Monday, July 18, 2011

No Good Work Left: Pay Me

The way to improve quality in America's health care system is pay for performance.  This model assumes most, if not all, providers are extrinsically motivated.  The only reason they aren't providing optimal care now is the money incentives are wrong.  Let's look at who is motivated by money, by material rewards:.

Aric Rindfleisch of the University of Arizona and James Burroughs of Rutgers University found that while "people who are more materialistic tend to be unhappy with their lives."
 And how does provider unhappiness relate to clinical quality?

"Studies have found that burnout and dissatisfaction influence patient compliance, patient satisfaction with their medical care, and quality of care. ... On a personal level, burnout has been shown to relate to suicidal ideation among both physicians and medical students and may contribute to other personal problems such as substance abuse and broken relationships. Burnout is also associated with malpractice suits and turnover which can create substantial cost to hospitals and practice groups."
So the people most likely to be motivated by dangled rewards are the unhappy materialistic.  Dissatisfaction leads to quality problems, which rewards are intended to address.

Extrinsic motivators are very powerful in the short run and can improve performance on simple tasks within the control of an individual.  Add complexity and interdependence and extrinsic motivators perform worse than no reward scheme.  The problem with extrinsic motivators is they kill people's intrinsic desires to learn and improve.

The move toward pay for performance started under President George W. Bush, who ironically thought doctors had the time to negotiate price with patients holding health savings accounts.  This seemed a poor use of valuable professionals' time.

President Obama will bring pay for performance to life in a Frankenstein fashion.  He wants to reward doctors for their performance on measures, sometimes two years old.  That's asking doctors to drive using their rear view mirror.  Things get worse inside Medicare's Rube Goldberg P4P scheme for accountable care organizations..

Hospitals are executing pay for performance schemes with providers.  They shifted medical director fees and physician equity investments to co-management agreements.  Co-management deals frequently have a P4P sharing component.  Here's a description:

Co-management companies enable physicians to hold leadership positions that are designed to influence and improve day-to-day clinical management and operations. Participating physicians buy shares in a separate management company (usually an LLC) along with the hospital which allow an equal or controlling interest. The new "Comanagement company" (LLC) is then contracted to provide management oversight and services for the defined parameters of the hospital service line. 

Management fees?  How long before they seek preferred taxation, like carried interest?  The big money men are in health care and the system will be much worse and more expensive for it.  In my next post I'll examine the roots of health care P4P.  It's straight from the corporate board room.

Update 9-6-12:  Deforming P4P is here, courtesy of Uncle Sam.

Update 7-16-18:  America's healthcare system does complexity like no other country and it costs us dearly.

Update 9-11-19:  The greed and leverage boys are behind physician companies that produce outrageous surprise medical bills.  This should be no surprise for those who know private equity and the financial distortions they impose.

Sunday, July 17, 2011

ASU's Ninja Turtle Secretarial Elimination

It's the bad dream that won't go away.  The last installment had host Nancy Allen and ASU's VP's judging a "mujer y mujer" fight for secretarial positions along the lines of The Secretarial Apprentice.  Dream themes frequently change, as did my latest on organizational trauma at Angelo State.

Last night's horror had President Rallo call out, "I ordered a 1 for 2 reverse secretarial job split.  Who will give it to me?  Where are my implementers!?"

Rallo's four Vice President's ran forward.  Rallo turned into a giant rat, while his VP's turned into Teenage Mutant Ninja Turtles, Limbaugh, now Turtle Planman L told his fellow VP's:

In this you must never lapse.  Even those who would be our allies would not understand.  Our domain is the shadow.  Stray from it reluctantly.  For when you do, you must strike hard and fade away without a trace.
Four VP Turtles formed a protective circle around Rat Rallo, weapons drawn.  Turtle Bearnereid jabbed his budget daggers in the air, saying "I shall incise any leech-like, excess costs draining our university's life blood?"

"Excess costs!  You know how much I hate those," screamed Rat Rallo, with spit flying from his lips.  Turning red in the face, Rallo ordered, "Round up the secretaries!" 

Four VP turtles slipped from shadow to shadow in search of excess office staff.  Turtle Rent-a-VP neared a group of students.  One student commented to his peers, "Didn't the VP's just get $30,000 raises, roughly the annual pay for a secretary?"

Turtle Rent-a-VP, with his superior hearing, overheard the off-putting remark.  He used his twin swords to stab the student in the gut.  Rent-a-VP followed up with a lecture, "Young man, your pitiful analysis failed to account for fringe benefits.  By the way, we Turtles earned our raises! Don't you know it;s hard to find and keep good administrators?"

The student pointed his bloody finger at Rent-a-VP, stammering "Are you nuts?"  Rent-a-VP replied, "No, but when you point your finger at someone, four point back at you."

The student looked down at his hand.  "Turtlebrain, you're wrong.  Only three point back at me."  When the student looked up, Rent-a-VP had disappeared. 

In the 104 degree temperature Turtle Blows felt hot inside his suit. Blows tried to focus on the list in his hand, the one identifying two secretaries he needed to retrieve.  Blows felt compelled to fulfill his mission.  Otherwise, rival VP's would gain favor with Rat Rallo.

Blows tried to catch his breath, but each inhale seemed to come from an automobile exhaust pipe, oppressively hot and toxic.  The heat overtook Blows, who crumpled to the ground.

Crone Nancy Allen saw Blows collapse.  She knelt to remove Blows' turtle head, taking a big draw from her cigarette as she worked.  Red hot ash fell, igniting the turtle mask.  Crone Nancy used her purse to beat the flames, as Blows arms and legs flailed.

With the flames out, Crone Nancy worked the turtle head free.  A relieved Blows said, "Thank God, I'm free from that damned mask.  I feel so weak."

Allen blew a huge puff of smoke into Blows face.  Blows grimaced.

"Let's get you out of that hot suit," offered Crone Nancy, as she tugged hard, attempting to remove the suit from Blows' torso, then legs.

Blows pleaded, "Help me." 

Crone Nancy replied, "People say I have the vocabulary of a surgeon.."

A glimmer of hope flashed in Blows eyes.  His outstretched hand, holding the list, reached toward Nancy.

Crone Nancy, cradling the turtle suit in her arms, asked, "Can I deliver that note for you?"

Blows released his grip on the list.

With the paper secure in her smoke-stained fingers, Crone Nancy curled her lips.  She cackled, "You should know better than to believe an evil witch!  #%@^!"

Cradling the turtle suit and the note, Crone Nancy ran toward the office of Brian May. as fast as her blackened lungs enabled.

Eventually, four Turtles appeared before Rat Rallo with expendable secretaries.  Rat Rallo bellowed, "You have known for a month that six would become three.  Turtles, what is your pleasure?"

Three Turtles waited for VP Blows to speak, only an unfamiliar voice emerged from the suit.  It said, "We ran a thorough interview process, personality tests, faculty feedback, typing proficiency, you name it we looked at it."

Rat Rallo, "Turtle Blows would have spoken forevermore.  I am grateful for your succinctness.  What is your name?"

Crone Nancy stepped forward, saying "He is known as Mayangelo."  Rat Rallo bowed to Mayangelo, welcoming the new turtle to the Rat's inner sanctum.  Rat Rallo gestured toward the secretaries.  Rallo instructed, "Please proceed."

Turtle Mayangelo waved the candidates forward.  Each secretary knelt before Rat Rallo, offering their allegiance and fealty.  The secretaries were a mix of ages, sizes and skin colors.  Turtle Beanereid bound each one's hands behind their back and placed a blindfold over their eyes.

Rat Rallo stated, "But for the want of Austin money, I would keep all my loyal servants."  A brightly dressed man rushed forward hauling suitcases of cash.  He bowed before Rat Rallo and said, "I bring you riches from heralded alumni.  They heard of our plight and wished to help."

Rat Rallo looked upon the cash and said, "It is good."  The secretaries perked up at what they heard.

Rat Rallo continued, "I can install that $300,000 magic, student-recruiting yard art I've been wanting, not the kind that looks like aliens dropped it from space!  Now, cut off three heads!" 

Sunlight glinted off slashing swords. Swoosh, thud.  Swoosh, thud.  Swoosh, thud.  Three bloody heads rolled on the grass.

Rallo turned to address the brightly colored man.  "You've earned my favor with your hard work.  I appoint thee a Vice President.  Get this man a Turtle outfit.  You shall be known as Rainmaker!"

Rat Rallo added, "Now about your raise.  Will you be happy with the amount we saved by offing two heads?"  The man was speechless, the crowd horrified.

Saturday, July 16, 2011

City of San Angelo Wins ERRP Lottery! (Inaccurate Rumor)

Eight months ago Mayor Alvin New and City Manager Harold Dominguez called federal funding for early retiree health care "iffy."  Councilman Johnny Silvas referred to as "lottery money."  Low and behold, the City finally filed a claim for ERRP reimbursement.  In America's ERRP lottery, a claim is a winning ticket.  A City Council person told my source, COSA's initial prize is $150,000, ..

The ERRP recipient list as of June 17 does not include the City of San Angelo.  It does include a number of other Texas cities.  It's unclear what period of time the $150,000 covers.  ERRP pays for cases from June 1, 2010 to when the money runs out.  The City is able to file quarterly claims and could get another ERRP check before City Council deals with health coverage in early October.

What does this bode for the upcoming health insurance budget?  Say the city has $300,000 in its ERRP lottery bank.  Add the savings of $190,000 from 45 employees and retirees dropping coverage on January 1, 2011.  That's $490,000 to go toward any health insurance increases.  That's well short of funding a 25% health insurance increase.

When the City qualified for ERRP in August 2010, HR's Lisa Marley stated:

“It will either be a better benefit or their premiums can be lowered." 

It's neither to date.  Premiums rose, for some dramatically on January 1.  That cast 192 people from the City's health insurance rolls, with 147 of those retiree or employee dependents..

What about a better benefit? The City is soliciting health insurance bids, with the best option the status quo.   The same isn't better, but it might be worse.  The other three bid options have fewer benefits/more cost sharing than the current plan.

In December 2010 Councilwoman Farmer told city workers and retirees that she would not ask the public to pay more taxes to meet promises made by prior councils.  The word is Council plans a 4 cent drop in the tax rate.  City Manager Dominguez has plans:

He is hoping the city can both cut taxes and raise city employee salaries during the next budget cycle — and that it is looking at a variety of cost-saving provisions to help make those goals more achievable.

Will Harold finally talk about ERRP in the July 19 Council meeting?  Is he willing to put all his cards, i.e. ERRP checks on the table?

If Dominguez can pull off his goal of cutting taxes and raising salaries, that should burnish his resume.  I hope he cites his record of pitting early retirees vs. employees and keeping information about ERRP (the program that shall not be named) a virtual secret from the public.

Update 8-25-11:  City Public Information Officer Ty Meighan told me the City had not applied for ERRP reimbursement   The formal answer from HR and Risk Management Director Lisa Marley was "no new news."  Who can you trust to give accurate information, a City Council person or paid City leaders? 

Update 9-4-11:  ERRP is listed as an agenda item on the Council's September 6 agenda. It's only a year late and $300,000 short.

Friday, July 15, 2011

Such Matters at Angelo State

Final post from West Texas Matters which I wrote about earlier this week:


I am receiving emails from people who need to share but request that I do not post their comments, even anonymously. What that tells me is that ASU is so damaged that I do not think morale can improve until there are changes in administration. Transparency, openness, and a sense of ownership and belonging must be reinstated. It is my opinion that the current regime is operating like a militaristic dictatorship incorporating fear tactics to keep people from expressing their opinions to the general public. Leaders are treating their "subjects" like ignorant rubes and insinuating that they are lucky to have a job; therefore, they should blindingly obey. 

ASU is broken and there is nothing I can do if people aren't willing to put forth a concerted effort to make changes. But it is too frightening for them. I do not blame them. My heart breaks because in the end it is the very people they are there to serve that end up getting hurt - the amazing students.

I will be taking this website down in a few days. Since I posted it just a few days ago, I have learned many other things about just how bad things are and it makes me feel even more hopeless for what's ahead for ASU. I am not strong enough to tackle that hopelessness alone. 

It is time for me to heal and move on. I will carry the good memories with me always. I remember the days when I was proud to be a part of a fabulous regional institution. My office had an entire wall dedicated to display ASU memorabilia which has long since been removed. Back then, students mattered. Employees mattered. It wasn't all about the numbers. It was about the people.

I wish all my former colleagues nothing but the best in their futures. Hopefully, I will see you again - down a much happier road...

Spoken from the heart and mind from someone who matters.

COSA Seeks Health Insurance Bids that Hold or Lower Costs

The City of San Angelo published a request for proposal for health insurance for 2012.  Health insurance premiums have recently risen 25% for other employers.  This seems lost on the City, which specified four medical plan options.

Given the city's stated interest, three of the four plans should be the 2011 budget amount or lower.  Given the rapid rise in health care costs, it means less benefits, greater premium payments by employees/retirees or fewer people covered.

The City's criteria for selecting a plan reinforces the cost focus:

Here's the timeline.

The City is currently working on the budget for FY 2011-2012.  Their plug amount and budget assumptions remain to be seen. Despite a direct request to City Budget Analysts, HR stated budget numbers depend on bid results, which arrive mid August.  The public will find out in October.

Last time I checked with Ty Meighan, the City had not applied for any Early Retiree Reimbursement Program funds.

The purpose of the reimbursement is to make health benefits more affordable for plan participants and sponsors so that health benefits are accessible to more Americans than they would otherwise be without this program

The City drove 147 dependents from health insurance coverage as of January 1, 2011.  ERRP money is supposed to help employers maintain coverage, not cut it.  The feds can audit an employer to see how funds saved retirees money.

If the City were serious about ERRP participation, it would've included assistance with data submission as a specification.  It's omission could be an oversight or telling.  Might City leaders toss in the ERRP towel and ask for termination of participation with HHS?  Let's hope they get a check or two first.

Update:  City Council minutes from June 28 state regarding the upcoming budget, "Council recommended and directed staff to bring back budget cuts with significant impacts."  That should extend to health insurance expenditures.  Also, the City filed an addendum for the RFP.  It changes the location of documents from the city's website to their Holmes/Murphy representative.

Denny's San Angelo Health Reform Wish to Come True?

Denny Shelton once headed Triad Hospitals, the owner of San Angelo Community Medical Center.  He inked a deal with Shannon in fall 2006, that quickly fell through.  A year later he spoke on the future of healthcare at ASU.  Fresh from a $42 million profit on the sale of Triad, Denny wasn't willing to pay more in taxes to cover the uninsured.  However, he was willing to pay for his Medicare benefit.

Denny's words may come to pass, according to the AP. 

President Obama said he was ready to make tough decisions such as restructuring Medicare so that very wealthy recipients would have to pay slightly more.

Tough decision?  Hardly, at least one "very wealthy recipient" long ago indicated his willingness to pay for his government provided health insurance.  This recipient has the means to be heard.

Denny's direct line to the White House comes via Nancy-Ann DeParle, recently promoted from Health Czar to Obama's Deputy Chief of Staff.  DeParle made over $1 million on the Triad's sale.  She received stock from her board service.  Denny later worked for CCMP Managing Director DeParle.

DeParle's initial financial disclosure showed ties to numerous for-profit health care companies, publicly traded and private.  No updated forms have been made public.  Rest assured, Obama's health reformer is very wealthy.  Her having to pay slightly more for Medicare when she hits 65 isn't the least bit comforting. 
How long will it take for her Medicare increase to total her tax break on carried interest?  How long before Denny's premium share totals his Bush capital gains tax break of $1.5 million on his Triad proceeds? 

Denny's fortunes keep growing given his interim CEO appointment for OmniCare.  If he's paid at the same rate as the retiring chief executive, Denny will garner nearly $6 million for five months work. How will his political ties help OmniCare resolve its ethical problems?

The company agreed to pay $98 million to settle a Justice Department lawsuit alleging the firm paid kickbacks to nursing homes and received money for buying and making recommendations on certain drugs.

Little is said in public circles about health reform benefiting for-profiteers, many of them willing to bend the rules to meet profit targets.  In private circles, investors talk about the sweet table DeParle laid for them.. 

Making the "very wealthy" pay "slightly more" is a small, easy bone to throw into the ring.  If this is hard for President Obama, that's not saying much.

Monday, July 11, 2011

ASU Matters to West Texas

A number of ASU educators, staffers and students kindly shared their aspirations, stories and frustrations about the myriad of changes at Angelo State University.  A frequent contributor opened a website, West Texas Matters.  They state:

As a former employee of Angelo State University, I feared reprisals for speaking my mind about the uncertain future of our once-great regional university. I stressed so much over the inconsistent and unethical actions of administrators that I literally became ill. After two trips to the hospital due to health conditions very much aggravated by job stress, I determined it was time to leave. Several of my colleagues have opted to do the same. Many more wish they could but due to financial and family obligations, they simply have no choice but to stay.

The initial topic of discussion on this website was created for the employees of ASU to speak their minds and share their concerns for the future of ASU with the community. These issues not only affect the well-being of the employees and the university but most importantly the success of our students.

If you would like to submit a comment for me to post anonymously, please send it to Two things to remember:
  • Your anonymity is sacred. I will not reveal email addresses or identities of any kind. Make sure there is nothing in your comment that can lead directly back to you.
  • Incendiary or personally vindictive comments will not be posted. Profanity will be censored in some form.
I hope this forum gives my former colleagues a sense of relief in knowing their concerns will be presented in a safe manner. Please tell others about the website's existence so that they may contribute as well.
The Veterans Administration creatively managed their situation with a critical blogger.  They listened, then had him blog on the VA's behalf. As for ASU blogs, I'm still looking for that Texas Legislative Session blog.  Maybe, it'll be a huge summary post.

Sunday, July 10, 2011

Hospitals Pre-Screening ER Patients to Improve Collections

Daytona Beach News Journal reported:

Inside the emergency room at Halifax Health, patients are being greeted by a new policy aimed at making sure they have a real medical emergency before they get treatment, a move aimed at saving money for the public hospital. 

Adults with the sniffles or a persistent cough -- or anything deemed to not be an emergency medical condition by a physician or a physician's assistant -- will be directed to an onsite health clinic that charges $48, or they will be given a list of community resources

Adults can still proceed with the emergency room visit, but only if they first pay their insurance co-pay or $350

Hospital emergency rooms are required to perform a medical screening exam on all patients who present.  Moving this review outside the doors of the ER seems a technicality.  How is prescreening different than a triage assessment?

The clear aim of this new policy is to improve collections, both in the ER and the urgent care clinic.  Note Halifax's spokesman is their Director of Patient Business and Financial Services.  It wasn't the ER Director or Medical Director of Emergency Care.  How do they feel about the new policy:  Cash up front or no care, except in true emergencies.  

Halifax officials say 34 percent of their bad debt is generated through their emergency rooms.

Earlier this month, Halifax board members heard about plans to wring some $5 million in savings out of the current Halifax system. Halifax officials said those savings will start with weeding out patients who don't reside in the taxing district and don't have a real emergency.

Patients from Southeast Volusia and West Volusia rang up about $7.7 million in costs that were never paid, with a substantial portion coming through the emergency room, Halifax officials estimate. 
Let me guess, Southeast and West Volusia are served by for-profit hospitals.  They know how to ask questions about patient responsibility that make people get up and leave the ER without care.

Times are tough for tax supported nonprofit community hospitals, such that they have to glean patient conditions and wallets, steering away those outside their tax district. 

Health reform means difficult times for the uninsured and safety net hospitals until 2014.  Congressional  & White House corporacrats renamed nonprofit community hospitals in PPACA.  They're now "private, tax exempt facilities."  To survive they must act like their for-profiteering counterparts, creating systems to "not get marked up" with no-pays.  How many safety net hospitals will make it until 2014?

Wednesday, July 06, 2011

Bad Theorists Shocked at Atlanta Public Schools' Rotten Carrots

Extrinsic motivation schemes are effective at two things.  They foster short term improvement in simple tasks within the control of one person and widespread cheating in complex systems with large amounts of interdependence.  The stories are many, executive stock option backdating, upcoding and physician kickbacks at Rick Scott's Columbia/HCA and now Atlanta Public Schools described as.

(An) enterprise where unethical — and potentially illegal — behavior pierced every level of the bureaucracy, allowing district staff to reap praise and sometimes bonuses by misleading the children, parents and community they served.

The report accuses top district officials of wrongdoing that could lead to criminal charges in some cases.
Teachers should school themselves on CEO's, few of who were criminally charged.  Return the ill begotten gains, don't admit to any criminal wrongdoing, call the deal a settlement with the government and then run for governor in a Southern state. 

In 2009 I asked about Education Secretary Arnie Duncan's Reward-a-Palooza, layered on top of Bush's "No Teacher Left Un-Incentivized."
How might principals lie, cheat, and steal to garner payola?
Dr. W. Edwards Deming said "Fear causes wrong figures."  It's widespread in education, especially within APS.

For teachers, a culture of fear ensured the deception would continue.

Georgia's Governor Nathan Deal said:

“The report’s findings are troubling,” he said, “but I am encouraged this investigation will bring closure to problems that existed.”

Patently laughable, given motivation systems based on bad theory still exist.  APS is a case study for any organization spreading win/lose, pay for performance poison.  P4P originated in corporate board rooms, which ironically produced APS current Superintendent Erroll Davis.

Davis rose to President of Alliant Energy, then served on numerous corporate boards, BP, General Motors, Union Pacific, and PPG Industries.  Davis serves on the Compensation and Benefits Committee of Union Pacific's board, alongside U.S. Chamber of Commerce President Tom Donohue and Carlyle Group Senior Advisor Mac McLarty.  Greed addicts seem to know only method of motivating people to do a good job, money.

Healthcare faces a looming epidemic of P4P.  Expect to hear stories of doctors and nurses cheating in five to ten years time.  It's predictable.

Update 3-29-13:  The fish rots from the head down. Atlanta's Former Superintendent Beverly Hall has been indicted for racketeering, false statements and theft relative to cheating/stealing to garner the NCLB prize. 

Update 8-31-13:  Add El Paso to the list for widespread cheating to garner the prize.  Extrinsic motivators are not only bad theory, they produce poor role models.

Employer Coverage Slipping

Health reform shifts the burden of health insurance from employers to individuals and a tapped out Uncle Sam.  The Congressional Budget Office predicts in 2019 employers will insure 14 million fewer Americans than they did in 2008.  The drop is significant as America's population will have grown by 38 million people.

SEIU President Andy Stern said in 2006 that employer health insurance was "dead and not coming back."  Stern served on President Obama's health reform workgroup, supposedly representing the interest of workers..

Texas has the dishonor of having the highest number and percentage of uninsureds in the U.S.  Things are getting worse on the employer coverage front.  San Antonio Express reported:

As employers and workers struggle to absorb the skyrocketing cost of health insurance, fewer Texans below age 65 are opting for coverage through their jobs.
In 2008-2009, 51.5 percent of the state's nonelderly population enrolled in a plan through an employer, down from 62 percent in 1999-2000, according to a June study from the Robert Wood Johnson Foundation and the State Health Access Data Assistance Center.

Nationally, the share decreased by 8 percentage points to 61.4 percent in 2008-2009.
The rest of the country dropped to Texas 2000 levels, while the Lone Star state continued growing legions of uninsureds.  This study speaks to the first leg down, the drop from the blue bar to the brick colored bar in the chart above.  That represents 15 million losing employer health insurance.

The second leg down, the move from the brick bar to the green bar, kicked off with the financial crisis and will choke millions of Americans before health reform "rides to the rescue" in 2014.  That's a drop of 35 million people from employer coverage.  Illustrating this point, the City of San Angelo sent nearly 200 people off their health insurance rolls with draconian premium increases for dependents in January 2011. 

Peter Orszag's "political economy of delayed implementation" is a four year window of suffering for over 50 to 80 million Americans.  One could interpret the bill as setting the stage for for-profit health care companies and private equity underwriters (PEU's) to make grand returns in a bifurcated health care system, where safety net hospitals are called "private tax exempt facilities."  

It's hard to see how health care costs will go down as companies are bought for five times their original investment, in the case of Nancy-Ann DeParle's CareMore, or nearly four times total assets, in the case of TPG Capital's purchase of Immucor.  PPACA clearly set the stage for employers to slowly shed that pesky health insurance benefit.   Who will pick up their slack, suffering individuals, an empty pocketed Uncle Sam or the few remaining "private tax exempt facilities"?

(Click on the graph to view it larger.  This is updated from a March 2010 graph)

Tuesday, July 05, 2011

Blose's ASU Replacement: May

President Rallo formally announced two internal promotions. 

I am pleased to announce to the campus the appointments of Dr. Brian J. May as Interim Provost and Vice President for Academic Affairs and of Dr. Jason Penry as Vice President for Development. Drs. May and Penry have proven records of success at ASU and will be instrumental in helping us reach our university goals.

Dr. May joined the faculty in 1994 and has served since 2009 as dean of graduate studies, where he has overseen record enrollments. He will serve up to two years as interim provost and is eligible to apply when a full national search is conducted.
A full national search for Provost and Vice President of Academic Affairs culminated in April 2010 with the selection of Anthony Blose.  The perfectly suited match crumbled in less than a year. 

As for the appointment of May, one longtime ASU staffer with over ten years tenure offered:

Dr. May was never a department head. He was promoted to Dean of Graduate Studies (without department head experience) because the College of Graduate Studies has no actual faculty. The faculty who teach graduate classes report to the deans of their respective colleges. For example, a Mathematics professor who teaches a graduate Mathematics class reports to the Dean of the College of Arts & Sciences (formerly the College of Sciences). So, Rallo, in all his wisdom, has put a person who has NEVER managed faculty in charge of ALL faculty for two years. 

How long before Roscoe gets a VP job?  At least Roscoe can lift spirits when things look down.

Update 7-10-11:  The source for the comment on Brian May started a web site to chronicle ASU's sad stories.   It's called West Texas Matters.

ASU's Fifth VP Makes Rain

Angelo State University announced the promotion of Jason Penry from Executive Director to Vice President of Development.  The move comes while ASU eliminates and downgrades other positions. 

ASU President Joseph C. Rallo said the promotion acknowledges the development team’s unprecedented fundraising success at Angelo State.
Rallo stated the university created a new Vice President position in the midst of draconian budget cuts.  The press release went on to say:

This was a huge undertaking, but he knew it could be done because of his faith in the donors, alumni and friends of ASU.

Who knew a miserly state legislature would light a fire under alumni donors?  I expected alumni to write their state legislators.  Instead, they wrote a check.

How many wrote checks to save the ASU Honors Program, the elimination of which was bungled by other leaders, President and Vice Presidents? 

How much will Penry's salary go up from its current $95,000?  Other VP's make $148,000, $172,000, $172,000 and $160,000.

Interestingly, the VP with the lowest pay has been with ASU the longest (four years), not a surprise given the university's willy nilly wage and salary program.

Rainmakers get the rain.  Can ASU get Penry working on the big guy.?  Things are looking blighted.

Monday, July 04, 2011

U.S. Population Growth Dependent on Immigrants

The United States is expected to grow from 311 million to 423 million in 2050, keeping the U.S. the third most populous country behind India and China.  Not mentioned in these projections is the role immigrants are projected to play in growing America.

The basic international migration assumptions for the original projections included assumptions about levels of in-migration (both legal immigration and unauthorized in-migration) of the foreign born to the United States and about rates of emigration from the United States. Net immigration in the previous projections was 912,000 in 2025 and 984,000 in 2050. In the new interim series, net immigration is 996,000 in 2025 and 1,097,000 in 2050.

It's roughly 1 million immigrants (legal and illegal) per year.  Over 40 years, that's 40 million immigrants or 36% of the growth.  Where will they enter, Ellis Island or El Paso?  I can't predict, but America's leaders clearly count on more poor, tired and huddled masses coming to our shores.

Update 10-12-14:  Immigrant growth can be seen clearly in one simple picture.

Saturday, July 02, 2011

Medicare's Coming Fraud-a-Palooza

Giant health insurer UnitedHealth settled with the federal government for a decade long period of stock option cheating by executives.  Consultants once touted stock option compensation as the "most pure" form of incentive compensation.  UnitedHealth CEO William McGuire personally profited until caught with his hand on the backdating pen.  AMED News reported:

William McGuire, MD, the former chair and CEO of UnitedHealth Group, resigned in 2006 after an investigation into stock option backdating. Though he never admitted wrongdoing, Dr. McGuire returned stock in the company and settled with the Securities and Exchange Commission and shareholders who sued him over the backdating scandal.
Bloomberg cited in 2006:

McGuire is the most visible CEO to leave his job in the continuing probe into options-granting practices at U.S. companies.

At least 144 companies are conducting internal investigations or are subject to government probes on the matter.  From 1994 through 2005, McGuire realized $333 million in option gains.
Nearly 30% of stock options were backdated, i.e. had executives cheating shareholders, the very owners of the company.  No program, no cheating.

Medicare is implementing at least three incentive programs, Value Based Purchasing, Accountable Care Organizations and Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS).  All reward providers who "perform."  Most performance is in relation to peers, which means not every provider can get the prize.

These programs have the same foundation as stock option compensation, people need to be extrinsically motivated to do a good job.  Extrinsic motivators are powerful drivers of behavior in the short run, slightly improving results in simple tasks able to be performed by an individual.  Add complexity and interdependence to the work and extrinsic motivators can make things worse than having no incentive scheme.  It's disturbing that board room compensation philosophy is infecting America's health care system.  If almost a third of executives can cheat, what will doctors and nurses do?

Combine management's obsession with results and heavy-handed consequences for failure, and cheating is bound to explode.  Both practices are epidemic in today's world, seemingly unnoticed by leaders.  The William McGuire's and executives at 144 other companies are seen as aberrant, instead of instructive.

Rick Scott's Columbia/HCA settled for $1.7 billion for upcoding case severity and paying physicians for referrals.  No investigation cited Scott's heavy handed, results obsessed management.  Leaders were told to achieve the targets or the company would "find someone who could."  Fear drives bad figures.  Threats of punishment produce unethical behavior from ethical people.

Fraud investigations rarely evaluate management philosophy and practices at the executive level.  They avoid the Board altogether, although this is the primary source of distorting incentive compensation practices.

Medicare expects more cheating, as they implement fraud producing systems.  Otherwise, why would they target executives?

US federal enforcement officials are now targeting corporate executives over alleged healthcare fraud as opposed to merely targeting companies and negotiating with corporate lawyers.

The government is bearing down on companies which actively engage in the healthcare industry with a specific focus on Medicare and Medicaid. 

Under the shift in enforcement corporate executive can be held on criminal charges for corporate actions, even if they were not directly involved. Further, they can be banned from working in the healthcare industry.

I conclude Medicare expects millions to billions in future fines, as the opportunity for cheating expands exponentially under pay for performance.  It's a new revenue source, not yet accounted for by the Congressional Budget Office.

Extrinsic motivators kill intrinsic motivation, the internal desire to do a good job   Medicare's plans will turn health care into a chore for providers.  Many will focus on incentive pay instead of the good work to be done.  When the short term adrenaline rush of the first few rewards pass, many will say "you can't pay me enough to do this job."

Complex pay schemes based on competition and scarcity is not the answer to health care's myriad of problems.  How long will it take the system to shed this growing cancer?  First, this deadly disease must be diagnosed.

Update 5-30-23:  HuffPo's "The Golden Age of White Collar Crime" stated:

32 percent of American managers said they were comfortable behaving unethically to meet financial targets.

Friday, July 01, 2011


The City of San Angelo was approved for Early Retiree Reimbursement Program on August 31, 2010.  As of mid March 2011 many Texas cities received ERRP reimbursement.  San Angelo is yet to receive a penny due to the inability to properly prepare and submit claims.  City Council approved an agreement that has Blue Cross/Blue Shield doing the work.  Lisa Marley, Director of Human Resources and Risk Management reported:

The agreement was executed with BC/BS.

No claims have been filed to this date. Presently with BC/BS, members and dependents have the same ID number. ERRP requires individual ID numbers. BC/BS is developing a solution for the numbering system for dependents of members. 
There's a limited pot of ERRP money.  It's not clear how many quarterly filings COSA will get before the fund runs out.  How much ERRP funding will the City have by the time it makes health insurance decisions for 2012?  It remains to be seen.

ASU Tuition Raid

Angelo State University joined the Texas Tech University System in May 2007.  Since that date, tuition and fees increased 60%.  Here's the data pictured above:

Tuition and Fees (15 credit hours in a semester)
2006 -- $2,298
2007 -- $2,555
2008 -- $2,705
2009 -- $3,068
2010 -- $3,344
2011 -- $3,675 

That's a $1,377 or 60% increase over five years.   A number of ASU professors found past tuition increases disturbing. 

Dr. Rallo took a consistent stand on increases:

2007 -- "Tuition increases are very difficult decisions,” said Dr. Rallo. “Historically, ASU has maintained affordable tuition and will continue to do so. However, without additional increases in state funding, it will be necessary to provide the required funds through tuition increases to offer the level of education students expect and we will provide.”

2008 -- ASU President Joseph C. Rallo said, “Even with the increase Angelo State remains one of the best educational values in the nation and the state, particularly when you consider the quality of the education and the amount of scholarships and financial support we provide our students.”

2009 --ASU President Joseph C. Rallo said the new tuition charges will help enhance the quality of the Angelo State educational experience through broadened student services, including student retention, and will increase the value of an ASU degree in the work place through additional accreditations being sought from the National Council for Accreditation of Teacher Education and the Association to Advance Collegiate Schools of Business.

Rallo said ASU is committed to both keeping a college education within reach of the average Texas family and to enhancing the educational experience of its students. He indicated that the full impact of the increase in tuition and fees will only be felt by a minority of ASU students due to the university’s strong program of gift aid – financial assistance which does not require repayment.

2010 -- “We are mindful both of costs and of our need to grow,” said ASU President Joseph C. Rallo.  “Even with the increase, Angelo State remains one of the best educational values in the state and our extensive gift aid program means that two-thirds of ASU students on average pay only 25 percent of the actual cost of attendance because of the university’s financial support.”

Over the last decade, Rallo said tuition increases had been used to address immediate needs without providing strategic funding to build the academic programs necessary to grow enrollment.  Rallo said the new tuition rate will provide the resources for growth of academic programs and to strengthen summer school offerings.  Additionally, he said the increase will help address a state-mandated 5 percent reduction in appropriations without detrimentally affecting existing programs.

“We are committed to expanding our programs and our enrollment because in the long run that will help keep our costs down,” Rallo said.  “For every 500 additional students we enroll, we get back from the state an additional $3.7 million in funding.  This increase will help us build the programs necessary to attract more students.”

2011 -- “Angelo State University,” said Rallo, “remains committed to keeping a college education within the economic reach of all families. Since 2007 we have increased our scholarships and federal assistance from $18.5 million to $34.5 million. Despite the increases in tuition since then, the average out-of-pocket cost per student over the last four years has actually decreased, and we remain one of the best educational values in the nation.”

From here, it's expensive...

(Click on the graph above to view it larger.)