Is Your Business in the “Neutral Zone?”

As Baby Boomers business owners approach retirement (the youngest of them turned 50 this year) they face a unique challenge. The market for small businesses is increasingly a buyer’s smorgasbord A shrinking middle-aged population, corporate competition for talent and less interest in the long hours associated with many traditional small businesses combine to make selling many Boomer enterprises a more difficult proposition.

The best-of-class companies on both the smaller and larger end of the spectrum will still stand out as appealing propositions to buyers. On the main street side (companies selling for less than $3 million or so) there are still plenty of aspiring entrepreneurs who seek a lucrative opportunity.

The mid-market (companies with over $1 million of pre-tax income) has more money chasing fewer target prospects. Current estimates calculate over $1.6 trillion (about the GDP of Japan) allocated by Private Equity Groups and corporate M&A departments for purchasing those businesses.

stuck in betweenWhat about the companies in the middle? As in the Star Trek “Neutral Zone,” the place where neither the Federation nor the Romulans travel, these businesses have a special challenge when their owners seek to transition, and especially when they want to exit with the value of what they’ve built.

A generic history of these Neutral Zone companies applies to thousands of them. A Boomer entrepreneur bootstrapped a business thirty years ago. Badly undercapitalized, he or she struggled for years to make a decent living. As time passed, a four decade long expanding economy, driven by the influx of workers and consumers from the same generation, helped to grow the business until it provided a comfortable living.

Now in their 50s or 60s, those owners have achieved their life goals. Their labors have resulted in an enterprise that employs between 15 and 50 people, and puts between 300,000 and a million dollars to the bottom line above and beyond their own salaries. Compared to 95% of Americans, they are “rich.”

But they are too big to sell easily in the small business (main street) markets, and too small to attract mid-market buyers. They are in the Neutral Zone.

In main street sales (as I’ve explained here before) solid companies sell for an upper limit of around three times the pre-tax profit combined with the owner’s salary and benefits. As that pricing exceeds $3 million, and certainly above $4 million, it becomes difficult to find an individual entrepreneur who can leverage that purchase price.

In the mid-market, where the cost of a transaction limits targets to those with $1 million and more in EBITDA, many Neutral Zone owners would have to grow the business by 30% to 70% just to make the entry level numbers.

A Boomer entrepreneur who is in the “harvesting” phase of business ownership; enjoying the benefits that come from decades of dedication to the business, is often not interested in another big push. It may require more investment, more risk, and probably a lot more effort.

He or she built the company with a belief that it would fund a certain post-business lifestyle upon sale. Now they are finding out that a well run organization with solid and sustained profitability may not be enough.

I typically work with between 15 and 25 of these owners at any given time. For many, the solution can be to “hire a buyer.” Their companies are financially capable of recruiting top management talent. That talent should first be capable of taking the day-to-day management duties from the owner, but in addition, be entrepreneurial enough to eventually assume ownership in turn.

The secret to realizing the full value of a Neutral Zone company may not lie in bringing it up to another level (or, perish the thought, down to a lower level) of prospective buyers. Instead, consider using the organizational strength and profitability you’ve created to engineer an internal sale on your own terms, in your own time, and under your control.


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Police Deadly Force and Management

The outcry over the use of deadly force by police officers has dominated headlines. Ferguson Missouri, New York City, Virginia, Texas, Florida. Although incidents involving unarmed black men have dominated the headlines, the total number of deaths by law enforcement action, over 800 in the year to date, seems an astonishingly high number.

I think part of the problem is that police officers have fewer options for either self-protection or for subduing a suspect. They have to use deadly force, because they’ve been prohibited from other kinds in the name of protecting the citizenry.

Funny shore patrolMy dad was a Special Cop. That meant he had another full time job, but was trained in law enforcement (Navy Shore Patrol) and would work for a local department part time. Usually it was for big holidays or events.

When he put on a uniform, he was indistinguishable from a regular, full-time patrolman. His identification said he was a policeman, and he carried a gun. He also carried a nightstick.

In one town where we lived (Oakland NJ), there was a riverfront picnic and event property called Pleasureland. Since we were only about an hour from New York City, and there wasn’t much in the way of corporate amusement parks, it was a popular booking for union members’ family picnics.

Frequently there was more than one such event on the same day. The steelworkers and the bricklayers, for example, showed up in the summer heat and drank a lot of beer. Not surprisingly, someone would take offense at something a rival union member said or did, and his brothers-in-trade would rush to his defense. Melees of several score, and sometimes several hundred, weren’t uncommon.

No one was ever shot by an officer. In fact, Dad often said that he would prefer not to carry a gun, since he had no intention of using it on some family guy with a few too many drinks in him. He did allow, however, that it was useful for pulling the holster around in front to protect his private parts.

Instead, he employed his trusty hickory nightstick. I remember his description of breaking up the brawls. “Just keep it low. Never bring it above your shoulder where someone might grab it. No matter how big or how drunk a guy is, a good whack in the knee will take all the fight out of him.”

Unfortunately, nightsticks have become more associated with head cracking (bad form) in civil rights protests. “Police brutality” lawsuits have relegated the nightstick to the same fate as the thumbscrew and the rack. (BTW- those extendable batons that have taken their place, unless you know martial arts, are of limited value against anyone who is really intent on hurting you.)

Police are left with guns. Faced with a threat, they draw their weapon. In a really serious or chaotic situation, there aren’t many options after that.

We could accept a few broken knees as an alternative to shootings, but that is considered brutal. Police officers aren’t paid to lose. (Another frequent saying of my Dad’s). Now they are left without many in-between measures to take control without pulling a trigger.

How does this apply to management? Business owners hold the “deadly force” card in any employment relationship. They can fire someone. Experienced managers know that you don’t draw that weapon unless you really mean to use it, but many with less seasoning fall back on termination threats because they seem big and scary. They think they are using their power of position to correct a behavior.

“If you are late one…more…time, I’ll fire you!” OK. We all understand that coming in an hour late tomorrow means termination. What about next month? Six months from now? Is five minutes late enough to get fired? Fifteen? What if I have a job where I can just work faster and catch up? What if I am your top performer the rest of the time?

Make sure your managers have a nightstick; a clear and simple way to mete out corrective action without resorting to the big threat. It will make their jobs a lot easier, and probably help to keep some decent employees.

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Posted in Leadership, Managing Employees, Politics and Regulation | Tagged , , , , , , , , | 5 Comments

5 Responses to Police Deadly Force and Management

  1. Kyle Whale says:

    So what are some examples of “nightsticks”?

    • John F. Dini says:

      Sorry, I guess even the term is antiquated. A piece of hickory, cured and hardened, round (about 1.5 to 1.75 inches in diameter) and about 30 inches long. Longer than a Billy club, harder than a truncheon. Grooved handle for a good grip, with a strong leather thong for wrapping around your wrist. Formerly standard issue for every police officer in the country. Later “improved” with a second handle that came out 90 degrees from the side about 1/4 of the way up, but my dad never cared for those.

      • I don’t want to put words in Kyle’s mouth but I think he might have been referring to a “nightstick” in the context of what examples of a “corrective action” to mete out to an employee instead of the big threat of “deadly force” that results in termination.

        • John F. Dini says:

          Oh. Duh! Thanks Russ. A structured system of progressive discipline gives supervisors the ability to assign penalties without being accused of arbitrariness. Docked pay, deferred raises, forfeiting PTO (which in most states is only controlled by company policy), exclusion from an incentive pool and suspension are all options, but the supervisor needs to understand what is available and when it is appropriate.

  2. Chris White says:

    Perhaps some commercial examples might illustrate the point?
    1. Most serious examples short of termination might include probationary status, docking pay, demotion.
    2. Less serious examples might include a letter in the personnel file, attendance at a seminar on the topic causing the problem, loss of privileges such as parking space, etc.
    3. Least serious might just be a verbal reprimand without the “or else” attached to it.

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Don’t Train with Customer Pain

I have lot of favorite books. In business, they range from cutting edge theory to some of the little “quick reads” that build a single management or behavioral point around an allegory.

One of the best in the latter category is The One Minute Manager Meets the Monkey by Ken Blanchard and William Oncken Jr. As the title implies, it is a merging of Blanchard’s The One Minute Manager from 1982 and Oncken’s Harvard Business Review article “Who’s Got the Monkey?” from 1967, the most reprinted article in HBR history.

money down the drainLike most (if not all) of Blanchard’s book, this one has lots of white space, and call-outs that take an entire page. The best is “NEVER LET THE COMPANY GO DOWN THE DRAIN SIMPLY FOR THE SAKE OF PRACTICING GOOD MANAGEMENT.”

As owners, we unfortunately have to let employees make mistakes on our nickel. My friend Larry Linne, author of Make the Noise Go Away, tells this story.

An executive walks into the boss with a long face. “Boss, I screwed  up. I quoted that big job incorrectly. Instead of it being our most profitable work of the year, we will lose $100,000. If you want me to resign, I understand perfectly.”

The boss, like most of us, says something like “Bob, I presume you learned from your mistake, and it won’t happen again. We’ll just have to chalk it up to the cost of experience.”

Bob walks out, but an observer in the hallway would note that, as he travels down the hall, his step grows lighter and his head is held higher. He has dodged the bullet for his mistake, and the incident is over.

For the boss, the pain continues. It’s the employee’s mistake, but the owner’s consequences.

Sometimes, however, the opposite happens. The mistake doesn’t impact the company as much as it does the customer. How much of a learning experience should the customer bear?

A while ago I knew a CEO who had developed a great team. Her top executives were all very capable, both in their own technical areas and in developing people under them to take on more challenging projects. A customer was experiencing issues with her company’s service. Although her executives were on top of it, they let the responsible employee work through the issues at length to assess his problem solving skills.

The CEO called a halt to the process, and she quickly interceded to correct the situation. As she told me afterwards, “We don’t train with customer pain.”

I also have a long list of favorite sayings, and this one made it on a first hearing. As a mash up of the monkey and the CEO: “Don’t let the customer go down the drain for the sake of a learning experience.”

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Posted in Customer Relations, Entrepreneurship, Leadership, Managing Employees, Sales | Tagged , , , , , , , , , , , | 2 Comments

2 Responses to Don’t Train with Customer Pain

  1. Brent Lane says:

    You can usually recover from your pain, but not always from your customer’s discomfort – and especially if you do not know about it.
    With my firm, I would call every client every month just to say “How are we doing”? 99% of the time, I was met with appreciation. The other 1% sometimes involved yelling and occasional unpleasant suggestions. My response was always, “Thank you – now that I know about it, I can fix it.” And we always did.
    In 15 years our collection period was always less that an month and I never had a claim for any cause. I attribute it to good will and the ability to solve a problem before it resulted in slow payments, or worse, lost business relationships.

  2. I think they used to call it customer relationship management

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Why Health Insurance Isn’t

Last week I wrote about the success of Obamacare in driving people from the private insurance market towards a national healthcare system. Clearly, I touched a nerve when I look at the tone of the responses received. Although I don’t discuss big-picture issues in this space nearly as much as I do day-to-day business operations, there is one more item about the health care market that we should visit.

Did you ever think about the concept of health insurance? First, just to be curmudgeonly, we don’t insure against health, but rather illness. So it should be illness insurance. But I digress…

What is insurance? It is a form of gambling. Like the office Super Bowl pool. Everybody puts a little money in (they don’t call the participant base an insurance pool for nothing), and the “lucky” winner gets his or her bills paid. That’s how it works for cars, homes and property liability.

arab accidentIt’s for that reason that insurance is against the law in Moslem countries. It is considered gambling, even though winning a “prize” requires an unhappy accident. It is still a large number of contributors putting a little money in, so that one of them can get a large sum out.

What would happen to the office Super Bowl pool if it paid off equally on every single box that was purchased? Of course, everyone would only get out what he or she put in. That’s why health insurance isn’t really insurance at all.

Health insurance became a tax-deductible employee benefit after WWII, and grew widely in the 1960s and 1970s. I will beat my demographic drum once again. In the 60s and 70s the workforce was expanding at a record rate with young, relatively healthy Baby Boomers. Just as they did for Social Security, they carried the sick and accident victims in the insurance pools easily.

Today in the US, as in most of the developed world, the three major causes of death are Heart Disease, Diabetes and Cancer. I laugh at those health experts that point out how our unhealthy lifestyles make those the major killers. It is true that obesity, red meat and lack of exercise are contributors. But the biggest factor is age.

Let’s face it, in countries like Somalia or Myanmar, the biggest killers are communicable diseases from polluted drinking water, starvation and bullets. It isn’t hard to figure out why so few people die from diabetes. They don’t live long enough, or have enough food, to contract diseases from unhealthy eating habits.

No shared risk pool functions when everyone expects to take out as much as they put in. In a society where the vast majority will live long enough to require extensive and extended health care, insurance struggles just to maintain a zero-sum outcome.

Health insurance is no longer insurance. It is a lifetime prepayment program for the medical needs that each participant is statistically almost certain to need. About 30% of all Medicare claims are paid in the last 6 months of a patient’s life. Some use that as an argument against extending life, but I bring it up here just to make the financial point. Clearly 30% of recipients don’t pass away every year.

I can’t find any hard dollar figures past the mid-1990s for that end-of-life spending, but judging by my own and others’ recent hospital bills, I would consider $200,000 to be a very realistic number. If you work for 40 years, that means you’d have to save $5,000 a year net over your current health needs to build up enough to come out even. (I’m ignoring both interest on the contributions and medical cost inflation. Just making a point here.)

Of course, for the vast number who can’t pay in that much, someone else has to make up the difference.

There is no simple solution, but first we have to realize that our “insurance” is that in name only. It only works when each participant pays in as much as he or she is going to get back out.

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5 Responses to Why Health Insurance Isn’t

  1. Jim Marshall says:

    I had a great uncle who practiced medicine from the turn of the century until the mid 20th century. In the last chapter of his book “Doctor Do Tell” dealing mostly with his experience delivering medical care to the people of rural Wisconsin……he warned of the evils of “socialized medicine”. Much has changed since the time he practiced….including the willingness of health care providers to be “paid in pickles”. The evils of non “socialized medicine” have become crystal and painfully clear.
    The present health care system based on the idea that competition brings about the best result is a failure if for no other reason that there is and will not be true competition. Nationalized health care can minimize system costs….if design and operation remained focused on the goal of efficient, results oriented care measured by and paying for results. A single payer system that assures and pays for results oriented care (as opposed to pay per procedure) is probably the only way that a nation can bring about maximum care per dollar expended. The only logical single payer is government. If a clear goal (as mentioned above) was the standard to which any plan was held….much better product (our health care) could be brought about for all.

  2. Jim Marshall says:

    I neglected to mention his book was written in 1945.

  3. David Basri says:

    Except that not everyone is going to use all they did (or should have) put in. My mother will turn 99 early next year. She is in an assisted living center that costs thousands monthly, but uses just a small fraction of the services the price is meant to cover. This is good thing. Others use much, much more than they ever did (or could have) put in.

    The only solution is something based on the underlying concept of insurance. Many put in
    X and a fewer number take out Y. Even in countries where there is universal government provided healthcare, the concept is the same with taxes substituted for the bulk of premiums.

    The problem in the US is that the insurance paradigm is private and discretionary. Not everyone has to pay in, so healthier lower cost people opt out at a disproportionately high rate. The insurance companies are profit driven, so left to their own they simply do not want to cover those who represent a higher risk.

    Average life span in the US is into the 70s. That means both individuals and companies have to think very long term to justify the equation. In a system where participation is discretionary, and the actuarial pool is private and focused on making shareholders and executives happy the following quarter, the actuarial numbers will not to add up.

    Human nature simply does not work well in multi-decade time frames. Only an external entity can make the health care actuarial equation work. The ACA is bending the curve, but it is a poor mishmash trying to influence an inherently unworkable model based on private insurance and discretionary participation.

  4. Mike Weaver says:

    I have always thought it strange that people expect routine doctor visits and long term prescription medications to be covered under a health insurance plan. When you buy car insurance your tires and oil changes are not covered are they?

  5. David Basri says:

    It is only strange if you try to equate health care with consumer goods. Same basic problem as trying to force market principles to “control” health care costs. It is not a market or a consumer good, and should not be.

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Obamacare is Working, or it Isn’t

A few weeks ago I received notice of our annual health insurance increase. This year it was 38% more to keep the same coverage. Last year the proposed increase was 22%. The year before 12%. The year before that, 18%. The next day I got a reminder from my broker that with the increase, my premium would qualify as a “Cadillac Plan,” incurring another 40% non-deductible excise tax on the premium amount over what was considered “reasonable” under the Affordable Care Act. (Employers will calculate the tax and their insurers will pay it, effective in 2018).

Let’s put aside the irony for a moment, since I don’t consider these premiums to be in any way “reasonable.” Of course, we did the same thing we’ve done for four out of the last five years, and reduced benefits until we achieved an increase that was “only” in the low double digits.

How can an act named Affordable be so expensive, and how can I keep cutting my coverage each year but have it still be considered in the “Cadillac” range? Is the ACA working, or isn’t it?

That depends on what the ACA is supposed to accomplish. When I read the bill in 2010 (at least its provisions, not all 1,600 pages), I stated in a four part series here that I thought its main purpose was to drive everyone into a single-payor system. I still do. Here’s why.

The ACA’s supporters promote increased access to health care for those who were left out of the system. In reality, access to care hasn’t improved all that much. What has improved is access to insurance. If doctor’s won’t accept it, or patients won’t abide by the parameters of the system (by staying out of the ER for example) insurance doesn’t translate automatically into care.

dollars and caduceusEvery study for the last 40 years has found that the best way to contain costs is to steer people into primary care dominated networks, where their health is tracked and managed by a physician. The ACA does nothing to change the delivery system. In fact, even the government sponsored exchanges have co-payments for routine doctor visits; co-pays which can be avoided by using the Emergency Room for minor care, even though the costs are ten-fold or more. An ER is not allowed to turn you away over a co-pay. Many poorer patients consider medical collection calls a fact of life. In the ER, they just don’t have to pay right now.

The theory promoted about the ACA was that a more broadly insured community would reduce per-capita costs by encompassing the healthy. Instead, to no one’s surprise except perhaps the ACA marketing folks, easier access to insurance has resulted in adverse selection; the enrollment of people who are sicker than the average. No rational being believed it would be anything else. We are assured that the positive impact will be felt when healthy people eventually are forced to join, but the penalties for not enrolling are so minor, there is no reason to think that will come anytime soon.

So the taxes and penalties have become an income transfer mechanism from private industry to government programs. With the cost per person for health care at around $6,000 annually, how long do you think that the government will leave the tax on uninsured employers at $2,000 per employee, or exempt the first 30 employees from the qualifying head count? The law allowing those taxes is in place (and Supreme Court approved), but the amounts are to be determined by regulators, not legislators. They can change those by decree, and I’m sure they will.

In order to gain passage of the bill, President Obama publicly announced deals with the hospital, legal, physician, pharmaceutical and insurance lobbies to exempt each from specific price controls. Not surprisingly, stocks in all those industries rose on the announcement of the bill’s passage.  That’s not much of a sign that the markets feared the impact on the health care industry’s profits.

When I mentioned the Cadillac Tax a colleague said “Oh yeah, but that’s not until 2018.” Like the frog in the slowly boiling water, we are being gradually exposed to the actual costs of the ACA over time. The expansion of Medicare tax to capital gains, abolishing the taxable income limits, the recasting of how we calculate “full-time” employees, the uninsured tax, the tax on carriers (which they are expected to pass along to consumers) because of “unexpectedly” high costs of care. On the horizon are the Cadillac tax and the expiration of matching funds to states for expanding Medicaid under the bill. If it all came at once, we’d be up in arms.

The ACA has made health care less affordable except for people with medical conditions who were previously denied coverage. It is designed to make private insurance so costly that almost everyone will eventually capitulate and join a government plan. Then the government will have enough muscle to control costs by fiat. That objective is being met admirably, and without the revolution that nationalizing health care would have caused. In that sense, the ACA is brilliant. It’s a British National Health Service where everyone will sign up voluntarily; if only because not signing up costs so much more.

Don’t get me wrong. I’ve been to countries where access to every public building requires negotiating a phalanx of the crippled and deformed, many of which could be saved with basic care. I don’t want to go there as a nation. We need a rational approach to universal health care that controls unnecessary spending and delivers consistent quality.

Unfortunately, the ACA isn’t designed to address those needs at all. It’s primary objective is to put the government in control, and it is working. We just have to hope that better health care will eventually be the result.


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Posted in Economic Trends, John's Opinions, Politics and Regulation, Strategy and Planning | Tagged , , , , , , , , , | 11 Comments

11 Responses to Obamacare is Working, or it Isn’t

  1. Will Shain says:

    John, I can’t find fault with any of your logic. I can only speak to my circumstances. Over the past year, my rates have decreased by nearly 7% compared to 2014, but I had to move to a new carrier to get them. If I stayed with the old carrier, I was facing an 18% increase for a silver-level HMO-style plan based on wellness/.prevention. I can’t say that the ACA had any impact on moving to a gold-style PPO plan with a top flight carrier here in New England, but my $500/$1000 deductibles are down from last year’s $2,000/$4,000. We’re clearly paying significantly less than 2014. Maybe it’s New England, but competition appears to be a factor. Only 2016 will tell whether our new carrier will emulate the old carrier for exorbitant price increases.

  2. I agree with you 100% – about the actual intent of the bill, about the way it was put into being, about the sneaky “boil the frog” aspect to make people who don’t think very deeply stay clueless, and about the ultimate consequences.

    I was always very proud of our company paying for all of the employee coverage and most of the family coverage for health care – something that has shifted dramatically over the last couple of years. I have my own employees going out and shopping for better deals because it’s so expensive to have the company plan now. And, we are aggressively looking for the best possible pricing/benefits.

    It’s become a lose-lose for everyone – except those in governmment who want more control over all of us.

  3. David Basri says:

    Our small business experienced outrageous increases to our small group plans year-after-year in pre-ACA times. Finally we gave up and just had ourselves and our employees purchase individual plans for about 60% less than the group plans. After getting to keep the grandfathered individual HD plan for the extra year, we are going to see a huge bump in premiums this year.Basically, all the plans are headed to where small group plans used to be for all the reasons listed by John.

    The pre-ACA environment was completely unsustainable. The ACA itself is a poor compromise instead of a rational plan, but it was all that could be done in this fractured political era.

    There is more than enough money being spent on health care in the US every year to give everyone good care. The problem is that we have the least financially efficient system anywhere in the developed world, by a wide margin. Trying to force market principles on something that is not, and frankly should not be, a market does not work very well.

    The current system is based on the the market-oriented question of whether, when, to whom and how much you would like to PAY for your health care. Under that, however, is the real question: “Would you like your health?” That is a distinctly NOT market-oriented question that people always answer “yes” to given any choice at all.

    The ACA is poorly constructed and is pushing a muddled and convoluted path towards some kind of not well planned change.If it eventually leads in 10 years to the only rational choice of a single payer system, the messy transition will have been worth it. There is not enough political or cultural will in the US to do the rational thing deliberately.

    • John F. Dini says:

      You are right, David. We could never buck five of the most powerful lobbies in the country without restructuring lobbying itself, campaign financing, tort reform, and on and on. That’s why I said ACA was brilliant. Whether we agree with it’s long-term objectives or not, it set us on what appears to be an irreversible road to national health care.

  4. John Hyman says:

    The software industry has benefited by shifting from a transactional model to a subscription model. Now you pay a monthly fee to access the application(s) and get updates to the software automatically, as they become available. The company increases revenue because, in reality, no one always pays to upgrade to the latest and greatest version of the app

    So when will we see this approach applied to wellness? I’d prefer to pay my primary care provider a fee for wellness and care visits, tests and consultations. They’d see improved cash flow, reduce office administration costs, far less paperwork and accounting (sorry, John).

    It’s simple, easier to orchestrate, and could still be subsidized by the Federal Government for people who qualify based on financial need.

    • John F. Dini says:

      You know, John, the model for traditional Chinese village medicine was to pay a monthly stipend to the local herbalist/physician. If you fell ill, you stopped paying until you were better again. Of course, that isn’t “sophisticated” enough for advanced western medicine. 😉

  5. David Basri says:

    Several large providers (Mayo Clinic, Kaiser) are starting to follow a subscription model aimed at wellness, as opposed to services, as John Hyman suggests. That helps, but still does not address the monumental waste baked into a system where the entire payment side consists of competing, for-profit insurance companies.

    At the primary care practice we use, 10% of the employees are devoted to nothing but dealing with insurance. Insane and replicated throughout the provider side of health care. That does not count the billions in advertising, overhead, executive pay and profit that is being sucked out of the system with zero benefit to health outcomes.

  6. Cheryl Swanson says:

    ACA created the worst insurance plan coverage in 2015 we’ve ever had in our entire lives. We basically paid for a family of four all year and never used it due to the high deductibles PER PERSON. It only drives healthcare into the “delay”, “don’t address”, “self-insure”, or “self-treat” categories. Good thing we know doctors personally!

  7. Hello John,
    Perhaps a view from outside of the US, up here in “semi-socialist” Canada. This is also likely more of a big picture comment on national governance than anything.
    I of course cannot comment specifically on rates for medical insurance in the US, but I do think it is a fact that the US is the only really industrialized country that doesn’t have true universal health care. Now, I am by no means holding up our system as the model – after all we were ranked 30th by the WHO and the US, 37th, so clearly we both have a great deal to do in this 21st century world in this regard. (I realize these rankings a re a bit old and do have their flaws).

    What I will say though is that there is plenty of evidence to show that as a country’s healthcare and education systems go, so goes the overall success of the country in the long term. Its a bit like you are only as strong as your weakest link. If you do not provide general access to healthcare and education for all citizens, it is only a matter of time before the social fabric begins to erode – the cost of which is far, far greater than the specific costs of delivering those programs. My observation is that you are seeing some of this in the US – it is likely a key factor that is causing such massive division and polarization in the country politically.
    I personally don’t agree with fully private health-care. I have many friends in many countries in the medical system, and none of them agree with “medicine for profit”. I think the best models are private delivery within a publically managed system that provides equal access. I know many people in the US when they hear this rush to the – “well you have long wait lists in Canada – we don’t”. That really is not a complete picture. If you need treatment, you get it. But if its not required and/or elective, yes you will go on a wait list. Most Canadians (and Europeans) are fine with that. I have a friend who got sent for an angiogram, which found 4 major blockages in his heart. He had quadruple by-pass surgery the next morning – by a team rated as one of the best in North America. This would all be covered by Health Canada and paid in his taxes – no co-pay, no deductibles, no having to take a 2nd mortgage to pay his medical costs.

    At the end of the day, its how you view things – you have lower tax rates than we do, but we pay for our health care in our taxes. Lastly, I think this is a tough transition for the US – it is not going to be easy. You are likely where the National Health or Canada Health or Germany were 30 years ago. But what I think you cant afford to do is leave this to politicians to use as an election football (There is a difference between “politicians” and “public health care” – the former change frequently – the later should be enshrined in law).

    This is not meant to be criticism – like I say – we have much to work on too – but I think objective debate that takes this vital topic out of being called OBAMAcare is needed for long term success.

    • John F. Dini says:

      Your point is very well made, Malcolm. I will point out, however, that Canada shares a 3,000 mile border with a pay as you go system, which is open to any Canadians who have the money to opt out of their system. That said, I’m not arguing against universal health care, but rather a system that tries to deliver that care in a market with no cost (not price) controls. Despite our low WHO ranking, the US spends a higher percentage of our GDP on health care than any other nation.

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