Silk Purses, Sow Ears and Reality

I spoke with a friend yesterday about his new change of career. He is going to become a hedge fund manager. To start his business, he's going to get a business loan from Citi. This should be easy because my friend's going into business to help Citi out. He'll be independent of Citi of course, at least on paper, but they will work closely together. After he starts his business, he's going to get a government loan to buy some bad assets from Citi that have been hard to value. Even though Citi can't sell these assets for more than about 10-20% of their book value in the open market, they still insist that the assets are worth closer to 80-90% of book value currently. These are the so-called “toxic assets” that people talk about on the news.

What my friend will do is negotiate with Citi (a mere formality, really) to purchase these toxic assets at near what Citi wants for them, thus limiting their write downs, and then try to sell the assets himself on the open market. If it becomes obvious that they really are worthless, he will walk away and leave the government with the bad assets and default on the loan he received from them. That's because it's a non-recourse loan and there will be no action against him for defaulting – because really, he was just trying to help.

If the bad assets do increase in value from what he paid for them, then he and the government will split the profits 50-50, despite the fact that the government put up 93% of the money for the purchase.

Wow. And the best part is it's all legal.

Okay, so I don't have a friend who is planning on starting a hedge fund. But the above scenario is not only plausible, but likely. Large banks and financial companies will soon have the ability to set up third-party organizations to buy troubled assets at close to face value to get them off their books. The banks and financial companies get to be made whole, or close to it with government funded purchases of the toxic assets made by the third parties who will negotiate directly with the banks on price. The government puts up money via non-recourse loans to the third party purchasers and bears all the risk, yet only gets 50% of any potential profits on the future sale of the toxic assets.

Fine. If the government and their regulators want to believe that these toxic assets really are worth more than they would get today on the open market, then buy them outright and keep all the profits if they increase in value. Why expose taxpayers to risk and simultaneously limit their potential for profit?

But more importantly, why is it O.K. for the taxpayers to take a huge loss on these toxic assets, but not the banks. Why is it that these banks, the ones who wrote the bad loans to begin with, are excused from their poor decisions and the rest of us are made to pay for their greed and short-sightedness?

Well, that is what happens when the guy who runs the treasury department is in the pocket of the banks. Timothy Geithner is the financial industry's whore and we are all being played for fools.

Journalism 101

It may have been the very best 24 minutes of television I have ever seen.

On Thursday March 12, 2009, a comedian proved to be the absolute best investigative reporter in America. Well, that might have been the easy part because what he actually proved was that he is THE ONLY investigative reporter in America.

For several nights this past week, the main stream media has been called on the carpet by the less than main stream media, namely The Daily Show, for their complete lack of credible coverage of what has turned into the greatest financial disaster of generations. The host of The Daily Show, Jon Stewart, showed clip after clip from CNBC and their myriad of shows whose hosts / reporters / commentators were proven to not only be wrong, but to be completely oblivious about the risks and pending collapse of the financial world. On Thursday night, Stewart finally got one of the CNBC bozos on his show.

Jim Cramer from CNBC's Mad Money had been a frequent target of Stewart's over the previous several nights and had been shown in various clips encouraging his viewers to buy stocks that then tanked. The clips were juxtaposed with simple black and white text that then detailed exactly what happened to the stocks he was hocking. Simple. Effective. It left little doubt that a man of Stewart's caliber should be taken lightly.

On the show Thursday, Cramer was reduced to a fool and hack who not only missed the signs of impending doom, but actually knew the game being played and encouraged people to continue to invest their hard-earned money into banks and investment companies who could not possibly continue in their march forward. Several clips of Cramer speaking to another man about how to manipulate stock prices and whip up speculation were shown, much to Mr. Cramer's dismay. He was seen and heard on one saying, “I'd never say this on television”, implying that he wanted his TRUE nature and thoughts kept from the public. He became red and very uncomfortable after being exposed for who he really is.

Time after time, Cramer and the Daily Show audience and viewers were shown proof of his own inside knowledge of the gaming of the system. It was right there on video for all to see and appreciate. Stewart managed to get Cramer on one video basically admitting to committing fraud while running a hedge fund. It was a thing of beauty.

Now the whole premise was not to go after Cramer personally. Stewart's point was that CNBC had done a very poor job of reporting, and that, in fact, they had more or less been a cheerleader for the same financial system that has now reduced the retirement savings of most Americans by nearly half. His questions to Cramer were mostly in the vein of “where were you?” and “why didn't you tell people what you knew?” about what was going on. He actually held Cramer's feet to the fire and made him squirm on national television.

What does this say about America as a nation? Why is it that the single best piece of investigative reporting on the economic disaster occurring right now has come from Comedy Central? We should all be disgusted with where we are as a nation. Where is our fourth estate when the only reporting I trust on television comes from a comedy news show?

Hey main stream media people – were you paying attention? Did you learn anything Thursday night? Like maybe, HOW TO DO YOUR JOBS? What the hell have you folks been doing over the last 10 years? You who work in the news media should all be ashamed and hang your heads today – and for many days. You have been shown to be inconsequential and soft by a guy who makes “fart noises” for a living.

Perhaps those in the main stream media will go back and watch that tape from Thursday night and learn just how a professional reporter operates. It should become mandatory viewing from now on in all journalism classes as well. Perhaps we can expect more from our next generation of journalists than what we have today. Maybe someday soon, the spirit of Edward R. Morrow won't have to be invoked by a comedian.

On Being Realistic and Hopeful

In the midst of the greatest financial crisis to come along in more than a generation, I am beginning to find hope. Not the kind of hope that allows me to think the crisis is going to be short or painless; though that would be nice, I am not foolish enough to think it a possibility. Instead, my hope centers around the fact that with great upheaval there is a tremendous potential for change. Not the kind of change that occurs in increments or at a glacial pace, but real change like the dismantling and rebuilding of entire systems.

With the pending failures of health insurers – a high likelihood because of the stress on financial companies at present – and with 78 million boomers expecting a health care system that is intact and functional, the best option will soon be for the nationalization of health care. The U.S. is the last holdout among advanced nations not to provide this basic safety net for its citizens, and now may be the best time to restructure our system to provide the most good for the largest number with the resources available. That is to say, it may be the best time because it will soon be unavoidable given the situation.

“You'll never get people to accept limits on health care. That won't happen in this country.” These words were spoken to me by a friend at work. He is convinced that citizens will not allow for any health care system that does not cater to them. He argues that people want what they want, when they want it and therefore, they will not accept any decrease in services they currently receive. But really, that “drive thru” mentality (as my wife refers to it) of patients exists only because we have allowed it. Ever since health care administrators started calling patients “customers” and decided “market share” was an important aspect of treating the people of our communities, we have invited those patients to dictate what it is we do because we have sought their approval.

But, as I see it, those days are coming to an end.

In the midst of a depression - when millions will be unemployed, without savings and without retirement accounts to fall back on - what's to prevent them from understanding the limits on health care? My sense is that the majority of Americans will soon begin to understand that something is much better than nothing. After all, when you can have anything you want, you want everything – but when you have nothing, you will accept anything. Don't buy that? Check out your local soup kitchen for proof I'm right.

Our next health care system needs the following to be functional: 1. It needs to be reality based; 2. It needs to include legal reform; 3. The cost of education must be reduced; 4. Funding should be adequate and provide basic coverage for all citizens. It is well past time for a reality based, adequately funded, practical and responsible health care system in this country.

We can do more with less if we do it reasonably. We need to stop performing tests simply to prevent a lawsuit; we need to stop doing procedures that will have little to no impact on outcome; we need to stop performing heroic measures when it is obvious they will not change the outcome. We have lost all sense of reasonableness and have instead clung to the mantra of honoring patient wishes.

As an example of how a reasonable system can work, consider how organ donation is handled. Today, there are waiting lists for patients who need transplants. These lists only include patients who are most likely to survive (they cannot have several other major medical problems) with the new organ so that the precious resources are not squandered. Thus, patients in need of a liver must not be actively drinking alcohol or abusing drugs; those in need of lungs cannot be smoking. Break the rules and you lose your shot. It's simple and prevents organs from going to those who can't show the ability to maintain their health.

A rebuilding of heath care in the U.S. must also include legal reform that removes the threat of frivolous lawsuits against providers and limits damages awarded for mistakes that are not life-impairing. We work and live in an imperfect world and deal with imperfect patients – with few exceptions most of us do our best and then some to make sure patients are cared for appropriately. We spend more money (via unnecessary tests and procedures) trying to cover our backsides than we do actually doing the things that matter. This needs to stop. Medicine should never be practiced from a defensive posture. Fear wastes resources and the constant threat of legal action makes many leave the field prematurely.

Educational costs need to come down to levels that encourage people with the ability to enter the field. Physicians are typically saddled with $200K-$300K loans upon completion of their residencies. This level of debt is daunting and prevents many from entering fields like primary care where reimbursements are minimal compared to other specialties like anesthesia. As of 2005, of the 800,000 physicians licensed in the U.S., less than 1/3 were working in primary care. Primary care physicians should be able to manage the ongoing care and treatment of their patients. To do this, they need to have fewer patients attached to their practices, while making an income that allows for them to not have to take on more patients than they can manage safely. To achieve this, more primary care physicians are needed – period.

Universal health should cover the basics for all citizens. Things like regular office visits, preventative care and screenings, necessary medications, valid emergent care and EMS services and hospitalizations. Necessary surgeries and tests should also be covered. Unnecessary treatments should not be covered by the plan. By unnecessary, I am talking about such things as emergency room visits for non-emergent complaints, the use of EMS for non-emergent transportation and tests like CT scans done at the insistence of patients and families. If patients want to pay out of their own pocket, then they are welcome to request such things, but if the government funded system is to work, it cannot be permitted to pay for nonsense.

None of this is revolutionary. All of what I have described above is practiced almost everywhere else in the world – and with good results. We are the ones who spend more on health care than anyone else, and we are also the ones who rank about 40th in the world for life expectancy and infant mortality. Clearly, we have gone off course.

The group most opposed to such a system includes those who benefit most from the current system and those who stand to lose with the new one. People who have worked as physicians and made a very good living (albeit while saddled with massive debt thanks to the cost of education) can be some of the most vocal about arguing against universal health. Also, many employed by insurers are quick to denounce universal health as an impossibility. Often, they go further and argue that no government could possibly run a universal health system with any sort of ability. Well, insurance companies spend upwards of 30% of their capital on administrative costs. Medicare, a government run entity, by comparison spends a paltry 4% - in line with other universal health systems.

But the group of detractors is getting smaller and stands to get smaller still. The chances of large health insurance companies surviving this crisis intact is absolutely zero. There have been and will be more layoffs and write downs. The reality of our new financial world is coming into view for many more people and the ones who will see most clearly will be the ones who have lost the most. Sadly, that number is increasing on a daily basis.

My own hopefulness rests with the assurance that very soon, the best option will be the only possible one left on the table and the number of citizens who insist on it will be unable to be ignored. Someday soon, I will work in a system that is fair and makes sense.

Re-thinking the System - While in a Staff Meeting

I hate staff meetings and rarely attend them. I went to one yesterday – but only grudgingly.

It's not that I dislike my co-workers, or my boss for that matter, but getting together for a morning meeting to hear what the plan will be for the next month or two is always an exercise in frustration. I deplore the minutia of health care. I am not one who likes to dot the “i's” and cross the “t's”. I like to look at the bigger picture. Except for the time I spent in management, that preference has always been an issue.

The problem with seeing the big picture is that you usually have a good idea of just where things are headed. Since I am fascinated with economics and politics, I am well read on and all too well aware of the financial crisis that is just getting started. I see nothing but problems for health care on the horizon unless certain things are done and done correctly. Because I like to pull back my view, sitting in a meeting listening to someone enthusiastically discuss details I consider trivial and wastes of time quickly sends my mind wandering.

I have written here before about the pending failures of major health insurers. It is my belief that health care will be nationalized as a result of these failures and the threat they pose to the industry. The cost will be staggering, though it will come in much lower than the cost of rescuing the banks. One benefit of a new universal health program that will be forged in today's financial dire straits may just be a necessary change in the attitudes within and outside medicine about just what health care is and should be.

At the meeting, I listened to my manager talk about the “service” we provide to our “consumers” and how it is the goal of our hospital to not only meet the expectations of our “consumers”, but to exceed them.

While she was talking, my mind began to race and got stuck on the words “consumers” and “service”. I started thinking about just when health care sold its soul. The “consumers” of health care used to be called patients. We did not treat patients like they had money in their pockets and could go spend it anywhere they wanted. We didn't used to approach our jobs in the same way retailers approach theirs. What happened?

While my mind was working on the above discussion in my head, my boss continued to talk about a pending visit from the state to inspect the facility. This is a huge deal for hospitals because, in theory anyway, the state can reduce funding and reimbursement levels if you don't get rated high enough by the inspection team. In this state, where Maine owes hundreds of millions of dollars for care already delivered several years ago, I am wondering just why the inspection is a threat. What is the state going to do if they don't think we are worthy – not pay us? That's already happening.

And so my mind again went off – wandering through all the things nurses and others have to do to jump through ridiculous regulatory hoops to appease someone who finds such things important. I spend more of my work time on silliness, like adding certain phrases to orders so we can make sure we get reimbursed for things like CT scans, or documenting the same actions in multiple places, that I can get distracted from doing the other things that patients actually need me to do. Recently, my wife and I compared our workdays today with what they were like 10 years ago. We realized that up to a third of our workdays can now be spent away from patients, documenting on paper as well as in computerized charting systems. We both concluded that the levels of bureaucratic garbage which detract from actual care is getting to be too much to take.

Still in my meeting, I began thinking that when health care does get nationalized, it will force all of us to re-think just what health care is. It is a service to be provided for the sick and the injured. It's not something that should be looked at as if it were a retail store in need of customers. Simply stated, a hospital is not Wal-Mart.

And that's one of the biggest problems today – we approach our jobs as if we need the “customers”, not the other way around. We have and offer too many choices, yet people are always asking for more. Well, when the money to fund this system runs out, we will be forced to let our “customers” know that they can no longer demand tests and procedures that providers feel are unnecessary. They can't expect that every last possible thing will be checked or tested because they feel it should be done. They will have to accept that reality dictates that not every person will get everything they wish for from the system because we will have to care for more patients than we do today – but with even less money.

A realistic health care system will look more like a military chow line from the Korean War than an all you can eat buffet in Las Vegas. It will keep you alive and sustain you when you need it, but it will not fulfill your every whim and desire. In fact, since the government is going to be so short of funds, even the chipped beef may be substituted for peanut butter.

I missed most of the rest of what was said at the meeting. But I had a smile on my face thinking about just how good my big picture began looking to me. It even began to smell good. Maybe these meetings aren't so bad after all. I may just go to another so I can flesh out the details of our new system.

In the meantime, I'll start looking for an apron and hairnet to replace my scrubs.