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What’s All The Fuss About this New Sheriff at Downing Street?

Thursday, July 15th, 2010

With an British mother and an American father, comparing the US and Great Britain is simply a way a life in my family . . . plus it gives me a bit of street-cred in this department. In this story, in my opinion, the Brits clearly win!

Sunday mornings with Fareed Zakaria on CNN are sacred in my house.  Which basically means that my kids and husband abandon me for that hour.  More often than not, I’m highly tempted to blog about one or two of the topics Fareed covers.  I typically resist, because I rarely disagree with Fareed and over time I’m afraid I might come across as a “Fareed Groupie”, which could tarnish my image of a self-thinking, intelligent, strategic, modern woman.  That said, this week, I am giving into temptation. I simply must blog about this new British government and the 39-year old George Osborne (Chancellor of the Exchequer – Secretary of the Treasury to Americans) whom I found to be slightly pompous (expected), highly intelligent (expected), but unexpectedly refreshing and on-point in his ideas around what people really want from their governments.  I personally, think the US Republican party could take a lot of cues from the new conservative sheriffs at Downing Street.  As an Independent, I actually prefer it when both the Democrats and Republicans are acting wisely as it makes for better candidate options and more solution oriented action.

If you missed the show, it’s easy to watch or listen on demand.  Just click here.

Just to add my own touch to the conversation, and keep up my image, here are the four primary reasons why I like what I heard from Osborne and feel strongly that this is the direction that successful politicians will have to take (regardless of party) to be successful in the future.

Not Afraid to Act

Osborne has pledged to the British people that he will not hide hard choices from them and he will make them.  He has clearly lived up to this campaign promise with his austere budget that is getting a lot of press. He feels strongly that the public wants a government who can admit when there is a real problem, and work quickly to get it fixed.

Proper Leadership

The kicker here is their assumption that the public can and should act as an intelligent deputy to a sheriff who is willing to make and stand behind decisions regardless of which direction the political winds are blowing. This new conservative party clearly recognizes that the British public clearly understands there is a debt problem, and that the country has been living beyond its means for some time, and so they are willing to take it on as their first priority.  They also realize that not only Great Britain, but Europe, requires proper leadership to bolster their image and regain the world’s confidence in their ability to pay their own way.

Collaboration is Not a Death Sentence

Osborne speaks of forming a proper coalition government where the other party holds seats in the cabinet and how the real benefits of diversity in Parliament are less about looking different and more about being different and thinking different.  One of the best statements Osborne makes in Fareed’s interview is, “We can’t abandon whole areas of policy to the Left in British politics.  There is no reason why the Conservative Party should not have a progressive policy on climate change or be interested in issues of poverty and equity in our society and have answers to those issues.”

Open, Open, Open

They are open to new ideas, new views and anyone who can come up with a better way to reach a common goal.  Osborne indicated that he constantly seeks out second opinions and alternative views.  He encourages large numbers of people to come into meetings and say what they want to say, and understands that listening is a large part of the job.  His office recently asked the broader group of public servants for their ideas on how to reduce budgets in a way that doesn’t damage the frontline services people receive.  They received over 65,000 responses in a couple of weeks, and had some of them around to Number 11 Downing Street for a chat recently.  Interactive governement . . . what a concept!

I’ve been saying for years (just ask my friends) that the politicians in the US are simply making things worse and what most people really want is an entirely new breed of politician that is much more suited for the 21st century.  We need politicians who care less about party line and more about solving problems. We need politicians who can explain both sides of an issue, without bias, and why they believe their decision is the best option.  We need politicians who can work with other politicians to get the job done and stop wasting the public’s time and money on petty politics.

As much as I love they way in which this new and refreshing British government is behaving, I would certainly caution them that the best solution in today’s environment is likely a combination of austerity in some areas and stimulus in others.  Because western politicians failed to play the austerity card when times were good, we are all now stuck in a precarious position.  The equation is really quite simple and it works for government, companies, and at home.  When times are good you pay off your debts, make smart investments, and put a little under the mattress for a rainy day.  When times are hard you dig out your mattress money and stretch on credit a little if necessary.  If used responsibly, credit can be a very stabilizing element in an economy.  When abused, as we all now know, credit can backfire as surely as a 1970’s MG.

One of the things I love the most about this new government is the fact that they aren’t letting fear run the show.  They are taking a stance, creating a strategy, and they are willing to listen to other ideas.  The longer we let fear run our households, our businesses, and our politics, the longer this era of uncertainty will linger.  It really is that simple.

Posted in Courage, economy, global, leadership, political, social, strategy | 1 Comment »

Redeveloping the Real Estate Industry

Wednesday, June 30th, 2010

The opportunity to redevelop the real estate industry such that it contributes to the solutions the world is seeking, instead of continuing to pile on to the multitude of challenges, is huge. Such challenges include the energy crisis, climate change, natural resource preservation, population growth, urban sprawl with ineffective infrastructure, and a lack of sustainable growth practices. Those with the courage to see these opportunities and act upon them quickly will realize tremendous competitive and economic advantages.

Indulge me for a moment as I try to integrate the big picture of how the real estate industry can play a significant role in addressing the challenges we face as global citizens. Then, I’ll offer some details and specifics that outline a new approach to real estate.

Tom Friedman says in his book Hot, Flat, and Crowded, “We Americans are in no position to lecture anyone. But we are in a position to know better. We are in a position to set a different example of growth. We are in a position to use our resources and know-how to invent the renewable, clean power sources and energy efficiency systems that can make growth greener. If we, as Americans, do not redefine what an American middle-class lifestyle is – and invent the tools and spread the know-how that enables another two or three billion people to enjoy it in a more sustainable fashion – we will need to colonize three more planets.”

Real estate investors and developers play a huge role in how communities and cities are constructed, how buildings utilize energy, and what infrastructure and transportation is necessary to connect where we live to where we work, shop, and play. Without drastic changes in how we construct and live in our communities, what’s left of America’s competitive advantage in real estate will continue to fade. Others will take the lead in creating the technology and investment and development models that allow populations and standards of living to grow in sustainable ways that are also grounded in the pursuit of happiness and wellbeing for oneself and the rest of the world.

The global economic crisis should represent the perfect opportunity and context in which to effect meaningful change, unfortunately little is different today than it was 5 years ago in an industry that has endured massive losses over the last 2 years. The only changes fund managers (who ultimately control where and how capital is deployed) appear to be making are to appease their investor base with executive musical chairs, token fee reductions, and maybe a claw-back clause. Their plan is to ultimately convince investors that the world will soon get back to normal. Some fund managers are even sitting out a round or two of fundraising in order to avoid setting a precedent of unfavorable terms with their investors. These kind of non-structural changes or avoidance strategies will, unfortunately, not bring a new mindset, new strategies, creative partnerships, and the innovative models that are needed in the dynamic and interdependent world in which we all now reside. The pace of global change is so great, that the concept of “normal” may eventually become obsolete.

Investors, on the other hand, realize they have been paying too much to fund managers who, quite frankly, have lost their edge, allowing their value proposition to shrink to an almost unrecognizable point because such a large portion of profits have been driven by extremely favorable financing terms. Because investors rely on the income from their investments to fund whatever it is that they do (pensions, universities, etc.), they need to make commitments and keep the economic wheel turning. And, with so few new choices, many institutional investors are forced to give in to what fund managers are offering.

Large institutional investors have more power today than they realize, and with the right leadership they could help re-shape the industry for the better. Relying heavily on a previous track record as an indicator of likely success, in a future that will undoubtedly look quite different than the past, may not be the best strategy. A better bet may be fund managers that are more adaptable to change, that are more willing to present structures which focus on creating long-term value, and have a desire to begin working toward sustainable and energy efficient strategies of investing and development. When assets are viewed in terms of creating economic, social, and ecological value, growth is more balanced and sustainable and less susceptible to large swings in the financial and capital markets.

Suburban sprawl with carbon copy retail centers, minimally constructed housing developments, and energy-gorging apartment complexes are all simply unsustainable and will not work for the future. They are also poor examples to set for emerging markets that have to figure out how to support a net increase of 3 billion people over the next 40 years and typically look to America for answers.

The real estate industry will have to evolve because we are rapidly approaching the tipping point where it is economically advantageous to create and embrace new types of value. The real question is who will be the first group to realize just how incredible this opportunity is for those with the courage to change. Detailed below are two areas in which I believe the real estate industry can make great strides and become the leader the world needs in building more efficient communities that promote healthier lifestyles and sustainable living.

First, we must start with an investment model that is focused on creating value instead of creating fees. The days of creating a majority of profits from financing arbitrage while collecting huge fees and adding very little value are over (or at least they should be over). Those who can design integrated investment models that eliminate the double promote and have a viable long-term strategy that includes some elements of sustainability will have a tremendous competitive advantage.

Second, we must build asset management strategies that not only address the needs of capital but also begin to address the energy and climate conundrum we are all facing, offer end-users options that help solve their daily problems, and are congruent with the direction local municipalities and communities are headed. Typical asset management models are based on a pyramid structure driven by a chain of command. An integrated asset management model, as depicted below, puts the asset at center stage and focuses on adding value by integrating end user needs, investor needs, social needs, and environmental needs into one cohesive strategy.

An integrated asset management model is all about adding value. For example a C class apartment complex that provides residents with free parenting classes, free money management classes, and partners with a local non-profit that provides a mobile medical clinic to families that cannot afford healthcare, will enjoy the highest occupancy rate in its market. Alternatively, a high end retail center whose tenants all relate to health and fitness, sponsors weekend community races and farmer’s markets, will be able to charge a premium, because tenants will insist on being where the action is. Or how about an office complex that caters to “green” businesses that are happy to pay a premium because the building is carbon neutral and net positive on energy. These are just a few examples of a multitude of creative strategies available in an integrated model that views value through a multiple lenses.

Posted in Innovation, business, creativity, global, real estate, strategy | 1 Comment »

The Century of Women – The 21st Century

Wednesday, June 2nd, 2010

85Broads2Originally posted  The Century of Women on 85 Broads – a global network of 20,000 trailblazing women who are inspired, empowered, and connected.

Last week I had the distinct pleasure of seeing Isobel Coleman, the author of Paradise Beneath Her Feet, speak at a World Affairs Council event in Dallas. Like Isobel, for most of my career I strategically avoided “feminist” issues. After all, I grew up in a family where it was just as likely for a man to have a PhD as it was for a women and both genders were scientific leaders in their industries or political leaders in their communities. I have no brothers and my parents were clear from the age of 5 that we could be anything we wanted. We all saw Billie Jean King playing her famous tennis match, but to us kids, it was just another tennis match. She was there, playing against a guy, so what exactly was all the fuss about? Now, all these years later, I can appreciate Billie Jean and those like her for the courage they shared with world and the gifts they gave to all women.

As I made my way to the C-suite of some pretty impressive firms, I came to better understand the nuances and challenges that still exist for women today in the West. I also now view Women’s Empowerment as something that goes far beyond equal pay for equal work and obtaining 50/50 gender ratios. Much of the developing world’s success hinges on the empowerment of women in regions of the world where being raped can mean a brutal public death started by your own family.

Whereas the 20th century was clearly the beginning of equality for women, and phenomenal progress was made in a very short period of time, until our sisters in the remaining two-thirds of the world can freely speak, walk, vote, learn, and work, we cannot claim victory. As an eternal optimist I see much evidence that we are nearing a tipping point of progress that could get us there by the end of the 21 Century. 90 years is a long time. This is why I believe that the 21 Century is The Century of Women.

What Business and Politics Need the Most are Intrinsic to Women

The keys to success in the 21st Century are being more efficient with our resources, including the bottom of the pyramid, and innovating our way to preserving our environment instead of depleting it. We can all be thankful to the Henry Ford’s and JP Morgan’s of the world whose heavy-handed leadership led us through the Industrial Revolution. However, the skills needed to move forward in this century are far more intrinsic to women. I am in no way saying that women should replace all men leaders, but I am saying that we could all benefit from a few more women leaders.

When employees feel a part of a team, buy into the vision, feel they are heard, and are provided the opportunity to manage themselves, productivity and creativity skyrocket. In today’s business environment, most companies run at approximately half speed when it comes to human potential, productivity, and creativity. This is not about working longer and harder with fewer breaks. It’s all about desire, value, contribution, and time for rejuvenation and creative contemplation.

The 2010 Global IBM CEO Study, recently published, indicates the most important leadership qualities required over the next 5 years are: Creativity (60%), Integrity (52%), Global Thinking (35%), Influence (30%), Openness (28%), Dedication (26%), Focus on Sustainability (26%), Humility (12%), and Fairness (12%).

The paradigm shift that is revolutionizing not only business, but global social structures is a monumental opportunity for women leaders to step up and show the world that we have the innate leadership qualities that the world needs today and the courage to use them.

The Empowerment of Women in the Developing World

If you have any doubt that the empowerment of women is happening in places like the Middle East, you need only to read Isobel Coleman’s book, Paradise Beneath Her Feet. What she rightly points out is that for sustainable progress to take hold, it must come from within. The Soviets tried to forced education on women during their decade of occupation of Afghanistan and it ended up making things worse. Now Afghan men are sighting Islamic text to spread the notion that Islam is, and always has been, a religion that serves both genders equally. This is the only way for real progress to be made, and it is happening every day in the Middle East.

I’m sure most of you have heard about the “The Girl Effect” session at the 2009 World Economic Forum by now that unexpectedly stole the show despite having the worst time slot. Lee Howell, Davos Annual Meeting Director, indicated that, “The field work, economic analysis, and experience all point to the powerful effect you’ll have if you invest in girls.”

“A simple concept whose time has finally arrived”, wrote Ashish T. Galande of World Pulse. The tide is changing, but there is much work to do. Recognition of a solution and a change in mindset are always the first steps. “Despite the overwhelming evidence that helping girls escape poverty is the key to healthy social and economic growth, only a meager 0.6% of development money goes to this demographic” (Ashish T. Galande / World Pulse).

Shear Guts and Courage are Contagious

Technological advances have given all of us the ability to share and to seek out those who inspire and motivate us. Often it helps just to remind ourselves that we are not alone in our endeavors, despite how we may sometimes feel. 50 years ago, you might go months or years without hearing or reading something purely inspirational regarding the empowerment of women, now you can immerse yourself in wonderful stories, videos and writings anytime you heart desires.

Though many in the developing world don’t have access to technology, the few that do, spread the word. Conversely, those of us who live in the West have much better access to knowledge about women in the developing world and how we can support their efforts.

Shear guts and courage are highly contagious, especially from women to women. When we see others take risk, stand up for what is right, and challenge the status quo, we are much more inclined to do it ourselves. We must continue to support each other (men and women) in all endeavors that help to raise the level of human consciousness and provide a more meaningful life for more people. When you cut to the chase, this is the deep-seated desire of most . . . it is simply a part of being human. Sometimes, however, it gets covered with a bit of dust or becomes a little rusty. I believe that the power exists within everyone to good in the world. It is simply a choice how and when we use that power.

Posted in Courage, global, leadership, social | 1 Comment »

Are You Settling for a Pale Version of the Possible?

Monday, May 31st, 2010

“Settling for a pale version of the possible” is my favorite line in Tony Schwartz’ new book, The Way We’re Working Isn’t Working.  It’s in essence the question that we so often avoid because it gets to the core of our most intimate desire to be the best that we can be.  Those with the courage to ask and truthfully answer that question, will be the ones who end up operating at their full potential and helping others to do the same.  Tony’s new book will help you find easy ways to ensure that your life is full of vibrant and endless possibilities.

I am often asked to review and blog about new business books coming to market, and only rarely do I oblige.  When Tony asked me to review his new book, I said yes immediately. His ideas around managing energy as opposed to time resonated with me years ago after reading, The Power of Full Engagement and plays a big role in my own consulting practice. The energy management concept, if explored to its full potential, can do more to transform an organization than any other single component.

The great thing about Tony’s new book is that it is full of sound research that reinforces what Tony is teaching and helps us to really understand why we do the things we do, even when they are counter productive to our goals.  More importantly, he provides practical advise on how to begin the process of change that will work for anyone in any stage of their career, or any organization at any level of health.

Not only will you find great information to help you become a better employee, leader, or manager, but you will also find that this book will help you become the person, spouse, parent, child, and sibling that your heart desires.

If any of the following statements resonate with you, then you should RUN, not walk, to the nearest bookstore and get a copy of The Way We’re Working Isn’t Working.

  • I always feel like I am behind in my work and will never catch up
  • I want my team to be more productive
  • I desperately want to find balance between my work life and home life
  • I want my team to be more accountable and responsible
  • I struggle with the daily distractions of email, phone calls, and endless request for my time and can’t get any of my own work done
  • My company does a poor job of retaining employees

What I personally love the most about The Way We’re Working Isn’t Working is how it very easily connects to my own work around helping organization find competitive advantages that work in the 21st Century.  Tony reminds us that, “In a fiercely competitive and rapidly changing marketplace, creative and big picture thinking, curiosity, and openness to learning and empathy are a largely untapped source of potential competitive advantage.”  Going from more, bigger, faster to richer, deeper, slower seems counter intuitive to most, but is in fact the best way to distinguish your company from its competitors.

I have asked Tony to give us his thoughts on a few more in-depth questions on this angle around competitive advantage.

1)   Why do you think it is so hard for organizations to fully grasp that strengthening their connection with and investing in the well being of their employees can be a tremendous competitive advantage?

There’s an instinctive tendency in all of us to default to the easiest solutions. It’s easier to demand more of people than it is to consciously invest in them. It’s also part of the short-term preoccupation that characterizes so many organizations.  If you view people as expendable and interchangeable, you don’t worry about investing in them because you believe they’re all replaceable.  Leaders with a more  long-term view recognize that when you invest in people they become more valuable over time.

We make that investment in ourselves in the years we spend in school. But many organization are too concerned with the next quarter’s revenues to think about investing in the future. But the best organizations do just that. Companies such as Apple and Google offer more to their employees than most other companies – not just in perks like the free meals Google provides or the fitness facilities Apple has, but also mentally, in terms of the environments of learning and growth they actively nurture; and spiritually, by giving employees the sense that they’re doing something that truly adds value to the world. It shouldn’t be a surprise, in turn, that these sorts of companies attract better employees and have great results.

2)   In your work with a vast array of companies, do you see more of a correlation to the age of a company and the age of its executive team and their likelihood to fully embrace energy management in their culture, or is it more highly correlated to specific industries?

There’s no question that a certain kind of company is more readily drawn to our work.  They tend to be more progressive, forward thinking and innovative than average.  We’ve had our greatest successes with technology companies and with creative companies, but interestingly, we’ve also had significant success with more traditional financial institutions.  I think that may be because the folks drawn to the world of finance are often fiercely competitive, and we’re offering a science-based way for them to improve personal performance.

Ultimately, though, we’ve been able to work in almost every kind of organization, because in the end it’s usually one or two senior leaders who make the decision about whether to bring us in.  The trick, we’ve learned, is to introduce them to our work first at a personal level.  When they see its impact in their own lives, they become evangelists for the practices we’re teaching, and the new way of working we’re advocating.

3)   What is the one piece of information that you provide to clients that seems to resonate with them the most when it is difficult for them to see how proactively managing the 4 types of energy can have a profound impact on personal satisfaction and corporate success?

In an era of overwhelming demand, what resonates first is the science-based case we make for the fact that human beings aren’t meant to operate continuously for long hours. We all know, intuitively, that the way we’re working isn’t working, and that it’s actually depleting us.   It’s thrilling for people to understand that intermittent renewal actually drives higher and more sustainable performance.  Our work gives people permission to work in ways that serve them better – and make them feel better.  And that ultimately serves their organizations better.

Posted in business, creativity, leadership, management, success | 1 Comment »

The Courage to Change the Healthcare Game

Monday, May 10th, 2010

3 applesAs someone who dreams up creative ways to engage customers and helps companies update their business models to thrive in the 21st century, I find myself often thinking about the healthcare system and how desperately it needs an updated model.

There have been a couple of news spots recently on healthcare providers starting to do things differently and experiencing huge success.  In one doctor’s office in Seattle, patient emails are answered daily by a physician, and appointments last twice a long as the average doctor’s visit.  The result is a much higher level of connection between patient and doctor and a much greater chance that “health-care” is being provided as opposed to “disease management” services.  The other story I saw involved a hospital here in Dallas that last year experienced the death of a patient while he waited in the ER for hours.  They completely revamped their ER process creating a number of different pods or mini ERs that take in multiple patients at one time so they can keep a closer eye on everyone.  Again, huge success in dropping their wait times and even more impressive, a dramatic drop in the percentage of patients that left before they were seen by a professional care giver.

In my opinion, the US healthcare industry needs a new business model far more than it needs new legislation.  We seem to be in this mode in America where we think that the best solution to all problems begins with massive new legislation.  Sometimes a tweak here and there can be very helpful, but solving all problems with more rules just runs counter to everything I’ve experienced on how to create change and lasting success.

At its most basic level, it is relatively easy to see that the healthcare system in our country is a bit backward.  We pay physicians when patients have something wrong with them as opposed to when they remain healthy.  To get paid for anything, the physician must start with a diagnosis and a diagnosis code.  Any time or energy a physician spends on prevention or educating patients on how to stay healthier longer is a bottom line deduction from their profits.  It is a simple case of rewarding the wrong behaviors.  There are no fingers to be pointed or people to blame, it’s simply a model that is ineffective at creating what is needed, which is healthier and happier people at a lower cost.  Perhaps 100 years ago, when there was far less knowledge about and focus on prevention, the currently model was relatively effective.  Healthcare is no different than so many other industries (like energy, automobile, finance, and telecommunications to name only a few) that need to change with the times in order to remain effective.  What is sneaking up on most of us is that the rate of change has skyrocketed and is now at a pace that is uncomfortable to most industries and businesses.  There is hope though; we just have to be willing to change the way with think about things and be willing to do it in dramatic ways.

During the thrust of the healthcare debate, I only saw one article that touched on the real issues.  The article discussed how organizations such as The Mayo Clinic and the Cleveland Clinic appear to run at a much lower cost structure and simultaneously have reputations for the best service available in the industry.  The article attributed this in large part to the fact that doctors from different disciplines collaborated very effectively on all kinds of cases on a daily basis, which tends to cut out tests and procedures that ultimately end up being unnecessary.  Unfortunately, most of the healthcare industry is built on an “every doc for himself” model that actually dissuades doctors from taking the time to collaborate as much as they would probably like to.  It is much easier to collaborate when people are co-located and when the concept is built into the care model.

Because the “every doc for himself” model is so pervasive, it has been difficult for the industry to take advantage of technology to the extent that it could, which would ultimately benefit the patients and reduce costs.  For example, if a doctor sees a new patient and diagnosis him/her with diabetes, there schedule probably only allows for them to spend 15 or 20 minutes explaining everything.  The patient is in such a state of shock they likely are only taking in a portion of the information that is radically changing their life.  What if you could also send the patient home with a computer login that accesses their own health web page customized to their personal care needs?  It could contain a longer video, of their very own doctor, explaining everything again that they could watch as many times as they wanted and could share with family members who might be participating in their long-term care.  A private chat board could be available that is manned by an RN or Physician’s Assistant answering questions in real time.  The possibilities are endless in this area.  How many relapses could be avoided if patients watched daily videos that indicate how things should be progressing after surgery discharge or an outpatient procedure.

The point is, we need to start thinking in terms of radical changes, and honestly considering if the business model is working toward our goals or working away from them.  Imagine a time when doctors get paid for keeping people healthy.  Imagine if your healthcare facility was a place where you could workout, ask a quick question, learn about nutrition, pick up some new recipes, and get motivated to live a healthier life?  The reality is the current business model is stifling progress, innovation, and advancement in how we think about and deliver healthcare.  Our healthcare system has been narrowed down to a transaction system.  It feels like progress is being made because there have been great advancements in understanding diseases and innovating new treatments, however, very little has been done around the delivery of healthcare.  We have State of the art medical knowledge delivered, in many cases, through an outdated and archaic system.  If you are looking for ways to cut costs and increase the quality of service, this is where the opportunities lie.  Unfortunately, until we correct the structure of the system, those efficiencies will likely continue to lie dormant.

In the business world we call this a classic case of structure taking over the strategy.  You always want your strategy to dictate the best structure, not the other way around.  Unlike a single business transaction or a single company, where you change the structure relatively easily, this is an entire industry in one of the world’s largest countries.  It is likely impossible for a single healthcare provider, a single hospital, or even a single hospital system to make a change to the structure on their own.  Maybe it will require a grass roots movement that strives for a total do-over in the way our healthcare system works.  Once the structure is changed to create the alignments and incentives necessary to meet the goals then, and only then, will we see meaningful change.

As much as I dislike the behaviors that the medical insurance industry sometimes displays, it is a complete waste of time to try and fight them.  Everyone has responsibility for things getting to the point that they have, and these bad behaviors are just another symptom of a system that is governed by an outdated and ineffective model.  The insurance companies will have to be a part of the solution.  Insurance is a numbers game.  When the youngest and healthiest people opt-out because the cost is too high it simply continues a vicious cycle where the insurance companies feel they have to remove the other end of the spectrum as well in order to balance out their risk.  I am actually a fan of having a minimum insurance requirement with the government picking up the tab if someone can’t afford it.  We have this requirement in the auto industry and I believe it is one of the reasons that auto insurance seems to work so well.

If you look at healthcare as an entire business system and start to dissect its “operating statement” you quickly realize that revenues are generated by one party (insurance companies) and expenses are created by another (providers), though for the providers those expenses are viewed as revenue.  The profits from the system are shared but not anywhere near equal to the value that each party contributes or in a way that promotes the desired outcomes.  The real value that an insurance company provides is an administrative function, yet in many cases, they take an outsized portion of the profits from a value perspective and often have the most control.  The insurance companies will say they also take on the risk, but I would argue that it is the purchasers of insurance that take the risk.  When profits start to go down the insurance companies simply start denying claims, dropping high-risk people, and jacking up rates for everyone else.  They have become experts at deriving ways of mitigating their risks by passing them on to their customers, and we have let them get away with it for so long that it is now seen as standard practice.  In fairness, nothing has been done to ensure that the young and healthy remain part of the pool, which I believe could solve a lot of the insurance issues.  This would be one of those areas where some legislative changes could be good.

The real question is not, could we come up with creative and inventive ideas to cut costs and increase quality, but do we have the courage to make the necessary changes to the underlying structure?  Do we have the courage to design a model that provides the incentives to promote the investments necessary to increase service quality and bring down costs?  I hope the answer is YES.  I believe the answer is YES.  We can have all the intelligence and innovation imaginable, but without the courage to make system wide structural changes we will likely only create an updated and over compromised version of what we already have, spend a lot of money getting there, and leave an even more complex mess for our children and grandchildren to clean-up.

We must find the courage to critically examine the current system and understand how the alignments and incentives are simply miss-directed to accomplish the goals of the medical community and our society.

We must find the courage to recognize that the failures are not born of malice from any party, but are born of a system that is simply out-dated and broken.

We must find the courage to work together and commit to create the world’s finest healthcare system and be a leader for the rest of the world.

WE MUST FIND THE COURAGE TO CHANGE THE GAME!

Posted in Courage, Innovation, business, strategy | 1 Comment »

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