Monday, January 08, 2007

Fire the Coach?

It happens all the time in sports - at the end of a losing season, the manager or head coach gets fired. Obviously, that's easier than getting rid of all the players and, more importantly. it deflects responsibility for the team's failure away from management.

This same type of thing happens in the corporate world and for the same reasons. If sales are down, more likely than not sales management will take the heat and/or get fired rather than the sales reps and rather than senior management looking looking introspectively.

A case in point, from an anonymous correspondent;
"I work for a well-known East Coast based financial services firm and 2006 was a horrible sales year for our division. In December it was announced that our Sales Manager would be leaving and that our department would be rolled into a division that sells products complementary to ours. While none of this seems bad or unreasonable to the outside world, one key element was missing - any kind of real investigation as to why sales were down. The real problems were out-of-date products and horrendous service, problems upper management refused to fix, and therefore a terribly unmotivated sales force. The new management went into the change oblivious to what the issues were and treated us as if all we needed was a lesson in sales, some new laptops and a bigger quota. We don't want to be seen as crybabies or not as "team players", but until some of the underlying problems are addressed we still won't be selling and whose fault is that? I believe it's upper management's fault."

Now, I'm not sure the "management refused to fix" part is 100% accurate as it's likely as not that they were either unaware as to the extent of the problems or were unable (for one reason or another) to remedy them, but still. Even when the ball team's manager gets fired, usually management makes other changes to ensure that the new manager and the team is successful, or at least, more successful. Marching on as if the only change required is a change in middle-management is hardly ever the right approach.

If things are bad enough that team, or executive, management feels the need to fire the manager, you can be certain that other, more serious, problems are afoot and need to be attended to.

Monday, January 01, 2007

The Promise (or Threat) of Universal Health Care

2007 is likely to be a watershed year in the battle for Universal Health care, in California and across the country and sides are already being drawn in what is shaping up to be a Red State/Blue State sort of conflict.

People use the phrases “Health Care” and “Health Insurance” interchangeably when, in fact, they are two different things. Health Care may or may not be a right for all Americans but health insurance is a funding mechanism that pays for health care and is not a right but a product that is bought and sold. When we talk about Universal Health Care we really mean Universal Health Insurance where one entity (usually the government) is the insurer for the entire population and so therefore everyone should have access to the same health care since it will all be paid for in the same way and in the same amount.

This battle over what form health care should take and who pays for it is likely to be hard-fought with accusations and claims on both sides.

On one side are the proponents of universal health care who will speak to the plight of the six million uninsured Californians, while on the other side the insurance & health care industries will remind us that we enjoy the highest standard of medical care in the world. In order to address, and fix, our healthcare system both sides are going to have to be honest about what various solutions entail and be willing to compromise.

One group of proponents claim that current administrative costs are between 25 and 30% while going to a universal system would bring it down to under 5%. I’m sorry, but this claim simply doesn’t pass the “reasonableness test”. There’s never been an instance where government performs a function more efficiently than private enterprise, much less 5 or 6 times more efficiently, so it seems likely that this is either very biased research or just wishful thinking. On the other hand, since the private enterprise we’re discussing is the insurance industry, never a paragon of efficiency anyway, if there was ever a chance for government to show its stuff, this would be the place. So, let us suppose that it’s a new day; we’re about to make history and claim that through the use of streamlining technology, bulk purchasing and reduced expenses and commissions, a universal care system can reduce administrative overhead from 20% to 10%. Considering the overall size of the healthcare budget, that’s a huge win. It sounds reasonable and do-able.

There’s also probably something to be said for having just one Big Bureaucracy rather than 5 (or 7 or 10) little Bureaucracies, since health care providers won’t have to keep re-learning the rules and procedures to be followed.

Insurance carriers are likely to proclaim that they can bring these types of efficiencies to the system, but there’s really no evidence to support that. There’s never been a standardized claim form or standardized procedures that have made it easier for providers to navigate the system. Technology-wise, carriers have never been at the forefront of change and have only adopted technology as profit warranted. They have had years and years to become the solution and have not done so. It’s also clear that the current system is rapidly leading to a crisis. Health care costs are a huge drag on the economy, affecting employers large and small, making coverage all but unaffordable for families and affecting the retirement plans for millions. We simply cannot continue to allow health care to eat up larger and larger percentages of GDP, and leaving so many people uninsured.

Several other issues will need to be addressed in any major change to our health care system – quality of care and rationing.

Our current system does indeed afford us the most technologically advanced care in the world, at least for those who have health insurance. In order to not be at a competitive disadvantage, carriers have to accommodate new procedures, drugs and technology because that’s what their customers demand. Will a universal system accommodate these advances? Moreover, with a governmental entity squeezing costs, what will happen to innovation in the field? Will the pace of advances in health care technology slow or stop?

This leads to the subject of rationing health care. In order to control (much less reduce) costs the system can’t provide all care to all people. That’s one of the main knocks against nationalized health care in other countries – everyone gets care but it’s not great care. That’s fine until you need great care. Stories abound about people waiting months for surgeries, and then dying during those surgeries, in countries with nationalized health care.

In the US we ration care right now based on whether or not you have health insurance. Those without coverage get acute care when they’re desperate and that’s about it. If we have universal care, rationing will have to be based on something else. Will it be based on circumstance (we refuse to pay for a heart transplant on an 86 year-old or refuse to pay the $2 million it would cost to save a baby born 13 weeks prematurely), based on lifestyle (refuse payment for smokers, obese people or helmet-less motorcycle riders) or based on something else? And who decides these issues and to whom can adverse decisions be appealed? Can adverse decisions even be appealed?

Will the system allow private insurance to supplement the universal plan, ala Medicare or will private insurance be prohibited as in Canada?

A note on insurance agents and brokers – many will applaud the elimination of what they see is the cost of an unnecessary middleman in the health care scheme, however, we should be careful what we wish for. Yes, agents and brokers get paid to recommend and place medical insurance plans, but their real worth is not in that effort but in resolving client service and claims issues that stymie mere mortals.

It’s clear that there needs to be changes to our current system of providing and paying for health care, but whether those changes require the wholesale replacement of the current system or whether some sort of hybrid will suffice requires us to honestly answer many questions about what we expect our health care system to provide and will likely require some sort of sacrifice of us all.