In the middle of political distractions that drown out most other news, the persistent bad news on American healthcare continues to roll in. In the past few months, the following has been reported:
Amidst the ongoing "who pays for healthcare debate", we seem to be missing the big picture. Who pays is part of the question; what difference does it make is a much bigger question. Shouldn't we all be upset about healthcare that costs more and delivers less? Shouldn't we all start challenging our politicians, our doctors and ourselves to ask different questions?
A few things to think about:
Access matters, but it isn't the whole issue
While increased access to healthcare proved to offset some mortality, there is little evidence that the expanded access of the ACA really helped make people healthier. This is partly because of the emerging realization that a rather small portion of overall health is determined by interaction with the formal healthcare system. Consider the following diagram:
Only 20% of health outcomes is driven by access to and quality of clinical care. Yet that is where our focus resides.
On the bad news front, much of this is illustrated by the reduction in life expectancy. Ohio is a microcosm of the major effects:
...the areas of the state that have the longest life expectancy tend to be in our suburban communities, which are doing better economically. The shorter life spans are happening in some of our urban communities, certainly, shorter lifespans for African Americans and then in, also, some of our rural and Appalachian counties.
...the overdose death numbers are really driving this. But we think that it's important that we continue to focus on tobacco. Ohio has much higher rates of smoking among adults with low incomes and lower educational levels and for people with mental illness and disabilities. We also know that people who have experienced trauma are much more likely to smoke. You know, imagine, for example, a woman who has lost her son to an overdose death and is now raising her grandchildren with special needs. Quitting smoking is probably not her top priority. In fact, she might see smoking as a way to cope with the stress. So all of these issues are really connected. And we need to be doing more to help people quit and help people struggling with addictions.
Addiction, overdose and suicide are predominately issues of the young, not the old. They are also issues that gather steam outside of the formal healthcare system and are more deeply affected by environmental, economic and educational issues.
On the good news front, some healthcare entities are recognizing this. United Healthcare continues to expand its housing initiative, addressing housing security, one of the primary drivers of poor health. Those enrolled in housing programs have 50% lower healthcare costs than those who do not participate. Healthcare entities focusing on these problems are becoming more and more creative, increasing access to transportation, starting conversations about nutrition and investing in healthcare education.
Big players in healthcare are also creating forums for innovation. For example, HIMSS is sponsoring tech and innovation challenges around rural health and aging. Robert Wood Johnson Foundation has also created initiatives to spur creative thought and energy around these issues. And Accenture has gone as far as appointing a physician lead focusing on these challenges.
Government has a role to play, but likely needs partnership
The focus of the policy debate continues to be on 2 things: who has access (everyone) and who pays ("Medicare for All"). These are important questions but the prior discussion implies that solving the access and pay question may not address the cost, quality or health challenge.
A little recognized fact in the push to a government-driven system: the UK has experienced a similar decrease in life expectancy over the past 2 years. This despite the existence of the notable National Health Service (NHS). Causes:
Government will always be a major funder of healthcare. But the building blocks of a system that works must be:
In an earlier post, we discussed whether an MBA has ever been worth the cost. You can read more about that here.
One of the key motivations for an MBA is that it is a "career accelerator". We operate under the assumption that the CEO ranks are composed entirely of former McKinsey, Bain and Deloitte consultants. But, according to Harvard Business Review, this isn't the truth.
In an article published last year, the authors cite a study (the interestingly named CEO Genome Project) that showed that only 24% of the CEOs studied have "elite MBAs". The underlying hypothesis was that the path to success is to land an elite MBA, climb the ladder and avoid risky moves.
In fact, the chief finding from the study is a profile called a "Sprinter".
Sprinters don’t accelerate to the top by acquiring the perfect pedigree. They do it by making bold career moves over the course of their career that catapult them to the top. We found that three types of career catapults were most common among the sprinters. Ninety-seven percent of them undertook at least one of these catapult experiences and close to 50% had at least two.
Hence, it is behavior- and risk- that determines trajectory. For example, 60% of Sprinters took a smaller role at some point in their career or moved to a smaller company for broader responsibilities. The article has a number of interesting case studies about people who took risk or were opportunistic even when trying new things was risky.
One other profile- inheriting a big mess. This is the example most closely aligned with the companies I've worked for. McKesson corporation experienced gross accounting scandal associated with the acquisition of HBOC, resulting in the removal of most of the C-level. The head of the pharmaceutical division and a recent hire, John Hammergren, was promoted to lead the company. During his tenure, the stock went from $14 to $252 (at peak). The lesson was that inheriting a mess and working through it, risking career and reputation, can often be the key to career growth.
My guess is that for every success story, there are dozens where taking risk blows up on people. There is comfort and security in playing it safe. But, for those who are willing to take risk, there may be ample rewards.
So, you've decided to start a sports team (or a college, or a high school or a pick-up basketball crew). The name of your team is important: it may be the difference between success and failure (see Browns). Hence, a few rules: * ** ***
* Every rule has an exception
** Where possible, I attempt to explain away the exceptions, generally in an attempt to prove my point
*** These rules are in no particular order. Plus, they are debatable- use comments section below.
Rule 1: If you are 12 or under, you can name your team whatever you want. It doesn't have to make sense.
Rule 2: The name of your team should ideally be 2 syllables or less or it will be abbreviated.
Examples: Cardinals become "Cards", Orioles become "O's"; Patriots become "Pats"; Cavaliers become "Cavs". For some, even 2 syllables is too much (Red Sox= "Sox"). On second thought, you might want to stick with 1 syllable, just to be safe.
Rule 3: Avoid adjectives in your name; they will eventually be dropped.
Examples: The Devil Rays are now the Rays; the Mighty Ducks are now the Ducks; the Louisville River Bats (AAA) are now the Bats (which is a pretty good play on words for a baseball team).
Exception 1: If you are a university with religious ties, you may need to maintain a modifier. For example, if you are a Baptist or Catholic school, you can't really call yourself the "Devils" or "Demons", so you might want to be the "Blue Devils/Demons", which is somehow nicer. Or, if you are worried that your team name might not strike fear in the heart of your opponent, you might need to be the "Demon Deacons" or the "Fighting Methodists" (which was the actual mascot at 2 prominent universities and a great trivia question).
Exception 2: If you are describing the color of your socks.
Exception 3: If your team name used to be racist, but you really like your school colors, apparently you are allowed to be come the "Red Hawks" or "Red Storm".
Rule 4: Try to narrow the geography. Only use a state if there are more livestock than people in your state. English Premier League teams are particularly good at this: some are named after neighborhoods in London.
Examples: The California Angels realized that there were 4 other baseball teams in California and perhaps they didn't represent the entire state. So they renamed themselves for the town in which they actually play: Anaheim. But then the renamed themselves as the Los Angeles Angels of Anaheim and then the Los Angeles Angels. Which is not where they are from. Nor do the New York Jets or New York Giants play in New York. And the Washington Redskins play in Maryland.
Exceptions: The New England Patriots. In general, the Patriots are an exception to every rule (except Rule 2 above) because they have found the fountain of youth and their coach knows stuff that no one else knew was actually in the rule book. But I digress.
Rule 5: If you move the team, change the name, especially if the old name was something specific to the old city. This is particularly important if you want to avoid confusion. If your team is something generic (Athletics, Braves, Colts, Giants, Cardinals, Rams, etc.) you're in the clear.
Good examples: Washington Senators (2) become Minnesota Twins, Texas Rangers. Cleveland Browns (old) become Baltimore Ravens. St. Louis Browns become Baltimore Orioles. Baltimore seems to be particularly good at this.
Really bad examples: Minneapolis Lakers become LA Lakers (where there are no lakes); New Orleans Jazz become Utah Jazz (where jazz was likely illegal until last week); Brooklyn Dodgers (shortened from Trolley Dodgers) become the LA Dodgers (where people hate public transportation). LA seems to be particularly bad at this.
Rule 6: Do name team something that is meaningful to your town, state or school.
Best examples: Cornhuskers, Boilermakers, Knickerbockers, Banana Slugs.
Further guidance: apparently, you can name your team after a natural disaster that may threaten their lives and property. Hurricanes, Cyclones, Earthquakes all seem to be fair game.
Rule 7: Do not name your team after an owner or coach. Or a color. See Browns.
Rule 8: Avoid Wildcats, Cardinals, Cougars, Eagles, Tigers, Lions, Bears....and Redskins.
Allow me to introduce Drake, an amazing dog who has been our companion for the past 10 years. He was a gentle, sweet and beautiful dog and is the subject of this post. He was put to sleep last Friday; it is that experience that serves as the impetus for this post.
For context, I need to go back a month. My wife and I took our 2 dogs for a walk. At the end of that walk, Drake seemed more tired than normal so we said to each other, "Maybe that's a little bit long for him." After all, he was 12 so it seemed normal that he might be slowing down a bit. However, after a brief rest, Drake stood up and it was clear that something was wrong. He was favoring his right leg and seemed to be in pain.
We let him rest and gave him some aspirin. The following week, we took him to our vet, beginning what became a month of exploration and treatment. Along the way, Drake got the best care from the kindest people. They were thoughtful and considerate of his age, consultative and responsive. Emails got quick responses; phone calls were returned; questions were answered.
We had a couple of moments where we thought things were improving but last week things took a turn for the worse. Recognizing we may need support not available at their clinic, our vets recommended we see a doctor at regional veterinary hospital. We called, discussed our situation and were able to make an appointment for later in the week.
We arrived at 10:45 and were quickly shown to an observation room. The doctor entered shortly thereafter and what followed was amazing:
Newsflash: applications to top MBAs are down by 9%, the fourth straight year of declines. This has led to much hand-wringing and analysis of whether an MBA is still worth it. The way that question is phrased implies that it is common knowledge that an MBA was once worth the investment. I think that's worth a discussion.
I am no educational historian so I will limit my comments to the 20 or so years since I first took the GMAT. Back then, at least for junior officers trained in nuclear engineering, MBAs were considered the fastest route to a career change; in exchange for $80,000 (or so), you could expect a 50%+ increase in salary and a massive recruiting advantage in specific fields, particularly consulting and investment banking.
I hit my first hurdle on my first round of application (full disclosure- I had to apply to Kellogg twice). The feedback was, "The purpose of Kellogg is not to serve as career guidance and career placement for former military officers." This was in response to my application which stated far too clearly that I didn't know how I was going to use my degree. I knew little or nothing about the business world. Other than doing a little bit of personal investing, I knew nothing about markets. I grew up in a family of pastors, so the only education and career path I understood was that of theological training. I thought that the purpose of an MBA was exactly what Kellogg said it wasn't: vocational retraining and recruiting support.
My second awakening was mid-MBA. More often than not, the classes resembled "common sense". Few exceeded what I felt could have been gleaned by reading a series of good articles or a book. When I brought this up to my friends who already had degrees, they sort of smiled, like this was some inside joke. "Then why do an MBA?", I asked. "It's a union card", said one friend in the consulting industry. "You need it to be considered."
It was then that it occurred to me that even by the late 90's, MBA programs were just doing the hard work of screening and vetting candidates for specific industries. Because of the churn in entry-level positions in consulting and investment banking, they needed to replenish their ranks. They had 2 entry-level tracks; undergrad and grad. In many cases, these employees did the same job, but one was paid more than the other and was, therefore, more willing to put up with the lifestyle challenges associated with the job. The MBA programs represented a pool of people who were ideal for this second round: motivated, rested and in debt.
My third surprise was once I got into consulting. I was quite taken aback that the case-work, creativity and teamwork highlighted in business school were entirely missing in real-world consulting. No one was interested in my opinion; they just wanted the results of my analysis. Furthermore, the "messiness" (or what David Epstein calls "wicked" learning environments in his excellent book, Range) of real world problems bore little resemblance to the challenges we were trying to solve. I had never imagined a data file that would exceed Excel's 64,000 rows (yes, that was the limit back then). I just figured clients would hand us clean balance sheets and we would pontificate on how they could do better.
Which brings me to my fourth surprise: people who ran businesses were pretty smart, and few of them had the academic pedigree I had been trained to expect. This especially came home in my 2 stints as an employee in Fortune 500 companies. I worked for really good people, most of whom had achieved far more professionally than I had and didn't come from top MBAs (or even "top undergrads"). True, I could do a few things they couldn't and could write better decks; but, their grasp of the industry, of management, of teams and of what made their business go was tremendous. It made me wonder what I had really accomplished with my education.
Perhaps this reflection is also conditioned on when I finished my MBA. The opportunity for the MBA classes of 2001 and 2002 was highly affected by the collapse of the dot-com era and 9/11. Many struggled to make up for those lost years; many of us have careers that look like random walks across the economic landscape. But I don't think that's the answer. I think that current MBA programs would be better split as continuing education for managers and executives; brief, intense seminars to increase knowledge in specific domains and on specific issues. It would allow managers to apply learnings directly to issues they are facing, a far more practical approach than attempting to apply case studies 20 years after the fact.
But the greater thought is this- we all need to be lifelong learners. Some institutions are introducing the "60-year curriculum" in recognition of the potential length of careers, the broad number of challenges faced over a career, the burden of expense and the likelihood that what I'm doing today is not what I'll be doing in 5 years. This better reflects the needs of people and companies; instead of asking, "Should I go back to school?", many of us will be asking, "What do I want to learn next?"
Perhaps, instead of churning through undergrads and replacing them with MBA grads, consulting firms and investment banks should invest in training and retention. Perhaps the notoriously painful rights of passage of 100 hour weeks and miserable pay could be replaced with less work, more training and a more sustainable career trajectory. Wouldn't that be cheaper and more effective than having to replace and retrain your workforce with higher cost resources? It might undermine many long-held beliefs; it might also be the right thing to do.
So, has an MBA ever been worth it? Many would say, "Yes, it set the course for my career." But wouldn't those same energetic, curious, creative people have developed new paths and new solutions wherever they were planted. I think yes- MBA or not.
What is Corporate DNA? In general parlance, your corporate DNA is a mixture of culture and strategy but we want to be a bit more specific. Like biological DNA, corporate DNA is the underlying coding that dictates your organization's response to issues, questions and challenges as well as guides your internal decision making. Like biological DNA, corporate DNA is unconscious; sometimes, it will manifest itself in unusual and surprising ways.
Sometimes the easiest place to see corporate DNA at work is in conglomerates or companies that have multiple (but dissimilar) operating units. Take, for example, the distribution company that owned a large information technology business in the same industry. The combination of these assets made sense on paper; much of the information technology fed efficiency in distribution and streamlined the ordering process, increasing opportunity for the distribution business.
When the parent business reported quarterly results, one of the key measures they reported to the street was margin percentage. In high volume distribution businesses, squeezing margin out the business is key; margin improvements are measured in basis points (or hundredth of a percentage point). The impact of this was stark on the non-distribution businesses. When a business initiative was proposed in the technology business which might require investment, it was always measured on the basis of margin dilution. If it would result in an overall reduction in margin percentage (even with a commensurate increase in profit), it wouldn't be approved. So, if a business was currently doing $10 million at 30% margin but had an opportunity to do $20 million at 20% margin (an increase in $1 million in profit), that initiative wouldn't be approved.
This is corporate DNA at work. In this instance, there was an unwitting exchange between profit-maximization (which should have been the goal) and margin-percentage maximization (which was seen to drive the share price, an unlikely fact if the impact was an overall reduction in earnings). Hence the need to know your DNA.
Another example. A healthcare company had three divisions: pharmaceuticals, diagnostics (essentially an equipment business) and nutrition (mostly nutritional drinks sold in retail outlets). The nutrition business was an international business and competed against global food companies in many international markets. Those companies were used to selling products at 20% gross margin, leveraging marketing to drive high volumes and making money based on massive scale. However they tried, the international nutrition businesses struggled to compete with these formidable competitors. Why? Because they were required to price at 60% gross margin (or better). The presiding corporate DNA was that of the pharmaceutical business where 95% gross margins were common. They treated the nutrition business similarly, grudgingly conceding 60% margin- but, in effect, ensuring that their nutrition business would be a niche, premium business with high margins but low share.
There are many other examples:
The point is, as leaders we need to be fully aware of our corporate DNA. Much of it is good; much of it leads to positive action by default, to rapid decision processes in line with the corporate strategy and in alignment with the general direction of the company. However, there are many situations where that same DNA can lead to bad business decisions, much in the same way that a mutation in our biological DNA can cause the wrong protein to be synthesized at the wrong time, leading to disastrous consequences. The goal is to know when corporate DNA is an asset- and when it is a liability.
At i2g Consulting, we encourage people to think differently. Different perspectives lead to different conclusions. Let's start with healthcare.
Everyone knows that the cost of healthcare has gotten out of control. The average cost of employer sponsored healthcare is $20,000 for a family plan. We know that a portion of that money goes drugs, a portion to hospitals, a portion to home health and nursing. About 16% of the money spent on healthcare goes to doctors- approximately $550 billion a year.
To do some simple math, there are about 1 million physicians in the country. So, physician services average about $550,000 per year. Of course, doctors have to pay malpractice insurance, staffing costs, some office costs and other expenses. But, the average physician salary is still around $300,000 per year. Pretty good pay, right?
Right about now, the reader is checking the title of this piece and trying to connect "$300K per year" with "free med school". To better understand this, we need to answer 3 questions:
Why are physicians so well paid?
Physicians aren't necessarily well paid around the world. In the US, Western Europe, Australia and New Zealand, doctors are well compensated. However, in Spain, doctors make about $63,000 while in Mexico, doctors make about $22,000. These differences aren't in line with the difference in cost of living or the size of economies. Doctors in the US are well paid for a few reasons:
The simple answer is, no. In fact, the disparity between 2 doctors who may have gone to the same med school is pretty substantial. There are 2 primary reasons for this:
Medical School Role
By now, it should be obvious that the cost of medical school is part of this equation. The "pot of gold at the end of the rainbow" is one of the reasons that medical schools can charge what they do. The average annual cost of tuition at public schools is more than $30,000; more than $50,000 at private medical schools. But that doesn't capture the full cost. Students generally borrow for living expenses as well and often have to continue to borrow money through a portion of their training. As a result, the median debt for students at private medical schools is $180,000. That number drives behavior for years, from choice of specialty (higher compensation) to choice of location (cities or academic medical centers which pay more) to the actual practice of medicine (more patients, more volume, less personalized care).
This necessary appetite for higher compensation directly affects both the quality and the cost of healthcare in America:
Given everything we've discussed, free medical school may seem an illogical conclusion. An industry that generates $4 trillion in revenue annually seemingly has the money to pay high salaries and absorb high costs. However, the fiscal impact of medical school debt impacts what we pay for healthcare and where we can get healthcare far into the future.
With that in mind, consider this modest proposal:
Jim is the CEO of i2g Consulting