Category Archives: Business

Goodbye to an Old Friend

Long before my time, Theodore and Milton Deutschmann started a business to cater to the new field of wireless—specifically, amateur radio. They called their business Radio Shack.

rs

Why? Ships were among the first to adopt wireless communications, and since early transmitters created a signal by generating a huge spark, there was the risk of starting a fire. To minimize risk, the radio equipment was placed on the main deck, in a separate small building, which came to be called the radio shack.

Ham radio operators (no one knows for sure why they’re called “hams”) tended to call the place where their radio station was located as the radio shack, or ham shack. Amateur radio was shut down during both world wars, but hams returned to the air as soon as it was legal to do so. The end of the Second World War provided an added advantage with huge selection of inexpensively priced military surplus radio equipment.

When I was a youngster, there were a few radio stores around town where you could buy components or tools. However, periodically the mailman would deliver a catalog from Lafayette, Allied, or Olsen Electronics. The Sears Christmas toy catalog couldn’t compete with these for the pure lust they generated. I remember building a set of Knight Kit walkie talkies, purchased from Allied.

In the late 1960s, Allied began opening stores in malls, outcompeting most the other companies, which gradually faded away. Allied purchased Radio Shack, but the combined Allied-Radio Shack was determined to be too monopolistic, and the two companies were split up. Allied became the industrial supplier while Radio Shack stayed as the retailer in the malls. Radio Shack sold things that you couldn’t find elsewhere. The TRS-80 computer was one of the first personal computers. They introduced a pocket-sized computer and one of the first laptops. Radio Shack had a niche market—the nerds—but nerds were paying $2,500 for a radio shack computer before the general population knew personal computers existed.

You could find all the parts to build a stereo from tuner to speaker wire. How about a multimeter and a soldering iron? They sold CB radios, of course, but also some ham radio transceivers. Most everything was manufactured by someone else, but carried one of Radio Shack’s brand names.

If you were working on a project and need a 47 ohm resistor (usual price, 10 cents—Radio Shack price, two dollars) you could drive to the mall on a Sunday and finish your project before dinner, even on a Sunday afternoon. Yeah, their components were overpriced, but the convenience made it worth it.

Then, one fateful day, the brainless
pencilnecks management of Radio Shack decided to sell the same products (e.g., cell phones) that you could buy for less money at Best Buy, WalMart, RiteAid, etc.

I’ve been told by Radio Shack managers that the really profitable part of the store was the parts section with those overpriced resistors, capacitors, and semiconductors. You know, the ones you could buy whenever you needed them? The parts selection went from a large section of wall to a metal cabinet with multiple drawers. I think the cabinet got smaller, but in any case, there were fewer and fewer parts available. Cell phones—no problem. Parts? Sorry.

I hear that Radio Shack is still sort of, kind of, in business, but you couldn’t prove it by me. The last local store is now empty. Like Bigfoot or the Loch Ness Monster, you only hear about someone who knows someone whose brother-in-law saw one. It’s too bad—they could have coasted a few more years just on what I spent there.

Fixing Healthcare – Part Three

Physician’s Assistants (PAs) and Advanced Registered Nurse  (ARNPs) are helping lower costs and increase access. While some nurse practitioners, can operate relatively independently; other nurse practitioners and most physicians’ assistants, cannot. Why?

Physicians are adamant that they maintain a high degree of control over these and other healthcare workers. This is a throwback to the nineteenth century—which is kind of interesting in a weird sort of way. The story, and I cannot vouch for its accuracy, although all my research seems to support it, is that the country was besotted with traveling medicine shows hawking patent medicines (You’ve seen it in the movies—“One for a man, two for a horse”). The physician industry supposedly promised to get things under control if they were put in charge of medical practitioners, i.e., physicians and surgeons (MD). It, at best, minimized, if not blackballed, osteopathic physicians (DO), chiropractors (DC) and chiropodists, now known as podiatrists (DPM).

A physician, at the time, could authorize any hireling under his license to perform any duty under the concept that the doctor was “the captain of the ship” and was responsible for everything. Therefore, he had authority to authorize any employee to do anything—hopefully, but not necessarily, after some training.

Today, many non-physician healthcare workers are licensed in their own right; in most states this includes nurses (of all levels), therapists (of all varieties), and technologists (ditto). These people are trained and possess technical skills that physicians do not. Generally speaking, only television doctors leave their practice in order to operating high technology devices. It’s good theater but bad economics.

Many of the other healthcare careers such as nurse practitioners, physicians’ assistants, etc., have made significant advances Unfortunately, old attitudes die hard, and there are too many physicians who try to maintain an inordinate control over everything, including these other professionals. Nurse anesthetists and physicians’ assistance must be “supervised” by a physician, although such supervision does not require actual observation or even the presence of the supervising physician.

Efforts to keep others under control have led to some bizarre arrangements. In radiology, for example I’m told that the technologists are now required to periodically retake the examination that initially proved their competence even though there has been continuing education requirements for 40 years. If true, I believe this is a unique requirement, but a warning to all others. Of all the physicians’ assistants, only those specializing in radiology are not permitted to interpret x-ray or other diagnostic images.

Why?

Some blame the American Medical Association, a very powerful organization with effective lobbyists. However, it apparently speaks for a self-selected group of physicians. Out of 923,308 practicing physicians, the most recent numbers available indicates that only 228,000 belonged to the AMA. If you don’t round, that’s just less than 25 percent.

Nobel Laureate Milton Friedman and his wife, who wrote the book Free to Choose, asserted that the AMA functions more like a guild with the goal of increasing physicians’ wages and fees by limiting both the supply of physicians and the competition from non-physician groups.

This is yet another issue that must be addressed if we are truly interested in fixing healthcare.

Medical School Rationing

Fixing Healthcare – Part 2 — Doctors

I’ve known many intelligent, talented, committed young people who aspired to become doctors, but couldn’t get into medical school. Some were resigned to their fate and used their degree in biochemistry to become medical technologists; others made arrangements to attend medical school outside the United States—primarily in the Caribbean. In one case, in order to study at a school in the Caribbean, the aspiring medical student’s parents sold virtually everything to finance her education. She’s nearly complete with her rotations back here at US hospitals and plans on serving rural or tribal underserved areas.

While we don’t have enough graduates of United States medical schools, we grant 85,000 special visas to foreign medical graduates every year because it’s a “critical shortage.” Today, roughly one quarter of all practicing physicians are foreign medical graduates. I’ve worked with many, and while their initial desire is to return home, after about six months the sports car and the arm-candy significant other appears. When I ask if their plans have changed, I’ve been told, “If I return home, I will be paid in chickens and melons. If I stay here, I will be paid in dollars. I like dollars better than chickens and melons.”

So, we import thousands of non-American doctors every year even though we have many Americans who want to study medicine but are turned away.

A decade or so ago, when more students wanted to study law, the educational industry had no difficulty in adding seats—even if they had to build new schools. Why won’t (not can’t) we do the same for medical schools?

Some claim there wouldn’t be enough residency opportunities if we graduated more doctors from US schools, yet foreign medical graduates can and do get residency positions at US hospitals. In any other industry, this might be viewed as restraint of trade.

I suggest that the goal of US medical schools should be to increase their capacity so that by 2030 ALL US residency openings can be filled with US citizens who graduated from US medical schools.

Next, I would change the entry criteria to include the following:

  1. Accepting students with a commitment to actually practice medicine; better yet a commitment to practice whatever type of medicine is in short supply, wherever needed, for at least three years. After that, every accommodation should be made to place that individual in a residency or fellowship of their choosing for which they have the talent, without a decrease in salary.
  2. While academic achievement is important, the ability to work as a team is critical. History is full of brilliant people who didn’t succeed because they could not work with others, and medicine is now a team sport—whether the person with MD or DO after their name likes it or not, they are teammates with the nurses, technologists, therapists, etc. No one is a superstar.
  3. Children of doctors or other elites should have to prove themselves more—not less—than other medical school candidates. They’ve grown up exposed to the field, often in an environment of privilege, so they should demonstrate their desire to serve, not their pedigree.

In short, we need more doctors, but our current method of selecting them is less than optimal.

Fixing Healthcare in America

First in a series

To correct healthcare and get costs under control, we must first acknowledge, then change the healthcare industry’s unique and outrageously dysfunctional business model.

  1. Physicians and other practitioners who decide which resources will be used in a hospital are often neither the direct provider, the one who pays, nor the beneficiary of the service. Basic economic rules, therefore do not apply. Medical tests, which are intended to provide information that will in some way impact the patient’s course of treatment, don’t. Many test and other procedures are ordered even when the outcome of the test will in no way affect the treatment of the patient or its results.
  2. Medical products and services are priced without any rationale. Often, prices are set artificially high in order to allow large discounts to insurance companies. This means that patients without insurance can be charged list price; eighty dollars for an aspirin or $100 for a BandAid®. Hospitals, which were once a ministry, stewardship, or public service have changed their priority to the bottom line. Some hospitals now own and operate their own collection agencies augmented by a small army of lawyers to guarantee that they collect what they have billed. This is why it is not uncommon for a small-town hospital to have millions of dollars in the bank—and still retain their not-for-profit status.
  3. And the insurance companies that get those big discounts? The hospital needs a staff of trained bureaucrats to generate the paperwork that is sent to the insurance company in order to receive payment. Payments may not be received for several months (for the MBAs out there—remember the first rule of finance—a bird [dollar] in the hand is worth two in the bush [accounts receivable]). When payment does arrive, administrative staff must reconcile the payments and file additional paperwork as necessary. All this adds to the hospital’s costs without adding any value. The insurance companies, on the other hand, are usually quite profitable, even after spending a lot of money on lobbyists. But just like Don Corleone said, “It’s nothing personal, it’s strictly business.”

So, what do we do?

First, it would be valuable to have the physicians evaluate how tests really affect the outcome for their patients and develop appropriate protocols. Malcolm Gladwell relates an excellent example in his book, Blink. The cardiology staff at Cook County Hospital was able to reduce tests while simultaneously improving patient outcomes.

[Gladwell, Malcolm (2005). Blink: The Power of Thinking Without Thinking. New York: Little, Brown.  ISBN 0-316-17232-4 (Especially the chapter on Cook County Hospital Cardiologists)]

Second, revise medical pricing so that it reflects reality—and that must include adequate margin to offset costs for necessary but expensive services. Emergency rooms are expensive to operate while an intensive care unit for patients suffering from burns is actually cost prohibitive. However, hospitals have an obligation to the community to provide necessary services—either directly or by affiliation—to the community. The community, in turn, must ensure the hospital is resourced to provide a wide range of services. If hospital prices reflected cost plus a reasonable margin to offset other costs, and everyone paid the same price—patient or insurance company, it might lead to more rational decisions—outcomes first, but economics as a consideration. If Grandpa—God love him—is a 96-year-old heavy smoker with high cholesterol and other morbidity factors who was hospitalized because of a stroke, a battery of tests that will not affect his quality of life or his longevity are not appropriate, and the insurer should not be expected to provide carte blanche payments. However, if the prices are realistic, the family may decide that they would be willing to pay for those additional procedures on their own.

Third, emphasize cooperation over competition. Is there any other business, other than hospitals, that would allow someone to work in their facility AND directly compete with it? Radiologists have their competing imaging centers, surgeons may have their private surgery centers, etc. Should specialty practitioners be entitled to benefit from the hospital’s patients and compete with the hospital for those same patients? It should be the practitioners’ choice—one or the other, but not both.

Two excellent resources for these issues are:

Brill, Steven (2015), America’s Bitter Pill: Money, Politics, Back-Room Deals, and the Fight to Fix Our Broken Healthcare System. New York. Random House. ISBN 978-0812996951

Rosenthal, Dr. Elisabeth (2017). An American Sickness, New York: Penguin Press. ISBN 9781594206757

If you want to fix American healthcare, pass this along to your friends, neighbors, doctor, etc. I’ll get a lot of hate mail, but we need to have the discussion.

More to follow.

Positions

No, not that.

There’s a great Monty Python bit in which the suitor is talking to his intended wife’s father. The abbreviated version would go something like this.

Graham Chapman: “Do you have a position?”

Michael Palin: (Snort) “I cleans public lavatories.”

Graham Chapman: “And is there a potential for promotion?”

Michael Palin: “Yeah–after five years they gives me a brush.”

We spend the first quarter of our life preparing to take on a position. The next two quarters of our lives, we define ourselves by our positions. Finally, we learn that our position is what we do, not who we are.

Jackson Browne (with, perhaps some help from his neighbor Don Henley) may have said it best in “Running on Empty”:

Gotta do what you can just to keep your love alive
Trying not to confuse it with what you do to survive

We are who we are and we do what we do–don’t confuse them.

 

Everybody panic! It might snow!

Buffalo, NY 2014 (Courtesy PBS)

Southeast Virginia’s TV meteorologists are in a full-blown tizzy because (gasp!) it looks like it’s going to snow. This is not necessarily bad, because TV meteorologists love to be in a tizzy over any weather event—but if you lived as boring a life as they do, wouldn’t you? The only other excoitement they get is standing outside in a storm on a live broadcast telling everyone else not to go outside.

Our neighboring states average the following annual snowfall:

West Virginia 62″

Delaware and Maryland 20.2″

North Carolina (due south of us) 7.6″

Virginia as a state averages 10.3″ per year, but the southeast (Norfolk, Virginia Beach, Hampton, Chesapeake, etc.) averages a paltry 5.8 inches, although eighty years ago, in January 1936, there was a record snowfall of 20 inches. Wow!

So, wish your television weatherman a happy blizzard, but leave quickly or risk having it all explained in great detail to you.

Undocumented Features

explo

Former Washing Machine Photo Daily Mail

Among software types there’s an old joke that programs never have bugs—merely undocumented features.

Hardware I catching up:

  • Airbags that spontaneously deploy and throw shrapnel at the car’s occupants,
  • Cars that adjust the engine to run one way during emission testing and another for regular driving,
  • Smartphones that burst into flames,
  • AND, my personal favorite—washing machines that explode

People today don’t realize how good they have it. When I was a kid, you had to do all these kinds of things the hard way—by hand. It was tough. If you wanted to blow up the washing machine, first you had to stuff the tub with a $#!+load of firecrackers with the fuses connected. There was always enough moisture left inside the washing machine so that half of them would get soggy. Still, once you lit the fuse, you had to run like hell to get out of the way. If the fuse fizzled out, you never knew how long to wait to go back and try to relight it without accidently blowing yourself up. We worked for results, and when we blew up a washing machine, we were proud!

Today, people just expect these things to happen all by themselves.