Monday, April 19, 2010

D.C. Center of Knowledge Management?

A WaPo piece on D.C.'s fortunes noted "the next great burst of business in Washington." It stated:

There is a new wave of government activism underway, and with it, new opportunities for the private sector: Cutting down on paperwork in the health-care system, developing greener energy supplies, making information more secure, overhauling education.
Carlyle Group co-founder David Rubenstein is the great tea leaf reader. He presciently spoke of a monstrous stimulus plan from Seward's Folly. The private equity underwriter (PEU) stood ready to cash in on any Obama stimulus.

Rubenstein recently interviewed White House OMB Director Peter Orszag at the Economic Club of Washington. They talked health care, where Peter confessed the government did not know how to pay for quality. It would "throw stuff against the wall, and see what sticks." Unfortunately, the interview is not posted on the Club's website.

The Carlyle Group has two affiliates specializing in health care cost management, MultiPlan & recently acquired Viant. How much will Peter pay them to sling things against the "health care cost" wall?

Peter suggested health care research should move toward econometrics, i.e. clinical modeling, and away from double blind clinical trials. Econometrics provided Wall Street with "no lose models" for packaging investment junk, stuff that sticks on the wall when you throw it. The odor is similar to a PEU.

Insurance companies are happy to sell their billing databases to D.C. knowledge workers for manipulation. Expect Quants to do for health care what it did for securitizations.

As for education, Carlyle made an initial cash payment for Phoenix based Western International University's move to Apollo Global, Carlyle's joint venture with The Apollo Group. MarketWatch reported:

Western International University will collaborate with BPP, a leading provider of education and training to professionals in the financial services and legal industries in the United Kingdom and Europe; UNIACC, an arts and communications university in Chile; and ULA, a communications, business, and medical university in Mexico.
Carlyle also owns Wall Street Institute, a language education firm, and TOPIA Education, a Korean tutoring firm. They show BlackBoard, Catapult Learning and SchoolNet current investments.

One Carlyle division, huge government consultant Booz, Allen, Hamilton, is likely to drive many federal initiatives. It can serve as the prime integrator of government desires and private sector talent. How might it steer federal dollars to Carlyle affiliates?

America's version of knowledge is ignorance in the eyes of the world's foremost quality guru, Dr. W. Edwards Deming. A generation of mean and greedy leaders has taken its toll on our economy and the American spirit.

It can't end fast enough, but change won't come from our hallowed halls of government or teak lined corporate board rooms. Profound knowledge involves an understanding of systems, variation, knowledge and psychology and their interactions. It is sorely lacking.

Without it, leaders can make things worse. Incentive laden solutions for education and health care match Wall Street's extrinsic pay-gasm the past decade.

Wall Street banks stuffed bad loans and bad loan packages into even more complex packages--including synthetic CDOs--to disguise problems and continue to earn bonuses.

It's a bad trajectory as incentives distort.

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