hmm, I think that I might have an idea for a guest post for that writer.

All of these short sighted techniques that bloggers use to get a little bit more traffic obscure actual legitimate interactions and community building. As a result, I was completely skeptical about the one email that I got where the person was truly interested in paying me to advertise. I was even more stunned when they proved to be legitimate and actually did pay me. Thus, I can claim that I actually have monetized my blog.

However, most of these attempts show that there are not a lot of smart people working on web advertising and the competition is never so intense when the stakes are so low. Now, I am going to try and complete my 100 tips for raising goats. What do goats eat anyway?

My Predictions for the Health Care Industry in 2011

2010-12-16T20:13:00.001-08:00

It's the holiday season which means it's time for holiday parties, left over money in the company budget is blown on work parties, lots of food, plenty of excuses to drink alcohol, and lots of nostalgia. For bloggers, this means guaranteed blog topics either in a form of 1) a review of the year that was or 2) predictions for the next year. I have a tradition of making conservative predictions. Last year there was a trend for bloggers to dismiss predictions as so last year and boldly proclaim that no one can predict the future. Really? Is that the best that you can do? Are you going to tell me that bears poop in the woods (and wipe their butts on the the rabbits) and "refudiate" isn't really a word?

With that introductions, my non-refudiable 2011 health industry predictions are:

1. Hospital Executives will be the next set of CEO's to be hauled in front of Congress: and struggle to take their inquisitors seriously. I mean it's probably tough not to laugh at the histrionics of some of the members of Congress, let alone not stare at Henry Waxman since he's so funny-looking. Or want to ask Dennis Kucinich if he wants to sit on your lap and tell you what he wants for Christmas.

However, hospital executives will have to practice refraining their giggles as recent articles have pointed out how some hospitals are so dominant that they can paid above market rates by insurance companies. Another article pointed out that California inpatients hospital costs have increased 150% (or 11% annually) since 2000. The best defense that hospital executives could muster in response to these articles was "the data must be flawed." That's not much better than a response of "So's your face." Hospital costs (and accompanying specialists) make up at least half the health care dollar and are growing too fast not to be identified as key driver of runaway health care costs. While the insurance companies have received the most public scrutiny this year, next year it will be on like Donkey Kong for hospitals.

2. Despite state budget woes, Medicaid will continue to grows: I wanted to pick a word that rhymed with woes and couldn't figure out how to use toes. Since 2007, the number of Medicaid recipients has grown 16% nation-wide to 50 million. In Oregon, it's grown 25% in the last year. This growth doesn't even include the projected 16 million new Medicaid enrollees in 2014. This isn't going to change in 2011 since the states are getting larger matching funds from the federal government. Every $1 the state spends brings $1.60 from the federal government. Medicaid is still one of the best ways to arouse, er no, stimulate a state economy.

3. Everyone gets more comfortable with Medicare Advantage: Despite becoming the ginger-headed step child of government programs, a lot of reform provisions are borrowed from Medicare Advantage. Risk adjustment based on health conditions in the Exchanges is from Medicare Advantage. Open Enrollment periods are being used for individual insurance for those under 19 years of age. Currently, seniors are in the middle of the November 15th-December 31st Annual Election Period for Medicare Advantage. One of the crankier bloggers who doesn't like health reform (or much of anything) sees open enrollments as good replacement for an individual mandate that will likely be challenged in the Supreme Court. The senior citizen model for health insurance is quickly becoming the market norm under health reform only with slightly better shoes and a mobile phone app.

4. Health Care Costs will actually decline: Earlier in the year, there was discussion of reduction in the Pentagon budget. What they really mean was not an actual budget cut but the budget just wouldn't increase as much as it typically did. Rather than an increase of 3% in the budget, the increase would only be 1%. Until Robert Gates took a dump in the punch bowl and announced that there would be an actual budget cut complete with negative numbers.

This situation was pretty similar to health care costs where the holy grail was an increase that merely matched inflation. This may be the year that we see an actual cut. The money that insurance companies are inhaling from businesses like a frat guy sucks on a bong is about to get bogarted. The canary in the West Virginia coal mine was the Connecticut's Insurance division rejection of Anthem's 20% rate increase for individual plans and a counter offer of 0%. The rejection of rate increases is likely to become more common. Providers are likely to get similar treatment if the "budget" or health insurance revenues are frozen like a Siberian winter.

For the record, Senator Lieberman expressed disappointment at the Connecticut Insurance Division's decision because he saw a great opportunity to be a dick wad.

5. There will be more consolidation in the health care industry. This prediction is to absolutely guarantee that I get one of these right. Predicting consolidation is as safe as predicting that your human resource department will do something aggravating. There has been annual consolidation in every industry from health insurance to Thai food carts since the 12 tribes of ancient Israel were consolidated in 10. Even ancient Hebrews understood economies of scale and market power.

Figuring out how to Write Objective Statements on Resumes

2010-12-08T19:29:00.001-08:00

One of my annual blog posts is a review of the resume objective statements written by graduating class of Wharton Health Care Majors. Analyzing objective statements has been a hobby of mine for a while as I made fun of my classmates objective statements during our end of the year banquet. Some feel that I may need new hobbies and probably some new friends given one of my hobbies is to alienate my classmates/friends. However, a self-deprecating sense of humor goes a long way and it's my blog so I get to pretend that I'm funny.

First the disclaimer. The people for whom I am about to make fun of (Wharton Class of 2011) are orders of magnitude smarter than me. From looking at their pictures they are also really really really ridiculously good-looking. No one in my organization lets me even pick a lunch place, let alone make a hiring decision, so what I wrote should not be considered to be actual career advice.

Allow me to elaborate on the Wharton MBA Resume Objective statements:

So you're telling me that I have a chance: In previous years, students had grand visions of requesting "strategic opportunities" or "leadership opportunities". This year, everyone was more humble with requests for a simple "opportunity". One student trumped all as he was looking for a "strategic leadership opportunity." No one has raised the stakes like consumer goods companies raise the number of razor blades with a 3rd adjective prior to opportunity. Nor went for complete honesty by requesting an opportunity "that doesn't suck monkey balls."

Ask not what your company can do for you: Actually, this year's students are telling their companies what they expect of them. Many students use their objective statements to tell companies that they are looking for "entrepreneurial" or "innovative" places to work. Luckily all the established highly bureaucratic Fortune 100 companies that mostly hire at Wharton don't seem to be too worried. Some want their teams to "high quality". One person wants their company to be both "entrepreneurial" and "pioneering". Upon checking this person's resume, I was disappointed that they did not work for the pioneering company that develop the educational game Oregon Trail. One person was just looking for a company that was "promising".

Does anyone remember how we originally used the word leverage? The word that appeared most often in everyone's objective statement was "leverage." Everyone was looking to leverage something whether it be their scientific and business background, their leadership experience, or just leverage their levers. I can't argue with the whole idea of leverage. Whenever I go to the bathroom, I try to leverage my trip and do both number one and number two. I try to leverage my hand washing, too but my wife doesn't seem to appreciate it.

Some in this class actually figured out how to write an objective statement: My biggest surprise was not how good-looking all the students were (seriously, did they air brush the picture or are people in their 20's really that much better looking than the general population?). The surprise was that a number of students wrote really good objective statements. They didn't fill the objective statements with unnecessary adjectives that really just say "doesn't suck monkey balls," or hedge every career opportunity. Some figured out how to write an objective statement that provided succinct and relevant information to a future employer. Most used the word "leverage" but there's definitely worse words to use (like "create value").

The best objective statements simply said "An opportunity to leverage my X background and Y background." It's elegant, simple, and relevant. It tells the employer their industry background that they're looking to build off. It shares who they are. After seeing this solution to an objective statement, I realized that they might just create strategic value in an impactful resume. Argh, must stop reading resumes. I am going to strategically go to the bathroom and try to leverage the 2 remaining squares of toilet paper.

Judging WikiLeaks: Amazon and PayPal's Glass Houses

2010-12-04T20:27:00.000-08:00

It's safe to say that the story of WikiLeak's posting of diplomatic cables or what happens when diplomats stop being nice and start getting real is as ubiquitous as Leslie Nielsen quotes. WikiLeak's actions have triggered government investigations and lively debate about the role of news organizations and democracies. WikiLeaks creates extreme discomfort and operates in shades of gray as it forces us to deeply question the definition of freedom and role of government. Personally, I like my government like I like my negligees which is transparent. However, this debate is far from clear.

What I think is clear is Amazon and PayPal's role in the WikiLeaks story. PayPal dropped WikiLeaks as a customer which cut off their primary way of receiving revenue. Amazon kicked WikiLeak off their servers because Senator Joe Lieberman complained. Both companies judged WikiLeaks before any judicial body had made a decision and put their political and possibly ethical opinion above shareholders or the traditional role of a business.

The role of business in society is the subject of a few lectures in the required business school ethics class. One side will claim that shareholder value trumps all as business' prime purpose is profits not societal change. The other will claim the business needs to support its communities and there is a return in investing in society. Businesses have also become intertwined in politics in positive ways such as the boycotts of oppressive regimes and as corrupting forces by pumping money through PACS and lobbyists.

However, PayPal and Amazon's role is beyond a business decision to invest or even endorse a particular position. Their actions were similar to blockading a harbor or funding rebel troops. PayPal's blog claimed that cutting off WikiLeaks' account was prompted by a violation of the service provider's policy, "which states that our payment service cannot be used for any activities that encourage, promote, facilitate or instruct others to engage in illegal activity." Comments on this PayPal blog post are closed. However, one can freely comment on the Pay Pal blog post "Tips for Safe Selling this Holiday Season".

I find it perplexing that PayPal seems to have decided that WikiLeak's engaged in illegal activity when no court has convicted WikiLeaks. Considering the scrutiny of financial institutions and new regulations, PayPal may find themselves convicted of committing illegal activity before WikiLeaks. I had a recent phone conversation with their outsourced India-based call center about fees that I was charged on a transaction that were not disclosed clearly. When I asked them who their regulatory agency was, they had no idea.

With regards to Amazon responding so quickly to Joe Lieberman's complaints, I have to say, seriously? Lieberman is an old east coast orthodox Jewish guy which means he complains 30 times a day by definition. Amazon's customer service is probably on a first name basis with him over complaints about how his last order, Big Dick Cheney, turned out not to be about the former vice-president.

In reality, both companies probably caved into political pressure faster than the Kardashian's update their twitter posts. I just hope that they at least got a good deal for selling their souls and advancing well beyond the normal role of business in politics. Because people in glass houses should change their clothes in the basement.

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

2010-11-30T21:46:00.000-08:00

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.

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

2010-11-27T20:27:00.000-08:00

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.

SIR Medicaid Opportunity Presentation

View more presentations from dongrunt.

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?

The MBA Admissions Consulting Season in Review

2010-11-19T19:02:00.001-08:00

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.

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

2010-11-12T20:44:00.000-08:00

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.

Roll Away the Dew is Speaking at the Society of Insurance Research Conference

2010-10-29T12:48:00.000-07:00

It's road trip time at Roll Away the Dew. Well, actually it's just a plane trip with a connection in Altlanta, on the way to Jacksonville, Florida where I will be speaking at the 40th Annual Society of Insurance Research Annual Conference (SIR A.C.). Did you know that Jacksonville is the largest city in terms of square milage in the lower 48 states? That actually sounds horrifying me to as an example of uncontrolled urban sprawl that we don't see here in Oregon with our Urban Growth Bounderies. However, I did hear very positive things about Amelia Island and Florida in November is not something to look down at.

Readers may be wondering what Roll Away the Dew could pontificate upon for 45 minutes. How many colonoscopy or animal husbandry jokes will the speech include? Will the inmate and asylum analogy continue? Will familiar topics of MBA's behaving badly be broached or will this be a pure health care focus on the strengths of the Medicare Advantage program, the dysfunctions of the Individual insurance market, or the future of Accountable Care Organizations? Will the words, MediCAID for all be uttered and for those guessed this topic, you know Roll Away the Dew way too well!

Actually, I think that I need to make a "MediCAID for All" T-shirt for the conference. I will be speaking at the newly created Health Insurance track for the Society of Insurance Research. My topic will on the business opportunity that health reform created for Medicaid managed care companies. If there is a health care organization that can afford to ignore a market that is going to almost double then I want to see your business model. That's because that health care organization must be performing at a very high level in commercial, Medicare, individual, self-funded or other aspects of health care to be able to ignore 25% of the market.

If you want to hear more about my presentation, come to Jacksonville, Florida from November 14th-17th. I hear that the Property and Casualty insurance guys really know how to party. Another option is to just wait until after the conference when I'll do a full postmortem on my site.
Before I do that, I think that I really need to make myself a MediCAID for all T-shirt.

Seeking True North or How to Talk like an MBA

2010-10-27T09:57:00.000-07:00

I graduated from my MBA program at the tail end of the dot-com/corporate scandal/Not so Great Recession of the early 'oo. As a result, I interviewed a lot and got to hear a lot of corporate jargon. Most jargon was a harmless way to avoid being specific about any answer. MBA's, including graduates of online MBA programs, pick this up to show they understand corporate code. The only insidious example was during my interview with The Advisory Board Company (ABC).

The ABC is very serious about their corporate jargon to the point it's used to brainwash employees. Every employees' answer to a question ends in an inflection? That is because ending in an inflection makes you sound curious? And interested in what everyone is trying to say?

The most egregious example was my interviewer's answer to my question of "What would you say the ABC company does best or how would you distinguish yourself from other consulting companies?" I admit that my question was a little obnoxious but I had already written off ABC as a likely employer and wanted to have some fun.

"We are best at finding true north?" my interviewer inflected back. I dug my nails into my thigh to keep from laughing. True North was a popular corporate cliche at that time that means finding the right strategic direction. Or finding any strategic direction. Or any direction and if it's actually strategic, that's a bonus. It merges on saying that ABC can predict the future on a high end or like saying they were really best at peeling the onion or kicking the tires on the low end. As Damon, from the HBO TV series Hung said, "All that you get when you peel the onion is more onion."

With that back story, I would like to share a recent column that has some of the best corporate jargon that I have seen in a long time. Here are my favorites from the link above:

End of the Day
Formerly 5 to 5:30 p.m., now defined as an uncertain point in the future when everything magically turns out okay. Example. "At the end of the day, the pollution in the groundwater may just drain into the earth's core and become unnoticeable."

Space
Industry or field. Example: "I'm in the manufacturing space," "I'm in the waste disposal space," "She's in the adult film space," or "He's in the space exploration space."

Can't Wrap One's Head Around
Unwilling to get into the details or deal with the facts; intellectually lazy. Example: "I can't wrap my head around all this recycling business; Let's throw everything in the dumpster behind Home Depot and let them deal with it."

You will also talk like an MBA, especially if you remember the inflection in your voice?

The Guards take over the North Gate: The battle for the Asylum of Health Reform Rages On

2010-10-24T16:33:00.001-07:00

In the battle for the implementation for the first provisions of health reform, I will continue to beat my inmates battling for control of the asylum analogy like an actual inmate probably used to be beaten in an asylum. In the latest battle, the guards or the government agencies like the Oregon Insurance Division have beaten back one of the craziest inmates.

This inmate in question is Lifewise of Oregon, a subsidiary of Premera, the Washington Blue Cross/Blue Shield company. Lifewise typically acts like Oz's Ryan O'Reily. They don't look very strong, kind of wiry, but are devious and will not hesitate to do whatever they need to win. Lifewise's interpretation of guaranteed issue for children 19 and under or no longer denying coverage due to pre-existing conditions was that they could wait until September 2011. However, the law states that this provision must go into effect September 23, 2010. The Oregon Insurance Division informed Lifewise that all new sales of individual insurance plans would be suspended until they complied with the law. Lifewise also needed to comply by the end of October so they could participate in the first open enrollment period for children 19 and under.

Lifewise's defense was "that it is in alignment with the “good faith” provision of the U.S. Department of Labor FAQ (dated 10/8/2010),which provides issuers a reasonable period of time to come into compliance with the requirements of the Act". In other words, they would be happy to comply but would do it later. This is the same defense that young children use to avoid cleaning their room, high schoolers use to avoid doing their homework, and college graduates use to avoid moving out of their parents' house. I think that only college graduates are moderately successful with this defense.

Technically, Lifewise files their individual plans in September which is why they though that they could wait until September 2011. They planned to continue to deny coverage to children under 19 with pre-existing conditions until that date. However, there is nothing in the law or general field of logic that supports this conclusion.

Forcing an insurance carrier to not flagrantly disregard a health reform provision should not seem like a victory. However, if Lifewise's behavior was allowed to continue much longer, it would have been much worse. It would have provided every other insurance carrier with a complete disincentive to comply with health reform or made the future riots even worse.

Riots in the Asylum: Part 3 of the End of Pre-Existing Conditions for Children

2010-10-18T19:16:00.001-07:00

When we last left this series of health reform implementation gone wildly badly, it looked like the inmates had built a roof top hot tub and organized a spa day. The state insurance divisions appeared to be overwhelmed trying to set up a system to ensure that insurance carriers would provide insurance for those under 19 without denying coverage to anyone with pre-existing conditions. This is also call guaranteed issue for children.

Insurance carriers had been defining their own rules or not participating. It had gotten even worse as insurance carriers started introducing perfectly legal ways to charge people even more money for insuring children in response to this legislation. This new method was to change the "underwriting tier" or how they classified the price based on the type of family unit that was applying. Most insurance carriers have a family tier that is the same whether a family has 1 child or 12. Only 5%-10% of families have even more than 2 children so it's not like John and Kate + Eight are getting a free ride. However, insurance carriers announced that they would no longer offer a family tier but would now charge families per child. When one thinks of Jon and Kate + Eight or OctoMom, this doesn't sound like a bad idea. However, for a family with 5 children this could triple the amount of money they pay for health insurance.

Regence Washington announced this change and attributed it to health reform. While nothing in health reform was related to underwriting classifications, it did cause insuring children to become more expensive. As a result, insurance carriers are moving away from any pricing strategy that makes it attractive to provide insurance to children. This probably represents the peak of the inmates' control over the asylum and showed just how many perfectly legal strategies they could deploy to not support guaranteed issue for children.

However, the insurance divisions sent in the riot squads, cut the electricity, drained the hot tubs, and poured out the exfoliating cremes and cucumber wraps from spa day. In response to Regence's Washington decision to stop selling child only policies, the Washington Insurance Division charged them with age discrimination. The California and Maryland state legislatures have introduced legislation to require insurance companies to offer child only plans. It's gearing up to be a siege on the asylum.

However, given how easily insurance carriers have short-circuited this legislation, I am not optimistic that the guards will regain control. The hole in the logic of any of the state insurance divisions or legislators, especially Washington's, is that the child only plan was an invention of the insurance industry. When insuring children was an attractive prospect, insurance companies developed new ways to insure them. A child only policy is not an inherent right of citizenship (except in Ohio, New York, and Virginia where this was mandated into state law a while ago) but a private sector innovation.

When the courts would probably rule in favor of the inmates, the Obama administration might need to rethink it's health reform implementation approach.

Oregon Health Insurance CEO Forum: Lame and Lamer

2010-10-13T05:33:00.000-07:00

Last year I attended, the Oregon Health Insurance CEO Forum and noticed some excitement in the air around some new developments such as cost transparency, value-based benefit design, and the importance of caring for children. This year, despite their very industry being turned upside down, they talked about popular health care topics from the 80's and 90's. That was the lame part. The lamer part was four CEO's including the CEO from local Blue Cross, Regence, which used to have the largest market share, didn't attend. Considering the unpopular decisions their plans were making around not providing access to insurance for children, it was not very likely that their absence was because they were receiving humanitarian awards elsewhere.

First, the Lame:

The popular topics from the 80's were around capitated arrangements with providers where the primary care physician manages medical costs and how 10% of the population uses 70% of health care costs. The Cigna Northwest Region CEO, Chris Blanton, still wanted to talk about how employer groups should play an active role in driving health insurance change. The only thing that was missing from his 90's flashback was flannel as employer groups are either currently pushing the innovation to the limits of what their employees will accept or scrambling to understand the post-health reform environment.
To further underscore the stock shorting performance of Cigna's Blanton, he did a poor job of hiding the smirks on his face when questions were asked such as what did everyone think about Health and Human Service's (HHS) assessment that health reform would only increase insurance prices by 1%-2%.
Robert Pallari, the former CEO of the Portland-based Legacy Health System and architect of the Oregon Health Plan was the moderator. He was also formerly colorful and bombastic as he lobbed soft ball questions like "Look into your crystal ball and tell me what you see in the future?", "How will health reform influence your organization", and "What type of partnerships are you pursuing with providers?"
Actually Pallari did blatantly insult the Kaiser Permanente CEO, Andy McCulloch, by pointing out that the Kaiser system has been as much about setting up barriers to health care as it is about providing care. Perhaps, McCulloch was too distracted by Banton's smirking or thinking about who play 3rd base for the Cleveland Indians in the 80's since his expression didn't change at all. Nor did he respond.
During this forum, the battle for the future of the individual insurance market was raging, the payment process for Medicare and Medicare Advantage is being completely revamped, and the new health reform provisions had been effective for 5 days. Three of the CEO's were trying to decide if their individual plans should remain open to children while Cigna and their Chief Smirking Officer had already decided to close their plan to children. Yet not one question was asked about insurance for children. Last year, CEO's couldn't talk enough about how important it was. I badly wanted to ask the question but I recognized that it would a CLM (Career Limiting Move). Next year, I'll find a plant in the audience to ask questions like this one.

There were some bright spots:

ODS CEO Robert Gootee did have the great line of pointing out that we "can't drink our bath water and call it champagne" about some of the more egregious performances.
Gootee also called the Secretary of HHS and Middle Finger Extending Kathleen Sebelius by the name, "Kathleen Celibate". That would explain a lot. Actually, I talked with someone who worked at HHS who did vouch for Celibate's er I mean Sebelius's administrative skill. That person also pointed out that just because she has been launching the political attacks doesn't mean that she wrote them or necessarily believes in them. It's just politics.
My main conclusion from last year's forum was that we should let our children grow up to be actuaries. This conclusion was proven again by the presence of the PacificSource Chief Operating Officer, Sujata Sanghvi, who is a Harvard educated actuary!

And the Lamest Aware goes to:

While the CEO's that did show up gave lame performances, at least they came. Well, Cigna's Blanton could have just sent a 12 year old boy to smirk for him so I don't give him credit for attending.
On the other hand, Lifewise, Health Net, United, and Regence sent no representatives. They all have announced that they are no longer offering child only coverage in the individual market in the last few days so their lack of attendance is probably not a coincidence.
Lifewise's membership has been dropping like acid at Woodstock, Regence has lost their 2 largest group accounts in the last 2 years and 40% of their group enrollment, Health Net is trying to sell itself, and United is well, still United. Given how badly these plans are currently doing, I can't imagine that they would have many great ideas to share. Perhaps it's best that they did not attend.

The Inmates have taken over the Asylum: the 2nd step of health reform

2010-09-27T14:47:00.000-07:00

When we last left health reform, one of its most significant early changes was dangling over the cliff. Guaranteed issue or the practice of no longer denying health insurance for children under the age of 19 was scheduled to start on Sept 23rd. Health insurance plans or the inmates in this analogy were expected to change their practices but there was a trouble brewin' on the horizon. The insurance companies pointed out that with this provision, children could drop their insurance whenever they didn't need it and then enroll whenever they needed it. This would be expensive and individual insurance could become even less affordable. The Obama administration was so concerned that they gave the state insurance divisions flexibility to negotiate and offer concessions like a limited period of time when children could enroll or open enrollment period.

How did the state insurance divisions and Obama respond in this crisis when it emerged in early August? Late and ineffectively. If they were super heros, school bus would have toppled over the cliff. If they were Austin Powers, they would have been eaten by sharks with frickin laser beams.

Children were supposed to stop being denied insurance on September 23rd. As that date approached, the two state insurance divisions in my area (Oregon and Washington) had yet to issue any guidance or rules to respond to the insurance companies' concerns. In response, the insurance companies steadily began to announce that they would stop offering insurance to children. First, national carrier Health Net, stopped offering individual insurance to anyone. Other national carriers like Cigna, Assurant, and Aetna pulled out of the child or dependent only market. This means that a parent must both pass the health screening and enroll in the individual insurance plan in order to purchase coverage for their child with these plans. In Oregon, the nail in the coffin was when when Regence, the local Blue Cross plan who sells almost half of the individual insurance plans in the state, announced they were leaving the child only market. When there is market uncertainty, the market seeks certainty. The main result of this health reform provision has been the disappearance of the option for children to purchase insurance without a parent.

There was great hope that reform would stop insurance companies from sinking to the lowest common denominator. It was thought that there would be vigorous and clear enforcement by the regulatory bodies that would convince all insurance companies to participate in guaranteed issue for children under fear of fines, exclusion from future opportunities, or even sharks with frickin laser beams. The biggest fear that insurance companies had is that they would be the only ones participating, receive a disproportionate share of unhealthy children, and be at a competitive disadvantage that they couldn't recover from. This fear was not allayed.

Instead, the Obama administration and Health and Human Services (HHS) did not provide sufficient support and guidance to the state insurance divisions. The state insurance divisions to not have the resources nor bandwidth and were overwhelmed by the issues with this implementation. Insurance companies filled this leadership vaccuum by announcing their own interpretations and intentions for how they would implement guaranteed issue.

The Washington and Oregon insurance divisions finally issued draft guidelines on open enrollment periods and other provisions that would apply on Sept 23rd which was the day that they were supposed to be implemented. Insurance brokers have reported that some insurance carriers like Lifewise, don't intend to comply until Sept 2011 when they have to refile their plans. However, that's actually fairly irrelevant since the insurance division haven't been able to provide guidance and ensure compliance for the insurance companies that have expressed an interest in following the rules.

I had higher expectations for reform then this.

Hibernating for the MBA application season

2010-09-14T19:42:00.000-07:00

All my faithful readers (Hi Mom, Dad, Halley, and Uncle Danny!), have noticed that my blog posts have slowed from their raging torrent to more of a trickle. That's because MBA applicants have started to work on their applications and it's been a busy start for admissions consultants. Therefore, I've decided to declare some form of hibernation for this blog while I spend the next month or two shredding essays on leadership, teamwork, and other lofty MBA goals, words counts, and the occasional self-esteem of the future MBA class of 2013.

The application environment has shifted as more candidates are using some sort of skilled or professional reviewer. This does not mean that everyone is using admissions consultants or an applicant is at a disadvantage if they do not. I don't use anxiety to sell. What it does mean is the days of sending your essays to your parents to review for a comma adjustment here and there are done. There is enough information on the web and people can access skilled reviewers. As a result, essays are consistently more coherent, tightly written, and better answer the questions.

In order to not leave applicants or readers lost and without any guidance in my blogging hiatus, here are some tips that I can share about the early MBA application season:

Current MBA students typically give bad advice: MBA students are focused on being accepted by employers and have forgotten what they did to be accepted by business schools. Business schools look for different criteria than employers. Employers like to hear business jargon, a detailed explanation of your investment philosophy, or your strategic planning capabilities. MBA programs want to hear about how you will be a contributing member to the class in your essays. Every MBA question is some variation of "Who the f#ck are you and why do we care?" not "Here's a case study. What framework would you use?"
MBA admissions look at work history and academic performance to guess how smart or successful you will be. Therefore, the essays are for describing you as a person. If your hopes, dreams, rises, and falls in your essays all center around leveraging your life mission towards creating organization value that maximizes risk and return, you either have been very focused on an MBA since you were 12 years old or will come across as a complete tool. Or more likely, both.
Achievements move the essay along but are not the primary focus. MBA applicants have generally been very successful compared to their peers. As a result, most of their interviews are more like victory laps where they expect questions like, "Really, tell me what you did next! How did you escalate the project plan to achieve the next milestone?" MBA admissions want to know what that achievement actually meant to your personal development and the emotional connection should be slightly more developed than "Everyone appreciated my contribution." The focus is how the achievement shaped you in to who you are today and not about admiring it like a wedding centerpiece.
No cliches. If your essay ends with something like, "This experience taught me that it was about the journey not the destination," there are a few outcomes all of which are bad. 1) That sentence is true for 99% of the applicant pool and you did nothing to distinguish yourself from the masses. 2) If the reader thinks that's actually a plot twist, then you lost them a long time ago.
You will not get denied due to your recommendations. Actually, that's not completely true. If your recommender answers 50% of the questions with, "So's your face," then you might get denied. Or if you use a generic To Whom it May Concern form or some of those universal recommendation forms that's floating around, you might get denied. Nothing tells a school that based on your careful research, they are clearly your top choice like using a generic form that says, "I'm applying to so many schools, I can't even keep track."

Happy MBA application season everyone.

Moving Away from a Middle Finger Relationship in Health Reform

2010-09-11T20:27:00.000-07:00

During one of the many webinar's on health reform where I was multi-tasking (or looking at youtube videos of water skiing squirrels), there was a presentation on the evolution of the relationship between insurance companies and regulators. The speaker described it as an arm's length relationship that needed to move towards a hand shake or hug for the industry to be more successful. I disagree with this. The relationship is not currently arm's length but rather a middle finger relationship that may involve orifices shortly. The worst part is that the Obama administration has a model in place that could move the insurance industry and regulators to a friendlier position.

Health and Human Services Secretary and prominent middle finger extender, Kathleen Sebelius, fired off a statement last week accusing the insurance industry of blaming health reform for a 1%-9% increase in prices. Sebelius felt the price increase attributed to health reform should only be 2% at the most. The insurance industry pointed out that removing maximums on lifetime benefits, making preventive services like colonoscopies free for everyone, requiring that children under 19 never be denied insurance, and other provisions are not going to make insurance any cheaper and defended their numbers.

Implied was that insurance companies should reduce their profit margins which average 3%. While that is reasonable (and expected given the current viewpoint that the only difference between insurance companies and a horde of pillaging Vikings is that the insurance companies have moderately better personal hygiene), the insurance companies have been losing profit margin with other reform provisions. There are billions in new fees and a requirement that medical expenses be at least 80%-85% of revenues which has taken a few percent off profit margins already. Additionally, the reduction in Medicare Advantage payments will increase the cost that employers and individuals pay for insurance. Medicare Advantage was most of the profit margins for insurance companies the last few years.

Insurance companies are prepare to give the middle finger right back by refusing to participate in the coverage of all children under 19 by not offering individual insurance to any children at all. There has been some movements in that direction and it's increasing in my home state. Individual insurance covers 9% of all Americans and children make up around 1/3 of that group. Therefore, it's a very small line of business and insurance companies are signaling that they may leave it entirely rather than follow the new rules. Individual insurance may stop being sold to any child no matter how sick or how healthy as a result. I was initially surprised at the speed in which insurance companies deployed a nuclear option. However, given the Obama approach towards the industry, it's not like insurance executives were going to be invited to play pick up basketball anytime soon.

The state regulators are in no position to enforce rules as Sebelius has promised they would. In my state, the email around a proposed open enrollment period as a solution to this issue had the subject line, "Please disregard previous email, this is the correct version." If state regulators can't even send the right attachment with a very important email, they are not in a position for this volatile and tricky negotiation.

What makes this situation even more unfortunate is that the Obama administration has a way to avoid all these dueling middle fingers. That way is the much maligned Medicare Advantage program. This is the program that Obama has said doesn't work since it overpays insurance carriers since it pays 15% more than the federal government pays for traditional Medicare.

The private Medicare Advantage program used to be called Medicare + Choice and it paid 5% less than traditional Medicare. Not many insurance companies and only 7% of the seniors participated in it. I listened to a webinar with Tom Scully, former administrator of Medicare, where he explained that they needed to pay insurance plans more for participation. This increased payment did result in 25% of seniors participating and a lot more insurance companies. However, he agreed that 15% more was too much which is why Obama should have cut the payments (despite the impact on employer and individual insurance which I describe above). With the payment cuts, there are quality bonuses that plans can earn for demonstrating good customer service, medical management, and ensuring high quality care. To earn these bonuses, plans have to cover preventive services for free, pay 85% of revenue on medical expenses, and similar requirements as health reform. However, insurance plans are not fighting these provisions because of the Golden Rule. Medicare has all the gold so they make the rules. Insurance plans will be paid more for following these provisions and less if they do not.

This supports a future health insurance model of the government contracting with private insurance plans which is the current Medicare Advantage model. It's the simplest incentive plan in the planet. If the government controlled all payments for health insurance, insurance companies would have to follow the rules. There are no middle fingers given in Medicare Advantage. In fact, Tom Scully's advice for how insurance companies could form a successful relationship with Medicare regulators was:

"Suck up, suck up, and suck up some more. Take a nap, then suck up, suck up, and suck up again. Medicare likes working with good plans and doesn't like working with plans that don't follow the rules."

Table Manners at the Executive Table or Keeping your Interview Skills Good Enough to Eat

2010-09-01T11:57:00.000-07:00

In a thrilling sequel to my previous post, I offer more complaints about Human Resource recruitment and the thrilling conclusion to my theory around applying for jobs as a networking technique. The sequels are rarely as good as the original but I think the bar for my first post was pretty low. Complaining about Human Resources falls in the same category as complaining about your hold experience with an appliance call center or the customer experience of airport security. No one's story is unique, we only want to share our complaint, have no real interest in listening to others, and these type of blog posts can be completed while someone is sitting on the toilet.

Having set the bar low enough to trip over, I can assure the reader that my post will be slightly more interesting and I will not need toilet paper after I am done typing.

Recruiter complaint: After filling out the recruiter's questionnaire, she wrote back and told me to complete the section for current employees as soon as possible. When I responded that I was no longer a current employee, she wrote that she had realized that mistake after she had sent the email. Her recovery technique was apparently waiting until I pointed out her mistake. I'm glad doctors don't use that same technique of waiting for patients to have an adverse reaction to their medication before correcting their mistake.

However, after my painful experience (that was probably equally painful to read) was done, I was allowed to interview with the division vice president. I did some preparation but there is nothing like a live interview to make you realize the difference between practice and game time. It's almost like the difference between masterbation and actually having a partner. None of the interview questions were unexpected but it made me realize how I needed to adjust future preparation. This insight enforced my belief that applying for jobs as a networking technique is a good idea because of the additional opportunities for live interview practice.

Interview Questions:
Why do you want to leave your current position and come back to work for us? The real reason was because the new job would allow me to work from home and pay based on a state with a higher cost of living. The job itself was in an area that interested me, too and I liked the company which were my actual answers. It was a surprisingly difficult question to answer since I couldn't respond with my true #1 reason. As a result, I probably will not apply to jobs in the future if I can't articulate the real top reason in my interview.

Tell me about a time where you had an ambiguous assignment.
The interviewer was fairly vague with the questions and made them very open ended. She didn't ask me to explain the results, what I did, how I responded but left that up to me. I knew to include these aspects but I did have to take a few moments to gather all my thoughts without the framework in her question. Ultimately, I used my story that I also use to answer the questions about a time that things did not go well or I had failed. As a result, I'll have to remember to develop a separate story for ambiguous assignments because. . .

Tell me about a time when things didn't go well.
Doh! I had to think for a few minutes since I had used my typical failure story. The interviewer also specified that this be a more current story since my ambiguous assignment tale was about my first job after college.

Describer your work style:
I had to wing this one a little bit and as a result, I didn't factor in that she had just told me that her department's culture is about action and getting things done. That should have been my work style too but instead I was a little too honest about the fact that I still act like a former social worker who likes to check in with everyone.

Do you have any questions for me?
Of course I do. Even though I talked with some of my former coworkers about this job, had worked at this company, and looked up your profile on Linked In, I will always have questions. Like, tell me about your background and how you arrived in this position so I know who I am going to work for. Or what will a successful candidate do in this position or what advice would you give to someone who accepted this job. Even ask what are the key challenges in the industry or with this position. It's better to ask a dumb question than no question. I've seen interviewees not ask questions and they look disinterested in the position.

The fact that I had been reviewing MBA admissions essays and offering a lot of critique of the importance of building up the stakes in the story, focusing on what you did, and what you learned helped me structure my answers. However, it did reinforce the fact that we can probably all anticipate the typical questions that we will be asked in an interview and should have a few separate stories prepared. Preparing these stories can give you something to do the next time you're sitting on the toilet without a blog post to write. While we're at it, could someone get me some toilet paper?

Getting a Seat at the Executive Table

2010-08-25T16:17:00.000-07:00

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.

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

2010-08-18T19:23:00.000-07:00

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.

Olympic Penninsula: Marmot Pass and Buckhorn

2010-08-13T06:43:00.001-07:00

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.

Parallels between Peace Corps Training and Harvard Business School

2010-08-04T06:46:00.000-07:00

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.

How will Hospitals Weather Health Reform?

2010-08-02T16:22:00.000-07:00

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.

Providing Care in a MediCAID for Everyone World

2010-07-26T19:25:00.000-07:00

For all who dream about a single payer US health care system, I continue to tell them the calories in that punch bowl by declaring that a US single payer system will look like Medicaid. I don't turn their dreams into a nightmares or urinate in that punch bowl. It's more like finding out that the girl of your dream has man hands.

In all likelihood, a national health care system will resemble Medicaid, the health plan that stretches dollars to the previously uninsured with tightly managed care and low provider reimbursement. According to Ingenix, in 2016, the number of Medicaid beneficiaries will grow by 30% while the numbers who have better paying commercial insurance will remain flat. Medicaid will be the fastest growing insurance market so providing care will become increasingly important. Here's how I think that it will play out:

1. Who are these new Medicaid beneficiaries? Some feel that the health care utilization of Medicaid beneficiaries is unique while some see the only difference between a Medicaid beneficiary and someone with a blue collar health insurance plan is union dues and 5% of the Federal Poverty Line. What we do know is that they will mostly be adults but what we don't know is how much pent up demand they have for health care services and what kind of services they want. What will probably happen is that their health care utilization will decrease over time as they can regularly access care as opposed to gorge on the newly opened health care buffet.

The significance is that for those who participate in the Medicaid world especially with dollars at risk in a capitated environment will have some rough early years. However, the health utilization will stabilize over time and there will be opportunities to be profitable in the future.

2. Nurse case management will be key: The type of care that current Medicaid beneficiaries receives is often related to their chronic disease state or difficult socioeconomic environment. Those types of problems don't require a doctor to tell a diabetic to eat more vegetables and not leave their guns on the kitchen table. Nurses or social workers are the best option. However, currently only doctors get paid for the visit while these types of providers do not. A change in the payment system can address the revenue side of the equation while greater use of mid-level providers (I think that's the right term for nurses or social workers. I wouldn't want to call them lower mid-level providers) instead of doctors will help the expense side.

3. The Medical Home will save the day! The Medical Home model is the idea that someone should get all of their medical services in one place and it should be coordinated. It is also a friendly place where a patient likes to go. Definitions vary wildly but it is the latest trend in health care delivery. The flip side of a medical home involving throwing random bits of health care in settings where no one knows your name isn't appealing so the Medical Home model should stick. Especially since there is more money for available in the form of Centers for Medicare and Medicaid demonstration projects or large employer groups who are so desperate to reduce health care costs that their alternative plan involves sacrificing a goat. Since there are so many organizations willing to pay for the research and development, the medical home model will be tested and ready for that influx of Medicaid beneficiaries.

4. Go Federal, Federally Qualified Health Center (FQHC), that is: There will be $11 billion available nationally to double the patients served by FQHC's or Community Health Centers. FQHC's receive federal grant funding are are reimbursed at their costs for Medicaid visits. They are well equipped and knowledgeable about providing care for the uninsured and Medicaid. They also get paid more than private providers due to the fact that they get reimbursed at cost for Medicaid patients. The application process for becoming an FQHC is not a simple one. However, with limited provider access and low Medicaid reimbursements for non-FQHC clinics, the benefits are well worth investigating the application process.

The Second Greatest Hat that I have ever Knit

2010-07-19T19:39:00.000-07:00

For those who forgot, this is a blog about knitting as well as health care, MBA's, and whatever completely random topic that I have come up with in order to keep blogging (I may have to revisit my topic about whether or not 7-11 can be a flag ship store in a commercial district). Therefore, I proudly present the second greatest hat that I have ever knit on the left. The greatness is a combination of having abandoned knitting patterns for hats in favor of my own designs and the subtle patterns.

For those knitters out there, this hat uses Berrocco Cool worsted weight because I still had a lot left over from the toddler sweater. It's a blend so it's not too itchy nor warm which I like. I used size 4 needles and cast on only 100 stitches for a gauge of about 6 stitches/inch. That comes out to about a 16 inch circumference hat. No, my head isn't really small but actually kind of big at a weather system impacting 24 inches (Head!). Using normal knitting calculations, one would subtract 1 inch from head circumference and with a 6 stitch/inch gauge, cast on 138 stitches. If I followed normal knitting calculations, would this be the 2nd greatest hat? I think not. I like a snug fitting hat for warmth, comfort and fashion and have learned over time and practice that 100 stitches is right for me. For those less adventurous with gauges, I would offer the following advice:
1. If you think a project looks really small when you're just starting, that means you're on the right track. If the projects looks like the right size when you're starting, that means it will grow to such immense proportions that people will wonder if you are knitting for an elephant.
2. Knitting patterns seem to be written for the sizing of Shaquille O'Neal's family. Always check the size since it will generally be too big.

As far as the rest of the details, the beginning black band of the hat is knit with a knit 2, purl 2 rib pattern and the rest of the hat is straight knitting. I reduced by knitting 10 then knit 2 together (repeat), knit a row, knit 9 then 2 together, knit, knit 8 then 2 together, etc. I think that you get the idea. I stopped knitting after the knit 2, knit 2 together row and ran a kitchener needle through the remaining stitches and tied it all together. I decided when to start reducing based on trying the hat on and seeing if it covered my ears and almost covered the top of my head.

I definitely made some errors during the reduction since I knit while watching 30 rock. However, that is not the reason that it is the 2nd greatest hat! The greatest hat title was given to the hat below which was the original greatest hat that I ever knit.

Note the similarities. Greatness doesn't need to be changed to significantly. The original greatest hat had a very good run but had gotten stretch out and was no longer fitting my head as snugly as I would have liked. It disappeared on an Amtrak train in Montana around the same time that I was pondering its succession plan. This allowed for a very peaceful transition.

Don't let me write like Dan Brown!

2010-07-17T20:25:00.000-07:00

I write like
David Foster Wallace

I Write Like by Mémoires, Mac journal software. Analyze your writing!

I heard of the website I Write Like (IWL) on NPR and read about it on Yahoo. After reading it on Yahoo, I figured that it was old news. Similar to how when I first heard about the Spice Girls through Newsweek while living in rural South America, I knew they were probably not the world's hottest band anymore.

IWL was developed by a programmer in Montenegro and uses key word analysis on text that you enter that is similar to the logic used on spam filters. Its creator has only entered 50 authors so your options for who you write like are limited. As you can tell by the badge above, I write like David Foster Wallace based on its analysis of my posts Bring Me a Bucket of Bankers, Love in the Time of MBA's, Free Markets Response to Gaps in the Individual Insurance Market, MBA's seeking health care jobs, Early Results of Medicare Advantage Cuts, and COBRA: Strategies and the Stimulus. At first, I thought that David Foster Wallace had written Breaks of the Game, one of my favorite books about the Portland Trailblazers 1977 NBA championship season and I was really excited. Turns out that David Halberstam wrote that book and that I have never heard of David Foster Wallace. However, since the majority of my most popular posts are written in his style, I checked out his book, Infinite Jest, from the library.

Of my other popular posts, The Legacy of the Leveraged Sell-Out was written like H.P. Lovecraft, the Summer Reading List for non-traditional MBA's was written like science fiction writer Iasacc Asimov, and Lake of the Angels: Olympic Peninsula was written like Stephenie Meyer, the writer of the Twilight series. Given that post is basically a trail guide, I really have to wonder about the Twilight Series.

One of my posts was written like popular writer Dan Brown which horrifies everyone who finds out that they write books with tortured logic and albino monks. Some people are told that they write like horror writer Stephen King and no one seems to know what to make of that. That wouldn't make me happy but it's nowhere near as bad as Dan Brown. Stephenie Meyer is pretty bad, too but I like vampires and werewolves more than Dan Brown's characters.

Personally, I think the programmer should load some really badly written books and attribute them so that someone could be told, "I write like someone who writes DVD programming guides," or "I write like the Unabomber." I admire IWL's creator for exercising this restraint.

Then We Were Done or when We have Blogged All there is to Blog

2010-07-15T22:33:00.000-07:00

Bloggers do not blog forever. A lot of blogs don't get beyond 1 post. Conscious of the high failure rate and motivated to produce a quality blog, I made sure that my blog reached at least 100 posts during its first year and 8 posts per month. During my second year, I haven't had the same motivation and have settled on a respectable 6 posts per month.

The two main reasons that I got into blogging were to practice my writing and participate in the online blogosphere community. My interest in the blogosphere community did not burn out as much as it faded away. Some of my favorite bloggers that are linked under my "Men Are Smart, Women Are Smarter" section stopped writing. Others no longer seemed as compelling. My fantasy baseball team filled up my internet surfing time as I was no longer interested in what the blogosphere had to say. It had started to feel like everything there was to say on a blog had already been said and the arguments became circular.

1. Who owns social media at company? Marketing was nominated to own social media. No, Human Resources wanted to own it in their quest to get a seat at the table at a place that doesn't involve a buffet. No, everyone owns social media. No, no one owns social media. So, who owns social media again?

2. Be careful about what you post on Facebook. But if you don't want to be careful, understand your privacy settings. Wait, privacy setting changed. Okay, go back to being careful about what you posted on Facebook.

3. Generation Y is unique, special, and going to take over the world with Twitter. Generation X is still bitter and snarky and writes nasty comments back to Generation Y about how they should move out of their parent's house before they take over the world. Generation Y says the the home ownership dream is dead and they'd rather live at home and save money to start their own business. The Boomers are too busy actually running the world to care about either generation. Boomers win. Again.

4. The most important indicator of a blog's success is traffic. No, it's content. No, it's comments. No, none of those things help make money so I'll just become an affiliate marketer like people who sign up for Amway. But it's not call affiliate marketing anymore but multi-level marketing instead.

5. You should blog to show you are an expert about your niche! Get traffic to your blog to show off your expertise! But it's not about traffic, it's about connection and no one cares about your niche expertise in vintage cookie jars. Oh well, there's always multi-level marketing.

6. Resumes will never get you a job. Well, since every job asks for a resume, that's not really true. It's all about networking. And to be a really awesome networker, you should start a blog. Oh wait, forgot about #4 and #5.

7. It's important not to settle and find a career that makes you happy. I don't know what career will make me happy. But I know that I don't want to settle. So I've defined myself by what I don't want to do. Blogging makes me happy so maybe that will be my career. Crap, forgot about the last 4-6

8. I am going to blog about how something sucks. Well, it doesn't really suck since I am going to write a fairly nuanced post. Using words like suck in blog titles is good because it draws traffic. Traffic is important, oh wait, we've done this before.

9. I am a personal finance blogger. However, you shouldn't take advice from me but use a professional financial adviser. So should I ignore the advice about using a professional financial adviser since I shouldn't take financial advice from a random personal finance blogger? This is the ultimate circular argument kind of like those circular Excel formulas that trigger a big warning when I create them.

10. Making lists are great blog posts. Lists that end in a round number like 10 are even better since ending on a random number like 7 or 8 makes it look like you just ran out of ideas. Yes, I reached 10! Victory is mine!

My lack of interest in the blogosphere and lack of motivation to engage with this community is a disappointment. The internet provides many opportunities to join community and I really do like a good community. However, I haven't found it. I do like blogs from more experienced professionals and bloggers like Fred Wilson and Laurie Ruettimann but I'm realizing how unique their blogs are.

This leaves me with a blog that is an opportunity to develop my writing and motivates me to more fully research ideas. I use some of my ideas at work. Sometimes, I just try to impress the marketing department by talking about my blog.

Getting Really Horrified about the Personal Information that's on the Internet

2010-07-12T20:57:00.000-07:00

The personal branding industry became prominent in 1997 with a Tom Peters article and now yields 7.9 million hits on a Monday night search by the Google. The main contribution of the personal branding industry seems to be fairly obvious guidelines on what you should share online. For example, putting up photos where you are scantily clad in a compromising position with a goat while drinking alcohol is apparently not good for your personal brand.

What would really actually be helpful and impressive from the personal branding industry would be specific guidelines for those of who just can't resist showering the internet with nudity, alcohol and barnyard animals. For example, is a picture with a knowing smirk, cocktail dress, martini, and a sheep personal brand neutral? What if the martini is replaced with a Pabst Blue Ribbon and there is a little bit of tongue emerging from the smirk? Is that bad for a personal brand or just a little racy? For those with these low levels of impulse control, knowing line and when have we passed it would be very useful.

These are the types of assignments that those who work in personal branding should have to wrestle with. No naked pictures online is the low hanging fruit. Give me the exact square inches of skin that can be shown to not hurt someone's personal brand and that is someone who has earned their fee.

The information that we can voluntarily share on the internet pales in comparison to the latest business models for online aggregators of personal information. The previous paragraphs were on my to do list as part of making fun of the personal branding industry. The meat of this post is about sites that that make you wish that untagging that awkward middle school picture was all that you had to worry about.

Spokeo is the New York Yankees of Privacy Violating free sites. It is frightening in both the information that it portrays (address and birthday) and its inaccuracies (attempts income, profession, and home value with no success whatsoever). A street level google map of your address just adds to the creepiness. It has all the information that someone would need to target you for marketing or a home invasion. The only good thing about the site is that it is easy to get your information removed.

Zabasearch is similar to Spokeo but more of a white pages and doesn't attempt to peddle financial information. When I attempted to find myself and a few others, it seemed to have this default setting of LAST NAME Hole or in my case it would be Hedge Hole. I don't know if the site was really calling me an A-hole, it was a glitch, or Hole is a really common last name. Overall, it seemed too inaccurate with basic information to be really harmful. To opt out of zabasearch, you have to fax them a request along with a proof of identity.

Pipl is an aggregating site that pulls in information from Spokeo, Zabbasearch, and Google in attempts to create an unauthorized profile. They are kind of the open market with some quality goods and some snake oil. I give them credit for having a real person respond to emails about removing your information. They will remove your results from google searches if you contact them at mail At Pipl Dot Com but will not take down your profile.

For $40, you can also pay many sites to get even more complete records of anyone that you want. I understand that business model and market need for this information for those who are willing to pay. I don't appreciate the business model of the sites above that use my available personal information as their product. At least include me on a pay for click model for people who search for me. All their sites claim that they search available public data bases and are merely aggregators who just happened to put together profiles that would only appeal to people who you generally wouldn't want to find you.

Ignoring the Lyrics of the Gambler: the love for the Boom and Bust cycle

2010-06-29T06:57:00.000-07:00

You've got to know when to hold 'em, know when to hold'em.

Know when to walk away and know when to run

The lyrics above are from the Kenny Roger's karaoke classic, The Gambler. Perfect for tone deaf karaoke singers and words that are ignored by free market economies who appear unable to break a boom and bust cyle.

This realization has occurred to many hedge fund managers, but I became interested in this from learning about Steve Eisman in the Michael Lewis's The Big Short. Like Lewis, I really enjoyed Eisman because he was a hedge fund manager who won't ask you how big your boat is and knows what credit card debt is (reference: the skit "Advice from a Hedge Fund Manager"). Eisman is also known as the guy who predicted the subprime mortgage melt down early enough to bet against it. Less known was that he was as genuinely angry as your average social worker at how subprime lenders were exploiting lower income Americans.

Eisman's next target is the for profit education system which he believes is poised to implode and has also been accused of exploiting lower income Americans. As Eisman or enraged former social workers like myself would say, for profit education institutes exist to skim off the top of education loans by saddling students with debt for a degree that will not help them in the job market. For profit education institutes would indignantly say that they help marginalized individuals get an education in order to help break the cycle of poverty.

The fact that for profit education institutes are very profitable and academically and socially perform at the levels of less expensive 2 year community colleges (and they are 4 year institutions) doesn't help their case. Their profitability has spurned investment which has caused these institutions to become the fastest growing sector in the education system and inhaler of federal loans.

In some ways this has a lot of the characteristics of the subprime business. Easy access to money from the government has fueled growth that has relaxed lending/admissions standards. Regulatory agencies are swooping in and hedge funds are starting to bet that these companies stock will fall in the form of short selling. There will be a bust which will result a lack of payment of loans which have been packaged into securities somewhere which will defaults that are buried in investor portfolios. Since it is unknown where those portfolios are buried, banks will start to mistrust each other which may reduce lending. The only thing difference is that MBA students haven't started to major in education like they majored in real estate during the subprime boom. It also won't be on the same scale as the subprime mortgage business which had reached one trillion dollars. Therefore, we won't have to learn what number is bigger than a trillion but there will be another outlet for indignant rage.

I question if there is any way to ever prevent these boom and bust cycles or are they a permanent part of our beloved free enterprise market that 70% of Americans support according to the Economist (read in a British accent)? Stopping the boom cycle is actually more straight forward as a monetary intervention in the form of the federal reserve board raising the interest rate for banks lending to each other would have a big impact. It's one step by a government body to slow the torrent of easy credit to a brisk stream. The frustrating aspect is that would result in even the liberal New York Times accusing the government of being socialism. I believe in a lot of things that aren't likely to happen (Cleveland Indians winning a World Series, for example) but I don't believe in that happening.

The more popular side of the equation would be to stop the bust cycle. Some of the levers being discussed in the subprime crash were limiting short selling. However, short sellers like Eisman, are increasingly being viewed as serving a useful private sector watch dog. Additional regulation is another option but that usually happens after the fact. Health care has also been considered a candidate for a bubble and the boom and bust cycle given it's rapid increase and overvalued services. The for profit sector is a minority player in this industry so if there is no bust, that could be considered a part of the equation.

Otherwise, Kenny Roger's lyrics will continue to apply to western economies' addiction to the boom and bust cycle.

What the US Health System should be when it Grows Up

2010-06-24T07:05:00.000-07:00

In 5th grade, I decided that when I grew up, I was going to be a writer who lived in a mobile home. The writer part came from my 5th grade teacher who gave us lots of creative writing assignments. I don't know where I got the idea for living in a mobile home. I think that I thought it would save a lot of money since I wouldn't have to buy both a car and house. I pictured parking the mobile home either outside my parent's house or outside the drug store where I got candy. I had never heard of trailer parks at that time which certainly would have impacted my decision.

Like my 5th grade career plan, the US health care system has some flashes of brilliance and some thinking that is not well founded. The current system can easily be described as one that values innovative high tech care that is driven by specialists and venture capital. It pays for all that care by denying a certain percentage of Americans access to it. An interesting part is that someone else generally pays for our health care. Employers pay for their workers' health care, workers pay for the senior citizen's health care, and the government pays for the health care of the poor. In a country that emphasizes personal responsibility and the ability to buy what you want, this is an interesting contradiction.

The unfounded thinking is that the US health system can be transformed to covering all Americans while maintaining the same level of innovation. That is where the US health care needs to grow up and develop a plan for what we want our health care system to look like. A realistic strategy and philosophy will stop divisive arguments around public option plans or if Obamacare plans to sell grandma's organs to gypsies to pay for free colonoscopies for the uninsured. If there is no philosophy that mentions funding by gypsies or government takeovers then those arguments melt down faster than France's soccer team.

Many other developed and non-developed nations have made these tough choices while designing their health care systems and funding it based on these strategies:

Rwanda has a national health plan that covers basic services and primary care where everyone pays $2/month regardless of income. High end specialty services are often not available or has a long wait as it is a developing nation that relies on donations. However, the philosophy and decisions are very clear. It's an individual mandate that everyone pays the same amount regardless of income. The public program covers basic services, primary care, but will not necessarily cover the most innovative care. It's distribution model is very local as an area's clinics are funded by the local citizens and vary.
Thailand has a similar health system to Rwanda and is dubbed the 30 baht plan because that's what everyone pays. However, their health care system has aspects of the England's system as health care is allocated centrally by a body of primary care physicians who decides what services will be purchased. Their philosophy has the individual mandate, a very centralized system, and has physicians making the decisions that health insurance companies make in the US.
England and Canada systems are fairly well known but in philosophy, they are centralized and control health care from top to bottom. Private insurance or providers are squeezed out. In exchange for offering low cost, quality care, these countries sacrifice access with long waits or denials for services.
Germany has a two tier system that mixes public and private aspects. The public tier provides a basic level of services and pays physicians a capitated rate or set amount to provide them. If people want more care, they get private insurance and there is a thriving private provider market. Morocco has a very similar system.
China had an interesting public/private blend where clinics were run by local government and provided subsidized basic services at a low cost. The philosophy was to provide low cost care to the poor (which is the role of most governments in health care). However, clinics and providers could charge whatever they want for medication, imaging, or other ancillary services. As a result, these publicly employed providers highly encouraged medication, imaging, and these ancillary services since they made a lot of money and the system looked a lot like the US. Dissatisfied with the results, China changed the system.

The reader can see clear philosophies in these systems. There are individual mandates, required taxes, defined government services, and defined private sector role. They US system was pretty much created by following the money in a free market environment and the results are what Maggie Mahar calls money-driven medicine that does produce some of the best care that money (lots of money) can buy. It was not a planned system like our education system. Since the US developed a centralized plan for education (basic level of public services covered and a private system for those who want more) without devolving into socialism, it's possible to do the same for health care.

At the beginning of writing this post, I wondered what the philosophy for the US health system could be? What could combine our zeal for personal responsibility, free market principles, desires to sell the elderly to China to pay off our debt (okay I'll stop the death panel jokes), and need for colonoscopies on demand (but I'll never stop the colonoscopy jokes)? It actually became quite clear:

We already have an individual mandate to contribute a portion of our payroll taxes (capped for the wealthy) to pay for Medicare. Redirect that money to our own health care for a basic public insurance plan or the public option.
The rallying cry for all politicians is that "We won't let a government bureaucrat/insurance company/crazed llama get in between you and your doctor." Let's implement that with Thailand's system and put doctors in charge of purchasing health care. This is the Accountable Care Organization approach which is capitation 2.0. Take the money that people pay for insurance and give it to the primary care doctors. They will be responsible for purchasing services from specialists and hospitals.
The free market aspect is that with increased power, primary care physicians will have increased pay. As a result, promising medical students won't sell their soul to become urologists or opthamologists because it's lucrative with good hours. I can't believe that many medical students are so disproportionately interested in those parts of the body.
Since primary care physicians control the money, specialists, hospitals, drug and medical device companies will compete for their business. Again, free market reigns supreme.
For those who want more insurance, they can buy it on the private market.
The government will still pay for colonoscopies for the poor as they do everywhere from China to Rwanda.

There are barriers to this system (like the specialist dominated American Medical Association) but all these changes have been fairly strongly expressed in public rhetoric. The US has only sporadically done planning for its health care system but it's time for the system to grow up.

Don't let your Strategic Plan stand in the way of a Good Colonoscopy Joke

2010-06-16T20:42:00.000-07:00

Anyone involved in strategic planning has learned that nothing can paralyze a planning process like trying to distinguish between a vision, strategies, and objectives. One simple way of distinguishing between those three could be:

Vision: #1 market share in the colonoscopy market
Strategy: Attract new patients with our outstanding facilities
Objective: Clean instruments at least 3 times a day

The paralysis comes when someone wonders if cleaning the instruments could be a strategy and the objective could be to purchase organic bleach. Some other genius will confuse a vision statement for a marketing slogan like "Your bottom is our top priority". Then the finance guy in the room will want every objective to have an ROI or they just can't support it. At this point, the strategic planning department has decided to just hire a consulting firm for next year's strategic planning process.

I bring this up because obviously I'm still scarred by some of my planning offsites and because I am reviewing the strategic priorities that form the pillars of this blog. They are pretty well mapped out on the right below the picture of the photo shopped purple baby hedge hog (It's really photo shop, I did not dye a hedge hog purple) as health policy, MBA admissions, knitting, and the Pacific Northwest. From my my tags, I have done an excellent job with health policy with 76 tags for "health care" and 44 tags for "reform" and with the MBA admissions process with 45 tags for "MBA experience" and 14 tags for "MBA admissions". I am pretty good with "Pacific Northwest" with 26 tags and lagging a little bit with knitting which only has 6 tags.

Given how remiss I have been with tales of knitting, I wonder if I should evaluate the strategy of my blog. Two other objectives (or are they tactics?) is to make as many colonoscopy and animal husbandry jokes as possible. I have always considered colonoscopies to be an objective under my health care posts but some recent data has caused me to reconsider. It turns out that I have 10 posts with the word "colonoscopy" in them and one of my more popular posts has colonoscopy in the title!

Some recent developments in my company's discussion around health reform implementation has spurned this strategic evaluation. The conversation has slowly risen up to the top before traveling tranversely and going down (I am foreshadowing). Health Reform requires the coverage of preventive services that receive an A or B on the US Task Force. Most of these preventive services like prenatal services or glaucoma screenings are already covered at a low cost by most health plans. However, this is causing all health plans to look at colonoscopies, an A rated preventive service, in a whole new light. Previously, health plan member could pay 20% of the cost which could be $250-$400. Under reform, colonoscopies would be free. This is causing a lot of discussion at health plans and a lot of colonoscopy double entendre like:
1. We really need to probe this issue and flush everything out.
2. Have we found everything and searched all the dark pockets?
3. Do we need to dig deeper?
4. Let's make this process as smooth as possible.
5. I think that I see the light at the end of the tunnel

It became impossible for someone to even say, "As a (w)hole, the colonoscopy benefit will change" without half the room falling on the floor in laughter. Finally, a regulatory staff member commented that he been eating, breathing, and drinking health reform, no one needed to finish the sentence on what else he was doing with health reform after all that eating.

For all of us who are taking health reform very seriously and working very hard to understand it, there is always time for a good colonoscopy joke. I may need to look at the role of colonoscopies in my blog's strategy. However, there are actually 12 posts about animal husbandry which may be a future topic.

With Health Reform, the Obama Administration Needs to Learn to Keep its Enemies Closer

2010-06-10T20:13:00.001-07:00

In October 2009, the Obama administration declared the insurance companies an enemy and began keeping them at arm's length (or really middle finger length). This move was triggered by the decision of the health insurance companies lobbying group, AHIP, commissioned a PricewaterhouseCoopers (PwC) report that forecasted significant increase in health insurance premiums and lack of affordability. This report was released shortly before Congress voted and PwC (why the lowercase w? What did waterhouse do?) shortly refuted AHIP's interpretation and how the methodology was applied.

Kathleen Sebelius of Health and Human Services returned the favor with a Wall Street Journal editorial that was released the day before Medicare Advantage bids were due. It's methodology was also not applied well and was also released too late for it to have an impact. Although, Sebelius could have extended the deadline for bid submission if she actually wanted something to be done. Like the PwC report, it was the equivalent of an abstinence lecture to a couple during their 6 month prenatal visit.

This WSJ editorial was not the first jab on the health insurance industry by Sebelius nor was it the least effective. The prize for the least effective was the angry letter to WellPoint that pretty much received a F#ck Off response from their CEO.

The Obama administration has tried to brawl with the insurance companies as part of is health reform strategy and given the AHIP PwC report, I can't blame them. However, I do blame the strategy. Providers and hospitals brawled with the health insurance companies in the 90's once providers got big enough to fight back. In California, Sutter Health System and California Blue Shield made some of the World Wrestling Foundation rivalries look tasteful in comparison. It was also about as effective as both lost their reputation and money over the stalemate. Through consolidation, providers and health insurance have become equally strong which has mostly higher payments to providers and higher insurance premiums for the country. Still licking wounds from their previous battle, these two were mistrustful and had no interest in learning each other's business. For example, with medical management, providers have missed the opportunity that insurance companies capitalized on with nurse case management programs. Insurance companies could learn from hospitals on how to develop better cooperative partnerships with physicians.

The Obama administration is fighting a 90's style battle with insurance companies. Like acid wash jeans, it's no longer fashionable and not yet retro cool (like leg warmers). Although most in health care thought that the insurance companies would lose influence as their business models were not sustainable, they are as powerful as ever. There is no reason to think that the Obama administration's battle would have a different outcome as doing the same thing but expecting a different outcome is the definition of insanity.

My recommendation is that the Obama administration keep a closer relationship with the insurance companies. There is much to learn about the insurance model that can be applied to populatio health or how to talk its beneficiaries. For example, insurance companies learned a long time ago not to send glossy 4 page full color material to seniors since they see it as a waste of money. Insurance companies could price out some of the Obama administration initiatives which will help address future claims of affordability. Simply, it's an Abraham Lincoln, Team of Rivals approach of staffing his cabinet with his enemies. It would represent a new approach to competing with the insurance companies since the current approach hasn't worked for anyone else.

Democrats: Missing the Point about Segmentation in the Medicare Advantage Market

2010-06-05T20:00:00.000-07:00

I read a recent Government Accountability Organization (GAO) report about the Medicare Advantage market that Democrats are portraying as an example of private health plans "piling on extra costs to health seniors." Some readers might be shocked at the Democrats accusation. Some readers might be more shocked that I actually read a GAO reports.

The reports notes that healthier Medicare beneficiaries who buy less expensive, lower premium plans have higher out of pocket expenses for hospital visits, skilled nursing facility stays, and other services than seniors in poor health who buy more expensive plans. The Democrats feel that is evidence that "health care reform will protect Medicare beneficiaries from unscrupulous insurers". I feel that a better parallel for this example is to note that college seniors tend to buy cheaper alcohol when hanging out with their friends watching sports than they do when they're on a date with a woman they're trying to impress. There is a time when a case of Pabst Blue Ribbon will get you a fist bump and a time when a nice bottle of red wine will get you invited back to her place. Democrats are really missing the point of market segmentation.

With health insurance, you either pay more upfront in the form of a higher premium to minimize the risk of having to pay more if you get sick or you do the opposite. If you are sicker, you are probably more likely to buy better health insurance because you know that you are likely to use it. This GAO report describes this perfectly. Healthier seniors buy cheaper plans that have a higher copays and out of pocket costs for hospital services or skilled nursing facilities. The plans are cheaper because they cover less services and according to the report, the 43% in good health prefer those plans. For the 20% in poor health, they will pay more upfront in order to have lower costs when they are likely to enter the hospital.

To underscore this example of segmentation, 55% of the plans that seniors in good health chose, had fitness discount benefits. Only 28% of the of the plan that seniors in poor health chose had fitness discounts. In other words, a healthy senior would rather pay a lower premium for a plan with a fitness discount than one with a good hospital benefit that they are not likely to use.

I should stop acting indignant when political parties spin reports to support their point of view. It's like getting indignant when your cat doesn't listen to you. But I can get indignant when political parties seem to completely misunderstand the data or think so poorly of the average citizen that we believe their illogical point of view.

The most interesting question that the report helped address is whether it is worth it to pay more for a Medicare Advantage plan with richer benefits. When we buy insurance, we always wonder if we should we pay more for the lower deductible an our auto insurance or will we never use it?

The report noted that the average premium for a plan that a healthy senior chose was $24/month, for a moderately healthy senior it was $37/month, and $31/month for a senior in poor health. For seniors in poor health, this likely includes Special Needs Plans (SNP) which receive more money from Medicare so they charge lower premiums. They also have less healthy, low income members so are not a good comparable. The best comparison is the $24/month plan for a health senior and $37/month for the moderately health senior. The difference per year is $156.

The report indicates that for the plans that a healthy senior would select compared to a moderately healthy senior are:

$97 more for a hospital stay for the plans a healthy senior would select
$14 more for an inpatient psychiatric stay
$60 more for a skilled nursing facility stay
$320 more for renal dialysis for the year

It looks like the healthier seniors are saving money with their plan selection. If a healthy senior has a hospital stay and a skilled nursing facility stay in a given year, they will break even from their premium savings ($156 vs $157). Otherwise, they will be ahead financially.

From talking with seniors, they make very calculated decisions when selecting a Medicare plan. They literally take out a calculator, look at the premium difference and how much they project to spend in out of pocket costs for services they are likely to use. They don't rely on Democrats to protect them.

MediCAID for Everyone

2010-06-04T19:52:00.001-07:00

The title of the post really is Medicaid for all not Medicare for all. The excitement level for all single payer advocates should drop a little bit. For the rest of the population who is trying to remember the difference between Medicaid and Medicare, Medicare is for seniors, pays doctors a little bit better, and is the non-stigmatized government health insurance. Medicaid is the ginger-headed step child that has to sleep in the boiler room when it comes to government programs.

I tracked an interesting set of comments from the Archimedes group list serve, an Oregon-based advocacy group started by former Oregon governor John Kitzhaber. It was a debate on whether Medicare or Medicaid should be the health insurance plan that should be turned in to the single payer system. There were some participants who had both insurances. Ultimately, they admitted that they didn't like Medicaid because it was less widely accept by providers but primarily due to the stigma associated with it. Not surprisingly, Medicaid for Everyone has a branding problem.

From a plan design perspective, Medicare for Everyone makes little sense. It's designed for seniors and thus covers a screening for aortic aneurysms but no annual check ups. It covers eye glasses that one gets following cataract surgery but no routine vision exams. It covers 3 pints of blood for transfusion but not maternity services. It's benefit design fits the non-senior population as well as Glee's Rachel Berry's skirts and general wardrobe fits her. Finally, the benefit design basically covers 80% of all services with no limit to out of pocket costs. That leaves the beneficiary with 20% of all medical costs that are covered with no cap.

From a care delivery perspective, Medicare is a fragmented payment fee for service system that had the least successful experience with disease management in US health care history. Lifemasters, a disease management company, went bankrupt trying to work with Medicare.

Medicaid typically operates in a capitated managed care environment. The benefit design focuses on preventive care, mental health services that most of its beneficiaries need, and even dental. It focuses on fixed copays and limited out of pocket exposure. A primary care provider is given the budget and control of the beneficiaries health care dollars to use appropriately. Most of the currently uninsured have more in common with your average Medicaid beneficiary than your average senior citizen. Thus, Medicaid is the most appropriate federal health plan design to use for a single payer system.

I touched upon the provider payment issue with Medicaid which is the main current barrier to a Medicaid for All campaign. It's more difficult to find providers to work with Medicaid beneficiaries because it pays so little. The capitated payments that it provides don't cover a lot of health care services so delivery systems usually lose money on Medicaid. However, with any business that is losing money, there are always 2 levers. The revenue lever and expense lever. Health care has focused on growing revenue for a long-time which is why it increases at the twice the rate of inflation.

Health Reform will shrink revenue for health care organizations. Medicare's physician payment needs to be cut 21% according to current laws and commercial insurance revenue is not going to grow at present rates. Medicaid payments for primary care actually are supposed to increase. The biggest factor is that number of people with Medicaid is forecasted by McKinsey Consulting to grow by 25% through 2016. Employer insurance is forecasted to remain flat or the same levels at 2010. Health care organizations that can thrive under a Medicaid level payment structure will thrive in a post-reform world. It will grow more than any other insurance market and refusing to accept its patients because the payment is too low is not going to be an option.

Instead health care organizations will have to learn to adjust their cost structure in order to be able to make money under a Medicaid level of revenue. That includes deciding where to invest money and where not to. The care delivery system to be built around the Medicaid patient does not have to be expensive since the primary care provider is king (or queen). Networks can be narrow and special partners and hospitals can be required to be on the same electronic record system, use the same disease registries, and follow other protocols as a requirement for payment from the capitated pool.

Providers and hospitals have been in an expensive war for commercial insured patients. However, the competition for the Medicaid market can be a much cheaper fight and can be most lucrative in a post health reform world.

Health Reform as a Stimulus for the Consulting Sector

2010-05-25T19:52:00.000-07:00

Business school colleagues of mine who worked in consulting beforehand had a unique view of HIPAA or the Health Insurance Portability and Accountability Act. Former consultants remember this as the Consultant Employment Act as it resulted in a bonanza of new business as the health care industry scrambled to figure out how to understand and implement this legislation.

Health care is as retro as the fashion industry and tends to repeat itself every 20 years (the 80's capitation payment models and leg warmers are both back in fashion). The latest health reform act has unleashed another horde of consulting opportunities. Consulting firms offer to help understand the strategic opportunities in key provisions or how to treat mandated provisions as new product opportunities. Niches have been created for companies to enter as there will be more money available in Medicare's customer rating system or money to be lost based on hospital readmissions. Providers are trying to figure out how to become effective Accountable Care Organizations which is really Capitation 2.0 (where providers would accept a fixed dollar amount per patient and be in charge of managing all of their health care).

As always, there is the good, the bad, and the ugly with the snake oil that consultants or new niche companies are selling to help the health care industry swallow health reform.

The Good:
Accountable Care Organizations (ACO) represent the best opportunity for consultants: However, no one is really piling into this space since it won't hit until 2014 and it's going to be hard. The reason it's such a good opportunity for consultants is that few provider groups or insurance companies can accomplish this without an objective third party. The third party doesn't even have to be smart, just objective, because these companies are crossing into industries where they had traditionally combative relationship. It's like Sue Sylvester coaching the Glee club.

An ACO is the offspring if an insurance company and provider group mated. They provide population-based health care across a fixed budget and are in charge of managing health and costs. Some insurance companies have these payments models set up and they also called risk sharing. Basically an insurance company would approach a provider group with the following offer. The insurance company keeps 10% of the insurance premium for administration and expects to pay 80% of the premium to the provider group for medical costs. The two will split the remaining 10% if everything goes well. If all goes better than expected, they split the surplus and health care costs are worse than expected they share the loss. There is some stop gap in place for the provider groups.

The typical current payment model involves insurance companies trying to squeeze every last dollar from providers to control costs. Providers don't have enough data or experience with population health to know if 80% of the premium is appropriate or how much risk to put on the table. Their main lever is to increase their utilization to make more money. Both sides are extremely entrenched in their current business models. They have built infrastructure like hospital charge master systems that produce incomprehensible bills because a revenue management consultant configured them to maximize Medicare reimbursement by making the cost for all bed pans a prime number.

The US health care industry need armies of consultants to figure Accountable Care organizations. Or they can just contact the public health systems at every other industrial nation (and some emerging markets) that have figured this out already.

The Bad:
Still charging to tell everyone what they don't know: The Obama administration has only provided guidance on a few of the big changes that will happen in October. That is what has passed for news at most of the $279 webinaires that are being offered. In the rush for first mover advantage, firms are launching webinaires touting their expertise with the grand conclusion of "We still don't know more than we do know." That's kind of like expecting your probation officer to be excited that you didn't jaywalk during your drug-fueled weekend crime spree.

The Ugly:
Overstating market opportunities and not understanding the work to achieve it: Consultants are good at identifying strategic opportunities but bad at figuring out a way to actually implement them. Yes, that statement is not exactly at the same level as one of the Lost Season Finale explanation of the flash sideways, but health reform has only exacerbated this tendency.

For example, Medicare will start paying 4% more for plans that receive 4 or more stars for their overall customer service rating. 23% of Medicare plans have a 4 star rating so there's lots of insurance plans who could use this revenue boost. That 4% more can mean an additional $25-$30 per month per member or $300-$360 per year or $3-$3.6 million per year for 10,000 members. Three million dollars can buy a lot of customer service staff to improve that rating which is why consulting companies are promoting this opportunity. In theory, an insurance plan can hit the Medicare reimbursement jack pot by hiring some staff to call Medicare members on their birthday or asking them how their doctor office visit went.

They have no idea if these calls are going to be considered welcoming or creepy to your average senior. They don't know how many customer service staff should be allocated or if there is another service issue that is causing problems. There are probably no proven methods to actually improve the Medicare star rating. No one has looked at this before because Medicare enrollees don't seem to care about the star rating.

All that is known is that there is a $3 million opportunity that can be achieved for far smaller costs. If consulting firms sell a few proposals, than they quickly advertise themselves as subject matter experts or even better, share best practices. Which is why this round of health reform can be called The Consultant Stimulus Package.

Idealizing Rural Life in Southern Oregon

2010-05-20T10:07:00.000-07:00

I have lived in rural South America and rural southern North America for a total of 2.5 years. Therefore, my idealization has an actual foundation. This is different than my idealization of spending a week in an opium den in Morocco which is grounded in fantasy from watching Naked Lunch.

I can't exactly put my finger on why I idealize rural living. I've spent some time in fields doing subsistence farming, know that night time entertainment options are drinking around a smoky charcoal pit, and trudged down muddy roads to get supplies so I know the less glamorous sides of it. I realize that I obviously like solitude, don't mind seeing the same people all the time, like that you can talk to strangers without creating suspicion, and probably really like the big open sky, towering forests, and foothills. The rural country store that includes a seating area, random religious-based gifts or folding knives and lighters that are decorated with screaming eagles also appeal to me. They're vaguely reassuring like the consistency that one finds in a Starbucks.

There were the feelings that I had in my rural Southern Oregon road trip this week. Despite bad weather conditions and snow levels up to 5000 feet, I drove out to Klamath Falls for some hiking and climbing. K Falls, its nickname that is too good not to overuse, looked beautiful as I approached the town. On the upper Klamath Lake, with Mt Shasta and McLoughlin in the background it changed my spirits. Kind of like approaching Philadelphia with the view of the Sunnoco refinery also changed my spirits but in the opposite direction.

Due to the conditions, I only attempted to scramble up Union Peak off route 62 near Crater Lake. The Pacific Crest Trail (PCT) was well marked so the fact that it was covered with snow wasn't a problem. At the right elevation, I picked a compass path off into the snow to find Union Peak. As I write this, I'm trying not to sound like I'm high fiving myself for my mad navigation skills.

Union Peak was steep and snow covered as I had expected. I kicked some footholds and punched hand holds halfway up the peak before snow conditions got worse and I descended. The picture on the left is Union Peak and the picture on the right is the view of Mt McLoughlin on this overcast day.

Given the weather, my next stop was the North Umpqua Hot Springs for a soak. The fact that someone built a shelter and carved this hot springs out of the stone is another reason I idealize rural life. Low population density and lack of foot traffic give incentive to build free public facilities like hot springs overlooking a river.

The hot springs is not clearly marked from the gravel road. It's 2 miles from the fork of route 34 and I noticed it because of another car parked on the road. There were a few people camping around there so look for signs of life or partying. After parking, cross a log bridge with no hand rails, head right and go up the hill that do have hand rails.

What happens when a Market Innovation becomes a Mandate

2010-05-11T21:13:00.000-07:00

One aspect of health reform that looks great on paper is that preventive services must be covered in full by insurance companies. Mammograms, pap smears, well baby visit and other services listed on the US Preventive Task Force list as receiving an A or B rating are now free. A $1.50 will get you a cup of coffee and immunizations that are on the Center for Disease Control list.

It seems like a good idea. Preventive services are low cost and prevent disease or prevent chronic disease from getting worse. It also helps make health plans more uniform, easier to understand, and get closer to the ability to just purchase "1 health insurance". Insurance companies should have been doing this on their own. They were. It's called value-based plan design and it was gaining traction. Employer purchasers coalitions were promoting these plan designs and providing input for insurance companies. They are growing almost as fast as Health Savings Account plans which inject consumerism into health care.

Not all companies were interested in buying value-based plan designs that covered preventive services at not or low cost. Preventive services were generally available for $20. Some companies would switch insurance every year to take advantage of insurance companies who would try and buy their business. Some companies had mostly young men who thought a preventive visit involved using a condom and had no need to go to a doctor. These companies used to have the choice to not pay more upfront in the form of a higher price for plans. Now, they do not.

The problem with mandating a broad benefit design is that they no longer become a market innovation for a particular segment but instead become a cost. I support the mandate of coverage for benefits that a particular potentially vulnerable population needs like hearing aids for children. Mandating preventive services eliminates choice and adds cost to those who may not value it. Or creates a gold rush as providers or manufacturers will try to get their services classified as preventive. A former Medicare administrator told my MBA class a story of how Medtronic tried to get pacemakers classified as a preventive services so they could preemptively implant them in half the population.

One of the more obscure provisions in health reform involves grandfathering of existing plans. This is Obama's "If you like your plan, you can keep it provision." It will allow companies to avoid some mandates like the coverage of preventive services in full. This will provide a test of the market response to the coverage of preventive services in full. In a year, we will see if companies grandfather their health plans in order to avoid these types of mandates.

Portland, Where you don't gotta dance with them that brung you

2010-05-10T21:32:00.000-07:00

Molly Ivins was right about politics when she wrote, You Gotta Dance with them What Brung You. That phrase usually applies to dancing too. However, I've got to say that the dance scene in Portland, OR is unique where you can dance with anyone anywhere.

Publications have praised Portland's beer, wine, spirits, food carts, bicycle lanes, quality of life, strip clubs, greenery, volcanoes, and hospitality. I'm here to praise the Portland dance scene which is not something traditionally praised in a city with a population that is 74% white. However, there is a sizable Cuban population in this town that has resulted in a good salsa scene. Someone told me that Cubans who don't want to settle in Florida are given a choice of resettlement assistance in Portland or some towns in upstate New York. I haven't been able to confirm this. Portland also ranks 12th highest in number of refugees who must be attracted to some combination of the Portland dance scene, beer, strip clubs, or bicycle lanes.

In Portland, I've danced salsa, belly, contra, and Irish, Macedonian, and Israeli folk dancing without even trying. It's lively dance scene that is easy to find and access. Last week, we attempted to find some contra dancing but stumbled upon Israeli folk dancing instead. We stayed and tried to keep pace with the class that had been dancing together for some time. What made the dance so accessible is that the class was composed of people who one would not typically expect to see in a dance class. The class was made up of the very young, very old, and very stiff and slow moving. My only complaint was that one of slower moving dancers had a very quick digestive system if you know what I mean. Fart smells aside, it was really great to such a variety of people dancing.

It's part of a unique dance scene that is as open and inclusive as your average pro gay marriage ballot measure. I'll raise an organic microbrew to the Portland dance scene and ride my bike from the latest food cart that was open by a graduate of culinary school to find the latest folk dance movement. This open and inclusive dance scene should also be as praised and publicized as anything else that the New York Times has made famous in Portland.

Pulling an Anthem

2010-05-06T19:44:00.000-07:00

In February, I wrote a defense of actuarial science as an excellent example of evidence-based practice in the context of Anthem's 39% price increase for individual insurance policy holders in California. There were calls of profiteering and that Anthem probably considered harvesting their policy holders' organs and selling them for profit as an alternative option to the price increase. As heroically as any blogger who writes in their pajamas, I defended Anthem and their actuaries as those who followed math and science to come up with their numbers and did not succumb to the pressure of quarterly earnings expectations. I called on others to come to terms with hard facts that the price increase is indicative of the increase in medical costs and the true health status of those who purchase Anthem's individual insurance.

Turns out that I was defending some actuaries who aren't that smart. Anthem's actuaries made math mistakes while calculating the 39% price increase. Now, I'm trying to figure out the right term for someone who fully intends to follow scientific guidelines and evidence-based practices but does it wrong. How about planted evidence-based? What about evidence-based with broken chain of custody?

What I do know, is that there is an opportunity for a new catch phrase that you don't have to be an actuary to understand. I would like to coin the phrase "Pulling an Anthem" (trade mark pending, all rights reserved).

Pulling an Anthem: verb, Publicly commit an egregrious mistake by misinterpreting the data in your environment

Examples:
My friend invited me to Moby, the vegan rock star's BBQ. However, I dropped a plate of bacon on the grill and the smell filled the area in seconds. I really pulled an Anthem.

I had an interview with Cisco, the computer system company. Turns out that I had spent the night researching Sysco, the food distributor. I really pulled an Anthem.

I'm running with this idea. My last great patented idea was knitting patterns for cell phone cozies. One year after I knit the first cell phone cozy that anyone had ever seen, I saw patterns appearing everywhere. This time, I'm not going to pull an Anthem.

Medicare is Teaching Private Health Plans about Free Market Principles

2010-05-04T20:11:00.000-07:00

I never thought that I would write a title about the Center for Medicare and Medicaid Services (CMS) is teaching private health plans about free market principles. I shouldn't be surprised considering how our current president has captured the merchandising opportunity that passing health care legislation presented. My sister bought me a T shirt from Obama's store that immortalized Joe Biden's reference that health care reform is a big f#cking deal. After seeing the Obama store, I don't see how anyone can accuse Obama of being a socialist. That's like accusing Dick Cheny of being nice.

Back to Medicare's venture into capitalism. They recently issued a memo announcing that if a health plan has multiple Medicare Advantage plan designs, there must be a significant difference the total out of pocket costs for a member. Medicare analyzed utilization for 15,000 Medicare members to come up with the significant cost difference at $20 per month between 2 plans that a company offers. Therefore, if a plan has 2 different Medicare Advantage plans (in the same category like both HMO or both PPO), than the member's copays, coinsurance and other costs must have greater than a $20 per month difference.

This is good old fashioned proper product segmentation. Good product design will result in plans that appeal to different segments based on how much they want to spend and the difference in benefit design. If plan sells 2 HMO plans and the only difference is the color of the brochures and $500 in hospital visit copays, that's poor product development. That's like selling cars whose only difference is the size of their spoiler. Or breeding yak whose only difference is whether there fur turns into dread locks (I haven't made an animal husbandry joke in a while). Those are 2 overlapping plans and the insurance company should have the good sense to terminate one of those plans or change it. They appeal to the same segment of customers and offer no significant choice or benefit.

However, private insurance plans have not done that themselves which is why Medicare has stepped in with a good lesson on proper product segmentation. In the early wild west of the Medicare Modernization gold rush, health plans through some plans on the wall just to see what stuck. Some ideas didn't work and it's the private plans fault for not correcting their portfolio on their own.

Latest Knitting Project: Toddler Truck Sweater

2010-04-29T19:52:00.001-07:00

While not often blogged about, knitting is one of the 4 pillars of this blog (health care, MBA's, climbing being the other pillars). That's probably because I no longer knit as quickly as I used to but for those readers who tune in for the knitting stories, here's the latest project.

Berroco offered this pattern for a toddler truck sweater using their Berroco cool yarn. Berroco Cool yarn is considered baby yarn which means you can easily wash it and dry it when someone vomits on it.

Unlike Sirdar patterns which I consider to be the 11th plague that was almost inflicted on the Egyptians, this pattern was very straight forward and easy to follow. The challenging part is the truck pattern and weaving in all of the different colors. Knitting with a second color is not difficult as you just use the second color for the designated stitches and follow in the back. Managing all of those different strands of colors and weaving them in within a kitchener needle is the hard part. I consolidated a few colors in the pattern so it was easier to manage.

I also knit 2 sizes larger than needed in anticipation of not finishing it during the winter that I started it. I haven't forced it over its recipient's head yet but it should at last through next winter.

Don't Let your MBA Suck the Soul Out of you Hobbies

2010-04-26T12:00:00.000-07:00

The latest issue of my Wharton alumni magazine arrived a week ago. As usual, I looked at the class news sections to see who wrote about their new job using nonsensical corporate buzz, investor relations pitch, and rationalizations. For example, "I am starting my own long-term, early stage mezzanine fund with a focus on transforming legacy systems in emerging economies to dynamic, nimble, green-based cloud systems. I work 18 hours a day and drink my own urine because I don't have time to drink and go to the bathroom but I wouldn't trade this experience for anything!"

After that enjoyable perusal, I saw an article about Lei Wang's attempt to become the 10th person in the galaxy to climb the highest peak on each continent and ski both Poles. Wang's background makes the story even more incredible. I also knew Wang, was a classmate of hers, and saw Luna in concert with her (another example of her sense of adventure). I like her but hate her climbing philosophy. I hate the sin but love the sinner or in more modern parlance, I won't hate the playa, just the game. I ain't no playa hata but I am going to criticize her quotes in the article. This does not mean I am critical of Wang herself and everything that she has done.

This is part of the larger issue of MBA's who take the fun out of any hobby. They are not content to have a leisure activity but need to be the best at the leisure activity and establish metrics to dominate that leisure activity. These metrics are pursued with the intensity of a quarterly earning reports where it is not enough to meet analyst expectations. No, the ideal MBA will attempt to kill themselves with exertion to meet those metrics or even better, or achieve the holy grail of exceeding them. An MBA will not just take up knitting and maybe make a scarf and hat or two. An MBA must knit a wardrobe for a small village while starting a side knitting business that will be taken public.

Wang is guilty of this (but I'm not being a playa hata it's for illustrative purposes of a larger problem). I had previously read she wanted to initially accomplish her goal by the 2008 Beijing Summer Olympics. That's because MBA's don't just like to accomplish incredible goals in their lifetimes but they like to finish them early. The Wharton magazine article talks about Wang battling hypothermia, food poisoning, and fire breathing dragons with big swords in an effort to summit. This is actually a bigger issue of climbers making bad decisions to reach the summit rather than try another day. Or, the desire for MBA's to push their bodies to the absolute limits for their hobbies. There is no distinction in effort between jobs, relationships, or hobbies. If an MBA became a monk, they would pray and chant harder than anyone else in order to achieve enlightenment by year end in order to achieve first mover advantage in their cloister.

I've been climbing for about the same time as Wang. Last summer, I backpacked to the beautiful Lake of the Angels in the Olympic Penninsula to climb Mt Stone, a modest 6,612 foot peak. I tweaked my ham string during the hike and decided not to climb. Instead I enjoyed the lake, goats, and hiked to the top of a ridge to enjoy the views. The mountain will always be there, I'll have the vacation days, and I can climb it when I wouldn't risk my safety. I preferred to climb the 10,778 foot Mt Baker for a glacier experience rather than the 14,411 foot Mt Rainier. The reason is that the glacier travel experience on Baker is similar to Rainier without having to gain 5,000 feet of elevation for the approach. The "prestige" of climbing Rainier is not worth it for me. I take climbing classes, I take opportunities to improve my skills, and I enjoy climbing as a hobby. It's not about achievement for me.

Future MBA's, remember this when you first experience the powerful force of hundreds of MBA's together in a small building. Placing all those type A personalities in one room violates a law of physics since energy gets created in greater quantities than the mass that produces it. Or something like that. Channel that competitive spirit into appropriate places like your job, career, or philanthropy. If you like to jog, you don't have to run an iron man marathon. If you like to write, you don't need to publish a best seller in 5 languages. If you like to snort cocaine, you don't need to inhale a small Colombian jungle.
Don't let the MBA competitive spirit consume your soul by taking over your hobbies.
And Lei, congratulations, on your climbs.

Has Misery made Health Insurance and the Financial Services Strange Bed Fellows

2010-04-19T16:32:00.000-07:00

There's nothing like a good mixed metaphor in a blog title. As a health insurance trench worker, I have experienced the misery of the scolding by the media coverage during health reform legislation. That experience has made it tempting to be gleeful about the misery that the financial services is experiencing as Congress debates an industry overhaul. However, that experience should make health insurance and the financial services strange bed fellows. Or just strange as both industries are experiencing social critiques while new legislation being pursued that will reshape their future.

During the coverage of the health insurance industry, the statistics used were often exceptions rather than really tell the story of the industry. Articles claim that health insurance companies spent 30% of the cost of health insurance on administration and profit. What is missing is that this represents the individual line of business which has higher administrative costs. Senator Rockerfeller commissioned this report which provides great analysis of how much carriers spend on medical care by different lines of business and how it varies by state. While it is used to show that carriers are not meeting the new requirements of spending at least 80% on medical care for individual insurance, the other side is that they are only 5% off this threshold. Considering that the cost of insurance is increasing 10% every year, the 5% reduction does not really address affordability. For employer group business, this report does show that they generally are meeting thresholds or are a few percent off.

Finally, keep in mind that this report is for national carriers. Local insurance plans tend to lower administrative costs and spend more on medical care. The actual story is much more complicated than the easy characterization.

The high increase in health insurance rates like Anthem's infamous 39% increase in California as well as the rhetoric has led to the Massachusetts insurance regulators' refusal to allow rate increases. Massachusett's plan was to blame the insurance companies for the double digit rate increase rather than their own regulations around community rating or the fact that prestigious hospital systems demands have grown to rock star proportions. The elite Massachusetts hospital systems reimbursement demands are fairly comparable to the rock star who demands a peeled M&M's in a bowl by every toilet they use.

In general, the focus has been knocking 2 or 3 percent off the 15% of the health care dollar (insurance administration and margin) rather than addressing the 85% of the health care dollar (actual medical costs). The insurance reforms being put in place are long overdue and will make health care more humane but they are not following the big money.

This mischaracterization of the cost structures and real cost drivers of the health insurance industry has caused me to wonder if the characterization of the financial services industry and banks are really fair and balanced. This is despite listening to This American Life's story about the hedge fund Magnatar, which made me forget my MBA diploma in favor of a pitch fork and torch for some populist rage. In this story, Magnatar (named after a black hole which is something else that sucks), made a lot of money by exacerbating the collapse of the mortgage industry even worse. Currently, Goldman Sachs, who are kind of the peeled M&M eating rock stars of banking world, are being sued by the SEC for their role in similar schemes as Magnatar. Finally, I really can't think of a reason not to reinstate the Glass-Stegall Act which placed additional regulation on banking. Keeping investment and commercial banking separate sounds like a very logical idea. Combining them has been a very costly experiment.

All of this should even get the most stoned and M&M bloated rock star angry. However, I could find similar material on health insurance companies and disprove it with my industry knowledge. The financial service industry has countered that these reforms will reduce consumer and business access to credit by making the cost of capital more expensive. These risky financial products that were dubbed Weapons of Mass Destruction allowed banks to lend more and increase credit because of the lack of impact on their capital requirements or balance sheet. However, these new reforms will unlikely change the bonus system or bank's fee structure. Consumers who want to borrow more money than they can afford to buy power boats will still find a way to do so.

I think the spitting and sputtering vitriol that has been spent on the health insurance industry, banks, and Duke Blue Devils is due to the fact that we know what we don't like in a health insurance or financial system but we don't know what we do like. Well, with the Blue Devils, we actually know what we want their underdog opponent to win and Duke to lose in the 2nd round of the NCAA basketball tournament every year. But we do hate this team as much as we hate those other industries.

Regulations and the popular media are looking to punish these two industries rather than advocate for and build a new system because we don't know and can't agree on what a new health and financial system should be. With health care, we want care to be affordable enough that everyone can access it but aren't ready to get really serious about the decisions to create such a system. We can't expect everyone to be able to access as much innovative and invasive care as they want for a cost less than 20% of the US GDP.

With financial services, we believe in access to easy credit is essential to the American dream to pay for college, start a business, buy a house, and start a cocaine habit with really premium cocaine. Access to credit has become a key platform in civil rights issues. However, we haven't come up with a better way to determine credit worthiness and sound lending that is not too conservative. These last 5 years was an interesting experiment but should we be surprised that people with a bad credit history make bad financial decisions? Should we be surprised by the results when banks can figure out a way to get paid for giving bad loans and pass the risk on to someone else?

With health care, balancing access, quality, and cost is the iron triangle. A common joke tells people that they can have 2 out of 3 of those. With financial services, the balance of risk and return while greasing the financial wheels is the holy grail. These are tough challenging problems and there is too much with anger with companies to really come up with tough answers. Hopefully, we will realize that the current reform has some good ideas but is mostly a catharsis. After our anger has passed and we can all sing folk songs together, we'll be able to address these tough questions.

Why do Guys Give Bad Interview?

2010-04-16T20:22:00.000-07:00

It's like watching Wile E. Coyote use explosives or Shaquille O'Neal shoot free throws. It may look like this time it's actually going to work, but it never does.

As you might have guessed, I watched a guy give interview today. I used to interview a lot of high school seniors for my undergraduate alma mater. It doesn't seem to matter whether the guy is a hormonal 18 year old or hormonal 30 year old. Guys do not interview well.

Not interviewing well mainly entails talking for too long without really saying anything that wasn't covered in their first sentence. For example they will usually answer the question with the first sentence, then describe the entire project in too much detail, give a hypothetical example of something they might have done, get into a hypothetical argument with themselves about the hypothetical example and than repeat the first sentence again. Most interview questions can be answered with 6-10 sentences but guys usually need that much time to cover their project plan.

Guys also can only seem to handle concrete questions that cover the trajectory of "What did you do." When I ask a guy why he likes something or what the favorite part of his job is, he seems to get completely stumped. I almost see panic in their eyes when a sentence starts with "Why". Actually, I have a similar reaction when most women ask me why I did something so maybe that's a conditioned response.

Finally, they are terrible about asking any questions at the end of an interview. Actually, this seems to becoming a lost art for women too. The interviewers all know that every candidate has probably googled the entire company history and probably knows more about the organization than the interviewer. However, the questions at the end of the interview are used to show that you actually want to work at the company or show off this research. Ask about career paths or the person's favorite part of their job to show that you are actually interested in the company. Ask about the latest company tweet to show off this research.

I don't have a good answer for this behavior. There just seems to be something dangerous about asking a guy to spend an hour talking about himself with limited structure. Sometimes, I think that some guys are one slightly informal remark away from describing their weekend bachelor party plans at an interview.

I think that as a result, male interview performance gets discounted. Expectations plummet to the same level that we have for character development and plot in a Kevin Smith movie (which have become elaborate vehicles for penis jokes). I actually do the same thing with my office dress. My baseline dress is slow that when I tuck in my shirt and wear real shoes, I get more compliments than the guy who coordinates his belt and shoes every day.

If poor male interviewing was at crisis levels, I think that we would see even lower employment levels for men and the onslaught of career coaches would have identified this market opportunity. There would be advertisements everywhere about how men are as incapable of interviewing as they are at dressing themselves. Since that hasn't happened, I can only wonder if the recruiting market is more efficient than I suspected and has incorporated low expectations into their interview evaluation.

Readers, what are your opinions of the male ability to interview and my assessment?

How I Learned to Stop Loving Health Reform and Start Worrying Again

2010-04-11T13:27:00.000-07:00

In my last health care post, I was pretty excited about health reform. Our current health insurance has not working for some time and reform offered some initial improvements. Also, I thought that I would haven't to worry about any of the changes until 2014. However, there are some seemingly minor changes that need to be implemented by October 2010 that have me worried. They hit me out of nowhere like the feeling you get when you see your ex-girlfriend for the first time in a while and see that she got even hotter since you dated. Like that ex-girlfriend, I'm no longer loving health reform and there's no quickie involved.

One would think that a 2,400 page document would provide pretty extensive instructions. However, it's really a lot of broad principles. Other agencies like Health and Human Services will have to provide specific guidance to health plans for the implementation. These principles are primarily for the small employer group and individual insurance markets. These are the most dysfunctional insurance markets and in greatest need of change so they are well targeted. Health plans will have to decide how to implement these very gray shades of principles. Now, there are some black and white principles, like children under 18 will no longer be denied health insurance which I think makes us a somewhat more humane country. Adults will have to wait until 2014 for this option primarily because they're not as cute as children.

Some of the grayer shades is that health plans can no longer apply a lifetime or annual maximum benefit to different classes of "essential" benefits. These essential benefits include hospitalization, surgery, doctor visits, drugs, lab work, preventive services, maternity, and mental health. That pretty much covers 99% of what an average health plan covers. However, health plans generally place benefit limits on durable medical equipment (like crutches or wheel chairs), ambulance rides, or the mysterious and hard to pronounce temporalmandibular jaw disorder (TMJ). It's unclear what will be considered essential and what will not. That answer will probably be determined by how strong the TMJ lobby is.

Another shade of gray is that preventive services must be free or health plans must cover them in full. As one can guess, there is no clear list of preventive services. A measles vaccines is probably obviously a preventive service but what about a travel vaccines for purple fever in Mongolia? Health plans could argue that the easiest way to prevent catching purple fever is not go to Mongolia so it's not as clear. Most health plans cover preventive services for $10 or $20 so I would question if these services really need to be free in order to be more effective. Great in theory but that means individuals and small businesses will be paying more upfront in the form of higher prices so they can pay less when they use the services.

The game theory for health plans is to not be the only plan covering TMJ or Mongolian purple fever vaccines in full. If that happens, that health plan will get more people who want to use those services, incur higher costs, and need to charge more for their plans. This will drive out people with perfectly health jaws and no interest in traveling to Mongolia and is known in the industry as "adverse risk selection" or "death spiral." Some readers might be completely unsympathetic to the insurance companies in their efforts to figure out how to figure out ways to do the minimum required or exploit loopholes. Or they're thinking about their friend who's life was changed by Mongolian purple fever and how their insurance company who wouldn't cover it.

These reforms make insurance more straight forward and move it to a product where someone can just say, "I'll take 2 insurances please." The purchaser will know that preventive services are covered, loopholes closed, and they will be covered. Insurance companies will learn to compete based on service, smarter provider contracting that pays on quality of care, and value adds like gym discounts and magazine subscriptions.

The primary drawback is that insurance will get even more expensive. Other bloggers have put forth such dire predictions of the cost of insurance that it's getting hard to take these claims seriously. However, prices will be greater than than the price increases that are incurred from higher medical costs. This could easily result in annual insurance price increases of 15% (compared to today's 9%). None of these reforms will make insurance any cheaper nor address affordability. With limited ability to make adjustments with benefit designs and the insurance plans will become more commodities, and the price will continue to rise. Consumers will realize that the cost of medical care, doctor visits, drugs, hospitals, and other services were the main driver behind the rising cost of insurance. Profits, CEO salaries, and administration were a very small factor in the annual 9% premium increase. As a result, our country (meaning politicians) will have to make hard decisions about health care costs and providers will have to change their practices.

Which is not a bad outcome either and I'll go back to loving health reform. Change is easy as long as someone else is doing it first. People are going to get hurt and it's going to look like this health care reform wasn't such a great idea. However, people are getting hurt today and at least this will put us farther down the path of making hard decisions and addressing health care reform.

New addition to the non-traditional MBA Reading List

2010-04-05T05:53:00.001-07:00

My non-traditional MBA reading list has one been of my more popular posts on this blog. It's even more popular than my post about how I was a sperm donor which surprises me but reassures me about the general state of my blog readership. Since I consider myself to be market driven and responsive to my readership, this post will be an addition to the book list. Readers, please remember my humble gesture the next time that you have to endure a post about animal husbandry or colonoscopies.

My non-traditional MBA booklist is for future MBA's who were like myself. These are folks who are still surprised that they enrolled in an MBA program, may have worked in very non-business fields like non-profits, education, or the arts, or think of animal husbandry when they hear about the stock market. These books are intended to be clear to the novice but yet informative enough to allow the reader to a hold a conversation with the most cynical banker. Additionally, they are entertaining enough so they don't feel like homework. Benjamin Graham's book on value investing is not on this list. Andrew Sorkin's Too Big to Fail does make this list.

Too Big to Fail tells the tail of the economic melt down from the viewpoint of all of the players on Wall Street. It gives a both a beautiful and frighteningly clear picture of what the players were thinking or not thinking. The fates of Bear Sterns, Lehman Brothers, Merrill Lynch, Goldman Sachs, Morgan Stanley, Bank of America, JP Morgan, AIG, Wachovia, and Henry Paulson and the Treasury Department are all woven together in a way that provides a systematic view of how companies with hundreds of years of history changed in a matter of weeks. Sorkin writes clearly enough that the novice can understand (avoiding the biggest problem with House of Cards which was written in some banker dialect) but drops enough f bombs to demonstrate that he really did know the industry.

The highlights or what I learned was:

The financial industry did have some idea that the financial crisis was coming: The fact that years of easy credit and leveraging would come to a catastrophic end was not a surprise to the Treasury Department or Wall Street firms. Well, it probably was a surprise to Bear Sterns who appeared to have made a strategic decision to never be strategic but rather be as opportunistic as possible. For everyone else, the crash itself was as surprising as another celebrity sex video tape. The severity, swiftness, and lack of ability to contain the spread was the surprise. I found this to be reassuring that the US financial experts at least did see the crash coming but I don't think anyone could have predicted its severity.

When the going gets tough, the tough make deals: Henry Paulson or at least some investment banker was probably the best person to be Treasury Secretary during this time period. A more policy oriented secretary would not have been able to unleash the flood of mergers and other deals that Paulson helped trigger. This probably mitigated the financial crash significantly. Paulson was careful enough so that there was no documentation of him orchestrating Bank of America's purchase of Merrill Lynch or any other mergers. However, the frenzy of the Treasury Department's brokering and deal making got so extensive that even technocrat Tim Geithner was screaming for deals as loudly as any seasoned banker. Investment bank CEO's starting calling Geithner "Eharmony" because of all his attempted matchmaking.

A whole new view of Wall Street CEO's: Despite my MBA, I've never thought that highly of Wall Street CEO's. Mainly because I think that they had to sell their soul and humanity to out elbow other contenders. However, I did start to view some CEO's in a more favorable light after reading this book. JP Morgan's Jamie Dimon was pushed to buy almost every single player in the list above and had both the business acumen and intestinal fortitude to repeatedly tell Paulson and company no. If Lehman Brother's Dick Fuld was in that position he probably would have bought every single firm just because it would make his penis feel wonderful.

A combination of Too Big To Fail, When Genius Failed (about a bank on bank Wall Street bail out involving the hedge fund, Long Term Capital Management), and Barbarians at the Gate (about investment banking in the 80's and corporate raiders) will give a reader a very complete chronology of Wall Street over the last 30 years. Add American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century for a little populism and you'll be able to score some points in your argument with even the most cynical investment banker.