Management Styles that don't work...and why government uses them.

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My last article exposed some of the completely unnecessary micro-management functions, by as yet non-existent government agencies, written into the health care "reform" bill. Now I'll give some insight into why such things matter.

After the many decades I've spent working with and consulting to hundreds of business firms, I have seen just about every management "style" that probably exists. One style, which is apparent in a surprising number of small firms, is something I call the Delusional/Paranoid (D/P) style.

This management style is a direct reflection of the business owner's psychological state of mind...and it comes in many degrees, from the moderate to the extreme. The key elements are based first in the delusion that the manager is simply smarter than others, and that others must be monitored constantly or they will not be able to function at an acceptable level.

This is not surprising, or shocking, as the business owner is the one who has put everything at risk in starting a business. It's natural they worry about things "going right." Most managers are concerned with quality control, what their employees are doing when at work, and other issues of work quality...but the D/P manager just takes it a bit further than most.

I have seen situations where employees are grossly underutilized. As soon as they finish a project, they have to wait for the boss to approve it before moving onto another project. They may spend 15 minutes making a part...then wait an hour for approval...then spend another 15 minutes on the next part, and the cycle continues.

There was one example, a boss unable to trust anyone else to inspect parts...even though he had a nearly 0% rejection rate, that he worked as a full-time parts inspector rather than running the business. He did that work after the plant closed every evening...literally putting in 14 to 16 hour days.

The problem was that his micro-management was a "cost item" and not a revenue item. The time he spent on the floor inspecting parts did not contribute to the value of the product, and he could not charge for it, so there was no offsetting revenue to balance the expense. In essence, he worked all day for free.

The second element is the degree of paranoia the owner has in regards to employees and others. In extreme cases, the manager is certain employees are stealing, though there is no proof, or that they are conspiring to ruin the business, to steal ideas and technology, or to break out and start a competitive firm.

Now, of course, all of those things have happened and are possible. But the D/P manager, again, takes these fears to the extreme. Once again, oversight and micro-management is the response. And again the time and effort put into this oversight is an expense not balanced by added value.

Obviously every business will expend some degree of effort on monitoring employees and managing the work place. But these functions are direct expenses, and do not directly add to the value of the product so cannot be charged against the customer. The bottom line, for a business firm to grow beyond a certain very base level managers need to learn to train, trust, and to delegate or they will simply not be able to handle more than a few employees. Those who learn these skills can grow their firms into larger firms and eventually into public corporations.

So there is a direct relationship: the more time and effort spent on micro-management, the more the costs go up without increasing product, and the more expensive the product becomes per unit. Eventually the company languishes or goes broke.

I have seen similar styles in small divisions of large firms, where a local manager overdoes management of a sales force...leading to high turnover in the ranks due to frustration and loss of profit as costs go up without contributing to value. On the other hand, I've seen award-winning sales crews where managers watch from a distance, giving sales people "permission to excel" and guidance only when asked. Those sales managers grow value instead of expense.

Here's the bottom line: all management function comes at a cost. A certain degree of management is a necessary cost, but a management heavy firm loses money and the over-abundance of management is an expense that does not contribute to production. Therefore, the product costs more...there's less of it...and the customers pay more and make do with less. Unless, of course, there is competition...then the firm closes its doors as the customers move on.

This simple rule is true for a small business, a large firm, or an entire industry. The health care "industry" in the US, for example, is actually a term for the conglomeration of hundreds of thousands of small and large firms...from huge corporations to private practices. All of these firms put out a product, for which they have to charge us, the consumer, to cover their costs. One of those costs is management.

The health care bill is absolutely flooded with new micro-management requirements...not by the owners of these firms...but by government bureaucrats who will contribute nothing to the value of the products and services being delivered. This is simply a laundry list of new expense items...and the government will not be paying them.

These new expenses will run into the trillions of dollars...literally...and they will be passed on to the consumer, until the consumer is simply unable to pay. Then, services and products will simply become scarce, prices will rise dramatically, and the consumer will learn to live without...because there will be no competition. Every health care provider will have to expense the micro-management from government...no one will be exempt, so, as in a monopoly market, the prices will skyrocket as products become scarce.

When politicians tell you that health care is "unaffordable" now...or that the bill will "make it more affordable" or "balance the budget" they are either flat out lying to you or they are incredibly foolish individuals. Anyone who has ever run a business, or done a household budget for that matter, can look at the reality of the situation and understand that.

Of course, many elected officials are Delusional/Paranoids. Looking at it from their viewpoint...we're way too stupid to figure out what's happening to us and they don't dare tell us the truth...as we couldn't handle it...and they certainly can't give us choices. That might confuse us and screw up everything.

Maybe it's time for a little turnover in employees...and guess what...we're the employers. This coming November seems a good time to start!

The Professor

Digging Into the Health Care Bill

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I keep being told about the "details" of the "Health Care" bill, recently rammed through Congress, by folks who have never even tried to read the bill. Doesn't matter, they obstinately assure me, they know what's in it. It must be that ESP thing...I never knew so many people had that psychic skill.

As I don't have such perception...I have been reading the thing...not an easy task due to it's rambling and obfuscatory nature. I've managed to identify a few thousand reports that physicians and others in the industry will have to file with various agencies and commissions...none of which yet exist. And I'm only a third of the way through the monster.

Not surprisingly, the budget office of the congress forecast the cost of the bill based on benefits estimated will be paid out. They did no forecasting of the costs of providers having to hire admin personnel to fill out and file the millions of pieces of paper demanded by government micro-managers. The real costs of the legislation will likely run not 1.4 trillion, but in the tens of trillions. We will have to pay that.

The money, of course, doesn't exist and won't...so the system will crash and leave the industry in shambles. But enough bright and cheery talk...let's look at some items actually spelled out in the bill...such as a list of new agencies that don't yet exist. Here's a start:

1. Grant program for consumer assistance offices (Section 1002, p. 37)
2. Grant program for states to monitor premium increases (Section 1003, p. 42)
3. Committee to review administrative simplification standards (Section 1104, p. 71)
4. Demonstration program for state wellness programs (Section 1201, p. 93)
5. Grant program to establish state Exchanges (Section 1311(a), p. 130)
6. State American Health Benefit Exchanges (Section 1311(b), p. 131)
7. Exchange grants to establish consumer navigator programs (Section 1311(i), p. 150)
8. Grant program for state cooperatives (Section 1322, p. 169)
9. Advisory board for state cooperatives (Section 1322(b)(3), p. 173)
10. Private purchasing council for state cooperatives (Section 1322(d), p. 177)
11. State basic health plan programs (Section 1331, p. 201)
12. State-based reinsurance program (Section 1341, p. 226)
13. Program of risk corridors for individual and small group markets (Section 1342, p. 233)
14. Program to determine eligibility for Exchange participation (Section 1411, p. 267)
15. Program for advance determination of tax credit eligibility (Section 1412, p. 288)
16. Grant program to implement health IT enrollment standards (Section 1561, p. 370)
17 Federal Coordinated Health Care Office for dual eligible beneficiaries (Section 2602, p. 512)
18. Medicaid quality measurement program (Section 2701, p. 518)
19. Medicaid health home program for people with chronic conditions, and grants for planning same (Section 2703, p. 524)
20 Medicaid demonstration project to evaluate bundled payments (Section 2704, p. 532)
21. Medicaid demonstration project for global payment system (Section 2705, p. 536)
22. Medicaid demonstration project for accountable care organizations (Section 2706, p. 538)
23. Medicaid demonstration project for emergency psychiatric care (Section 2707, p. 540)
24. Grant program for delivery of services to individuals with postpartum depression (Section 2952(b), p. 591)
25. State allotments for grants to promote personal responsibility education programs (Section 2953, p. 596)
26. Medicare value-based purchasing program (Section 3001(a), p. 613)
27. Medicare value-based purchasing demonstration program for critical access hospitals (Section 3001(b), p. 637)
28. Medicare value-based purchasing program for skilled nursing facilities (Section 3006(a), p. 666)
29. Medicare value-based purchasing program for home health agencies Section 3006(b), p. 668)
30. Interagency Working Group on Health Care Quality (Section 3012, p. 688)
31. Grant program to develop health care quality measures (Section 3013, p. 693)
32. Center for Medicare and Medicaid Innovation (Section 3021, p. 712)
33. Medicare shared savings program (Section 3022, p. 728)
34. Medicare pilot program on payment bundling (Section 3023, p. 739)
35. Independence at home medical practice demonstration program (Section 3024, p. 752)
36. Program for use of patient safety organizations to reduce hospital readmission rates (Section 3025(b), p. 775)
37. Community-based care transitions program (Section 3026, p. 776)
38. Demonstration project for payment of complex diagnostic laboratory tests (Section 3113, p. 800)
39. Medicare hospice concurrent care demonstration project (Section 3140, p. 850)
40. Independent Payment Advisory Board (Section 3403, p. 982)
41. Consumer Advisory Council for Independent Payment Advisory Board (Section 3403, p. 1027)
42. Grant program for technical assistance to providers implementing health quality practices (Section 3501, p. 1043)
43. Grant program to establish interdisciplinary health teams (Section 3502, p. 1048)
44. Grant program to implement medication therapy management (Section 3503, p. 1055)
45. Grant program to support emergency care pilot programs (Section 3504, p. 1061)
46. Grant program to promote universal access to trauma services (Section 3505(b), p. 1081)
47. Grant program to develop and promote shared decision-making aids (Section 3506, p. 1088)
48. Grant program to support implementation of shared decision-making (Section 3506, p. 1091)
49. Grant program to integrate quality improvement in clinical education (Section 3508, p. 1095)
50. Health and Human Services Coordinating Committee on Women's Health (Section 3509(a), p. 1098)
51. Centers for Disease Control Office of Women's Health (Section 3509(b), p. 1102)
52. Agency for Healthcare Research and Quality Office of Women's Health (Section 3509(e), p. 1105)
53. Health Resources and Services Administration Office of Women's Health (Section 3509(f), p. 1106)
54. Food and Drug Administration Office of Women's Health (Section 3509(g), p. 1109)
55. National Prevention, Health Promotion, and Public Health Council (Section 4001, p. 1114)
56. Advisory Group on Prevention, Health Promotion, and Integrative and Public Health (Section 4001(f), p. 1117)
57. Prevention and Public Health Fund (Section 4002, p. 1121)
58. Community Preventive Services Task Force (Section 4003(b), p. 1126)
59. Grant program to support school-based health centers (Section 4101, p. 1135)
60. Grant program to promote research-based dental caries disease management (Section 4102, p. 1147)
61. Grant program for States to prevent chronic disease in Medicaid beneficiaries (Section 4108, p. 1174)
62. Community transformation grants (Section 4201, p. 1182)
63. Grant program to provide public health interventions (Section 4202, p 1188)
64. Demonstration program of grants to improve child immunization rates (Section 4204(b), p. 1200)
65. Pilot program for risk-factor assessments provided through community health centers (Section 4206, p. 1215)
66. Grant program to increase epidemiology and laboratory capacity Section 4304, p. 1233)
67. Interagency Pain Research Coordinating Committee (Section 4305, p. 1238)
68. National Health Care Workforce Commission (Section 5101, p. 1256)
69. Grant program to plan health care workforce development activities (Section 5102(c), p. 1275)
70. Grant program to implement health care workforce development activities (Section 5102(d), p. 1279)
71. Pediatric specialty loan repayment program (Section 5203, p. 1295)
72. Public Health Workforce Loan Repayment Program (Section 5204, p. 1300)
73. Allied Health Loan Forgiveness Program (Section 5205, p. 1305)
74. Grant program to provide mid-career training for health professionals (Section 5206, p. 1307)
75. Grant program to fund nurse-managed health clinics (Section 5208, p. 1310)
76. Grant program to support primary care training programs (Section 5301, p. 1315)
77. Grant program to fund training for direct care workers (Section 5302, p. 1322)
78. Grant program to develop dental training programs (Section 5303, p. 1325)
79. Demonstration program to increase access to dental health care in underserved communities (Section 5304, p. 1331)
80. Grant program to promote geriatric education centers (Section 5305, p. 1334)
81. Grant program to promote health professionals entering geriatrics Section 5305, p. 1339)
82. Grant program to promote training in mental and behavioral health (Section 5306, p. 1344)
83. Grant program to promote nurse retention programs (Section 5309, p. 1354)
84. Student loan forgiveness for nursing school faculty (Section 5311(b), p. 1360)
85. Grant program to promote positive health behaviors and outcomes (Section 5313, p. 1364)
86. Public Health Sciences Track for medical students (Section 5315, p. 1372)
87. Primary Care Extension Program to educate providers (Section 5405, p. 1404)
88. Grant program for demonstration projects to address health workforce shortage needs (Section 5507, p. 1442)
89. Grant program for demonstration projects to develop training programs for home health aides (Section 5507, p. 1447)
90 Grant program to establish new primary care residency programs (Section 5508(a), p. 1458)
91. Program of payments to teaching health centers that sponsor medical residency training (Section 5508(c), p. 1462)
92. Graduate nurse education demonstration program (Section 5509, p. 1472)
93. Grant program to establish demonstration projects for community- based mental health settings (Section 5604, p. 1486)
94. Commission on Key National Indicators (Section 5605, p. 1489)
95. Quality assurance and performance improvement program for skilled nursing facilities (Section 6102, p. 1554)
96. Special focus facility program for skilled nursing facilities (Section 6103(a)(3), p. 1561)
97. Special focus facility program for nursing facilities (Section 6103(b)(3), p. 1568)
98. National independent monitor pilot program for skilled nursing facilities and nursing facilities (Section 6112, p. 1589)
99. Demonstration projects for nursing facilities involved in the culture change movement (Section 6114, p. 1597)
100. Patient-Centered Outcomes Research Institute (Section 6301, p. 1619)
101. Standing methodology committee for Patient-Centered Outcomes Research Institute (Section 6301, p. 1629)
102. Board of Governors for Patient-Centered Outcomes Research Institute (Section 6301, p. 1638)
103. Patient-Centered Outcomes Research Trust Fund (Section 6301(e), p. 1656)
104. Elder Justice Coordinating Council (Section 6703, p. 1773)
105. Advisory Board on Elder Abuse, Neglect, and Exploitation (Section 6703, p. 1776)
106. Grant program to create elder abuse forensic centers (Section 6703, p. 1783)
107. Grant program to promote continuing education for long-term care staffers (Section 6703, p. 1787)
108. Grant program to improve management practices and training (Section 6703, p. 1788)109. Grant program to subsidize costs of electronic health records (Section 6703, p. 1791)
110. Grant program to promote adult protective services (Section 6703, p. 1796)
111. Grant program to conduct elder abuse detection and prevention (Section 6703, p. 1798)
112. Grant program to support long-term care ombudsmen (Section 6703, p. 1800)
113. National Training Institute for long-term care surveyors (Section 6703, p. 1806)
114 Grant program to fund State surveys of long-term care residences (Section 6703, p. 1809)
115. CLASS Independence Fund (Section 8002, p. 1926)
116. CLASS Independence Fund Board of Trustees (Section 8002,p. 1927)
117. CLASS Independence Advisory Council (Section 8002, p. 1931)
118. Personal Care Attendants Workforce Advisory Panel (Section 8002(c, p. 1938)
119 Multi-state health plans offered by Office of Personnel Management (Section 10104(p), p. 2086)
120. Advisory board for multi-state health plans (Section 10104(p), p. 2094)
121. Pregnancy Assistance Fund (Section 10212, p. 2164)
122. Value-based purchasing program for ambulatory surgical centers (Section 10301, p. 2176)
123. Demonstration project for payment adjustments to home health services (Section 10315, p. 2200)
124. Pilot program for care of individuals in environmental emergency declaration areas (Section 10323, p. 2223)
125. Grant program to screen at-risk individuals for environmental health conditions (Section 10323(b), p. 2231)
126. Pilot programs to implement value-based purchasing (Section 10326, p. 2242)
127. Grant program to support community-based collaborative care networks (Section 10333, p. 2265)
128. Centers for Disease Control Office of Minority Health (Section 10334, p. 2272)
129. Health Resources and Services Administration Office of Minority Health (Section 10334, p. 2272)
130. Substance Abuse and Mental Health Services Administration Office of Minority Health (Section 10334, p. 2272)
131. Agency for Healthcare Research and Quality Office of Minority Health (Section 10334, p. 2272)
132. Food and Drug Administration Office of Minority Health (Section 10334, p. 2272)
133. Centers for Medicare and Medicaid Services Office of Minority Health (Section 10334, p. 2272)
134. Grant program to promote small business wellness programs (Section 10408, p 2285)
135. Cures Acceleration Network (Section 10409, p. 2289)
136. Cures Acceleration Network Review Board (Section 10409, p. 2291)
137. Grant program for Cures Acceleration Network (Section 10409, p. 2297)
138. Grant program to promote centers of excellence for depression (Section 10410, p. 2304)
139. Advisory committee for young women's breast health awareness education campaign (Section 10413, p. 2322)
140. Grant program to provide assistance to provide information to young women with breast cancer (Section 10413, p. 2326)
141. Interagency Access to Health Care in Alaska Task Force (Section 10501, p. 2329)
142. Grant program to train nurse practitioners as primary care providers (Section 10501(e), p. 2332)
143. Grant program for community-based diabetes prevention (Section 10501(g), p. 2337)
144. Grant program for providers who treat a high percentage of medically underserved populations (Section 10501(k), p. 2343)
145. Grant program to recruit students to practice in underserved communities (Section 10501(l), p. 2344)
146. Community Health Center Fund (Section 10503, p. 2355)
147. Demonstration project to provide access to health care for the uninsured at reduced fees (Section 10504, p. 2357)
148. Demonstration program to explore alternatives to tort litigation (Section 10607, p. 2369)
149. Indian Health demonstration program for chronic shortages of health professionals (S. 1790, Section 112, p. 24)*
150. Office of Indian Men's Health (S. 1790, Section 136, p. 71)*
151. Indian Country modular component facilities demonstration program (S. 1790, Section 146, p. 108)*
152. Indian mobile health stations demonstration program (S. 1790, Section 147, p. 111)*
153. Office of Direct Service Tribes (S. 1790, Section 172, p. 151)*
154. Indian Health Service mental health technician training program S. 1790, Section 181, p. 173)*
155. Indian Health Service program for treatment of child sexual abuse victims (S. 1790, Section 181, p. 192)*
156. Indian Health Service program for treatment of domestic violence and sexual abuse (S. 1790, Section 181, p. 194)*
157. Indian youth telemental health demonstration project (S. 1790, Section 181, p. 204)*
158. Indian youth life skills demonstration project (S. 1790, Section 181, p. 220)*
159. Indian Health Service Director of HIV/AIDS Prevention and Treatment (S. 1790, Section 199B, p. 258)*

*Section 10221, page 2173 of H.R. 3590 deems that S. 1790 shall be deemed as passed with certain amendments.

WOW! Remember this is just a start. I haven't finished the thing yet...just skimming through the big sections. Heaven knows what macabre things will come to light as lawmakers attempt to roll this obscenity out...which could take at least a decade anyway.

So welcome to the new age of Hope and Change...sorry if you don't recognize it as having anything to do with Hope...but it does prove that change isn't always a good thing.