A Shortage of Doctors

We’re currently facing a doctor shortage in the U.S.  And a recent article in the New York Times pointed out how this shortage is about to get worse as we expand medical coverage to 40 million uninsured Americans.  The Association of American Medical Colleges estimates that by 2015 the country will be short more than 62,000 doctors, and that number will more than double by 2025. In addition to healthcare reform the article points to a few contributing factors that are causing the shortage:

1. Increased Medicare coverage for Baby Boomers (older people need more care).
2. Declining physician compensation – to make money, doctors have to specialize, leading to a shortage of primary care physicians.
3. Aging doctors are beginning to retire at a more rapid pace.

There’s no doubt that we’ll need more doctors in this country moving forward.  But in parallel, I believe it’s critical to continue to find ways to make the physicians we have more and more efficient.  I’m excited to see increasing amounts of early-stage capital heading to companies that have that goal in mind.

The Irony In The Supreme Court's Affordable Care Act Decision

There's a good column in the New Republic this week noting the irony that John Roberts decided to uphold the individual insurance requirement but struck down the expansion of state Medicaid payments.  Part of the Affordable Care Act would have required states to expand Medicaid eligibility if they wanted to receive increased federal funding.  They would have had to pick up a relatively small amount of the increase (10%) in return for big bucks from the federal government, but the court still struck it down. The statement made by the court in this decision essentially opens the door for states to fight any future changes that congress makes to Medicaid.  And this presents significant challenges for the federal government as it seeks to protect the viability of its investment now and in the future.  If the states begin to exercise too much individual control over the program, the federal government may opt to back off and simply run the entire program at the federal level.  Something that, ironically, Democrats would prefer.

It'd be ironic if a precedent set by the conservatives in a contentious healthcare debate ultimately leads to a more centralized government program.

Retaining Your Employees

Fred Wilson had a good post a while back on employee retention. I posted some of my thoughts in a comment there and thought I'd post them here as well. One trend that I’ve seen is that employees leave companies, for the most part, for one of three reasons:

1. They don’t think they’re great at what they’re doing

2. They don’t feel like what they’re doing is important

3. They don’t feel appreciated for what they’re doing

Smart, ambitious people want to be winners. They want to be awesome at what they do, they want to be doing work that is meaningful and impactful and they want to feel appreciated for it. If an employee feels this way, it’s very unlikely that they’ll leave. But with so much going on, busy managers often forget about these things. It’s critical for managers to stop and recognize when an employee is good at something. Verbalize it, don’t just think it. Tell them they’re awesome. Say thank you. Show appreciation.

Everybody gets insecure at some point, even top performers. I remember Mike Krzyzewski, Duke’s basketball coach, explaining that once or twice a year he calls his best player into his office to tell him how much he’s appreciated. This kid is in Sports Illustrated and on ESPN and is the most popular kid on campus, but as Coach K says, everybody gets insecure. And when they do, results suffer.

It’s management’s job to create an environment where people feel awesome. They feel like they’re good at what they do, they’re doing important work and they’re appreciated by their company. When you have these three things in place,you’ll see your retention numbers soar.

As Jack Welch used to say, self-esteem is the fuel that powers great companies.

You're Not Special

Here's my favorite excerpt from David McCullough Jr.'s highly publicized commencement address at this year's Wellesley High School graduation.  It's about time educators starting sending this message...read the entire speech if you get a chance.

Contrary to what your u9 soccer trophy suggests, your glowing seventh grade report card, despite every assurance of a certain corpulent purple dinosaur, that nice Mister Rogers and your batty Aunt Sylvia, no matter how often your maternal caped crusader has swooped in to save you… you’re nothing special.

Yes, you've been pampered, cosseted, doted upon, helmeted, bubble-wrapped. Yes, capable adults with other things to do have held you, kissed you, fed you, wiped your mouth, wiped your bottom, trained you, taught you, tutored you, coached you, listened to you, counseled you, encouraged you, consoled you and encouraged you again. You’ve been nudged, cajoled, wheedled and implored. You’ve been feted and fawned over and called sweetie pie. Yes, you have. And, certainly, we’ve been to your games, your plays, your recitals, your science fairs.  Absolutely, smiles ignite when you walk into a room, and hundreds gasp with delight at your every tweet. Why, maybe you’ve even had your picture in the Townsman! And now you’ve conquered high school… and, indisputably, here we all have gathered for you, the pride and joy of this fine community, the first to emerge from that magnificent new building…

But do not get the idea you’re anything special.  Because you’re not.

Is Sales A Dying Profession?

A commenter on the 'A Sales Guy' blog asked this question the other day and Jim Keenan posed the question to his readers. There's a decent discussion on this topic on his blog so I recommend checking it out. Here's my answer:

Short version: Absolutely Not.

Longer version: Before you can answer the question of whether or not sales is going away, you have to define what salespeople do.  To me, salespeople make connections and tell stories that allow products to be diffused into the market at a faster pace and on a wider scale than they would be if a salesperson wasn't involved.  So companies hire salespeople when they believe that the investment in those people will be outweighed by the incremental revenue that will be produced from their activity.

That said, the commenter is right that because of the internet there are some products that can be sold to enterprises without the involvement of a salesperson.  But that doesn't mean salespeople are going away, it just means that salespeople will have to continue to adapt to selling those things that can't be sold off the shelf -- this means more complex sales and more innovative products.  This has always been true -- products adapt and salespeople adapt.

If a company decides that they can rest on their laurels and its products are so refined that they don't need people out making connections and speeding up the diffusion of their innovative products into the market, then salespeople aren't going away, that company is going away.  

In short, if a company feels like it doesn't need salespeople then that company either isn't innovating or doesn't have very ambitous goals.

Why The Healthcare Mandate Is No Big Deal

The piece of the Affordable Care Act that requires all U.S. citizens to have health insurance has caused quite a bit of controversy. It seems that a lot of that controversy is caused is by a lack of awareness of the details of the mandate. I’ve found that when I explain some of the details of the mandate to people that don’t like it they often end up realizing that it’s really not all that bad.

Let’s start with this: there are approximately 40 million people in the United States that don’t have health insurance.

And getting healthcare when you don’t have health insurance is super expensive. So when you don’t have insurance you tend to delay getting care until your condition becomes serious. Even when it’s serious, because you’re not insured, you still don’t get care through the appropriate channels, such as a Primary Care Provider or a specialist.  Instead, you very likely just show up at the emergency department of your local hospital (hospitals are required by law to give care to anyone that shows up at their emergency department, regardless of insurance or ability to pay). But emergency departments aren’t setup to deal with these people. They’re setup to deal with emergencies. They’re setup to stabilize a condition, not provide ongoing treatment or preventative care.

People without insurance that are getting care only when they’re desperate and through the wrong channels are costing the healthcare system lots and lots of money.  They’re waiting until they’re very sick to get care, they don’t access care through cost effective channels and, perhaps most significantly, when they get care from the emergency department they don’t pay their bills.

So who do you think pays for these inflated healthcare costs that are caused by the uninsured?  Answer: the insured.  In order to provide this level of care at no cost to the uninsured, hospitals must raise prices for the insured.

So Obama has proposed a solution that will alleviate the suffering for the uninsured and the suffering of the insured. This solution is a law that requires everyone to have health insurance.  The mandate.  And this is the controversial point in the Affordable Care Act.

But it shouldn’t be that controversial.  For a lot of reasons.  For one, nobody actually has to get health insurance.  If you believe that being uninsured is part of your freedom as an American, no problem. You’ll just have to pay a slightly higher tax rate each year (not more than a 1% increase). 

Also, of the 30 million that are uninsured, most are going to be getting insurance anyway as a result of some of the other components of the law such as expanded Medicaid to individuals with higher incomes and increased insurance coverage requirements for employers.

In addition, if you make less than what is required to file a tax return (somewhere around $9k/year) then you are obviously exempt from any tax penalty that comes from not having insurance.

So the fight over the mandate is really only about a group of approximately 7 million people (about 2% of the population). 7 million people that are costing those of us that are insured a lot of money because they delay care and don’t pay their healthcare bills.  And all the mandate is doing is asking those 7 million people to either get insurance or pay a slightly higher tax rate (not more than 1%) to make up for what they’re costing the system.  When you look at it this way, suddenly the mandate doesn’t seem like such a big deal.

Do Your Employees Know How To Work The Projector?

I've seen a few blog posts over the last few days about the lack of innovation that exists in large companies. One of the fundamental lessons I recall from business school was this: success leads to arrogance and arrogance leads to failure. The notion was that companies that get successful and big will inevitably become comfortable with their own success.  This comfort will encourage them to stop innovating and start putting bureaucracy in place that will protect what they have -- and that will eventually cause them to fail.  It’s a natural cycle that always exists. So my professor was encouraging us to be conscious of it so our companies might avoid that fate.

Over the years, I've met with companies big and small -- from startups with fewer than 10 employees all the way up to Fortune 50 companies with hundreds of thousands of employees. A small thing that I’ve noticed is that if the company has more than about 1,000 employees you can guarantee that something will go wrong with the presentation tools in their office. You can’t get online. The projector is broken. Nobody knows how to turn the videos screens on.  The cabinet storing the CPU is locked.  Literally, 95% of the time, something will go wrong when you're presenting to a big company.

This never happens when I meet with startups. Everyone knows how things work, there’s less security and bureaucracy and even the most senior people in the room know how to work the projector.

Obviously, on the surface, this observation seems meaningless. But I do believe it’s symbolic of the arrogance that exists naturally in a large company. Employees at big, successful companies either don't believe they need to know how to do simple things like this or the company has put so much bureaucracy in place that they're unable to learn.

If you're an executive at a big, successful company ask around and see if your employees are able to work the projector. If they're not, I wonder what else they can't do.

Firing An Employee

A while back Chris Dixon had a good post on firing people. I shared a couple of my thoughts on the topic in a comment. I thought I'd post those thoughts here as well and add on a couple more. These are a few things I like to keep in mind when parting ways with an employee:

1. With very, very few exceptions the person is better off being fired. If you're considering firing someone, and you decide not to, they have very little chance of being successful at your company in the long term. And the situation is bound to get worse. It's better to get them off to another organization where they can shine. While it can be very painful in the short term, I've never seen someone get fired that didn't end up in a better situation within a year.
2. In another role, in another company, in another culture, the person you're firing could perform better than you or anyone else in your company. You're not better than the person you're firing. They're in a place where they aren't performing at their best. It could be the role, the industry, the company, even the management that's keeping them from performing at the highest level. Regardless, I believe it's always best to push that person to find a place where they can rise to the top.
3. With good management, a firing should never come as a surprise. I believe strongly in a culture of candor. If an employee is performing well they should know it. If they're not performing they should know it as well and they should know exactly what they need to do to perform better. They may be unable to perform better (either because they don't want to or they're not capable) but managers should lay out clear expectations for employees and clear consequences when expectations aren't met. So that when it comes time to make a change, it's not you telling them they're fired, it's an agreement that expectations aren't being met and it's best to move on.
4. Never, ever, ever speak ill of a terminated employee to customers, employees or anyone for that matter. For whatever reason, it wasn't a good fit. It's that simple. Leave it at that.
5. Even though I've broken this rule in this blog post, don't use the word "fire". Say "part ways" or "moved on" or "made a change".  It's a small thing but these phrases are far more elegant and professional.

I Like Mike (Part 2)

Regular readers know that I'm a big fan of Mike Bloomberg. I wrote about him in an earlier post back in 2008. Chris Dixon interviewed him for TechCrunch’s Founder Stories series last November.  It's an insightful and inspiring interview -- I recommend watching when you have some time.  Here's some of the highlights/insights for me. I’m paraphrasing Mike, of course.

• One of the goals of New York City is to have a park within a ten minute walk of every New Yorker.
• The business goals for New York isn’t to pay companies to come here through subsidies, it’s to create an environment where people want to live.  That means great culture, parks, schools and reduced crime.
• Big companies are like governments in that they setup very reasonable bureaucracies to minimize risk.  But that bureaucracy is what prevents them from innovating.  That’s why we need startups.
• The United States is committing suicide by not giving citizenship to foreign entrepreneurs.
• People talk about making New York more of a hub for college education, much like Boston.  It turns out that there are more undergraduate and graduate students in New York City then there are people in Boston.
• There are 13 public golf courses in New York City and Staten Island's land mass is almost 25% park.

Healthcare Tech Lessons: Capitation

Earlier I wrote about the differences between a managed care payment model and a fee-for-service payment model. Today I’m going to write about a specific managed care model called capitation. In a capitation model, healthcare providers (doctors and nurse practitioners) contract with a type of HMO called an independent practice association (an IPA). The IPA is a group of providers across a wide range of specialties that look to provide care for patients in their community. Patients enroll in the IPA and pay a fixed, monthly fee to have access to care from those providers. The IPA then pays each healthcare provider a set amount for each patient that’s enrolled. The provider receives this payment regardless of whether or not the patient seeks care.

So, in short, the bad news for the provider is that the payments are “capped”, regardless of how much care they provide. But the good news is they get paid even if they never see the patient. The amount of the payment the provider receives varies based on the expected healthcare utilization of the patient (factors such as medical history, age and gender are considered); though there are some capitation models where the payment is the same, regardless of the expected healthcare utilization.

The capitation model provides a few unique incentives for physicians and nurse practitioners:

1. Providers will consider cost when providing care. You don’t want to order treatments that cost more than the payment you receive.
2. There’s an incentive for providers to focus on preventative care. Healthy patients mean more profit.
3. There’s an incentive to avoid costly patients. So with a capitation model, the provider effectively becomes the insurer for the patient. They take on the risk of whether or not the patient is going to seek care. They can have good and bad years, depending on the amount of care patients need.

There are two major challenges when providers insure patents:

1. They’re providers, not actuaries or underwriters. As a result, they’re not as good as assessing risk as a traditional insurer and could take a loss as a result.
2. Risk fluctuation is a function of the size of the portfolio. Because a provider’s patient panel is limited by the capacity of the physicians in the IPA, portfolio size can be small and risky.

It'll be interesting to watch how the relationship between providers and insurers changes as changes in Medicare and Medicaid force more providers to adopt a capitation model.

Where I Get My News - 2012

Growing up my parents were news junkies. As a result, I sort of pride myself on knowing what’s going on in the world. The other day I was asked where I get my news and it took me a while to answer the question. So I thought I’d think about it and lay out the answer in a blog post. I’ll try to order these sources from most consumption to least consumption. Here goes. Blogs. Currently I follow 52 blogs and I read them daily. The topics include business, technology, sports, current events and healthcare. Most of the blogs are written by individuals, but I do follow the What’s News section of the Wall Street Journal, the New Yorker and Techmeme which aggregate posts from a wide variety of writers and sources. I use Google Reader to manage the blog feeds on my desktop and the Reeder App to view them on my iPhone and iPad.

Twitter. I follow about 200 people on Twitter. I get a ton of news from individual Tweets as well as links to other content that I’m interested in that gets Tweeted. I follow a variety of news outlets, bloggers, traditional writers, businesspeople, athletes and musicians.

Podcasts. I follow 14 podcasts. My most listened to podcasts in order are a variety of shows on WEEI (Boston’s sports radio station), the Adam Carolla Show, This American Life (NPR) and the B.S. Report (Bill Simmons).

Television. I watch far less TV than I used to. I watch Meet the Press and 60 Minutes every week without fail. And I sporadically and somewhat infrequently catch parts of the local broadcast news and national cable news.

Newspapers. Because I'm from Boston I read the online version of the Boston Globe virtually every single day. Living in New York, on a rare, rare occasion I will pick up a copy of the Times, the Post or the Daily News.

Magazines. I subscribe to hard copies of Men’s Health and Outside Magazine. With some regularity I’ll download the New Yorker, the Atlantic or the Economist onto my iPad.

Other Social Media. Occasionally I’ll find a link to an article posted by a friend or connection on Facebook or LinkedIn.

Kindle. I got my first Kindle back in March. I love it. But so far I haven’t used it for anything other than reading books, though I plan to use it to read newspapers and magazines when I get around to it. Currently I’m reading Great by Choice by Jim Collins and Breakfast at Tiffany’s by Truman Capote. Both are great.

So there’s my somewhat organized list of where I get my news. It’ll be interesting to see how this changes over the next few years.

Some Thoughts on the Celtics

My favorite Boston sports team is, by far, the Celtics. I grew up in the era of Bird, McHale, Parish, Johnson and Ainge. This was back when nobody went to Red Sox games and the Patriots were a joke.

The Celtics had a great year this year and came within a few minutes of advancing to the third championship of the "Big Three" era.

The consensus seems to be that the "better team" -- the Heat -- won.  I disagree completely. What happened on Saturday night was more about health.

The Heat got their third best player (Chris Bosh) back full time and healthy in game 7.  It's that simple.  That's why they won.  He hit three three pointers and took the Celtics' big men way out of position to open up the lanes for James and Wade.  He had 19 points, 8 rebounds and a very key block.

If the Celtics got their fourth best player (Avery Bradley) back full time for game 7 it would've been a different result.  The better team didn't win; the team that got healthy just in time for when it mattered won.

No doubt this is the end of the road of the five year run of the Big Three in Boston. It was an unforgettable group. Their heart, commitment and unmatched defense will be remembered in Boston for a long, long time to come.

Bill Simmons wrote a column about the team back in March the day after they beat a very tough Clippers team in Los Angeles. He ended the column with these words and I'll do the same with this post.

We’ll always have that final minute after the Clippers fans filed out, when it was just the sea of green and a nodding Pierce happily soaking in those "Let’s go Celtics!" chants again. Leave them alone and the 2012 Boston Celtics will go down swinging. That’s all we know, and frankly, that’s good enough for me.