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Nine Trillion Dollars in the Hole?

August 22nd, 2009

Let me be the first to admit that I was and am all about change. Change has been the only consistent thing in my life.  Today, however, when the deficit projection was revealed to be nine trillion dollars over the next ten years, my non-economist mind began to wonder where this is all going?

My son-in-law is coming home in the next several days from a one year deployment that saw him in harms way in Iraq for the last eight months, and now we all sit with our fingers crossed that we will not be facing a similar deployment not too many months from now to Afghanistan.

How does one maintain two wars, keep soldiers stationed post-World War II in Italy, Germany, and Turkey, to name a few, and in South Korea plus continuing to remain in Iraq, and now push more and more into Afghanistan without bankrupting this country?  Is it possible that very very smart people are not capable of figuring out that in a down economy, the finances will continue to go south until we are, like the USSR in the Cold War, going broke?

When do we begin to see that the previous several administrations lead us into a mindset of borrowing against our future to the extent that we may not have a future, and when will we say, “Okay, enough, let’s stop feeding trillions into wars, and start trying to figure out the rest of this economic equation?”  It clearly is no longer a war on terror, but what is it?  If it is an economic war intended to create jobs a.k.a., the argument for or against the F-22 cuts, can’t we find a better way?

health_debate_specterThe people who seem the most upset about the health care debate are clearly the people who have healthcare, and the people who are least likely to speak out are the young women and children who have no coverage.  Not only will they not speak out, they also don’t, for the most part, vote.  If anyone believes that we are not in some way paying for the 46 or 47 million uninsured now, they are clearly delusional.  Ask a hospital CEO how much the facility charges for an aspirin or a Q-tip.  It’s not because these items cost so much more in a hospital setting, it’s because there is not enough money to go around when patient after patient presents at their doors without healthcare coverage.

We have acquiesced to AIG, to the very large banking institutions, to the automobile manufactures, and to numerous major financial houses.  We have placed billions of our tax dollars into their hands and have watched as their CEO’s, like that of AIG, continue to make millions in salaries with millions more in bonuses.  We have continued to wage wars that were clearly called “Republican Wars” during the last administration, and have no name now.  And we are watching our Social Security and Medicare accounts dwindle more quickly than anyone could ever have imagined.

Far be it from me to take a political stand on such complex economic matters, but it does seem very certain that our futures are tied inextricably together and, unless we slow down our expenditures, find ways to be more fiacally responsible, and, take care of our fellow man, we seem to be heading down a very destructive path.  Alan Greenspan’s admission of missing the economic targets of not too many years ago rings in my ears as he said, “I underestimated the greed.“  Maybe we have all underestimated the greed for too long.

As a professional giver of advice, let me conclude by saying that we can make this work. We can pull back the reins, slow the spending, and still move the economy.  It’s no different than managing our own personal economics; live below your means, save, take care of the necessities, and realize that not all belts can wrap around a 44″ waist. But all of this takes some serious discipline, something that our leaders seem to have been missing for a very long time.  We can’t continue to talk our way out of trouble;  serious, positive action is the key.

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Happy 4th of July…(Sort of)

July 3rd, 2009

Recently, my youngest child —a wife and mom in her 30′s,  got a new job that came with a company cell phone, a Blackberry. The problem was that she had a “Friends and Family” cell Phone plan, and no longer needed her old phone.  She called the wireless company, explained the situation, and they said, “We’re sorry, but the telephone bill is in your husband’s name, and only he can change this.”  She painfully explained that he is in the Army National Guard in the middle of a war zone.  The wireless carrier’s “Customer Care” representative replied, “I’m sorry, but he must call in, give us his Social Security number and the password or nothing can be changed.  There are no exceptions.”

American soldiers with the 101st Airborne Assualt Division at Camp Pennsylvania make phone calls from a makeshift, and often malfunctioning, phone center. - Photo by Benjamin Lowy/Corbis -Image © Benjamin Lowy/Corbis
American soldiers with the 101st Airborne Assualt Division at Camp Pennsylvania make phone calls from a makeshift, and often malfunctioning, phone center. – Photo by Benjamin Lowy/Corbis -Image © Benjamin Lowy/Corbis

She explained, ”He does not have a telephone to call you from his base in the desert.” The service representative said, “ Then he must send us his Power of Attorney.”  This frustrated young army wife and mother of three said, “We’re not adopting a child or buying a house, we’re trying to change a wireless plan?”   “Let’s see, Osama Bin Laden is still making DVD’s, but you can’t change a phone plan?,” she went on.   “That’s correct,” came the icy cold reply.

Undaunted by this setback, we went to the local wireless store hoping that we would find an employee who was not the Tin Man from the “Wizard of Oz.”  The young lady patiently waited the 20 or so minutes until her name was called, went up to the associate at the counter and said, “I’d like to take this phone off the family plan and move it over to my new company.”   “I’m sorry, he said.  “The bill is in your husband’s name.”  She explained that her husband was deployed.  The mystified sales associate said, “I’ll check with my manager.”

The Tin Woodman speaks

You guessed it,” the manager said, “Just have your husband call.” “He doesn’t have a phone,” she exclaimed.  By this time everyone was listening intently.  The young man said once again, “Have him call.”  It was at that point that I lost it and said, “He’s in the war! They shot at him today.”  A few stations away, a man who was obviously a veteran yelled out, “Give me his numbers, I’ll put a war movie in the DVD and call these jerks for him.”  The next woman over just shook her head.  Undaunted, the red faced associate stuck to his guns.

Clearly corporate America was making a point.  War?  What war?  Who cares?  “Rules are rules, and they will not be altered!”  This was the third time in as many months that she was greeted with this type of callous big business attitude.  Because it was in a new location, the local cable company would not put cable into their home to provide access for the family to communicate with their dad via the internet for under $3,000.  Even when she explained the desperation of a war mom separated from her husband for a year, their reply was simple, “No, it’s $3000,  or no cable.”

She then asked that her satellite TV be discontinued, and was told that she would be assessed another several hundred dollars because the contract had not expired.  She once again explained the Iraq situation and the need for high speed cable, but they replied, “Sorry, but that’s the way it is.”

So, let’s all take this opportunity to thank our wireless company, the cable company, the satellite company, and every other United States-based company who so fervently support our troops and their families. Sung to the tune of America the Beautiful:

The magnitude of gratitude expressed by corporate greed;
Tells all our soldiers everywhere we’re grateful, yes indeed.
We’ll fleece you here and fleece you there as you protect our homes
Just watch us help your families until you all come home . . . NOT!

In the words of Stephen Colbert, you’re on notice.

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In My Opinion, It’s Tinker Bell Dust!

June 4th, 2009

Everyone has seen the media reports on the $1.7 trillion of cost cuts being projected by health care leaders over the next decade, but does anyone really believe it? According to this group, the premises embraced that will lead to these cuts are based upon improving care for chronic diseases, reducing unnecessary care, and streamlining administrative costs. Included in this wish/promise list are cutbacks, commitments to permit fewer Caesarean sections, better back pain management, less use of antibiotics and a reduction in diagnostic imaging tests.

U.S. President Obama meets with health care executives at the White House on May 11 (Pete Souza)
U.S. President Barack Obama meets with healthcare executives at the White House on May 11 (Photo credit: Pete Souza)

The groups involved have made commitments to try to reduce medical errors, begin the use of common insurance forms, to initiate a reduction in patient re-admissions, to improve the efficiency of drug development, and to promote the expansion of in-home care. (The majority of the preceding information comes from an article by Janet Adamy entitled “Health Groups Detail Plans to Reduce Costs,” in the June 2nd Wall Street Journal. )

If you are reading this, and you are a health care professional, it may be reminiscent of listening to your three hundred fifty pound, five foot tall neighbor describing how he is going to get back into his size 34 Levi’s. It also reminds me of a conversation that I had about 22 years ago when a hospital vice president said to me, “We are going to begin putting  computers into the hospital, and they will reduce costs, lower the need for staff, and contribute to much higher efficiencies.” What part of this equation didn’t happen? Even at the little hospital from which I just retired, we went from two, to three, to four… to about a dozen experts in every aspect of computer technology, and IT has been a dominant part of the capital budget for over a dozen years. So, what’s wrong with this scenario? As the equipment became more sophisticated, more well trained experts were needed. The higher the cost of the equipment, the greater the overhead required for maintenance, and the larger the demand became for everyone in the facility to be computerized.

It is not my intention to be a complete cynic, but isn’t it true that tens of thousands of people who have become used to a certain standard of living will be controlling these cuts? If we could have improved chronic disease care, why wouldn’t we have done that already? It’s all about the reimbursement system. We are still reimbursing for sickness rather than wellness. How do we line up the incentives so that statements like “we will permit fewer Caesarean sections or we will initiate better back pain management” will not ring hollow as words directed toward placating the new President? Nowhere in the equation is there any reference to initiating tort reform. As long as doctors, hospitals, and other clinicians have to practice defensive medicine, we will not be able to reduce tests. We will not be able to reduce unnecessary costs.

pixie-dustl1Yes, of course a reduction in medical errors would be great. So would common insurance forms, and fewer re-admissions. I’m sure we will see our peers work diligently toward those ends, but, unless or until incentives are aligned, the system will continue to roll along pretty much as is. I’m not sure why the President hasn’t called me yet. Maybe it’s because he knows how I feel about tort reform. Maybe it’s because he knows that I’ll say that the list articulated in the opening paragraph is filled with smoke, or maybe it’s because, like all government-touted initiatives, it’s not supposed to actually come completely into play until two and possibly six years after he leaves office. That philosophy certainly didn’t work for our former Presidents, and, unless someone gets really serious about changing the way healthcare is delivered in the United States, these pledges will be just what they appear to be, “Tinker Bell dust!”

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The Health Care Reality

May 15th, 2009

1979 was the year in Johnstown, Pennsylvania when I decided that it was time to leave teaching and transition into business.  For those of you who don’t remember that year, it was the beginning of some serious financial challenges for our country, but it was also two years after the Johnstown Flood of ’77, and there was an unemployment rate of 19.5% in Cambria County, PA.

1979 Rolling Stone cover Blues Brothers SNL Dan Ackroyd John BelushiIn 1980, when I accepted a job with a then bankrupt nonprofit organization in Somerset, PA, what had been a booming coal industry went into the skids. My house mortgage was about the same as the unemployment rate, 19%.  The job that I took was in the arts and Ronald Reagan was interested in cutting funding to the National Endowment for the Arts.

In 1985, my new job was with a tourism agency, and that was the year that then-PA Governor Casey cut funding to tourism.

In 1988, when I entered healthcare, it was clear that Johnstown could no longer support four hospitals, and the next decade and a half resulted in the closing of two (and almost three) of the four hospitals in that area.

Turn the clock forward to last October, when I announced my decision to become a healthcare consultant.  The stock market crashed, eight of every ten hospitals stopped, postponed, or scaled back needed capital projects, 58% of hospitals are now reporting  increases in uninsured patients using the emergency departments, 48% of hospitals have cut staff, and 80% have reported cutting expenses that include consultants.

As a consultant, the first thing I would tell anyone is that “No matter how bad things appear to be, you can do it.”

  • Our successes as a teacher continue to remain evident as former students ranging in age from 38 to 58 continue to remind me of great memories of our time together.
  • The arts organization became the largest and most successful rural arts organization east of the Mississippi.
  • The Convention Bureau went from almost closed to the fifth largest agency in the State, and most of you have tracked the successes that we experienced at Windber.

Not unlike the little engine that could, we focused on the positive, forgot about the negative, and never dealt with “Mr. In-between.”

roosevelt_action400

There are those who approach life cautiously, carefully, and very conservatively, and then there are those of us who drink from that same cup in big gulps and dream about how things could be rather than how they are.  There are those who are afraid of failure, and those of us who embrace failure because we know that it is getting us closer to more dramatic successes.

The only boundaries that we have are between our ears.

Because the future is a design function. Let me close this blog post with the ending from my commencement address to the graduate students of St. Francis University (with the help once again of Dr. Leland Kaiser):

  • Nothing has to be the way it is.
  • We can invent (or prevent) our future, because all limitations are self imposed.
  • We can empower ourselves to create a new world.
  • Reframe any limitations to become opportunities because…
  • Tremendous limitations breed success. They open doors.

So, as we design our future, remember that we should not work to create what people will like, but instead work to create what people will love!

…and we will know success beyond our wildest dreams.

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A Proactive Approach to Ecology

February 22nd, 2009

The Greening of America is here.

Despite the fact that the Clinton and Bush administrations determined that we would not be legally bound by the Kyoto Agreement, President Obama has a more proactive view on the nation’s environmental policy.

The following is a short list of Obama administration initiatives that will be funded for greener solutions to clean, efficient, American energy: Smart grid, advanced battery technology, energy efficiency:

  • $30 billion for such initiatives as a new, smart power grid, advanced battery technology, and energy efficiency measures, which will create nearly 500,000 jobs.
  • Help state and local governments make investments in innovative best practices to achieve greater energy efficiency and reduce energy usage.

Tax incentives to spur energy savings and green jobs:

  • Provides $20 billion in tax incentives for renewable energy and energy efficiency over the next 10 years.
  • Provides a tax credit for families that purchase plug-in hybrid vehicles of up to $7,500 to spur the next generation of American cars.
  • Includes clean renewable energy bonds for state and local governments.
  • Establishes a new manufacturing investment tax credit for investment in advanced energy facilities, such as facilities that manufacture components for the production of renewable energy, advanced battery technology, and other innovative next-generation green technologies.

The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change.

The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. The Kyoto Protocol was adopted in Kyoto, Japan, in December 1997 and entered into force in February 2005; 184 parties have ratified its protocol to date.

Although the United States did not ratify the Kyoto Protocol, voluntary efforts were made to reduce GHG emissions here, even as 132 of the nation’s mayors pledged to meet Kyoto-like emission targets in 2005.

In 2003, some U.S. companies and cities agreed to participate in a legally binding voluntary carbon market – the Carbon Credit Exchange.

The CCX, like other cap-and-trade programs, set limits or caps on allowable emissions.

The CCX issued allowances for trading among the members that correspond to the emission cap. CCX members have agreed to reduce their emissions by 6 percent below their baseline for 2007 to 2010.

The publically traded CCX is about a $70 billion business that previously was somewhat limited to power producers and large industries.

A recent article in the New York Times indicated that within the next four or five years, this market is expected to grow to $500 billion as the country begins to work toward green and a cleaner environment.

Currently, the European Union has the largest and most famous carbon trading system.

The European Trading Scheme is a cap-and-trade system in which the government sets national emission caps based on its Kyoto and national targets.

Allowances, totaling the caps, are then distributed to individual firms for trading throughout the EU. If emissions are capped, for example, at 200 million tons a year, there are 200 million allowances distributed to firms for offsetting emissions.

These firms can then use the allowances to offset their own emissions, reduce their emissions and sell the allowances to other parties, or bank the allowances for future use.

If a firm does not have adequate allowances to offset its emissions, the firm must purchase allowances or pay a significant financial penalty.

The cost of allowances, if available, is generally less than the financial penalty. The buying and selling of allowances, trading, creates a market, thus the cap-and-trade program designation.

Due to the financial challenges companies face on an ongoing basis, recent studies have shown that Sector 3 organizations will have the most difficulty dealing with this metamorphosis.

Consequently, schools, churches, hospitals, and local government will be struggling to find the means to make the green transitions such as retrofitting lights, more efficient use of demand meters, voluntary curtailment, and the installation of efficient energy supplies utilizing renewable fuels, i.e. biomass combined heat and power systems.

E-CCAP is one possible solution to this nonprofit problem, an initiative that is funded through two prominent Pittsburgh Foundations led by the Pittsburgh Gateways Corp. and its partner in this project, World-Class Industrial Network.

They are working together to capture opportunities in the developing financial markets associated with energy and carbon reduction and general sustainable practices such as switching to renewable resources or investing in energy efficiency methods.

E-CCAP is working on a set of developmental and applied activities designed to define and demonstrate that nonprofit organizations, serving industrial, commercial and institutional based stakeholders, can leverage relationships with its constituents to both promote and financially share in the benefits of sustainable business activities.

In so doing, the nonprofit organization can better meet its core mission by exploiting new revenue streams not previously available.

E-CCAP is targeting a pilot project with industrial, commercial, and institutional based stakeholders, to aggregate the financial benefits of energy efficiency and renewable energy projects through the emerging markets for energy efficiency credits.

These green credits will be aggregated and traded to support the partnership and serve the participating third sector organization and their constituents.

They will specialize in the development of credit generating projects, have those green savings validated by an independent third party, and broker the credits.

(This blog post is also published as a feature article in the 2/21/09 edition of The Tribune-Democrat.)

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