(Roughly) Daily

Posts Tagged ‘business

“America’s health care system is neither healthy, caring, nor a system”*…

Care is deteriorating even as prices rise. There are a number of reasons; Fred Shulte explores a new and growing category of culprit…

Private equity is rapidly moving to reshape health care in America, coming off a banner year in 2021, when the deep-pocketed firms plowed $206 billion into more than 1,400 health care acquisitions, according to industry tracker PitchBook.

Seeking quick returns, these investors are buying into eye care clinics, dental management chains, physician practices, hospices, pet care providers, and thousands of other companies that render medical care nearly from cradle to grave. Private equity-backed groups have even set up special “obstetric emergency departments” at some hospitals, which can charge expectant mothers hundreds of dollars extra for routine perinatal care.

As private equity extends its reach into health care, evidence is mounting that the penetration has led to higher prices and diminished quality of care, a KHN investigation has found. KHN found that companies owned or managed by private equity firms have agreed to pay fines of more than $500 million since 2014 to settle at least 34 lawsuits filed under the False Claims Act, a federal law that punishes false billing submissions to the federal government with fines. Most of the time, the private equity owners have avoided liability…

The terrifying details: “Sick Profit: Investigating Private Equity’s Stealthy Takeover of Health Care Across Cities and Specialties,” from @FredSchulte at @KHNews.

See also: “Private equity, health care, and profits: It’s time to protect patients,” “Private equity health-care monopolies are on a profitable killing spree,” and “Private equity deals drive up healthcare use, costs among physician practices, JAMA study finds” (this last, source of the image above).

* Walter Cronkite

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As we muse on mercenary medicine, we might send healing birthday greetings to James Collip; he was born on this date in 1892. A biochemist, he partnered with Frederick Banting and Charles Best to discover insulin in 1921. The co-inventors sold the insulin patent to the University of Toronto for a mere $1. They wanted everyone who needed their medication to be able to afford it.

Today, Banting and his colleagues would be spinning in their graves: Their drug, on many of the 30 million Americans with diabetes rely, has become the poster child for pharmaceutical price gouging.

The cost of the four most popular types of insulin has tripled over the past decade, and the out-of-pocket prescription costs patients now face have doubled. By 2016, the average price per month rose to $450 — and costs continue to rise, so much so that as many as one in four people with diabetes are now skimping on or skipping lifesaving doses

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November 20, 2022 at 1:00 am

“Things gained through unjust fraud are never secure”*…

Mischief is cyclical—it is bred in good times and uncovered in bad times…

The bad news just keeps coming. Ten months after America’s stock market peaked, its big technology companies have suffered another rout. Hopes that the Federal Reserve might change course have been dashed; interest rates are set to rise by more than previously thought. The bond market is screaming recession. Could things get any worse? The answer is yes. Stock market booms of the sort that crested in January tend to engender fraud. Bad times like those that lie ahead reveal it.

“There is an inverse relationship between interest rates and dishonesty,” says Carson Block, a short-seller. Quite so. A decade of ultra-low borrowing costs has encouraged companies to load up on cheap debt. And debt can hide a lot of misdeeds. They are uncovered when credit dries up. The global financial crisis of 2007-09 exposed fraud and negligence in mortgage lending. The stockmarket bust of the early 2000s unmasked the deceptions of the dotcom bonanza and the book-cooking at Enron, Worldcom and Global Crossing. Those with longer memories in Britain will recall the Polly Peck and Maxwell scandals at the end of the go-go 1980s.

The next downturn seems likely to uncover a similar wave of corporate fraud…

The archetypal sin revealed by recession is accounting fraud. The big scandals play out like tragic dramas: when the plot twist arrives, it seems both surprising and inevitable. No simple formula exists to sort the number-fiddlers from the rest. But the field can be narrowed by searching within the “fraud triangle” of financial pressure, opportunity and rationalization…

As Warren Buffett has noted, “you don’t find out who’s been swimming naked until the tide goes out.” Read on for more from @TheEconomist, “A sleuth’s guide to the coming wave of corporate fraud” (a gift article: no paywall).

* Sophocles

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As we contemplate criminality, we might recall that it was on this date in 1997 that MCI and Worldcom announced what was then the largest merger in history, valued at $37 Billion, creating the second largest telecom company in the U.S. (after ATT).

Worldcom, the acquirer, completed the deal in 1998, then continued to grow via acquisition. MCI Worldcom (as then it was) filed for bankruptcy in 2002 (the Dot Com Bust) after an accounting scandal (as referenced above), in which several executives, including CEO Bernard Ebbers, were convicted of a scheme to inflate the company’s assets… which were ultimately acquired by Verizon.

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November 10, 2022 at 1:00 am

“So these are the ropes, The tricks of the trade, The rules of the road”*…

Morgan Housel shares a few thing with which he’s come to terms…

Everyone belongs to a tribe and underestimates how influential that tribe is on their thinking.

Most of what people call “conviction” is a willful disregard for new information that might make you change your mind. That’s when beliefs turn dangerous.

History is driven by surprising events but forecasting is driven by obvious ones.

People learn when they’re surprised. Not when they read the right answer, or are told they’re doing it wrong, but when they experience a gap between expectations and reality.

“Learn enough from history to respect one another’s delusions.” -Will Durant

Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works.

Unsustainable things can last longer than you anticipate.

It’s hard to tell the difference between boldness and recklessness, ambition and greed, contrarian and wrong.

There are two types of information: stuff you’ll still care about in the future, and stuff that matters less and less over time. Long-term vs. expiring knowledge. It’s critical to identify which is which when you come across something new.

Small risks are overblown because they’re easy to talk about, big risks are discounted and ignored because they seem preposterous before they arrive.

You can’t believe in risk without also believing in luck because they are fundamentally the same thing—an acknowledgment that things outside of your control can have a bigger impact on outcomes than anything you do on your own.

Once-in-a-century events happen all the time because lots of unrelated things can go wrong. If there’s a 1% chance of a new disastrous pandemic, a 1% chance of a crippling depression, a 1% chance of a catastrophic flood, a 1% chance of political collapse, and on and on, then the odds that something bad will happen next year – or any year – are … pretty good. It’s why Arnold Toynbee says history is “just one damn thing after another.”

Many more affecting aphorisms at: “Little Rules About Big Things,” from @morganhousel @collabfund.

* “Rules Of The Road,” by Cy Coleman and Caroline Leigh (famously recorded by Tony Bennett and Nat King Cole)

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As we ponder precepts, we might send prophylactic birthday greetings to Samuel W. Alderson; he was born on this date in 1914.  A physicist and engineer of broad accomplishment, Alderson is probably best remembered as the inventor of the crash test dummy.  Alderson created his first dummies in 1956 to test jet ejection seats for the military.  But with the passage of the Highway Traffic and Motor Vehicle Safety Act in 1966 (on the heels of the stir created by Ralph Nader’s Unsafe at Any Speed), Alderson found a much broader market.  (From the first experiments on car safety in the 1930s, cadavers had been used to assess risk and damage; the dummy had obvious advantages.)  Alderson continuously improved his dummies, and later branched out to produce medical “phantoms” for simulations– e.g., synthetic wounds that ooze mock blood.

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October 21, 2022 at 1:00 am

“The international situation is desperate, as usual”*…

… so desperate, an increasing number of pundits argue, that globalization– the “flat world” proclaimed by Tom Friedman– that was to totem of the turn of the century, is no longer possible. But as the estimable Martin Wolf argues, we shouldn’t be too hasty– nor too sweeping and blunt– in our judgements. Trade in goods may be slowing, but the potential for technology-enabled trade in services remains huge…

What is the future of globalisation? This is among the biggest questions of our time. In June, I argued that, contrary to increasingly widespread opinion, “Globalisation is not dead. It may not even be dying. But it is changing.” Among the most important ways in which it is changing is via the growth of services provided at a distance.

A crucial point is that the expansion of trade in such services has depended little on trade agreements. The regulation of service activities focuses on final services, not intermediate ones. There exist, for example, strict rules on selling accounting services in the US. Yet there are few rules on the qualifications of the workers that do the paperwork behind the provision of such services.

Thus, a “US accountant can employ pretty much anybody to tally up a client’s travel expenses and collate them with expense receipts”. Examples of occupations that provide intermediate as opposed to final services include book-keepers, forensic accountants, screeners of CVs, administrative assistants, online help staff, graphic designers, copy-editors, personal assistants, X-ray readers, IT security consultants, IT help staff, software engineers, lawyers who check contracts, financial analysts who write reports. The list goes on. As Baldwin argues in The Globotics Upheaval, the potential for this sort of technology-enabled trade is huge. It will also be highly disruptive: the white-collar workers who provide these services in high-income countries are an important part of the middle class. But it will be hard to protect them.

In all, the evidence suggests that natural economic forces have largely been responsible for past changes in the pattern of world trade. Growing concern over the security of supply chains will no doubt add to these changes, though whether the result will be “reshoring” or “friendshoring” is doubtful. More likely is a complex pattern of diversification. Meanwhile, technology is opening up new areas of growth in services…

Globalisation is not dying, it’s changing,” from @martinwolf_ in @FT.

* Tom Robbins, Even Cowgirls Get The Blues

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As we contemplate commerce, we might send muckraking birthday greetings to Upton Sinclair; he was born on this date in 1878. A writer, activist, and politician, he is probably best remembered for his classic novel, The Jungle, which exposed labor and sanitary conditions in the U.S. meatpacking industry, causing a public uproar that contributed in part to the passage a few months later of the 1906 Pure Food and Drug Act and the Meat Inspection Act.

Many of his novels can be read as historical works. Writing during the Progressive Era, Sinclair describes the world of the industrialized United States from both the working man’s and the industrialist’s points of view. Novels such as King Coal (1917, covering John D. Rockefeller and the 1914 Ludlow Massacre in the coal fields of Colorado), Oil! (1927, the Teapot Dome Scandal), and The Flivver King (1937, Henry Ford– his “wage reform” and his company’s Sociological Department, to his decline into antisemitism) describe the working conditions of the coal, oil, and auto industries at the time.

Sinclair ran unsuccessfully for Congress as a nominee from the Socialist Party. Then he ran, as a Democrat, for Governor of California during the Great Depression, under the banner of the End Poverty in California campaign, but was defeated in the 1934 election.

He was awarded he Pulitzer Prize for Fiction in 1943 for Dragon’s Teeth, which portrayed the Nazi takeover of Germany during the 1930s.

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

Upton Sinclair, ruminating on his gubernatorial loss

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September 20, 2022 at 1:00 am

“If you want to change the culture, you will have to start by changing the organization”*…

That’s perhaps especially true of cultural organizations. As Ian Leslie explains, while rock bands are known for drink, drugs, and dust-ups, they have something to teach us: beyond the debauchery lie four models for how to run a business…

… The notion that bands should make music for the love of it was always romantic and now seems positively quaint. Rock groups are mini-corporations (some of them not so mini). Bands such as Coldplay or Kings of Leon operate sophisticated corporate machines that are responsible for multiple revenue streams; at a recent conference, Metallica’s drummer spoke about the importance of using the right customer-engagement software. Yet the music machine ultimately depends on a small group of talented individuals working closely together to create something magical. Once members of a group decide that they can’t stand to be in the same room as each other, the magic stops and the money dries up.

If rock groups are businesses, businesses are getting more like rock bands. Workplaces are far more informal than they used to be, with less emphasis on protocol, rank and authority. Many firms try to cultivate the creativity that can come from close collaboration. Employers attempt to engineer personal chemistry, hiring coaches to fine-tune team dynamics and sending staff on team-building exercises. Employees are encouraged to share lunch, play table tennis and generally hang out. As the founder of Hubble, a London office-space company, put it, “We hope that our team will become friends first, and colleagues second.”…

Successful startups have to make a difficult transition from being a gang of friends working on a cool idea to being managers of a complex enterprise with multiple stakeholders. It’s a problem familiar to rock groups, which can go quickly from being local heroes to global brands, and from being responsible only for themselves to having hundreds of people rely on them for income. In both cases, people who made choices by instinct and on their own terms acquire new, often onerous responsibilities with barely any preparation. Staff who were hired because they were friends or family have their limitations exposed under pressure, and the original gang can have its solidarity tested to destruction. A study from Harvard Business School found that 65% of startups fail because of “co-founder conflict”. For every Coldplay, there are thousands of talented bands now forgotten because they never survived contact with success.

The history of rock groups can be viewed as a vast experimental laboratory for studying the core problems of any business: how to make a group of talented people add up to more than the sum of its parts. And, once you’ve done that, how to keep the band together…

The Beatles, Tom Petty and the Heartbreakers, REM, and the Rolling Stones– four bands, four models for business success: “A rocker’s guide to management,” from @mrianleslie in @1843mag.

Mary Douglas

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As we learn from the loudest, we might recall that it was on this date in 1968 that The Beatles (one of the four cases discussed in the piece linked above) performed “Hey Jude,” the #1 song in both the U.S. and the U.K. at the time, on the television show Frost on Sunday on BBC-TV.

Written by (Roughly) Daily

September 8, 2022 at 1:00 am

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