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WHY ARE HEALTH CARE COSTS SO HIGH?

September 8, 2013
communciations, Congress, economy, finance, funding, infrastructure, innovation, Insurance, Leadership, management, politics, Revenues, Uncategorized, Water Funding, water sewer management, water supplies
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Why are health care costs increasing so fast?  Did you ever wonder about that?  We keep hearing about how health care costs, Medicare, Medicare, Obamacare are going to bankrupt us, but why is that?  Why are the cots going up so fast?  It is an important challenge for local officials and utilities who generally pay the health insurance costs for their workers.  There is more to the story that we are not being told.

One problem that get identified quickly is that only 80% of the population is included in the health care system.  Many who are not are “healthy” young people who don’t demand the services.  The concept of the health care bill was to solve this problem by spreading the costs of health care across the entire population using private and public providers.  First, I think there are way more unhealthy  people included in the 20% than we realize because the political dialogue keeps focusing on the few that want to live off the grid – I feel great so I don’t need insurance.  That guy is part of the problem.  That guy gets into a car accident, gets taken to a public hospital, gets treated, gets a bill for $26,000 to fix his broken leg, refuses to pay anything, and the taxpayers get stuck with the bill.  My solution to that guy is if you don’t want to pay for health insurance, bring cash.  Otherwise, “no soup for you!” to paraphrase a famous Seinfeld episode.  Of course my doctor, nurse and therapy friends think that’s a little cold hearted. 

The next argument is the cost of doctors, therapists and nurses.  Okay, I know a bunch of them, and that’s not where the money goes.  These people have lost money in the past 10 years.  Many are going form full-time to part-time employments as Medicare, Medicaid and health insurance bureaucrats decide services are no longer needed.  They will tell you the major change in their lives is paperwork….hold that thought for a moment.

The cost of drugs comes up.  Medicare and Medicare are the largest purchasers of pharmaceuticals in the world.  So in other works, they set the lowest price by supposedly bidding the “contracts” for services. Only there is often only one provider, so exactly how does that work?   Sounds like we don’t get a good deal there, which is why the arguments for importing Canadian drugs or drugs from Mexico keeps popping up.  They get a better deal than we do and most of these are supposedly AMERICAN companies.  No home town discount (I guess I know where free agent baseball players get the idea).   And my medical friends confirm this as an issue.  Check out the comments from Mr. Falloon at Life Extension (www.lef.org) for discussion. 

So let’s go back to the paperwork discussion.  Once upon a time doctors simply sent a little paperwork to the health insurance company or the federal government and said you needed some service.  And the insurance company processed the bill for the services.  The cost was paid by insurance premiums collected by the insurance company.  Everyone was happy.  But then someone at an insurance company said, “wait we could make more money if we asked more questions and paid less for these services.  It would help our bottom line.”  So you hear the complaint that the folks at the insurance companies are deciding whether you need that procedure or not.  And contractors decide if someone needs Medicare or Medicaid services, not the government, not your doctor, your nurse or your therapist.  Not any person that knows you, but some unseen, private sector bureaucrat who’s goal is to minimize the amount of your premium spent on services so they can enhance their bottom line.  And apparently they are very effective because the health insurance industry is very lucrative.  So maybe we have stumbled onto something here.  Maybe the cost of medical coverage is more related to drugs and bureaucracy (and it is not government bureaucracy!!) than the actual cost of services.  Maybe the old system, even if there was some fraud in it, wasn’t nearly as bad as it was made out to be.  It reminds me of one of the 4 laws of City management I developed years ago:  Never give elected officials a bad alternative – it becomes a magnet.  It always worked (hence a law).  I didn’t learn why until years later when I realized, that the worst option was the one all the lobbyists lobbied for even at the local level.  It was the option where they could make the most money “fixing

SCHOOL’S STARTED

September 3, 2013
communciations, economy, engineering, Environment, graduation, innovation, Leadership, management, sutdents, Uncategorized
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School is back in session.  It is a great opportunity to see what kind of great things we can learn this year.  We can learn from the students as much as they learn from us.  Working with college students, in bridging that connection between my real world clients and my students keeps me engaged and allows me to act as a conduit of information between the two sectors.  That conduit potentially includes jobs for students and technology for clients.  It is remarkable how much the skills sets of the students have changes and increased in certain areas in five years, let alone 10.  I remind them that 5 years after they graduate, the skill set of the next group will be far ahead of theirs. Get your license and keep learning and staying up to date with technology.  It is far too easy to get behind and it is surprising how many graduates figure they are done with learning when the graduate.  Far from it.  The advances and changes in the industry move so quickly.  All my students are doing 3 dimensional projects versus cad drawings 5 years ago.  And those cad drawings were so far above the cad drawings of ten years ago.  All three groups are ahead of a lot of engineering firms with respect to technology.  And there accompanying utilities as well.  My students make great interns for GIS – it comes naturally to them.  My older friends?  Well, let’s say there is a bit of a learning curve.  As we try to be more efficient, training and skill development become continuous exercises.  It is obvious when you compare skill sets of recent, current or older graduates.  Of course skill sets may not translate to knowledge, for there is no substitute for field experience, especially in the water and engineering fields.  The reality is often much different than you expect, for a variety of reasons.  How you adapt means experience.  It is why the older crowd and the younger crowd need each other and need those communication avenues.  I find that my teaching keeps you engaged in the changes in technology, viewpoints and the new generation while maintaining the relationships with the real world

PAY YOUR BILL

June 24, 2013
communciations, Development loans, economy, finance, funding, Leadership, management, Marketing water, sustainability
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A recent Wall Street Journal article noted that 50 % or people have paid their utility (water, sewer, electric) bills late, but only 24.8% have paid the internet late, 39.5% the cable late and 44% the phone bill. Really? We are willing to pay water, sewer and electric late, but not the internet bill? This should be a wake-up call to water and sewer utility leaders nation-wide that we have a problem. Combined water and sewer bills across the United States average something around $50. True they are often higher in California, SE Florida, and some other areas, but they are also lower in many areas. Most of the time even in those high cost areas, the bill is under $100.

I have done a number of rate studies and I find that the cable bill, and the cell phone bills are almost always higher than the water+sewer bill locally, so why are people willing to pay our bill late, but not the others? Is it the perceived benevolence of local utilities, most of which are public entities? Is it a perception that water should be free so it is not important to pay the bill? Or is it the lack of marketing of an essential product by waterutilities? I have heard all these arguments, but I am thinking the latter may be more important. Most people know they need to pay the bill, and I don’t really know anyone who thinks water should be free in the US. People are used to cheap water, and costs are going up. Complaining to local elected officials often keeps rates artificially low, which means maintenance and replacement programs get deferred. That makes the utility more at risk to failure. EPA, GAO and others report regularly that we have been keeping rates low and deferring capital and maintenance for years to the tune of hundreds of billions of dollars. So what is wrong?

I suggest that as an industry, we have failed in marketing water. Treatment plants, piping and pump stations are out of the way, pipes are buried. No one sees them and people assume these faciliaites will work, but rarely ask how they work or how long they will work. They do not understand the complexity or the regulatory stringency of operating a utility. They do not understand that the number one priority is public health, and protecting the public health costs money. We have not made people understand this because we do not market our product. I have taught elected official classes where the elected officials tell me public dollars should not be spent on marketing, but they never say why when pressed. Rarely is marketing included in a budget. But if water and sewer is a business, isn’t marketing an important strategy to maintain that business?

Meanwhile we have a host of celebrities marketing cellphones, which are not required to survive. We have a host of glitzy cool advertisements for cable service options, but we don’t need cable to survive. The power companies send out glitzy stuffers in their bills that no one reads, but they do end up in the papers regularly. And power really helps us survive, but we could do without it (although it would be unpleasant). Our forefathers did. But no one ever survived without water. Maybe it is just too obvious. But maybe because it is so obvious, people are less conscious of it. We need to market better. As a private sector marketing manager would say – we have lost our market share!! We need to get it back.

Talk Radio discussion

May 18, 2013
Climate, communciations, economy, Environment, funding, groundwater, infiltration, infiltration gallery, infrastructure, innovation, Leadership, management, sea level rise, stormwater, sustainability, Tidal flooding, Uncategorized
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Talk Radio discussion

Hi All.

This is a radio show I did this week.  One of 4 I have scheduled.  It talks about me and my company, outlook, thoughts.  Take a listen.  Let me know what you think!

Fred

WHAT MAKES A GREAT LEADER?

March 25, 2013
communciations, infrastructure, innovation, Leadership, management, sustainability, Uncategorized, water sewer management
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WHAT MAKES A GREAT LEADER?

This a question that has puzzled researchers for some time.  Back in the 19th century we looked to enlightenment among people – mostly oriented to new ideas and processes that would move civilization forward.  That helped but did not provide full answers.  Of course we were still in the throes of the start of the industrial revolution.  We looked at psychology to show us how to find leaders at the turn of the 20th century, but that faded in favor of trying to determine traits that made good leaders in the 1920s.  The idea of traits faded as we started looking the style by which people managed (think all those tests out there), but soon found that management style, leadership perception and results were often not correlated.  In the 1990s we started looking at adaptation, but as Jim Collins points out the great companies seem to have leaders that are the opposite of the charismatic leadership many seek or seek to become.  It’s the plodders, who can adapt to changing facts or situations on the front lines, that seem to get results.  And we only tend to notice after the fact, or well into their leadership reign, not at the beginning.  In fact many of the best success stories received much criticism early on.

What this all seems to indicate is that leadership evolves, just as civilization evolves.  Those that can evolve and adapt to changing conditions appear to lead the most successful organizations, but are not often recognized as the best leaders.  No one set of characteristics in a person will fit each situation or challenge, but you need the ability to understand the context of the facts in order to chart a course and engage people in solutions.  Without buy-in, the problem will not be solved and most challenges require thought on the part of others who are committed to the same goals as the leader.  The leadership team concepts allows for the ability to delegate to those closest to the situation, or with the best skill set to resolve it, will achieve the best result and create personal accountability by creating a personal stake in the solution.

Engagement identifies another emerging hallmark of leadership which is that we all want to succeed and leaders tend to nudge their followers toward that success.  Good leaders always backstop their charges, and understand that not all situations will be resolved ideally and that there may be multiple means to resolve the problem.  That gives the followers the ability to “gamble” on innovative solutions without the fear of reprisals.  The fear of reprisals will eliminate innovation.  What you want is to lead your organization to be innovative.  Organizations that foster innovation can become more effective in their industry.  Isn’t that what we want?  Fostering innovation is how Google develops a lot of its applications.  They call it 20% time, where employees get to work on anything they want, with anyone they want, except their own projects.  Think GoogleEarth, gmail, and many others.  Dan Pink did an excellent discussion in his best seller “Drive.”  I recommend you check it out.  But then we need to ask, “When was the last time we tried something like 20% time in the utility industry?”

Market or be Outmarketed

March 10, 2013
communciations, finance, funding, Leadership, Marketing water, sustainability, Uncategorized, water supplies
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Municipal drinking water is strictly regulated by the USEPA.  We spend a lot of time testing our water, producing reports, and providing our customers with information on our results.  The results show it works, because the number of incidents of contaminated water are few, and rarely affect larger utility systems.  We are so good at providing water that the public expects their water to be safe, yet the buy bottled water?  Wait, huh?  Bottled water? Bottled water is not regulated by the USEPA and is not subject to the same requirements as potable water.  There are less than three full time people at FDA inspecting bottled water facilities, versus thousands reviewing public water supplies.  Water utilities run millions of analyses per year and must publish the results.  So why do they buy bottled water when our water is safe?

Keep in mind that in many areas of the world, the bottled water industries move in and compete for the same supplies as we currently use.  North Florida is rife with arguments over flows to springs as are other areas.  Some of the water is simply repackaged tap water.  So in addition to competing for our customers, they are competing with the sustainability of our drinking water supplies.  Then there are the hundreds of thousands of bottles that end up in landfills.  More impact on sustainability.  At the same time, bottled water is more costly that gasoline, which everyone complains about, but that does not stop the purchases?  So what’s up?

Marketing that’s what.  We don’t market water.  I noted in an earlier blog that we simply don’t market our product, which has allowed others to compete for the same dollars.  Customers complain about rate hikes, (averaging about 5% per year for the past 10 years according to the new AWWA study), yet they happily pay over $4/gallons for many of the popular bottled waters, more and more cable channels, fancy phones, etc.  Not that any of these commercial products are per se bad, but none are required for survival like water.

Interestingly when we do market, it reaps positive results.  New York and San Francisco have seen the wisdom of marketing for year.  They ship New York tap water to Florida to make Brooklyn style bagel because Florida Water doesn’t taste the same.  DC Water changed its name, and began a marketing campaign that changed public perception of the utility and has allowed it to start dealing with its infrastructure backlog.  Some of their ideas include branding the water, and having restaurants serve it in marked glasses, paid for by the utility.  Signs on drinking fountains, in schools and even sales of tap water in stores are options some utilities have started.  But the key is started.  Marketing takes dollars, to reap benefits.  Who knows, maybe tap water is the next bottled water….

What do you believe are the three biggest water challenges in the U.S.? Part 2

February 20, 2013
Climate, Environment, finance, funding, groundwater, infrastructure, Leadership, management, Marketing water, sustainability, Uncategorized, water sewer management, water supplies
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This question has been asked a couple times on on-line discussion groups.  It usually results in a short list of answers.  In the last post, I outlined the number one answer –  getting a handle on failing infrastructure.  The next issue has to do with water supplies.  You hear the argument that we need to get people to respect that drinking water as a limited resource, develop where water supplies are plentiful as opposed to arid regions that are water poor and protecting water sources instead of rendering it unusable in the process of using it. People (and their jobs) are moving to “more favorable” (read: warmer, more arid) climates, so people are now actually trying to grow rice and develop golf courses in the deserts of the Southwest US and complaining about “drought” conditions. The sustainability of groundwater supplies is often noted as a problem because much of the west relies on groundwater for agricultural irrigation. Having a 50 or 100 year management plan for an aquifer, which is how to insure there is water to last 50 or 100 years, is shortsighted, even though it doesn’t sound like it. Long term these areas could run out of water which will create significant economic impacts to these communities. More professionals should be involved in this discussion: regional growth planners; federal and state funders that offer ‘incentives’ to businesses to relocate their workers; city and county governments that accept these ‘incentives’ to beef up their budgets.

But just as cities market their community to developers and industry, it is interesting that marketing services is another issue.  I had a conversation where an elected official said it was inappropriate for government to market. Yet the bottled water industry does, power companies do, and cell phone companies do. Utilities ignore the people that put fliers on houses asking our residents to take a sample of their water, and then attacking the quality of our drinking water by explaining that having calcium and chlorine in the water is bad, should have been addressed long ago. Of course calcium and chlorine are in the water! Chlorine disinfects the water and then keeps the distribution system clean (especially an issue in warmer climates with TOC in the water). Our public is uneducated and we have been out-marketed for scare dollars for 40 years. That is an elected official, but also a water official problem.

Who are our leaders and why?

February 11, 2013
communciations, infrastructure, Leadership, management, sustainability, water sewer management
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Interestingly I asked this question on a recent on-line in response to a discussion topic.  Interestingly the only comment was about companies, not people.  Who are the people who are our leaders?  We’ve seen some people in the past, but have we forgotten them?  Are we too busy?  And why did we not come up with names today?  Is it that hard?  Do we not take the time?  Because without knowing our leaders, we can’t look for or train our next generation of leaders.  We can’t see the innovative ideas, the understanding of new trends, or the risk issues that we need to overcome.  We see some major issues in the coming years in the industry:  Infrastructure condition, water quality deterioration and supplies are among them.  The question is how to solve them.  It is also what do we leave behind?  If you are a person who wants to be a leader, there are a number of skills you need, and you need to be at the right place, at the right time.  You also need to think about the long-term impacts of your plans/policies and actions.  How will they be perceived 10 or 20 years out.  How will your decisions impact the course of the organization? I remind elected officials that no one remembers the guy who refused to raise water bills (or taxes).  But they do remember when infrastructure fails.  The do recognize when thought was put into securing a water supply, treatment capacity or treatment processes to secure water quality.

Leadership Part 3 Examples?

December 24, 2012
Climate, Environment, finance, funding, infrastructure, Leadership, management, Marketing water, planning, sustainability, Uncategorized, water sewer management, water supplies
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Leadership Part 3

One of the themes in the prior two posts on leadership was that leaders are defined by a vision, the people who follow the leader and the ability to market the vision.  We often fail on the marketing end, especially in dealing with water and sewer infrastructure issues.  We know the infrastructure is in poor condition and that billions, perhaps trillions are needed to upgrade the system to serve our needs.  But pipes are hidden and parks are far more glamorous, so guess what gets funded?  At least until a failure occurs.

I teach an elected officials class for water/wastewater issues.  The all acknowledge that a failure o f the utility system is a huge issue and the electorate and elected officials are often looking for “the cause” or someone who is responsible.  In other words, someone to fire.  It is every utility director’s nightmare, and a nightmare for many elected officials as well.  Yet a 4 hour outage in a year is a 99.96% success rate.  My students would be raising hell with the dean and president if I failed them for only 99.96% correct answers.  And rightly so.  Why are utilities any different?  Public health sure, but the systems can fail, and the condition that many are in warrants far more attention to potential to fail unless we can market to the public the need to invest.  Yet how many city managers, elected officials and finance director acknowledge any accountability for failures?  The investigation into the Walkerton Ontario failure indicated that the employees who falsified records, the governing body, the water advisory body and other officials all the way to the province had culpability in the failure of the system that made half the town sick and killed a number of residents.  Utility folks need to market the need to protect public health better, to make the public understand.

Marketing is a difficult skill set.  I can tell you sales in not one of my skills.  Common among engineers who tend to be more technical in nature, letting the data guide us.  Even so, we have successes.  Think about the City of Los Angeles.  The only reason large numbers of people can live in LA is the aqueducts that were started back in 1900s by William Mulholland under the guidance of Mayor Fred Eaton.  The vision was to grow LA but the limitation was water supplies.  The aqueducts sparked water wars (think Chinatown, the movie), and developed through the 1930s.  Hetch Hetchy, over 100 miles east, was established as San Francisco’s water supply back in 1913 as well.  The reservoir system continues to supply San Francisco today.  Denver Water acquired and/or constructed reservoirs and tunnels to the west side of the Rockies for water supplies prior to 1940, realizing that sustained growth in the Denver area was not available east of the Rockies. .  Pinellas County and Orange County California started projects to reuse treated wastewater for irrigation of private yards, and aquifer recharge in the 1970s to sustain their supplies.  Sustainability of water supplies, management of water sources including wastewater and stormwater as a part of an integrated program and sustaining the financial and infrastructure condition of the utility are the long-term priorities.  We need to find those visionary projects and people today.

So here’s the assignment.  Let’s find where those leaders are today, and identify what makes them a leader.

Leadership Part 2

December 20, 2012
Climate, communciations, Environment, finance, funding, infrastructure, Leadership, management, Marketing water, planning, sea level rise, stormwater, sustainability, Uncategorized, water sewer management, water supplies
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Among the many things I do is work with college seniors as they get ready to graduate and hit the job market.  The changes you use in many of these students over that last year in school is often significant, and in some cases remarkable.  Different students grow differently and the potential starts to appear.  Some gain confidence in their skills and begin to grow into the profession.  Some of these students are likely to make good leaders in the field in the future.  But trying to guess which ones and why it is often a challenge.  However I want them all to have some concept of what leadership is all about.  For many of them, they will end up in the water/wastewater/stormwater field.  They are going to have to deal with tough issues like rebuilding deteriorating infrastructure, sea level rise, climate changes, stressed water supplies, energy demands and a more demanding electorate.  They will recommend increasing water and wastewater fees.  But will they have the skills to encourage decision-makers to move forward with the needs of the system.  You see, that’s where leadership comes into play.  Often it is little things that set things into motion.  Our engineers go into the world with a technical skills et, that ability to learn to solve problems with solutions.  We try to encourage them to be creative.  An assigned reading is “The Cult of the Mouse” by Henry Caroselli, who urges creativity above profits in the workplace.  Mr. Caroselli is right in that it is creativity that allows us to come up with innovative solutions, the ones that change how we live.  It is also where the patents and economic opportunities exist.  America rose to greatness in the 20th century in large part because of automobiles – we figured that out and it made some many things possible.  Computers became common place in the latter part of the century.  We use the technology for both in the water/wastewater/stormwater industry.  In fact they have made us so much more efficient that costs have not climbed as fast as they might have, which is why cable tv is normally more expensive than your water bill.  Which one do you need to live?  My hope is that today’s students figure out energy solutions that will carry us forward as a world leader in the 21st century.  Those alternative energy options, greater efficiency of current technology.  Each will allow the utility industry to improve it’s efficiency further.  The City of Dania Beach built the world’s first LEED Gold water plant.  That took a little vision on the part of the utility director Dominic Orlando.  And a cooperative team of consultants and students.  When we give these projects to young people we can be surprised because they often don’t know that “that’s not the way we do it.”  Well that’s exactly what Mr. Caroselli said.

So we look for leadership.  Creativity, innovation and the “Can-do” mentality are part of leadership, but not all.  There is that ability to set a vision, like Mr. Orlando did in Dania.  There is the ability to convince decision-makers of the wisdom of an idea, as opposed to doing like we always did to make the shareholder happy as Mr. Caroselli noted.   Selling innovation is often the hard part because that’s were the costs are.  But there is more.  Often the selling of a good idea is difficult.  You can be ridicules by the status quo.  Many ideas are just lost in the shuffle because they never receive a voice.

Leadership is often not understood at the time it is occurring.  Ok, maybe we figured this out when Lincoln was President, but if you read accounts of his Presidency, the early years are marked with indecision and backtracking before he got it right.  Most of that is forgotten in lieu of the ultimate results.  Many of the issues we face today need real leadership to create a long-term solution.  The “fiscal cliff” issue is a prime example, as it the long-term need for solutions for social security, Medicare and medical costs in general.  The need to fix the infrastructure that made our economy strong should be among those priorities also.  Remember, we don’t remember the councilman, mayor, legislator. manager, director or President who did not raise taxes or water bills.  They do remember those who solved problems