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

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.

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


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


3. 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.

1. Conduct a public education and outreach campaign


2. 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.

1. 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.)


2. 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.

1. 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.)


2. 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

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

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

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

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.