Phil Hauck's TEC Blog

Friday, January 19, 2018

"This Health Insurance Mess ..."

The most recent St. Norbert CEO Breakfast & Strategy session featured Mike Hamerlik, CEO of WPS Health Solutions, headquartered in Madison but known up here for their Arise health insurance plan.  Bigger, they run a huge plan administration business for major parts of the government (VA, etc.), covering 22 million people and processing more than $100 billion.  Huge.

He talked about “the health care mess.”  Among his points:
•  We talk about access, how it works, and the payment system, but the real problem is cost.  We wouldn’t be in this unaffordability situation if costs had been better controlled.  (He didn’t explain how, or what we must do in the future.)
•  Health Care System?  It’s not a system, because the interactive parts aren’t working towards a common goal.
•  Competition doesn’t work to reduce prices because of the lack of transparency, so market-based solutions can’t work.  The total cost is shared (and hidden) by too many.
•  Demand is insatiable.  “Do what it takes.
•  The solution is somewhere in the middle.
•  ObamaCare is rich in benefits, including guaranteed issue which makes private insurance ineffective.
•  ObamaCare would only work under an insurance concept if everyone was required to pay, but the penalties were too low and the subsidies too narrow.  Too many people couldn’t afford it, which is why the Individual mandate went away.
•  It’s a death spiral.  As costs keep going up, healthier individuals figure out a way to opt out.
•  Drugs:  In 2000, drugs were 5% of the total spend.  Now they are 25%-33%.  We need government price controls.  The industry says that would impact R&D, but I don’t think so.  It’s the (third party payer) market that drives prices, not costs.
•  Some of his solutions:
— Measure and publicize Quality:  There are variations, and we need to know them.  That will bring rationality to pricing.
— Waste:  Correlated with quality.  There’s at least 20% waste in the “system.”
— Get employers out of the payment sequence.  Let families decide what they want.

Some good quotes:
•  In my position, when I go out in public, I feel like the fire hydrant at a dog convention.
•  Asking for questions:  Go ahead.  I’m your pincushion.
•  Congress:  Either they do nothing, or over-react.

On the EAA, Health Insurance Costs, Value, South Pole and Congress/Sex

On The EAA
Jack Pelton, CEO of the EAA in Oshkosh, spoke recently to a St. Norbert’s CEO Breakfast & Strategy session, and made these points.  He came to the job after several decades at Cessna, finishing as CEO.
•  When I took this job in 2015, it was with the understanding to rationalize our go-to-market and talent development strategies.  We had to re-integrate our mission and use it as a basis for developing a 10-year Vision and Strategies for what we wanted to accomplish in bringing value to our 210,000 members, and a talent development strategy to insure we have the right people to lead us.  My time is spent on having the right plans, and having the right people to execute them.
•  Our growth strategy is, first, to provide attention and services to every phase of private aircraft ownership.  As a result, we serve many different sub-interests within private aviation.  We have a central emphasis on youth at the level of our 800 chapters, trying to stimulate interest with free flights, and then helping educate them to get pilot licenses in their late teenage years.  Right now, we’re working with Marvel comics to create a comic book character, Aviar.
•  This shows up in our annual EAA Fly-in.  We make sure there is something going on for everyone.  That’s way we’ve grown from 21 aircraft and 150 people in 1953, to 10,000 aircraft and 290,000 people this past July … including 11,000 campers and 800 exhibitors.
•  When we hire someone, they know it’s not just for that job.  Our IT head is also in charge of all the parking and camping.  Our HR head is in charge of services for all the campers.
•  Second, we have to be on top of trends that will impact our industry.  Thus, we have a constant presence in Washington, DC to make sure new rules and regulations serve our members’ needs while protecting safety.  Drones?  We share airspace with them, so work collaboratively on the regulation proposals.  Next year we will have a drone race at the Fly-In.

Health Insurance Costs
On two sequential days recently, I heard venting from two friends … both pre-Medicare, both couples with no dependents, one self-employed and the other retired, both making more than $88,000 so no ObamaCare subsidies … who said they are being quoted annual premiums in the $20,000+ range … plus deductibles.  So, they will be paying around $30,000 before getting any insurance relief.  Barring something catastrophic, neither will come close.
This is the cost-shifting that is being required of insurers because they can’t break even with the ObamaCare subsidies and the probable decision to reduce payments to insurers for losses.
There’s going to be a major rebellion shortly.
About half of all households are employed by self-insured employers, who are achieving no increase to minimal increase.  Those making up to $88,000 get some subsidy (median U.S. household income is about $50,000)… a lot of subsidy up to about $30,000.  And a large number of both young and poor are paying the penalty rather than fund the insurers.  Result:  Cost shifting to everyone else, like my friends.
The concepts were poor back on March 23, 2010.  At some point, future lawmakers, the ones who will shortly replace the current ones, will figure out what’s right, what works.  It will have something to do with “one-size-fits-all.”

What Constitutes the Value You Provide Customers?
Can you define explicitly the Added Value you provide your customers?  What it is that they now can provide their customers that they can’t without your Value Addition?
It’s an important question for all employees to know the answer(s) to … because virtually everyone’s work should be aimed at helping provide that Added Value.  The only other work is that which is required for the enterprise to exist.
— Thanks for Michael Wentworth for this.

How High is the South Pole?
What’s its altitude, its “feet above sea level”?
Very surprising.  It’s 9,300 feet above sea level, due to the ice accumulation.  That’s oxygen deprivation area.
It also has only one day a year.  That’s right.  The sun becomes visible on March 21, and disappears on September 21.
The North Pole?

Congress’ Sexual Harassment Costs
Courtesy of my favorite Congressional watchdog, No Labels (, in the 20 years since 1997, Congress has secretly spent $17 million to resolve sexual harassment and other workplace claims filed by employees of Congress.  Doesn’t indicate how much is for sexual harassment, but those involved more than 250 individual settlements!
        Of interest:  There's now a bill pending that would require individual officeholders to pay their own claims, not the taxpayers.

Saturday, October 28, 2017

On China's Potential ...

Worry all you want about China and its future economic and political impact, but consider this:
Already, China is …
      •  In Top 3 nations for investment in virtual reality, autonomous vehicles, 3-D printing, robotics, drones and artificial intelligence.
      •  The world’s largest e-commerce market, with 40% of value of transactions.
      •  In mobile payments, has 11 times the transaction value of the U.S.
      •  In 2016, the three huge internet giants in China accounted for 42% of all venture capital investment, compared to the 5% total of Amazon, Facebook, Google and Netflix.  They also made 35 overseas deals, compared with 20 by the US biggies.
Source:  McKinsey Global Institute

Contrast this performance with the newly-announced government desire to control more and more of what's happening.  Indeed, in case you missed it, the government intends to begin "rating" each individual on the level of patriotism he/she shows ... formally including everyone beginning in 2020 ... based on participation in various kinds of government-suggested activities.

Takeaways from Manufacturers First Conference ...

This past week, I attended the Manufacturing First Expo sponsored by the N.E.W. Manufacturers Alliance at the KI Center, which had about 100+ exhibitors … and attended several of their presentations/workshops.  Among my takeaways:

•  Lindquist Machine Co., a 110-employee equipment manufacturer.  CEO Mark Kaiser, with consultant Lee Bouche, is in a multi-year effort to create a truly integrated Intentional Culture.  The major elements are in, and 2017 is dedicated to getting every employee to understand how to conduct “Crucial Conversations,” using the Patterson/Grenny-authored book of the same name.  Many plant floor employees, and even some leaders, aren’t readers or communicators, so it’s sometimes a challenge, but they are persisting.  Think of the cultural/morale/performance impact when a entire workforce is being trained in practical communication techniques!

•  Some great quotes and points, cited by Lee Bouche:
Employees’ Basic Needs:  Respect, Learning, Challenge and Inclusion!
Gruenter/Whitaker:  “The culture of any organization is shaped by the worst behavior the leader is willing to tolerate.”
David Couper   “Employees work harder for Cause than for Cash!”  Pay and benefits don’t make it anymore; they’re threshold.
From the book, Never By Chance, Aligning People and Strategy thru Intentional Leadership:  “One of the most important obligations as a leader is to create a compelling vision for the company and then create a culture to achieve that vision.”

•  From Melinda Morella-Olson, Imaginasium, on how to reach out to employees:
Have a Careers Page on your website, as Plexus does.
Look at Manitowoc Co.’s “Employer Brand” approach on its website.

•  Final Takeaways proposed by the three panelists:
Melinda Morella-Olson:  Get a feeler your Employees’ Experience.  What’s driving them to come to work every day?
Steve Hirt, Optima:  De-Select from your choices.  Don’t keep trying to do more just because you can.
Fred Johnson, InitiativeOne:  YOU drive the conflict.  Have the conversation, but in a spirit of respect and kindness.  Don’t let the conflict drive you, creating discomfort.

•  NOVO:  Physician-Led HealthCare.  I’ve seen their signs, but wondered who they are and what they do.  Because sick care costs and delivery challenges are such a problem these days, I attended … and founder Kurt Kubiak explained what they’re doing.  They began in 2015, after he spent six years with Plexus’ world-class manufacturing (and 6 sigma mentality) and then at Fox Valley Orthopedics.  His mission:  To speed up the trend towards “price bundling” while providing a more satisfactory patient experience … primarily for self-insured companies.  Today, he has bundled price arrangements with specialists in Cardiology, Orthopedics, Hematology/Oncology, and some in primary care and rehab.  They develop deals at much lower total costs (30% lower he says) than state averages.
Of interest:  To invent employees to use their doctors, they provide cash payments (often $2,000) to the employees … and even pay travel from remoter areas.
It’s a great idea, and a struggle to get inroads … because the major health systems won’t use them and are much slower to embrace the bundled pricing ideas, though they’re making progress.
They also do Workers’ Comp work.
How to make inroads into fully-insured companies, hoping the insurance companies will recognize the cheaper cost structure and reward with lower premiums … or at least lower premium increases?  And how would you know?

Monday, May 22, 2017

Servant Leadership Insights

Ben Fauske, an O/D specialist here in Green Bay, provided these insights at a recent Servant Leadership workshop sponsored by Prophit Marketing and Festival Foods:
  • Problem with connecting grandiose mission to what I do:  “I save lives … one folded carton at a time!”
  • “They are CAVE people … C.A.V.E. … Citizens Against Virtually Everything!”
  • Example of a great culture:  My family and I were at Disneyland, on a shuttle bus, an the driver was getting exasperated at riders not sitting down, as safety required. Finally, he broke from his “role” and yelled at offenders.  When we got off the shuttle, he got off with us.  “I apologize.  I should not have done that.  It was wrong, and I should be held accountable for it.  Here is my card and my manager’s card.  I want you to know that whatever you write him about what I did, I will verify and I will accept his penalty.”
  • He asked attendees, “Why was the worst team you ever worked on the worst?”  Responses:  Boss had his favorites; too much ego (too much “I”); micromanaging; saying things that were patently untrue; promising things that were never delivered … and a power struggle between team members.
  • What got him into O/D work?  “After college, I worked for eight bad cultures in eight straight years.”  (Wonder where his ninth was?)

"Soul Leadership"

Fred Johnson, CEO of Initiative One in Green Bay, at one of his Last Friday seminars, entitled “Soul Leadership” ...
  • “Emotional Intelligence is the main thing these days for a leader … and I think there’s something just beyond that, 'Soul Leadership’.  It’s where you actually ‘love” the people you work with.  Seattle Seahawks coach Pete Carroll, when his teams were at their peak effectiveness, said it’s because they love each other.  You are creating an environment where people actually feel loved.”
Some supporting comments:
  • After the Great Recession, the percentage of people wanting to leave their companies was at an all-time high, not because of the layoffs … people expected that.  It was because during the aftermath, managers/leaders didn’t treat them as adults … not keeping them informed of what the situations were (miserable as they were), “coddling” them, being paternalistic.  They felt like “assets” used to protect the bottom-line, not treated as a responsible, reliable, trusted adult team member.
  • Millennials, we believe, want a “flow” between their personal and work lives … high inclusion, high relationships … which builds Trust and Commitment.  It’s bad when the work culture is such that it is separated from one’s personal life.
  • Leadership Development today starts with creating a positive self-awareness that ultimately yields Confidence … confidence that leading the search, asking the questions won’t diminish his/her influence and respect.  Getting out of the organization’s way so they can help solve the problems, deal with the challenges.
  • Every process can be derailed if people who use/manage it don’t feel valued as a person.  As the American Airlines CEO said recently after the United Airlines debacle, “Never let process trump people.”
  • Good leaders don’t get “burned out.”  They become comfortable with being uncomfortable … and solving the dilemmas that create that discomfort.
  • Perfection kills you as a leader.  It’s an addiction to order … which can never be made perfect.

What Makes CEOs Successful?

From last month’s Harvard Business Review:  The CEO Genome Project, starting by analyzing 2,000 CEOs, and in detail 930 of them, on:
       What does make CEOs successful? After analyzing all of their data, the researchers found that roughly half of the candidates earning an overall 'A' rating in their database, when evaluated for a CEO job, had distinguished themselves in more than one of four management traits. (Only five percent of the weakest performers, meanwhile, had done the same.) The four were: reaching out to stakeholders; being highly adaptable to change; being reliable and predictable rather than showing exceptional, and perhaps not repeatable, performance; and making fast decisions with conviction, if not necessarily perfect ones.
PS:  The study also found that more introverts than extroverts tended to run successful organizations, but barely more.

Then, the in this month’s HBR:  Four Characteristics of Successful Performance by CEOs
1.  Deciding with Speed and Conviction
2.  Engaging for Impact
3.  Adapting Proactively
4.  Delivering Reliably

It gets confusing.