Over 50 million Americans are uninsured and health care has risen to approximately 17% of GDP. What should we make of this? Consumers are not positive on the state of health care in this country. They see issues with access to care, emergency rooms flooded by patients using them for primary care, and employers dropping coverage. However, when asked about government intervention, many Americans are wary. The reason for this is that there has not been a good option to solve these issues.
Health reform transformed from the idea of universal health care to a confusing array of mandates on providers, health plans, and life sciences companies. There are penalties and tax breaks. However, the average American still cannot comprehend what these changes mean for them. At first glance, some of the changes appear positive. Some of the issues that have plagued the health care consumer in the past have been coverage limits, lack of insurance options from employers, and the strong arm of big pharma dictating drugs and formularies. Now, small business will have incentives to provide insurance. More scrutiny will be placed on pharmaceutical companies. Limits on insurance coverage will be phased out.
The government views the health care issue as one that only they can fix. People are not happy. However, many will not be happier through government intervention. I agree that health care in America is fraught with issues. However, if I was given the option, I'd rather have my care performed in America than anywhere else on earth. I was able to see firsthand while in England what universal health care looks like. It is not better. Sure, there aren't the same concerns with reimbursements, but the level of care is not optimal. Have you ever seen the teeth of a Brit? Their care options are not complete.
I do not view health care as a right. It is a good or service, depending on what you're having done, that the government should not affect. The current state of health care is a function of America being a rich country. Greater emphasis is being placed on preventative care and health living. Do we need government intervention for this? How much of health care is actually life or death, and how much is pure consumerism?
The government is not financially prepared to truly overhaul the system. A model similar to TriCare within the Department of Defense would be great. However, it is not feasible to do this on a grand scale. I'll take our "broke" health care system over any other health care system, and day of the week. When the government tip toes around the issue, but is unable to actually fix the problem, most people lose. Actually, the hard-working American suffers.
I see the government as creating the very problem that they are now attempting to fix. Look at the big taglines in health reform. There is a lot of talk about the Medicare reimbursable rate. Rates, that I may add, will be cut. This will result in physicians seeing greater demand for their services, with less reimbursement. A new, potentially talented breed of providers may see this as a reason to enter another field. The demand for health care, with so many people lacking insurance, will naturally rise by providing options to these individuals. How will the supply issue be covered, though? Where will the providers come from?
While I do see a problem with so many uninsured Americans, you do have to look at why they are uninsured. Should the government give them handouts? I do not want to sound cruel, but either the government fixes the problem or they stay out of the issue completely. Let the consumer benefit from competition and enjoy the innovation and options that they have, even if the system is "broken".
Sunday, March 27, 2011
Thursday, March 17, 2011
Demand
In the past couple of years, consulting firms involved in the federal health care markets were sitting on a gold mine. There were several factors that contributed to this. Health reform became a huge issue (and still is). HHS and the CDC realized that they weren't adequately equipped with the personnel or skills to effectively react. DoD had a war on two fronts with an increased focus on the invisible wounds of war (psychological health). They, along with the VA and several other organizations, pushed this issue. As a result, many other patients were weeded out from past wars, creating access to care concerns.
Unable to keep up with the rising demand for health care services, and more specifically, knowledge about industry changes; consulting firms were able to effectively win government contracts. The demand, due to the reasons that I outlined, along with the propensity for the government to spend far more than they should for a given product or service, was fairly inelastic. Furthermore, government contracting regulations dictate that there is a hierarchy of organizations that must be considered before granting a contract to a large firm. This is easier to accomplish when the firms produce ideas and strategy instead of products. However, the smaller firms that previously served the federal health arena were simply incapable of meeting the requirements. Large, expensive firms were able to gain a greater foothold in this market.
Additionally, due to the structure of the contracts, consulting firms were able to lengthen their projected completion times and continue to be granted option years. Indefinite delivery - indefinite quantity contracts placed the risk in the government's hands. This still continues, to a certain degree, as none of the issues related to the increased demand have really changed. However, the government remembered its initiative to cut costs (and force the DoD to produce a clean balance sheet).
Now, agencies such as the DoD have decided that the costs have gotten out of hand. They have floated around the idea of cutting 10%. Contracts, as a general rule in government comptrollership, are the first to be cut. As a result, consulting firms are looking for the next big thing. At the moment, it appears to be emerging markets.
At the outset, demand is high and the first firms on the scene are price makers. Eventually, other firms will catch on and join in, increasing competition and decreasing prices. In this manner, consulting firms are similar to technology products. The trendy areas of consulting tend to go in this direction, while more "boring" areas (like retail) are easier to predict. Large firms balance the two areas, straddling both traditional and innovating, new markets.
Unable to keep up with the rising demand for health care services, and more specifically, knowledge about industry changes; consulting firms were able to effectively win government contracts. The demand, due to the reasons that I outlined, along with the propensity for the government to spend far more than they should for a given product or service, was fairly inelastic. Furthermore, government contracting regulations dictate that there is a hierarchy of organizations that must be considered before granting a contract to a large firm. This is easier to accomplish when the firms produce ideas and strategy instead of products. However, the smaller firms that previously served the federal health arena were simply incapable of meeting the requirements. Large, expensive firms were able to gain a greater foothold in this market.
Additionally, due to the structure of the contracts, consulting firms were able to lengthen their projected completion times and continue to be granted option years. Indefinite delivery - indefinite quantity contracts placed the risk in the government's hands. This still continues, to a certain degree, as none of the issues related to the increased demand have really changed. However, the government remembered its initiative to cut costs (and force the DoD to produce a clean balance sheet).
Now, agencies such as the DoD have decided that the costs have gotten out of hand. They have floated around the idea of cutting 10%. Contracts, as a general rule in government comptrollership, are the first to be cut. As a result, consulting firms are looking for the next big thing. At the moment, it appears to be emerging markets.
At the outset, demand is high and the first firms on the scene are price makers. Eventually, other firms will catch on and join in, increasing competition and decreasing prices. In this manner, consulting firms are similar to technology products. The trendy areas of consulting tend to go in this direction, while more "boring" areas (like retail) are easier to predict. Large firms balance the two areas, straddling both traditional and innovating, new markets.
Saturday, March 12, 2011
Incentives
The topic of incentives has recently come up in my Project Management (PMP) certification program. Some of the items we looked at were the Expectancy Theory, Maslow's Heirarchy of Needs, and Herzberg's hygiene factors. While some of these do not directly address incentives, at least in terms of monetary benefit, they do address motivation. Motivation, in my opinion, is the backbone of incentives.
The Expectancy Theory states that employees who believe their efforts will lead to effective performance or rewards will remain productive when rewards meet expectations. This is a learned behavior that we have come to expect since childhood. If we do well, it will be recognized and rewarded. If we do well and it is not rewarded, the problem lies with whomever is in the position of power to grant the reward. When reward fails to be an option, and good work is not appropriately recognized, morale falls. I tend to believe that this theory represents how employees function, as a whole.
Maslow's Heirarchy of Needs describes the most basic to the most advanced levels of need that one can exhibit. The first three are physiological, safety, and love/belonging. However, for the purposes of incentives, I will focus on the top two: self-esteem and self-actualization. Self-esteem is a major motive for incentives, as employees seek to be recognized for their work. While any monetary or time-off incentive certainly sweetens the deal, it is the pride and recognition that push these people to continue performing at high levels. This need is most closely associated with the Expectancy Theory in terms of motivation for performing at high levels. Self-actualization, on the other hand, is much harder to come by.
I have told myself in certain situations that my motivation for doing a good job was due to transcending to this level. For example, while working in the busiest trauma center in all of Afghanistan and Iraq combined, I convinced myself that the sole purpose was to help people. I can admit now that while I definitely believed in the mission, I had not transcended to this level. I did not receive a day off for over seven months and saw, on a daily basis, death and maiming. After some time, I came to expect recognition. I knew that, at this time, while serving in the military I would not receive any form of monetary reward. However, the performance award and evaluation ranking became an obsession of mine. I wanted to be recognized. I had not passed the self-esteem level.
This brings me to Herzberg's hygiene factors. He states that hygiene factors, such as improved salary, working conditions, etc. can destroy motivation, but not improve it. He also states that motivation stems from professional growth and recognition. I only believe this to be true of people who are at least at the self-esteem level of Maslow's Heirarchy.
Now, to tie this in with my current organization, I believe that hygiene factors are vital. The client site I work at is a hostile environment. The consultants, for the most part, are higher paid than the clients. However, we are often treated as second-class citizens. The work itself is overshadowed. In this case, improved hygiene factors, such as working conditions, would certainly improve motivation and performance. To complicate matters, leadership fails to step in on behalf of the consultants. The impression is that the leaders who do not have to work on client site are protected from the hostilities, yet still reap larger rewards.
This disconnect will eventually have a very negative impact on leaders who fail to provide adequate incentives for their employees. So far, it appears that the cream rise and leave the project. The less capable employees, who are more concerned with lower need levels (such as receiving a paycheck and not losing their homes), remain and perform poorly. Eventually, this is recognized, as the performance issues permeate and reach the leadership. At this point, the bonuses that the leaders received as a result of managing a large contract will be in jeopardy.
One cannot expect all employees to be motivated in the same way. As a result, incentives will (and should) differ for individual needs. Leaders who fail to recognize this will eventually succumb, as their own incentives are closely linked with the people actually performing the work (as T. Roosevelt said, "...the man who really counts in the world is the doer, not the mere critic-the man who actually does the work, even if roughly and imperfectly, not the man who only talks or writes about how it ought to be done.").
The Expectancy Theory states that employees who believe their efforts will lead to effective performance or rewards will remain productive when rewards meet expectations. This is a learned behavior that we have come to expect since childhood. If we do well, it will be recognized and rewarded. If we do well and it is not rewarded, the problem lies with whomever is in the position of power to grant the reward. When reward fails to be an option, and good work is not appropriately recognized, morale falls. I tend to believe that this theory represents how employees function, as a whole.
Maslow's Heirarchy of Needs describes the most basic to the most advanced levels of need that one can exhibit. The first three are physiological, safety, and love/belonging. However, for the purposes of incentives, I will focus on the top two: self-esteem and self-actualization. Self-esteem is a major motive for incentives, as employees seek to be recognized for their work. While any monetary or time-off incentive certainly sweetens the deal, it is the pride and recognition that push these people to continue performing at high levels. This need is most closely associated with the Expectancy Theory in terms of motivation for performing at high levels. Self-actualization, on the other hand, is much harder to come by.
I have told myself in certain situations that my motivation for doing a good job was due to transcending to this level. For example, while working in the busiest trauma center in all of Afghanistan and Iraq combined, I convinced myself that the sole purpose was to help people. I can admit now that while I definitely believed in the mission, I had not transcended to this level. I did not receive a day off for over seven months and saw, on a daily basis, death and maiming. After some time, I came to expect recognition. I knew that, at this time, while serving in the military I would not receive any form of monetary reward. However, the performance award and evaluation ranking became an obsession of mine. I wanted to be recognized. I had not passed the self-esteem level.
This brings me to Herzberg's hygiene factors. He states that hygiene factors, such as improved salary, working conditions, etc. can destroy motivation, but not improve it. He also states that motivation stems from professional growth and recognition. I only believe this to be true of people who are at least at the self-esteem level of Maslow's Heirarchy.
Now, to tie this in with my current organization, I believe that hygiene factors are vital. The client site I work at is a hostile environment. The consultants, for the most part, are higher paid than the clients. However, we are often treated as second-class citizens. The work itself is overshadowed. In this case, improved hygiene factors, such as working conditions, would certainly improve motivation and performance. To complicate matters, leadership fails to step in on behalf of the consultants. The impression is that the leaders who do not have to work on client site are protected from the hostilities, yet still reap larger rewards.
This disconnect will eventually have a very negative impact on leaders who fail to provide adequate incentives for their employees. So far, it appears that the cream rise and leave the project. The less capable employees, who are more concerned with lower need levels (such as receiving a paycheck and not losing their homes), remain and perform poorly. Eventually, this is recognized, as the performance issues permeate and reach the leadership. At this point, the bonuses that the leaders received as a result of managing a large contract will be in jeopardy.
One cannot expect all employees to be motivated in the same way. As a result, incentives will (and should) differ for individual needs. Leaders who fail to recognize this will eventually succumb, as their own incentives are closely linked with the people actually performing the work (as T. Roosevelt said, "...the man who really counts in the world is the doer, not the mere critic-the man who actually does the work, even if roughly and imperfectly, not the man who only talks or writes about how it ought to be done.").
Friday, March 4, 2011
Data Mining
While I am not a calculus guru, I do work for a consulting firm that is more than happy to hire math nerds and capitalize on the needs of businesses. There is a saying in consulting that “if you’re not part of the solution, there is good money to be made in prolonging the problem.” That is only partially true. In fact, consulting firms recognize opportunities and make themselves indispensable. Where does math factor into this? The answer is through data mining.
Data mining can sift through endless piles of data and identify trends. This predictive function is vital to many organizations. Furthermore, a good data mining system can discover these trends through automation. As a result, the company needs only to have personnel on board who can analyze the results. The math geniuses who designed the program are viewed as the conquering heroes. Of course, if the company does not employ anybody who can analyze the data, my firm would be happy charge the company for these additional services.
Companies that are not strong in terms of technology can easily fall into not knowing what they do not know. This is a weakness that perpetuates itself until poor results make themselves blatantly obvious. If leadership believes that maintaining an Excel spreadsheet is going to provide a reliable system, then they are mistaken. Instead, management must look at how they approach data mining. First, objectives must be clearly defined. The process of developing data mining infrastructure goes hand-in-hand with strategy. As a strategy consultant, this interaction is vital. Great strategy means little if there is not a system to evaluate the data it produces. On the other hand, great modeling programs mean little if the input or output is unknown or undecipherable. Once the company defines how it plans on using the data, the correct information can be categorized.
Should a client present itself with a data mining need, there are steps my firm would take to provide results. The strategy consultants would determine how the client is positioned in the marketplace and work with leadership to discover the way forward. This involves marketing statistics and data that is either available but cannot be trended, or has yet to be discovered. Preparing the data is often the most time consuming aspect of this process.
Next, we would determine what model to use. This depends not only on what industry the client serves, what its goals are, and its current capabilities; but also how much they are willing to pay for a sophisticated product. Once this is recognized, the technology team will utilize math and logic to develop a vehicle that will enable the data to be gleaned into relevant information. Market analysts can assist this process by making sure that the scope of the data mining meets the needs of the company (i.e. data quality).
Finally, if needed, consultants would interpret the data. This would enable the company to clearly see where they are weakest and identify trends. For example, data mining is great tool to use for SWOT analyses. The game is not over at this point, though. If predictive trends aren’t realized, then the system is not successful and has little value to management. Analysis must be done to scrutinize how the organization can either utilize the data to cut costs or take advantage of new opportunities. Also, there is the question of who officially owns and maintains the system.
A final consideration is that data mining is dynamic. Once the desired goals are realized, there is a necessity to continue adapting. While data mining statistical trends are largely historical, they still require a consistent flow of new information.
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