Thursday, December 24, 2009

Harry Reid's Christmas Present

The U.S. Senate passed health reform by a vote of 60-39. For-Profiteers haven't had this good a Christmas since President George W. Bush approved The Carlyle Group's buyout of nursing home chain ManorCare on December 22, 2007. Senate Majority Leader Harry Reid said his work isn't done.

"This morning is not the end of the process. It's only the beginning."

Of course it’s only the beginning. Now Uncle Sam can pull a Tricare or act like your employer by reneging on promises made. How much more will individuals pay in 2014 than promised? Will it be in greater premium sharing or in lower benefits? Maybe a combination of both?

Employers badly wish to shed that pesky health insurance benefit. Workers are dropping from the rolls by the millions, 26.3 million between fall 2008 & 2010. This is before the bill’s main provisions are implemented. Reform projections show another 17 million losing employer coverage from 2014 to 2019.

The process is nowhere near ending. A tapped out Uncle Sam has a history of reneging on its military health promises. I expect it to continue shafting individuals, while watching corporate backs. I bet the Carlyle Group is watching to see if the new long term care insurance provisions hold.

Sunday, December 20, 2009

For-Profiteer Kent Conrad Hits the Airwaves

Senator Kent Conrad appeared on Fox News and CSPAN this morning. He echoed Corporacrat Ben Nelson in calling for a very limited conference on health reform. Conrad called for the Senate bill to emerge largely intact from the House-Senate conference. This bill highly favors existing, private health insurance companies.

No longer can government leaders conduct a "make or buy" decision. Everything must be contracted to the private sector, with it's unceasing profit growth requirements. That leads us to Kent's second topic, budget reform. Conrad used the same logic for budget reform that he spouted on health reform.

One pillar is making America more competitive in a "global economy." This is a euphemism for the race to the lowest global common denominator on worker pay/benefits, regulation and taxes. The private sector hates paying taxes. Investment capital could flee to lower tax portions of the world economy. Goldman Sachs threatened to do just that in the United Kingdom.

Health reform is part of the race to the lowest global bar on worker benefits. Both CBO and CMS predict 17 million will lose employer sponsored health insurance under reform. That's after 26 million lose workplace coverage prior to 2011.

Kent Conrad serviced his for-profit healthcare corporate donors with no, as in zero, facilities in his state. I'm sure he can serve Wall Street and the moneyed class just as ably. Watch tax reform under a Conrad commission. Also keep an eye on health reform promises. A tapped out Uncle Sam might not live up to commitments made to the people. As employers and the government do less, who picks up the slack? That would be you, the individual.

Saturday, December 19, 2009

CBO Joins CMS in Projecting 17 million to Lose Workplace Health Insurance Post Reform

The Congressional Budget Office projects 17 million Americans will lose employer sponsored health insurance from 2015 to 2019. That will be the second stage of the health insurance dump to the individual. The first is underway.

150 million Americans will have employer coverage in 2010 (CBO projection)

176.3 million had it in 2008 (Census Bureau data)

If CBO is correct, 26.3 million Americans will lose workplace health insurance in two short years. Another 17 million will lose it once all reform provisions are in place. On the 17 million number, CBO and Medicare's Chief Actuary agree. CBO does propose employer coverage will increase by 2 million a year from 2011 to 2014, but that flies in the face an established trend of employers doing less (per Census Department numbers).

Health reform shifts responsibility for health coverage and medical expenses to the individual and a tapped out Uncle Sam. Businesses clearly want to do less. The government promised to do more in 2014. Those commitments may dwindle given talk of fiscal restraint.

A two stage dump is on the way. It's no fun to see, especially from the middle of the first shedding.

Other bill changes include giving WellPoint, UnitedHealth, Aetna, Humana, and Cigna an extra year before taxing for-profit health insurers. Nonprofit insurance plans in Nebraska and Michigan get special treatment. Nebraska also gets an extra year Medicaid supplemental from Uncle Sam. Nebraska, Nebraska? It rings like a Ben Nelson shakedown.

Thursday, December 17, 2009

Sickening Frame: From Health Care to Budget Reform

Senators tossed cliches in this morning's Homeland Security & Government Affairs Committee meeting. If I hadn't seen the players, Joe Lieberman vs. Max Baucus, it could've been a Senate Finance Committee meeting on health reform. I heard:

We don't want the perfect to be the enemy of the good.

It impacts America's ability to compete in a global economy.

Both phrases were heavily used in health care reform. They're now working overtime for America's Gordian budget knot.

Another odd coincidence, Senator Joe Lieberman did most of the talking. He sat fat and happy in the Chairman's, I mean Chimera's seat. "Flip flop" Joe lobbied for Medicare buy-in 90 days ago. Yet, his bait and switch garnered no ill will from the White House. Instead the White House went all Carrie on Howard Dean, using a five year old campaign health promise to eviscerate Dr. Dean.

Joe Lieberman creepily smiled at his guests, two fellow Senators. Kent Conrad (of North Dakota critical access hospital fame) testified on getting the budget under control. He specifically cited the revenue side of the budget, saying current taxation hampered America's ability to compete in a global economy. This is a buzz phrase for cutting taxes on the wealthy. Otherwise, they will take their ample capital to lower tax portions of the globe.

After Conrad was excused, the CEO of the Peter G. Peterson Institute testified. David Walker's boss funded the Institute with billions in profits from The Blackstone Group, a private equity underwriter (PEU). How did carried interest taxation and the Bush capital gains cut help Mr. Peterson? Not everyone was as lucky as Pete, cashing out at the market top.

Here's the frame:

The health care fix is expensive, necessary and paid for.

America can't afford its current obligations, programs will have to be cut.

How much of a stretch is it for people to think, we can't afford what might pass, even though health insurance assistance doesn't start until 2014?

Here's what's not being said. Employers will shift health insurance costs to workers, even dumping the benefit altogether. 60 million Americans went without health insurance at one point in the last year, according to the CDC.

CMS Chief Actuary Richard Foster projects 17 million Americans will lose employer coverage under health reform. If the name sounds familiar, Mr. Foster was threatened with his job by ex CMS head Tom Scully. After crafting the Medicare Prescription Drug program, Scully went the Pete Peterson route, becoming a PEU with Welsh, Carson, Anderson & Stowe. Now Senior Partner, Scully owns 135,880 shares of Universal American, a health insurance company and WCAS affiliate.

Joe's tantrum yanked the public option and ditched any Medicare buy-in. This drove Universal American's stock price up over $1 a share. Tom Scully's personal portfolio increased over $135,000. Sweet!

How long before Kent Conrad, David Walker and company call for a capital gains tax cut to make us more competitive globally? That would be perfectly good for Scully. He hopes it's soon.

Don't forget the two D.C. mantras:

We can't afford it.

We can't afford to tax the rich or corporations.

What pittance will remain in four years to fund health reform? By then the global economy, with its faceless greedy leaders, will be the enemy of good people everywhere.

Tuesday, December 15, 2009

Foster Says Employer Coverage to Drop 17 million

Richard Foster is back in the news. He was Medicare's chief actuary during the Bush Prescription Drug. CMS Chief Tom Scully silenced Foster over his cost estimates. NY Times reported in 2004:

Mr. Scully threatened to fire the agency's chief actuary, Richard Foster, if he released estimates to Congress showing that the bill could cost as much as 50 percent more than the White House had let on.

Scully went on to bigger and better things, lobbying for Alston & Bird and senior partner with private equity underwriter (PEU) Welsh, Carson, Anderson & Stowe. Richard Foster remained a loyal public servant, having survived his public dressing down by for-profit healthcare shill Rep. Bill Thomas (now retired).

Foster made the news again, albeit in very small print on back pages. The Cleveland Plain Dealer noted:

17 million workers who have (workplace) coverage would leave their company health plans. Some would decide to enroll in a different plan with lower premiums -- thanks to federal subsidies they could get -- or to enroll in an expanded version of Medicaid if their incomes are low enough.

Others, working for small companies, could be forced to switch because their employers drop coverage. Penalties for dropping insurance would be "very low" for these employers compared with the cost of providing insurance, Foster said.

Whatever their reasons, this would result in a net reduction of 5 million Americans who now get employer-provided coverage, Foster found.

Actually the net reduction would be 176.3 million - 168.4 million or 7.9 million Americans. That's 3 million more without workplace coverage.

The burden will shift from employers to government or the individual. As Uncle Sam is tapped out, expect most of that to land in the citizen's lap.

This is the plan, not some quirky afterthought. Soon America will party like it's 1999. Employers can celebrate when they ditch that pesky health insurance benefit.

President Obama said his criteria had been met and encouraged Congress to act on the bill. He said America was "on the precipice." For some it will be a long fall, with four years before help arrives.

Monday, December 14, 2009

For-Profiteers: Bayh Defends Lieberman

Two insurance shills, Senators Evan Bayh and Joe Lieberman, covered for their corporate sponsors by opposing Medicare expansion. (Lieberman opposed expansion three months after proposing it.)

But, Sen. Evan Bayh defended Lieberman as he exited a special caucus of Democrats and reiterated that Medicare expansion was out of the bill.

"..there was no acrimony, no singling [Joe] out," said Bayh.

Evan's household income received a huge boost from WellPoint. Wife Susan sits on five for-profit health care boards, including giant insurer WellPoint. She flipped stock options for over $1.5 million in the last five years.

Joe's insurance sponsors must be happy.

P.S. Dirty Max Baucus joined Bayh in coming to Joe's aid, saying it looked like Medicare buy-in wouldn't make it into the Senate bill. Corporafornication lives. Give them all a medal.

Most Missing Bush E-mails Found

The Executive Office of the President settled lawsuits with two groups over millions of missing Bush administration e-mails. The AP reported:

Computer technicians found 22 million missing White House e-mails from the administration of President George W. Bush and the Obama administration is searching for dozens more days' worth of potentially lost e-mail from the Bush years, according to two groups that filed suit over the failure by the Bush White House to install an electronic record keeping system.

It will be years before the public sees any of the recovered e-mails because they will now go through the National Archives' process for releasing presidential and agency records. Presidential records of the Bush administration won't be available until 2014 at the earliest.

When will the public have the opportunity to read Fran Townsend's and Andy Card's e-mails on Hurricane Katrina? Maybe on the 10th anniversary of Hurricane Katrina...

Saturday, December 12, 2009

Immelt Wrong: Meanness & Greed Hardly Waning

It's sad to see how far the management bar fell in a decade. At one time corporations existed to provide jobs and quality products. That shifted to permanently growing quarterly profits and optimizing executive incentive pay.

Wall Street ditched quality while packaging loans, residential and commercial. They shifted risk elsewhere, yet made huge securitization fees. Risk management was replaced with obsessive greed.

GE's Jeff Immelt commented on the fall:

We are at the end of a difficult generation of business leadership, and maybe leadership in general. Tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits.

Rewards became perverted. The richest people made the most mistakes with the least accountability. In too many situations, leaders divided us instead of bringing us together.

America has abysmal leadership. It infects teak paneled, corporate board rooms and hallowed halls of government. The perverted cycle of rewards operates within and between the two bastions of power. Corporate money fuels political parties and their business forwarding candidates.

Government makes little anymore, preferring to act as a giant general contractor. It is a fractal of American firms, many who have no domestic manufacturing capabilities. No longer can our officials conduct a "make or buy" analysis. Government farms out huge contracts on an indefinite quantity, indefinite delivery basis.

Immelt's mean, greedy business managers aren't gone. They're standing in line for their turn on Uncle Sam's teat, just like Jeff.

The Obama administration wants to import business tactics to cure education. The President plans to reward teachers and doctors with "pay for performance." It too will pervert.  Jeff's mean, greedy leaders manipulated P4P, by backdating stock options on a widespread basis.

Immelt correctly described horrific leadership and its damning impact. He's dead wrong that it's ending.

Horrible practices continue in spades. Obama leads by bad example. He's full of populist rhetoric and corporatist implementation. I think Jeff did a fine imitation of the President with his speech.

Update: NYT columnist Bob Herbert provided data showing the error of Immelt's prediction.

Update 3-25-11:  GE and Jeff Immelt's greed continues (from EPJ).

Update 4-6-11:  Uncle Sam paid GE $36.6 million under the Early Retiree Reinsurance Program.  Despite making billions in profits, GE paid no federal taxes the last two years.

Friday, December 11, 2009

Banner Day for Ghostly Corporacrats

From health care to financial reform, Congress caved on regulations. Corporacrats united in Capital chambers on behalf of their big money sponsors. Three Ghosts took them on a tour, after which Congress took appropriate action.

The Ghost of Armageddon Past visited regarding financial regulation. AP reported:

Prodded by moderates, however, nearly half the Democrats teamed up with Republicans late Thursday to loosen restrictions on derivatives and reject tougher (financial) regulations.

The Ghost of Health Insurance Future showed next:

A loophole in the Senate health care bill would let insurers place annual dollar limits on medical care for people struggling with costly illnesses such as cancer, prompting a rebuke from patient advocates.

Officials of the American Cancer Society Cancer Action Network said they were taken by surprise when the earlier ban on annual coverage limits was undercut, adding that they have not been able to get a satisfactory explanation.

"We don't know who put it in, or why it was put in," said Stephen Finan, a policy expert with the cancer society's advocacy affiliate.

The Ghost of Financial Christmas Present showed:

The House has rejected an effort to expand a Wall Street regulation bill with mortgage relief that would let debt-ridden homeowners reduce their payments in bankruptcy court. The vote was 241-188 to reject.
Corporations can cram down debt holders without triggering credit default swaps. They get a tax break for buying back debt for pennies on the dollar. Individuals can do none of that.

All three ghosts made it clear; it's unseemly to corporafornicate in public. Talk populist and keep any Tiger like corporfornicating behind closed doors.

Thursday, December 10, 2009

Nobel Peace Prize Winner Advocates for War

The world has gone flippy floppy when Barack Obama, winner of the Nobel Peace Prize, highlights advantages of a "just war" in his acceptance speech. His second in command in Afghanistan noted an attack may have killed noncombatants, i.e. innocent bystanders. I wonder if they found it "just," being eviscerated by the world's most high tech army.

As for just peace, President Obama provided rhetoric for his big money backers.

"just peace" includes not only civil and political rights but also encompasses economic security and opportunity. "For true peace is not just freedom from fear," he said, "but freedom from want."
Does President Obama know war causes want? It destroys infrastructure, making clean water, sewer and electricity scarce. It disrupts medical care as supplies and pharmaceuticals are hard to deliver. War creates blight and scarcity.

Who uses the U.S. military to oust foreign leaders not playing by Western business rules? It's American branded multinational corporations, the Government-Industrial Monstrosity (GIM). Eisenhower's Military-Industrial Complex morphed into the GIM after a decade of steroids, nearly $14 trillion worth. That's for whom Obama speaks.

Tuesday, December 08, 2009

Health Deform Goes PPP

The latest Senate move has any "public plan" coming from private insurers. The AP reported:

They may still call it a "public plan," but private insurers - not the government - would offer coverage under a compromise Democrats are considering to win Senate passage of President Barack Obama's health care overhaul.

Instead of Medicare-for-the-masses, it would be Blue Cross Blue Shield or Kaiser Permanente, albeit with a government seal of approval from the department that handles the health plan for federal employees, including members of Congress.

I made this prediction seven months ago.

Any public plan being privately administered. From our hallowed halls of government to corporate executive suites, general contracting is their forte. The question is how many layers of "profit maximizing" private sector corporations sit between the public plan and the insured?

The AP mentioned BC/BS and Kaiser, which have co-op roots. What about WellPoint, UnitedHealth, Universal American, AmeriGroup, MultiPlan or Humana? Surely Susan Bayh, William H.T. "Uncle Bucky" Bush, Gail Wilensky, Uwe Reinhardt, Tom Scully, or David Rubenstein put in a good word for their insurer to Congressional relatives and friends. How might their home finances grow under a For-Profiteering "public plan"?

So far, four of my five health deform predictions have come true. The only one that hasn't, taxing nonprofit community hospitals, is set up by the bill's language. It calls safety net providers:

Private, tax-exempt facilities

Language paves the road to future legislation. Senator Chuck Grassley and Representative Bill Thomas (now retired) pushed the tax-exempt button while Tom Scully was chief lobbyist for the Federation of American Hospitals. For-Profiteers have a fox in the hen house with White House Health Czar Nancy-Ann DeParle. How long before my fifth prediction comes true?

An ominous sign that health reform won't help the common man is private equity's keen interest in health care. Corporate flippers stand ready to pounce, expecting returns of 20 to 30% per year. The Carlyle Group's David Rubenstein echoed health care as an investment at a D.C. breakfast meeting. Deform is clearly on the way.

Update 3-23-19:   Medical bills contributed to 60% of bankruptcies. 

Monday, December 07, 2009

Health Care and Education: Game Theory Simulations?

President Obama wants pay for performance (P4P) to solve the ills of health care and education. P4P was the basis of a Defense Department study. The Pentagon incentivized 4,000 social network teams in an intelligence gathering effort. The bonus, incentive pay, was $40,000. WaPo reported:

"It's a huge game-theory simulation," says Norman Whitaker of DARPA's Transformational Convergence Technology Office. The only way to win the hunt was to find the location of every balloon, but a savvy participant would withhold his sighting until he'd amassed the other nine locations, or disseminated false information to throw others off the trail.
These two manifestations are common in extrinsic motivation contests. Substitute doctor or teacher for participant. Do you want them withholding knowledge or deliberately lying to garner the prize?

Dr. W. Edwards Deming suggested giving people a good job to do. Alfie Kohn recommends paying people as much as fairly possible, then making quality work the top focus. Instead American leaders play manipulation games. Theory says they'll sub-optimize the systems they wish to improve.

Rip Van Winkle: Employer Sponsored Health Insurance

Who knew employer provided health insurance would conduct a Rip Van Winkle? One could have sat down at the base of a tree for a nap in 1998, when employer coverage stood at:

1998--168.5 million

Twenty years later they could awaken to find a similar number (Center for Medicare/Medicaid projections--House bill):

2019--168.4 million

During that time the population would grow over 110 million people. Despite huge population growth, employer coverage will drop by 100,000. This clearly shows the plan.

Employers want to do less, which leaves the worker or the government to do more. The government talks a good game, but military veterans heard commitments that were later reneged. A tapped out Uncle Sam will likely welshing on any current commitments.

Government accounting changes will accelerate the shift of responsibility to the individual. GASB requires government units to treat their health insurance benefit like a pension. They want employers to capitalize projected long term health insurance costs and fund them. Why do this with health insurance and not other operating expenses, like payroll, supplies or rent?

Accounting standards are open to agendas and manipulation. A Congressional hearing on fair value accounting was instructive. Rep. Randy Neugebauer threatened FASB's chief, worthy of a scene in a Mafia movie. Randy told the accountant:

"Don't make us tell you what to do. Just do it. Just get it done."

Accounting tea leaves show employers doing much less in the coverage arena come 2019. Only 42% of Americans would have workplace coverage under CMS projections. This is down from 64% in 2000. If employers do less and governments are tapped out, responsibility falls to you. That's one reason for the individual mandate.

The more things change, the more they stay the same.

Congressional Tripping on Nonprofit Nickels

The Jack Abramoff scandal inspired Congressional rule changes on sponsored travel. A New York Times study finds a new middleman for junkets, nonprofit companies. It reported:

Seizing on the loopholes, lobbyists and the companies that employ them are still underwriting trips by dozens of members of Congress, particularly those in the House, the Times review shows. The companies finance much of this travel indirectly, getting around the spirit of the rules by giving money to nonprofits, some of which seem to exist largely to sponsor trips. In fact, the rules may have had the unexpected effect of obscuring who is actually paying for a lawmaker’s junket.

If Wall Street and big Pharma can set up captive nonprofits for Congressional travel, think what WellPoint, UnitedHealth and Humana can do with a "nonprofit" public option under health reform. One controls a nonprofit with start up money, initial board appointment and ongoing operating funds.

What happened with ethics reform can happen in health care. It's not the least bit unexpected. The role of 527 nonprofits in campaign spending is just as disturbing.

Sunday, December 06, 2009

GE's Hospital Consulting Brings Back Memories

Reuters detailed how GE management consultants will drive down health care costs. It gave two examples, operating room start time and bed management systems. Over a decade ago, I worked in two Texas hospitals that improved those very processes. I consulted with ten Georgia hospitals on transformation of management, Dr. Deming's description of his teachings.

I recently visited one of those hospitals. The CEO said we don't do strategic planning or process facilitation anymore. If a manager can't fix it, we fire them and hire someone who can.

During my time as Vice President, that facility hired one leader who made things worse. Through hard work from information systems, nursing, emergency room and housekeeping leadership and staff, we created an innovative bed management system. It leveraged automated phone and paging capabilities to notify housekeeping when a bed was empty and needed cleaning. When finished cleaning, the housekeeper would dial in, press a number and the bed would show as clean and available. The Nurse Supervisor had good, up to date information on hospital wide bed availability. During the busy winter flu season, it dramatically reduced ER admit waiting time. Within a year, a new "quality oriented" DON shut down this tool.

GE's "Neutron Jack" Welch continually threatened the bottom 10% of its workforce with firings. How will that work with nurses, physical therapists and doctors? The flip side of punishment is reward.

President Obama mentions continuous improvement, but they are empty words. He plans on giving providers "pay for performance." We saw how that worked on Wall Street. Most know the final blow up in fall 2008, however there was a twelve year track record of cheating on executive stock option compensation. Surely nurses and physicians can do likewise. Will nearly a third lie, cheat and steal to optimize their incentive pay? How will that distort an already distorted system?

Health reform could be based on Dr. Deming's system of profound knowledge. It's not. As for GE, I can't wait to hear how GE Capital applied Six Sigma.

Update 2-5-11:  Pay for performance and its distorting effects will hit New York public schools.  Only 5% of teachers will be at risk for firing.   Oddly, the system's predictive ability to identify top teachers over time is poor.  As knowledge is prediction, educators look clueless in pushing the system. 

Update 6-3-22:   Former General Electric chief executive Jack Welch takes the blame for much of what's wrong with businesses today.  Bad management theory remains widespread but Welch is getting his due.  

Update 6-5-22:  Welch's firing employees when things were going well was his contribution to selfish, greedy management which got outsized rewards.  His cost cutting ways were imitated by other CEOs and that led to the Boeing 737 Max and other disasters (BP Texas City Refinery explosion and Gulf Oil Spew).  Welchism led to offshoring and economic wastelands in the U.S.  That aided the rise of Donald Trump, who only thought of himself while in the White House.  

Update 6-11-22:   Management followed Jack Welch instead of Dr. W. Edwards Deming and our world is much worse off for it.  Ignorance and selfishness are widespread.   

Update 11-26-23:  Jack Welch lives on in Amazon's "performance management system."  Forced rankings and eliminating bottom x percent of workers.  Can you say morale killers?  What's a lazy, ignorant manager to do? 

Update 3-29-24:  Some have become aware of the damage done by Jack Welch's executive pay optimization management:

...“ranking and yanking” by firing the bottom 10% of employees every year, playing endless accounting games to make quarterly earnings goals, not thinking long-term

Wednesday, December 02, 2009

Executive Privilege for White House Social Secretary?

How far has the accountability bar fallen? A Congressional committee invited the White House social secretary to testify how two uninvited guests crashed a Thanksgiving week state dinner. It provided a George W. Bush like refrain:

White House press secretary Robert Gibbs said allowing Rogers to testify before Congress would violate the constitutional separation of powers between the legislative and executive branches of government.
Congressional oversight has is rooted in the Constitution. We can add Desiree Rogers name to Nancy-Ann DeParle, Frances Townsend and Tom Scully. All refused to testify before Congressional Committees.

Desiree Rogers-Obama Social Secretary

Nancy-Ann DeParle-Obama Health Czar

Frances Townsend-Bush Homeland Security Adviser during Hurricane Katrina

Tom Scully-Bush Medicare/Medicaid Chief during Part D-Prescription Drug passage

Two are red, two are blue, but in all cases the White House said "____ you." Ari Fleischer, Scott McClellan, Tony Snow, Dana Perino, Phil Gibbs and Valerie Jarrett. It's hard to tell the parties apart.

Saturday, November 28, 2009

The State of Shannon

Guidestar posted 2008 990 reports for various Shannon affiliated organizations. Fitch recently rated Shannon Health System's bonds.

Rising stars include:

Shannon Trust-Earned $22 million in oil royalties. For the first time it deducted Shannon Medical Center from its balance sheet.

Shannon Medical Center-After $15 million in help from the Trust, the hospital had an $8 million excess. It sold investments during the credit crisis at a loss of $7.2 million. The hospital gave $70,000 to Esperanza Clinic via a grant and provided over $37 million in charity care. The hospital's interest in net assets of the Shannon Trust were $65.5 million at year end. The hospital filed updated bylaws with their 990. Article V provides for dissolution and liquidation of the corporation.

Shannon Medical Management (new)-This division provides management services for Shannon Clinic. It had $26.7 million in program service revenue in its first year of operation. This is likely associated with the system's demand that doctors become employees of Shannon, in independent practice like arrangements.

Shannon Joint Ventures (Kidney Dialysis)-Program service revenue rose from $2.9 million in 2007 to $3.5 million in 2008

Falling stars include:

Shannon Health System-Program service revenue declined from $7 million to nearly zero.

Legacy Health Plan-shuttered, winding down $6.1 million in assets

Legacy Management Services-shuttered, winding down $414,000 in assets

Legacy Health Solutions-shuttered, winding down $2 million in assets

Shannon Rural Health Clinics Inc.-no filing in 2008, 2007 report showed payment for providers in El Dorado and Ozona

Shannon Surgical Center-Had no revenue and no assets

Shannon Clinic-Program service revenues of $85 million, the lowest number since 2003. $19.5 million deficit for 2008. The clinic paid Shannon Medical Management $26.7 million.

Shannon Real Estate-had a net loss of $5 million in assets for the year. $2.5 million was transferred to Shannon Medical Management.

Angelo Healthcare Services-no longer listed on Shannon 990 reports as a subsidiary.

Floating stars are:

Concho Valley Surgical Partnership-received a loan of $3.4 million from the hospital. This is for the Shannon outpatient surgical center on Sunset Drive.

Regional Cancer Treatment Center-the hospital has a $1.8 million investment in RCTC (book value). This facility is undergoing expansion.

Shannon Business Services-seems to be a catch all category, including support for the helicopter service, the purchase of Dr. Vernon Ryan's practice/Shannon SportsMed, Shannon Wellness and fundraising (Children's Miracle Network).

An eye to the health reform future reveals what about Shannon's stars?

Fitch Upgrades Shannon's Bonds in Dire Environment

Shannon Health System's bonds rose from BBB to BBB+ in the midst of a credit storm and a contentious health reform effort. The issuing agency is Tom Green County Health Facilities Development Corp., but the bonds are backed by Shannon's revenues. Fitch cited several interesting items:

1. Fitch views as a significant positive credit factor the strong support Shannon has historically received from the Shannon Trust (Trust), which had approximately $65.5 million in net assets in 2008.

2. Shannon Medical Center has 55% market share to Community Medical Center's 39%. These numbers have been stable between 2006 & 2008.

3. Shannon plans to call the $15.2 million in hospital revenue bonds in 2011. It will pay bondholders back early.

4. For the fourth consecutive year, Shannon Health System recorded a loss from operations, approximately $5.6 million (a negative 1.9% margin) through the September 2009 period. Shannon's losses from operations stem primarily from additional expenses associated with hiring locum tenens physicians, winding down Shannon's Legacy Health Plan, and higher employee health benefit expenses. Management is budgeting for the system to lose approximately $7 million in FY2010.

5. Shannon's service area, primarily the Concho Valley, has both stagnant population growth and below-average wealth indicators, reflected in a high 11.5% Medicaid payor percentage in 2009.

6. Although operations are expected to be negative in fiscal 2010, the organization has significant support from the Trust, which transferred an average $4.4 million per year over the last four fiscal years to Shannon for capital expenditures.

The report did not cite the Concho Valley's legions of uninsured people. Historically, Shannon's ER saw 80% of uncovered patients, Community Medical cared for 20%. Support from the Trust is critical to hospital operations. It also supports significant physician subsidies in some specialty areas, referred to in the report as locum tenens coverage. Shannon Clinic's 990 report showed expenses associated with two locum tenens firms, costing $1 million in 2008.

To thrive in an era of managed care CEO Tom Alexander and Managing Trustee Lester Smith built the Shannon Health System in the mid 1990's. The system started La Esperanza Clinic (a federally qualified health center), purchased the multi-specialty Angelo Clinic Association (renamed Shannon Clinic), seeded the area with rural health clinics and bought a small insurance company, which became Legacy Health Plans.

The rural health clinics died first. Most closed, but the few profitable ones rolled into the Shannon Clinic. The System played hard ball with physicians, become an employee under a relative value unit payment arrangement or leave. Most chose to stay. Legacy Health was next for dis-assembly.

Here's the irony. Health reform brings back managed care under a new name, "accountable care organizations." Capitation, the managed care payment method, is now "bundled payment." The move implies a new round of provider integration, vertical and horizontal. Three years ago, Shannon Medical Center planned to merge with Community in a new for-profit joint venture under the auspices of Triad Hospitals. The deal fell apart under further scrutiny, but it would not have been consummated.

Triad sold out to Community Health Systems (CHS), now the largest for-profit hospital chain. CHS rejected Triad's joint ventures. This provided ex Triad CEO Denny Shelton a niche. With the support of CCMP Capital, Shelton started Legacy Hospital Group. He's doing deals like the one that fell apart. Shelton's current and prior board members, Nancy-Ann DeParle, Uwe Reinhardt and David Bernd, are in sweet spots as reform progresses.

Nancy-Ann DeParle-White House Health Czar, ex-board member for for-profit health care firms

Uwe Reinhardt-Princeton health care economist advising on reform, board member for many of the same companies

David Bernd-White House visitor log-April 3, 2009

Will Shannon and LHP Hospital Group resurface past plans? Will Shannon use its good credit alone to re-integrate San Angelo health care? Fitch doesn't cover such questions.

However, Shannon added a new division in 2008, Shannon Medical Management Management. It's primary purpose is to provide management services to the Shannon Clinic. Odd, I thought the Shannon Health System (SHS) did that.

SHS may be headed the way of Legacy Health Plans. Its 2008 990 shows virtually no program service revenue, over $7 million in 2007. The system is a dwindling shell holding revenue bonds and paying Vinson & Elkins legal fees. Will it close in 2011, when the bonds are called and any qui tam lawsuit settled? The shell game continues.

Friday, November 27, 2009

DeParle's Health Reform: Twelve Years Back in Time

White House Health Czar Nancy-Ann DeParle spoke alongside Peter Orzag on health reform's cost containment measures.

DeParle added that it had been twelve years since any real cost containment had been attempted in health care, and it was successful, and that the current reforms would bring back lots of these cost-containment items.
Only they've been renamed. Health maintenance organizations are rebranded as "accountable care organizations." Capitation is now "bundled payment."

Why did managed care decline? People hated plans' restrictive panels and gatekeeper requirements. Providers hated bonuses based on utilization measures and restrictive clinical parameters.

Health reform will incentivize doctors on "quality," i.e. measures eerily similar to those used twelve years ago. Pay for performance has a clear track record over the same period. Executives cheated on a widespread basis on stock option incentive pay, supposedly the most pure form of pay for performance. Surely, doctors and nurses are as smart as corporate chiefs.

My prediction is business and government will continue shifting responsibility for health care to the individual. Corporations badly want to jettison that pesky health insurance benefit. Uncle Sam is tapped out. Look for any reform to go the way of TriCare, with its endless cycle of increased premium sharing, higher deductibles and co-pays.

The administration offers broad statements on reform like:

Moving to a system where providers are paid for overall care – not for each test or procedure they perform.

The chart above shows providers are paid a myriad of ways, capitation, per diems, DRG's, discounted fee for service, and no pays. The current system does not pay for each test or procedure performed. The Obama team is intellectually dishonest in this regard.

The 30,000 foot view shows:

1. Rebranded managed care

2. People having to buy insurance, which over time will shift greater and greater responsibility to the individual.

3. Distorting pay for performance

4. Misrepresenting provider payment

Hold on to your doctor and your wallet. Deform is coming.

Update 4-19-11: Accountable Care Organizations focus on utilization hearkens back to days of widely hated managed care.

Update 8-5-14:  Restrictive provider panels have been rebranded Narrow Networks under PPACA.  Same as it ever was...

Update 9-2-15:  As healthcare costs skyrocket employees get to pay more for less coverage, with the prospect of paying a luxury tax for worse insurance.

Update 10-3-15:  A premium increase of 60% is bending the cost curve in the wrong direction.  Who will hold Nancy Ann DeParle, Peter Orszag, Nera Tanden, Stephanie Cutter, Ezekial Emanual and other PPACA architects responsible?  Most are now making big money in the private sector.  One can only hope their insurance soared by 60% or more.

Update 1-3-18:  Pharmaceutical price increases continue unabated as PPACA did nothing to control them, much less cause them to drop.

Update 2-11-19:  High medical bills are responsible for 2/3 of bankruptcies.   Thanks PPACA!

Update 3-23-19:   Medical bills contributed to 60% of bankruptcies. 

Update 11-12-19:  In the last five years, 34 million Americans watched as someone they knew died because they couldn’t afford medical treatment, according to a survey report. 

Update 4-16-20:  A coronavirus pandemic revealed America's broken healthcare system and PPACA's many shortcomings. How many  22 million newly unemployed  can afford the premiums?  How many of these will get COVID-19 and die at home without proper care?  

Update 1-20-22:  In 2020, the average health insurance premium contribution was 6.9% of median income, while the average deductible was 4.7%, combining for a mighty 11.6% of median income.  Curve not bent in the least.  

Step Up to DeParle

The Obama administration released information on 1660 White House visitors. Visits involving White House Health Czar Nancy-Ann DeParle are below. It is important to note that this is a fraction of Ms. DeParle's actual visitors.

Using the White House Super Bowl Party as an example, only 3 of more than 75 participants were listed. That's a paltry 2.5% of attendees. Nancy-Ann's White House visitors include:

Errol Alden-American Academy of Pediatrics-August 11

Cybele Bjorkland-House Ways & Means Committee Staffer-May 28

Sheila Burke-Director of WellPoint & Chubb-August 27
Ms. Burke's annual compensation for her WellPoint board service is $326,500

Katherine M. Campbell-House Energy & Commerce Committee Staffer-August 7

John J. Castellani-President Business Roundtable-Eight visits to the White House from Feb. 18 to July 23. Only one involved Nancy-Ann DeParle.

Stephen Ciccone-lobbyist for Eastman Kodak-July 23

Richard A. Deem-Senior VP American Medical Association-August 11

Jack C. Ebeler-House Energy & Commerce Committee-May 28. Ebeler is the former President Association of Community Health Plans & Multiplan employee. The Carlyle Group purchased MultiPlan in 2006.

Ted D. Epperly-President American Academy of Family Physicians-August 11

Judith M. Feder-Professor of Public Policy Georgetown University, principal architect of failed Clinton health care plan, had 2 unsuccessful runs for Congress in Virginia-April 9

Jennifer L. Friedman-Chicago area OB/GYN, also a D.C. based woman of the same name donated $250 to Judy Feder for Congress-May 28

Maria Ghazal-Director of Public Policy for Business Roundtable-July 23

Tim Gronniger-House Committee on Energy & Commerce Staff-August 7

Robert T. Hall-Personal Injury Attorney in Reston, Va-August 11

Michael M. Hash-Principal at Health Policy Alternatives, a health care lobbying firm-April 21, April 28-29. Mr. Hash gave a presentation on March 8 to the AAGP. Their website details his credentials.

Renee R. Jenkins-Vice President American Academy of Pediatrics-August 11

Therese M. Jornlin-Corporate Wellness-August 29

Purvee P. Kempf-House Energy & Commerce Committee Staffer-August 7

Jeanne M. Lambrew-HHS Office of Health Reform, worked at John Podesta's CAP on health reform, served in HHS for Clinton's failed health reform-Jeanne had 27 visits to the White House between April 28 & August 31. Ten were with Nancy-Ann DeParle.

Jason Levitis-former policy analyst CCBP, member of Obama-Biden Transition Team-Four visits from April 21 to August 14

John C. Lewin-CEO American College of Cardiology-3 visits from March 25 to August 10, one with Nancy-Ann.

Caya B. Lewis-HHS Office of Health Reform-3 visits from July 31 to August 14, two with Ms. Deparle

Virgil A. Milller-House Energy & Commerce Committee staff-August 7

Karen Nelson-Aide to Rep. Henry Waxman-2 visits, May 28 & August 7

Elizabeth J. Noyes-Associate Executive Director American Academy of Pediatrics-August 11

Judith Paltrey-Pediatrician, Harvard School of Medicine-August 11

Antonio Perez-Chairman and CEO Kodak-July 23

Laura Petrou-HHS Chief of Staff (Tom Daschle staffer for 20 years)-6 visits between April 19 & May 18, three visits with Nancy-Ann

William F. Pewen-Congressional Staff for Senator Olympia Snowe-August 31

John D. Podesta-Lobbyist, President Center for American Progress-7 visits between April 13 and August 27, one visit with Ms. DeParle

Andy Schneider-Medicaid Policy LLC, part of Podesta's CAP team for health reform-August 7

Kathleen Sebelius-HHS Chief-3 visits between Feb. 20 and March 13, one with DeParle

Meena Shesamani-HHS Office of Health Reform-3 visits between April 28 & August 15

Rosemarie Sweeney-VP Public Policy American Association of Family Physicians-March 25 & August 11, one with DeParle

Neera Tanden-HHS Office of Health Reform, former John Podesta CAP staffer-4 visits January 28 to August 14, three with Nancy-Ann

David T. Tayloe-President American Academy of Pediatrics-August 11

Nancy E. Taylor-Greenberg Traurig, lobbying firm-Nancy Taylor has numerous health care clients-July 23

John P. Tooker-American College of Physicians (ACP)-Society of Internal Medicine & Director of National Committee for Quality Assurance-August 11

Richard L. Trachtman-Director of Legislative Affairs ACP-August 11

Michele Varnhagan-Congressional Staffer-May 28

Therese Vaughan-Senior Consultant for Charles River Associates-April 21

Brian Webb-One time Blue Cross/Blue Shield lobbyist-Manager Health Policy & Legislation for National Association of Insurance Commissioners-April 21

Chiquita White-Procter & Gamble-May 28

I have several observations. One, numerous Congressional staffers met with Nancy-Ann DeParle. This leads me to believe she had input in the writing of various bills. Two, the list of physician groups is mostly primary care, family practice, internal medicine and pediatrics. I find it hard to believe specialty physician groups weren't stating their case during this time. Three, clearly a number of lobbyists had input. And four, the number of Podesta CAP affiliated visitors stands out.

(Content cross posted on PEU Report)

Tuesday, November 24, 2009

Stack of Violations to Grow in Nidal Hasan Case?

It was bad enough a soldier committed fratricide against 13 people, while wounding over 30 others. Compounding the disturbance, Major Nidal Hasan was a trained psychiatrist, a medical doctor sworn to the Hippocratic Oath of "do no harm." He clearly planned the crime and executed it with precision.

The final violation might be an insanity defense, under consideration by Hasan's defense attorney.

"Anybody who allegedly engages in conduct that is completely contradictory to his lifestyle and military career - an insanity defense has to be considered."

The attorney left out religion. As for the use of allegedly, Nidal Hasan was physically shot in the commission of the crime, whether sane or insane.

One might expect the Army chain of command to identify mentally ill soldiers, especially a psychiatrist. Did Hasan's peer review show any signs of instability? What did other doctors think of Nidal's psychiatric diagnosis and treatment skills?

It seems the worst kind of violation had the Army employed an armed, insane Muslim psychiatrist and known about it. My guess is this is just "defense attorney talk." It reverberates as many boundaries are breached in America today. Who can anyone trust? Not the financial adviser, the hamburger grinder, the sheet rock maker, the politician, the vaccine maker, the ponzi scheme cleanup guy, the surgical tech, or the syringe maker. With profits over people the rage in today's management schemes, who can be surprised?

Like his "profit obsessed" counterparts, the defense lawyer wants to win. It matters not his "means to an end" adds another horrible layer to boundary violations.

Sunday, November 22, 2009

Senators Name Their Price

Conservative Democrats held out for booty in the Senate's slug toward health reform. Here's the take:

Senator Mary Landrieu (D-LA) : Money

"I am not going to be defensive," she declared. "And it's not a $100 million fix. It's a $300 million fix."

Senator Ron Wyden (D-OR): Helping employers ditch health insurance

Mr. Wyden Friday secured a commitment from Mr. Reid to support a $4 billion amendment designed to give workers greater flexibility to purchase health insurance outside the workplace. Mr. Wyden said the proposal represented a "modest step" forward and was "my price" for supporting moving ahead.

Senator Ben Nelson (D-NE): Covering for insurers

Mr. Nelson got Reid to protect health insurers' antitrust exemption.

Senator Blanche Lincoln (D-OR): Concessions to be named later
Lincoln made clear that she still planned to hold out for many more concessions in the debate that will consume the next month.

The price is right can be seen in Washington, D.C. It's noticeably absent from Blue blogs.