Economic fallout ....

Jeff396 · Jan 19, 2002

I find it appalling that people would find out about things on the Internet before hearing it from the company.

My wifes company seems to have a real problem in this area. I can't decide whether it's a matter of them not caring, incompetance or just plain not understanding how things affect people. An example....my wifes company just aquired another. Yesterday she was told that the new people would have to sign something that includes a non compete clause....can't work for any compeditors for a matter of time...I think 1 year. So she asks them when they would receive their offer letter. They weren't planning on issueing offer letters. So, they actually expect people to sign a letter on agreement without knowing exactly what their salary and position will be in the new structure.....CLUELESS/w3tcompact/icons/shocked.gif Unfortunately, it seems to be the rule rather than the exception.

Also, during their recent layoffs and work cutbacks, she thought the upper management, herself included, should also cut back their hours to help save some cash in the short term and to show that they're all in this together. Corporate told them they couldn't do that. I guess they think it's much more motivating to tell the underlings that they don't need their whole check as long as it doesn't affect the upper management. Anyways...I babble! FRUSTRATED!

Jeff

TerryinMD · Jan 19, 2002

Jeff,

No, you're not babbling. I have seen and heard of similar situations. Let's see, the term used is a "new paradigm".

There appears to be a new greed in the corporate culture now. It is hard to put your finger on it, but you see it and feel it. I don't expect that a company MUST provide me with all of the best healthcare and benefits. But, at least show some decency and respect. Treat us as adults and tell us what is going on. Elicit some ideas. I think you get the picture...

Terry

frank_f15 · Jan 19, 2002

rpm:i don't know that limiting the right to sue is the way to go, but i do think that frivolus suits should be punished. i also think that the hmo's create some of their own problems. i really don't know the ans. but i do know the the GREATEST, RICHEST country in the world should not have such high medical cost.i suppose u read about the 2 women that died this week because their oxygen meters were plugged into the wrong outlet? now why should that happen? a simple thing like designing one meter unable to plug into the wrong outlet is not so hard to do.hell u can't even plug your tv in the wrong way, just so the polarity is right, but u can plug an oxygen meter into an antistetic outlet? AS STATED BEFORE , IT IS ALL ABOUT GREED.

Anonymous Poster · Jan 20, 2002

I hate to say this, but it ain't as much about greed as it is just flat not giving a [censored], and being able to pass the cost along. In the 7th Judicial District of NY, it is virtually impossible to bring a malpractice claim, you first have to get a board to accept the case, and the docs here ain't paying exhorbidant premiums for malpractice either, but our costs just keep climbing.
The hospitals are in total disarray when it comes to billing, just last month there was a story where the Blues went into a hospital billing department and showed them how to bill so the hospital wouldn't go bankrupt.
The whole dam system can't stand to be looked at in the light of day. 20 years back the Senate looked at Blue Cross, and flat out stated they were so crookid they ought to be closed down, but the Blues cover so many people they can't be closed down. The Blues are tax exempt, and boy do they take advantage of that.
Every 6 months there's a story on TV how some doc or somebody else screwed the taxpayers for a few million. What makes anybody think the government can control this mess?

RPM · Jan 20, 2002

Terry,

RE: Now what do you folks know about healthcare insurance profits and their G&A. Do the big insurance houses have a lot of overhead, bonus programs, and large underutilized staffs? We all know that bigger is not necessariliy better.

Based on what I've seen the answer is yes. Certain insurance companies which I have consulted for over the last ten years (who will have to remain nameless because I'm under non-disclosure) are a mess internally. Years of acqusitions and mergers have made a mess of their internal IT infrastructure. There's usually a glossy front-end, but a mess in the back-end. Some of this was tidied up with Y2K and new HIPAA regs, but only enough to get over the hurdle.

Result is that the companies find it very difficult to take advantage of new technologies to reduce their cost. Many find it almost impossible to create a profile for an individual customer and all their policies / accounts - lots of tribal knowledge and thick instruction books littering those customer service operations!!

Add to this mess all the arcane insurance regulations and the fear that the company will end up out of compliance with one reg or another if they make changes and people are reluctant to touch the stuff. If you ask some of the IT staff in these operations they'll tell you that no-one actually knows how some of these systems work - just that they do. Scary stuff!

Patrick

Alan L. · Jan 20, 2002

Our health premiums went up nearly 50% from last year. We're having to change carriers and get less coverage.

TerryinMD · Jan 22, 2002

Some more stuff....

All of this stuff is public knowledge and I don't mind sharing. With all of the cost savings measures, the company has decided to also suspend any stock options this year. However, they DID decide to provide an exchange program for options give prior to our stock going south. /w3tcompact/icons/sad.gif This is a positive note!! /w3tcompact/icons/smile.gif The company is going to exchange the existing options with a new strike price which is to be determined this summer. Cool. The downside is that the option exercising periods start over next January. /w3tcompact/icons/frown.gif

Our group had a meeting to discuss all of this stuff today with our VP. He was very nervous giving the presentation. Too be expected. I think the poor guy expected to be skinned and roasted. One interesting question did come up, why is there 0% merit increased this year. I felt very sorry for him. He sat in utter silence for nearly a minute before he said that it was due to the economic pressures of the past year. Well - duh!!! The question was posed by a person who teleconferenced in and I believe was asked to put the poor guy on the spot.

Interesting economic times that we are going through.... I've been through a couple lean ecomonic times before and this one is still a little hard to guage. The next few months shoudl prove to be very, very interesting.

Terry

ejb · Jan 22, 2002

I for one am seriously considering dropping my coverage and self-insuring...as long as we don't get real sick we should come out way ahead...a gamble I know.

At about $9000 per year for premiums (and poor service at that) I save about $45K in 5 years if we can all just stay fairly healthy....haven't decided for sure but I should hate writing those checks every month and almost never using the doctor for anything. (Not that I'd rather be using him more/w3tcompact/icons/shocked.gif)

TerryinMD · Jan 23, 2002

ejb,

Wow - that's unbelievable...

Hey, have you checked out getting coverage from like the Farm Bureau or Costco or someone else....

Terry

scruffy · Jan 23, 2002

ejb, just be sure that you ALL have a thorough checkup prior to doing such a thing! I gambled on the same thing for a year and a half, got off scott free...almost...but still a large savings. Decided to go back to the corporate world, and luckily I did. Two months later, I was sick and diagnosed with cancer. Luckily, I had those corporate benefits! Could never have afforded those 60Grand in medical bills otherwise!
All I am saying is be very sure up front, and save those premium payments in case they are needed.

ejb · Jan 23, 2002

Yikes..60G in medical bills...wouldn't want to pay that out of pocket/w3tcompact/icons/shocked.gif

Then again at 9K per year, even with 60G in bills, you still come out ahead in 7 years if that was the only major expense...guess you just don't ever know...its a gamble either way.

scruffy · Jan 23, 2002

ejb, the whole point is, you don't know what lies around the corner, and once a situation occurs, it is too late to get coverage to help out. I have no guarentee that this year those expenses won't be duplicated, or if they do the bone marrow transplant, quadrupled! No matter what, under the circumstances, I am locked into the corporate job, because I cannot get medical insurance anyplace else (now), nor could I even begin to find life insurance! In order to protect my family, I will maintain the job, medical insurance and half mil. life insurance policy through the company.
I was more than guided in that fortunate decision to re-enter the corporate world by a gentle nudge or three (not to mention an outright push) through answer to prayers.

DVerbarg · Jan 23, 2002

ejb,

I dropped all coverage for about 4 years. No out of pocket expenses, what a savings, but a gamble.

If you do this you might want to get some sort of stop-gap coverage or catastrophic coverage. I considered a couple of these plans back when I did not have coverage (now have coverage through an employer) and they were about $150 per month for our family of 4. They typically were PPOs with a deductible of $4000 to $5000 per year. This is much more reasonable and allows you to coverage for large expenses, such as Scruffy's, and still save a huge pile of money (which would allow for more tractor goodies /w3tcompact/icons/smile.gif).

DVerbarg · Jan 23, 2002

RE:Now what do you folks know about healthcare insurance profits and their G&A. Do the big insurance houses have a lot of overhead, bonus programs, and large underutilized staffs? We all know that bigger is not necessariliy better.

Working for a strategy consultancy that specializes in healthcare I see some of the inside workings of healthcare companies. Many of these companies gobbled up others the past few years but did not adequately think through their aquisitions. Their combined size did not need all those people. One particular example I'm thinking of is a large national carrier that just laid off 6000 people (or was it 9000?). Over the past few years revenue growth was marginal but employee counts doubled. Hmmm, what's wrong with this picture?

Yes, as a general rule they have large staffs which are underutilized, not necessarily without work, but just not managed well. Most of these companies bought into the Amazon.com mentality during the 90s - "Its Ok to lose money on each transaction as long as you make it up in volume." (yes I know Amazon just announced a profit, but don't expect it next quarter) The insurance companies took any business they could get despite the profitability of the business.

This is not to say that some people should not be insured but rather that a company that tries to insure everyone cannot properly structure their company to efficiently deal with all types. For instance, insuring a large company, such as Motorolla, is typically not insurance (Motorolla is self-insured) but the insurance company would just be providing administrative services only (ASO). Or a small professional services company (who cares about providing great benefits to retain top-notch employees) is more concerned about great network coverage (how many doc and hospitals) and great customer service when dealing with claims.

Another wrinkle in insurance is that many states regulate the price differentials allowed. There is alot of regulation concerning employers with less then 50 employees. The insurance company cannot give a really low rate to a bunch of computer programmers (low risk people) then charge a super high rate to a bunch of silver miners (high risk). Laws govern how much the company can vary their price (a percentage, but this is too simplified), thus they price higher to protect their bottom line and the low-risk guys have to shop around.

Feel like I'm beginning to babble again and am not making any sense. This is a fun conversation and of course a problem to which there is no easy solution.

TerryinMD · Jan 23, 2002

Dave,

No, you're not babbling on. I think that what you're passing on is good information. Most of what you just said is probably true for a lot of the recent corporate acquisitions and mergers. What you're saying in a nutshell is that the larger portion of planning is in the execution of the "deal" to bring the companies together. The actual merger of the company cultures are left to the operating managers plan and execute. Now, from my perspective, this is not happening. I believe that a lot of the corporate executive officers and middle management do not have the operational knowledge to be successful at melding large operating units coming from different corporate cultures. These management teams are young, having their MBA's with no practical business knowledge and no personnel skills. The bottom line is all that matters without thought of how these mergers affect all of the worker bees.

Terry

MikePA · Jan 23, 2002

Even when they do have operational knowledge, personnel skills and business knowledge it can take a long time. Just changing a corporate culture within a single company, using commited managerial staff, can take 5 years. Mix in companies that are geographically separated. Oy vey /w3tcompact/icons/smile.gif BTDT.

ejb · Jan 23, 2002

catastrophic policy..now that would do it. I have been searching and so far have found no one that will write a policy in Massachusetts. [censored] state government imposes so many restrictions on insurance companies that most won't even do business here...very few choices for health and car insurances.

I'll keep looking though cause I could handle a 5 or 10 or maybe even a 20K hospital bill, but its the *really* expensive things that scare me.

Thanks for the suggestions.

DVerbarg · Jan 23, 2002

Terry,

Your point about MBAs and lack of practical experience hits home with me. No that does not describe me but is rather the exact opposite of my personal experience. Despite my lack of formal education, no PhD, no MBA, no Bachelor, no Associate, not even a formal high school diploma (home schooled) but experience in running a couple of my own businesses, worker bee in a corporation, middle management, and now management in a consultancy. Everyone I work with has MBAs (except the receptionist and powerpoint specialists) and am amazed at how many of our clients in large corporations can talk corporate/MBA mumbo jumbo yet execute so poorly. Don't know how they miss the most obvious issues that stare them right in the face! /w3tcompact/icons/frown.gif

They all seem paralyzed out of fear of upper management that they don't do anything, with the exception of those who generally do dastardly deeds. Of course there are exceptions to my overgeneralized rule but they are too rare. /w3tcompact/icons/sad.gif