Worthwhile reprint from Tom Foster's ManagementBlog.org:
Cheryl was determined to turn things around with her team. She was hired as a troubleshooter in Quality Control, but finding the problem and fixing the problem are two different things.
"So today, you said you were going to listen?" I asked.
Cheryl nodded "Yes."
"What position will you be listening from?"
The question caught Cheryl off-guard. "I'm not sure what you mean."
"The way we see the world is often influenced by our position. In fact, you have listened to your team before, but you were listening from a position of judgment, so you didn't hear what they had to say." I stopped to let that sink in. "What position will you be listening from today?" I repeated.
"I guess I will try to understand their point of view."
"Not bad, but not aggressive enough to be effective. What position do you want to be listening from?"
Cheryl was stumped. "Curiosity?" she finally blurted out.
I nodded. "So, when you sit in your meeting today, you will be listening from the position of a curious child?"
Cheryl smiled.
"And curious children always have a lot more fun than stuffy old Quality Control managers," I said. "And curious children often invent interesting ways to solve problems."
Thursday, April 15, 2010
Monday, April 12, 2010
What H/C Reform will look like in a year or two ...
On Friday, April 2, there were two articles that together tell the story of what's coming in the health insurance debacle that Congress has created:
Maine became a forerunner of our upcoming national disaster when in 1993 it declared that everyone applying for insurance must be provided it, regardless of pre-existing conditions ... with no requirement that healthy people also had to join up, nor any leverage on holding provider costs down. Today, for Anthem, 1% of its Maine insureds account for 50% of its claims. It has to raise rates greatly on the other 99% to pay for the 1%. The insurance commissioner feels Anthem's 2009 increases are too high and has nixed them, requiring a "no profit" year or two for Anthem. The premium levels, she says, are too burdensome for Maine citizens. What kind of a business model is this?
It's not insurance companies who are creating the cost problem. (They do create other problems in trying to operate a profitable business) They are trying to deal with it and provide a "broker" service between providers and citizens. The cost problem is driven by medical providers.
That same week, Massachusetts' insurance commissioner rejected 90% of the current requested increases in its state. You will see this in more and more states. Insurance companies won't be able to cope, and will withdraw.
Also that week, a New York state hospital/physician provider group said it needed a 15% price increase from a major insuror, and the insuror said it couldn't turn around and charge the resulting premiums without losing customers to competitors ... so it dropped the provider group. Now, the provider group has fewer patients and a big fixed cost problem.
Everything described above is happening just as it should from a cause/effect standpoint. High cost providers get pressure to reduce costs ... and pay the penalty of losing money and volume when they don't.
Do you see any good in the above? The health care reform package didn't solve the cost problem. It exacerbated it. What you see above is the beginning of the negative experience. The Administration says that the penalties imposed on people and businesses if they don't sign up for insurance will cover the over-spend. Yeah? The average cost per person of our health care system is $7,600 ... and the penalties are far, far less than that. It's better to pay the penalty ... another rational cause-and-effect you will see. It will be interesting to see what that drives ... people predict it is a purposeful way to get to government-provided health care.
PS: Running the system nationally (i.e., price-fixing a la Medicare) won't help ... as it hasn't in any European country. Yes, it "works," but not the way it could have if you understand what drives people to excel regardless of pay levels, and put that situation in place.
Maine became a forerunner of our upcoming national disaster when in 1993 it declared that everyone applying for insurance must be provided it, regardless of pre-existing conditions ... with no requirement that healthy people also had to join up, nor any leverage on holding provider costs down. Today, for Anthem, 1% of its Maine insureds account for 50% of its claims. It has to raise rates greatly on the other 99% to pay for the 1%. The insurance commissioner feels Anthem's 2009 increases are too high and has nixed them, requiring a "no profit" year or two for Anthem. The premium levels, she says, are too burdensome for Maine citizens. What kind of a business model is this?
It's not insurance companies who are creating the cost problem. (They do create other problems in trying to operate a profitable business) They are trying to deal with it and provide a "broker" service between providers and citizens. The cost problem is driven by medical providers.
That same week, Massachusetts' insurance commissioner rejected 90% of the current requested increases in its state. You will see this in more and more states. Insurance companies won't be able to cope, and will withdraw.
Also that week, a New York state hospital/physician provider group said it needed a 15% price increase from a major insuror, and the insuror said it couldn't turn around and charge the resulting premiums without losing customers to competitors ... so it dropped the provider group. Now, the provider group has fewer patients and a big fixed cost problem.
Everything described above is happening just as it should from a cause/effect standpoint. High cost providers get pressure to reduce costs ... and pay the penalty of losing money and volume when they don't.
Do you see any good in the above? The health care reform package didn't solve the cost problem. It exacerbated it. What you see above is the beginning of the negative experience. The Administration says that the penalties imposed on people and businesses if they don't sign up for insurance will cover the over-spend. Yeah? The average cost per person of our health care system is $7,600 ... and the penalties are far, far less than that. It's better to pay the penalty ... another rational cause-and-effect you will see. It will be interesting to see what that drives ... people predict it is a purposeful way to get to government-provided health care.
PS: Running the system nationally (i.e., price-fixing a la Medicare) won't help ... as it hasn't in any European country. Yes, it "works," but not the way it could have if you understand what drives people to excel regardless of pay levels, and put that situation in place.
Reaction to Health Reform ... not positive!
Okay, so why can't we get enthusiastic about the new health care "reform" legislation ... supposedly the biggest reform since Medicare in 1965?
Well, because it was done irresponsibly. No "family", no "business", no one who has responsibility for their own money would ever do it this way.
Even if you agree that universal coverage is important, which I do, this has NO substantive cost control. (Too, it was not engineered in a way that would create the "true reform" of a "broken system" that was needed ... but that's another topic.)
And it wouldn't have been that hard.
Here's what should have been included ... without even beginning to reform the "broken system."
1. Expand/Incent use of individual Health Savings Accounts coupled with High Deductible plans. It would put more of a person's money "at risk," incenting more careful spending. Says economist Gary Becker, "In the U.S., we spend 17% of GDP on health care, but out-of-pocket expenses make up only about 12% of total health care spending (businesses pay the rest). In Switzerland, the out-of-pocket is 31% of the spend, controlling the total cost at 11% of GDP (still one of the highest in the world)." Our third party reimbursement system is a total disaster.
2. Extend tax deductibility to all individuals, not just those covered by businesses. This puts everyone on the same footing and sends the message that health care is of national importance.
3. Transparency: Require some form of disclosure to patients/users of the approximate cost before they are exposed to the service. Forbid the non-disclosure/confidentiality clauses in the pricing agreement contracts between providers and insurors.
4. Medical Liability: Control it at a low level, such as non-economic damages caps of $250,000. To be sure, medical liability premiums aren't much (just $2 billion, although they are astronomic for such specialties as gynecology), but estimates are that they drive extra, un-needed tests to the tune of $210 billion ... almost 10% of our $2.4 trillion spend.
5. And finally, the quid pro quo: If we're going to subsidize the cost of health insurance, then there must be a "health/wellness/fitness" requirement of each person. They must be doing prescribed things that can be third-party verified to reduce the likelihood they will need the sick care system, and certainly the more expensive parts of it. Many businesses are requiring this of their employees; extend it. What are they: Diet/nutrition and exercise that controls such costly disease-causing factors as glucose, cholesterol, and triglycerides that can be analyzed by blood draws. Forbid smoking. Let's finally establish and enforce national standards, since parents and other adults aren't doing it.
Well, because it was done irresponsibly. No "family", no "business", no one who has responsibility for their own money would ever do it this way.
Even if you agree that universal coverage is important, which I do, this has NO substantive cost control. (Too, it was not engineered in a way that would create the "true reform" of a "broken system" that was needed ... but that's another topic.)
And it wouldn't have been that hard.
Here's what should have been included ... without even beginning to reform the "broken system."
1. Expand/Incent use of individual Health Savings Accounts coupled with High Deductible plans. It would put more of a person's money "at risk," incenting more careful spending. Says economist Gary Becker, "In the U.S., we spend 17% of GDP on health care, but out-of-pocket expenses make up only about 12% of total health care spending (businesses pay the rest). In Switzerland, the out-of-pocket is 31% of the spend, controlling the total cost at 11% of GDP (still one of the highest in the world)." Our third party reimbursement system is a total disaster.
2. Extend tax deductibility to all individuals, not just those covered by businesses. This puts everyone on the same footing and sends the message that health care is of national importance.
3. Transparency: Require some form of disclosure to patients/users of the approximate cost before they are exposed to the service. Forbid the non-disclosure/confidentiality clauses in the pricing agreement contracts between providers and insurors.
4. Medical Liability: Control it at a low level, such as non-economic damages caps of $250,000. To be sure, medical liability premiums aren't much (just $2 billion, although they are astronomic for such specialties as gynecology), but estimates are that they drive extra, un-needed tests to the tune of $210 billion ... almost 10% of our $2.4 trillion spend.
5. And finally, the quid pro quo: If we're going to subsidize the cost of health insurance, then there must be a "health/wellness/fitness" requirement of each person. They must be doing prescribed things that can be third-party verified to reduce the likelihood they will need the sick care system, and certainly the more expensive parts of it. Many businesses are requiring this of their employees; extend it. What are they: Diet/nutrition and exercise that controls such costly disease-causing factors as glucose, cholesterol, and triglycerides that can be analyzed by blood draws. Forbid smoking. Let's finally establish and enforce national standards, since parents and other adults aren't doing it.
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