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Sunday, March 31, 2013

Notes on being a positive deviant

I recently finished Atule Gawande's book "Better". It is a great read for anyone in the health care field and perhaps anyone who is interested in what it takes to get better. In my opinion, he left the best to the afterword which is where I lifted the title to this blog piece. He highlights five things:

1. Ask an unscripted question.
2. Don't complain
3. Count (and measure) something
4. Write something
5. Change

As it turns out there is an entire "Positive Deviance" community already formed, with a Wikipedia entry. The principles of the PD approach are outlined as the following (from Wikipedia):

The Positive Deviance approach is a strength-based approach which is applied to problems requiring behavior and social change. It is based on the following principles:[6]
  • Communities already have the solutions. They are the best experts to solve their problems.
  • Communities self-organize and have the human resources and social assets to solve an agreed-upon problem.
  • Collective intelligence. Intelligence and know-how is not concentrated in the leadership of a community alone or in external experts but is distributed throughout the community. Thus the PD process’s aim is to draw out the collective intelligence to apply it to a specific problem requiring behavior or social change.
  • Sustainability as the cornerstone of the approach. The PD approach enables the community or organization to seek and discover sustainable solutions to a given problem because the demonstrably successful uncommon behaviors are already practiced in that community within the constraints and challenges of the current situation.
  • It is easier to change behavior by practicing it rather than knowing about it. “It is easier to act your way into a new way of thinking than think your way into a new way of acting”.
Also from the same article:

Steps of the PD process[6]An invitation to change: A PD inquiry begins with an invitation from a community that wishes to address an important problem they face. This is an important first step of community ownership of a process that they will lead.
Define the problem: This process occurs with the community at the center of defining the problem for themselves. This will often lead to a problem definition that differs from the outside “expert” opinion of the situation. A quantitative baseline is established by the community. This baseline provides an opportunity for the community to reflect on the problem given the evidence at hand, and also measure the progress toward their goals. This is also the beginning of the process to identify stakeholder and decision-makers regarding the issue at hand. Additional stakeholders and decision-makers will be pulled in throughout the process as they are identified.
Determine the presence of PD individuals or groups: Through the use of data and observation, the community establishes that there are Positive Deviants in their midst.
Discover uncommon practices or behaviors: This is the Positive Deviance Inquiry. The community, having identified positive deviants, sets out to find the behaviors, attitudes, or beliefs that allow the PD to be successful. The focus is on the successful strategies of the PD, not on making a hero of the person using the strategy. This self-discovery of people/groups just like them who have found successful solutions provide “social proof” that this problem can be overcome now, without outside resources.
Program design: Now that the community has identified successful strategies, they decide what strategies they would like to adopt, and design activities to help others access and practice these uncommon and other beneficial. Program design is not focused on spreading “best practices” but helping community members “act their way into a new way of thinking” through hands-on activities.
Monitoring and evaluation: PD-informed projects are monitored their programs and evaluated through a participatory process. As the monitoring will be decided on and performed by the community, the tools they create will be appropriate to the setting. This can allow even illiterate community members to participate through pictorial monitoring forms or other appropriate tools. Evaluation allows the community to see the progress they are making towards their goals and reinforces the changes they are making in behaviors, attitudes, and beliefs.
A monitoring tool used by illiterate members of a community.
Scaling up: The scaling up of a PD project up may happen through many mechanisms: the “ripple effect” of other communities observing the success and engaging in a PD project of their own, through the coordination of NGOs, or organizational development consultants. However the project is scaled up, the process of community discovery of PDs in their midst remains vital to the acceptance of new behaviors, attitudes, and knowledge. 

I like this conceptually. It is consensus based and data driven. It is not top down but more bottom up and community driven.

Saturday, March 30, 2013

Great Summary of the EU/Cyprus crisis

There is a great piece on the European banking crisis at Project Syndicate: It is worth reading the entire piece but the relevant themes can be summarized in the opening and closing statements:
BRUSSELS – It is an old and never-ending contest. On one side are the moral-hazard scolds, claiming that one of the major responsibilities confronting policymakers is to establish incentives that demonstrate that imprudent behavior does not pay. On the other side are the partisans of financial stability, for whom confidence in the financial system is too precious to be endangered, even with the best possible intentions....
Ultimately, the true contest is less between moral hazard and financial stability than it is between financially sensible and politically acceptable solutions. In Europe, as elsewhere, financial policy used to be the remit of specialists – central bankers, regulators, and supervisors. Not anymore: the experts have lost their legitimacy. Nowadays, angry citizens are in charge, and politics is driving financial policy. But politics in Europe is national, and what one national parliament regards as the only possible solution another national parliament regards as entirely unacceptable. Europe has not yet found a response to this problem, and it is not on the way to finding one.
The experts have lost their legitimacy. It will not be the last time. The Emperors have no clothes.

For our own good

I have to be honest, I did not read this book. It costs $60 for the kindle edition. It is priced such that the authors does not really want anyone to read this. Perhaps it will be required reading for her students at Bowdoin. Even if they don't have enough common sense to purchase this on their own the power of coercive paternalism can force them to purchase even if free readers refuse to do so.

I did read her website which summarizes the theme of the book:

Against Autonomy is a defense of paternalistic laws; that is, laws that make you do things, or prevent you from doing things, for your own good.  I argue that autonomy, or the freedom to act in accordance with your own decisions, is overrated—that the common high evaluation of the importance of autonomy is based on a belief that we are much more rational than we actually are.  We now have lots of evidence from psychology and behavioral economics that we are often very bad at choosing effective means to our ends.  In such cases, we need the help of others—and in particular, of government regulation—to keep us from going wrong. 
I also read Cass Sunstein's review in the NYT review of books. ( Sunstein is a fan of paternalism and there are elements of his book "Nudge" which do resonate with me. However, it is a big leap to go from the assumption that we are not rational and we make sub-optimal personal decisions to the premise that a government made of similarly irrational creatures should be more broadly charged with nudging us. Sunstein acknowledged in "Nudge" that is is a slippery slope to go from a nudge to a shove. The 20th Century was replete with numerous examples where coercive states moved heavily into the shove domain with frightening loss of human life.

For Conly I have to be fair. I did not read this but I would like to (but not so much as to drop $100 on it).  The price the book is such that it appears you don't want others to actually read it.

You may be shrewder than we think.

1. You can dismiss any critiques assuming that no rational person would actually purchase it for such a ridiculous price and therefore they are criticizing what they did not read.  You do not need to listen to them.

2. For those who actually bought a copy sans coercion, they obviously cannot be rational and their arguments can be dismissed. You should not listen to them.

Where will this administrative cost be counted?

One of the selling points for Medicare is its reportedly low administrative costs, although the costs per beneficiary may not be so different from private insurance. (

The next foray of the state into the health insurance realm is about to roll out, that being the state insurance exchanges which only some of the states are taking on. One of those states is California and the federal government is providing generous grants to the state to help set up the exchanges. These grants are amazingly generous as highlighted in a piece in Health care policy and marketplace review  last week. (

As noted in this blog:

Privately funded Esurance began its multi-product national web business in 1998 with an initial $5.5 million round of venture fund investment in 1999 and a second round of $34 million a few months later.
The start-up experience of other major web companies is also instructive. Facebook received $13.7 million to launch in 2005. eBay was founded in 1995 and received its first venture money in 1997––$6.7 million.
Even doubling these investments for inflation still leaves quite a gap.
The California Exchange officials also say they need 20,000 part time enrollers to get everybody signed up––paying them $58 for each application. Having that many people out in the market creates quality control issues particularly when these people will be handling personal information like address, birth date, and social security number. California Blue Shield, by comparison has 5,000 employees serving 3.5 million members.

OMG..... This looks like walkin' around money. It will likely buy a lot of favors and loyalty but I am not sure that it will bring much value to those who need to purchase insurance.

Are we getting real value? Dealing with long time lines

My wife an I met with a team of financial advisers last week. I am not planning on working at the same gig until I drop dead and we wanted to perhaps hire some help to sort out our saving an investment strategy for perhaps the next 20-40 years. It might all be moot if we are wiped out by a North Korean nuclear attack but optimism still reigns. In the back of my mind I am thinking I need
to have sufficient funds until I reach 100.

We are talking about paying advisers a significant chunk of change. I could consider doing this myself but I know I will not invest much time or effort. I also would also beat myself up if I did a lousy job which is very likely. That said, I know enough just to be dangerous and also fear spending money unwisely. Damned of you do, damned if you don't.

Hiring someone to manage your money so you can be financially healthy long into the future is like hiring a health care professional when you are healthy to maintain your health. Presently we are financially healthy. We are prudent about saving and live within our means. We are proposing to hire an adviser who will be responsible for taking actions now to prevent something bad from happening in the future. I am somewhat skeptical of the actual value these professional can bring to me and my wife.  How can anyone know what to do now (other than the basics of saving and avoiding really bad investments) which will optimize our circumstances perhaps nearly a half century away?

The parallels between financial professionals and health care professionals are obvious. Some financial professionals deal with people with acute or chronic illnesses. Facing bankruptcy, mortgage foreclosure, or mounds of debt, there are those who can deal with your acute financial illness. It is not so attractive for professionals since broke people don't generally have deep pockets. Better deal with the financially healthy and try to convince them you can make them even healthier.

In healthcare we have more financial incentives through the insurance system prompting us to want to deal with those who are acutely sick. However, we also have a host of incentives to deliver care to people who are essentially well with the promise that we might prevent something bad from happening in the future. People and their insurers pay the health care delivery system huge sums of money to provide forms of care which likely do not provide any value to the vast majority of the recipients. Just think of the NNT concept. We acknowledge that we might treat thousands or tens of thousands of patients so a handful might benefit. We do cancer screenings, treat lipid abnormalities, and routine check ups on people whose only obvious pathology is that they are worrying about the future. We have a vast array of possibly predictive tests which for the most part we don't understand and a willing public who haven't a clue as to what value they could be receiving (or not). The typical health care encounter is 95% ritual and perhaps 5% science and we still ridicule funny dressed shamans in the global south.

As it turns out, the cost of health care premiums on an annual basis and the investment management fee on a $1 million portfolio is in the same ball park. Both are a lot of money. Are the services that are purchased by these fees really worth it? I am not sure. They are both trying to buy peace of mind and assure the best outcome so far in the future that we are crazy to believe that anyone or anything can see that far ahead. How do we measure success? You are still here...You are not broke yet. I guess it worked.

Saturday, March 23, 2013

Where can we have private conversations?

I read Sheldon Richmond's essay on Chuck Hegal's confirmation hearings and he raises a series of interesting concerns. I know little about Chuck Hagel prior to his confirmation hearings and really don't know much more at this point. However the gist of what Sheldon Richmond says is that Hagel sounds like someone who speaks his mind, may be wrong when he takes contrary stands, but has not shied away from raising concerns when they are not popular. The problem with people like this is you never quite know whether they are crazy or insightful (or perhaps both). As Sheldon Richmond sees the current approval process, it is less about vetting ideas as opposed to being beholden to sacred and unquestionable positions.

There was a time where prominent people could take unconventional stands or raise private concerns in private conversations and expect that these to remain private. There is utility in these situations. It is not unusual for me to be disturbed by something in conventional wisdom but initially not quite fully understand or be able to articulate my concerns. In order to work through such positions it is essential to run your ideas past other parties, looking for elements where others may be blind to flaws or where you might have significant blind spots. It is increasingly difficult to do so. Everything is increasing in the public domain.

Ideas can be old or new. They can evolve and change, often to the betterment of those affected by those ideas. Creating and floating new ideas involves taking risks. Create a world where the risks of creating and pushing new ideas become prohibitive, new ideas come less frequently. If everything new idea is quickly vetted in a very large public domain, it creates new and larger risks for those who are conceiving and pushing those ideas.

This has real implications in medicine particularly where new ideas may challenge medical dogma which has financial implications. There might have been a time where discussions within professional societies remained relatively private and disagreements, even very intense ones, could remain in a private realm for extended periods of time. Given the right people and the right environment sheltered from the drive to float all test ideas to the entire world from their inception, and the requisite amount of time for reflection, ideas and approaches could evolve and mature. Not all ideas are ready for prime time from their inceptions. There must be a venue for this to happen where it is not necessarily in a completely open public domain until some smaller group has had a chance to critique.

Within the world of medicine, I am not sure that such an environment exists.

Controlling the Elephants

I recently finished John Haidt's books "the Righteous Mind" and "The Happiness Hypothesis". I really enjoyed his description of our minds and psyche's using the description of our conscious minds as being riders on elephants. We might believe we are in control of our elephants but in reality our elephants go where they want to go. What we view as our controlling selves really just represent entities which are simply advisory.

When I look out at human social structures, I realize the rider and elephant analogy extends beyond individual people. I lead a small department in a health care system. While I am ostensibly the Chief of this entity, I am more like the rider on the elephant. I control only a very small segment of activity of this operating unit and I am aware of only a small portion of what happens as a consequence of the actions of the people who supposedly answer to me.

I am OK with this. Attempts to make the world operate according to different principles are destined to fail. Change happens when the elephants have real incentivizes to change, not when the riders attempt to force the elephants to change.

The single payer gambit

The ACA had dropped off the news radar for a little while. There were a number of other news items which took center stage; the fiscal cliff, sequester, etc. However, as the time lines for the various provisions of the ACA become relevant, this will again come back into the news. It is already happening.

Private insurers are planning for premium prices under the provisions of the ACA. Like any insurer, their actuaries use historical data to make estimates of costs and what premiums should be in order to avoid taking a bath. The problem is they have scant actual data to make such predictions. How much will it cost to provide insurance with expanded mandated care near universally with lifetime caps  removed, and they must insure those with pre-existing conditions, lumping such individuals in with young healthy people?  To believe that rates will not need to be increased defies common sense, given that absolutely nothing else is changing in the care delivery system in the short run.

According to the original time line of the ACA, health insurance exchanges , administered by states, should be open for business by 2014, offering a place for individuals to purchase moderately priced policies. The problem is that many states are basically taking a bye on this and the states who are able to open their exchanges will still need to depend upon private insurers to offer products at affordable prices. Given the challenges facing the private insurers in terms of solving the actuarial puzzles required to offer such products and not take a bath, I have a hunch this is not going to happen in any major way. In states where they are defaulting to the Feds to run their exchanges, I cannot imagine this happening any time soon.

I read my share of blogs and banter on the internet and associated with the NYT and WSJ. What I find interesting about what I read is there is amazing agreement between liberal and conservative voices regarding one thing relating to the ACA. They both appear to want it to fail miserably, albeit for different reasons. For conservatives, there is a desire to see this law fail to get to "I told you so moment". However, for liberals, failure is desirable because it will facilitate movement to where they wanted to end up all along; a single payer system. The functional details in the ACA were never particularly important since if they turned out to be dysfunctional the failure could easily be exploited to push the country to a single payer system.

As the events of 2013 unroll, it does not take a genius to see higher insurance rates and failures of the exchanges will be blamed on markets and insurance companies. That these "market based" entities are anything but market driven is a nuance which will be lost in the nanosecond attention span of the political class. The portions of the ACA that depend upon private insurance are going to fail miserably and we are moving toward a single payer system, sooner rather than later. When the exchanges fail to materialize the political right will claim government failure and the political left with claim market failure. The latter message, coupled with rhetoric about other market failures such as the housing industry, will hold sway.  

One can view problems in health care finances as being a political vs an economic problem. For the most part, liberals have viewed it as a political problem to be solved within the political sphere. For conservatives (and here I mean economic conservatives), this is essentially an economic problem solved with the economic (meaning market) sphere. For all of the limits which face politicians, they hold an inherent advantage in their abilities to appear to be directly solving problems. Even if taking legal and legislative action has no actual benefit upon a problem, the act of passing a law creates the appearance of action and caring. Relying on market based approaches sends a message of disinterest at best, even if markets create the most functional solutions in the short term.

In my estimation, the progressive statists are going to prevail. It is inevitable that we will end up with a single payer system. They hold all of the cards to win in the political realm, even with near term failure of the ACA. The problem is once they have achieved their political goals, where does that leave us in terms of fixing our health care mess? Having nominal coverage for an additional 10% of the population still leaves most of the structural problems of the current system in place.  Who will set the prices for every health care service? Who will define what services are on the menu? Who will define how prices will change? What will be the provisions which will allow for change and disruptive innovation? Perhaps we can hire bureaucrats who have retired from Goskomtsen. They had plenty and experience in failure in administrative pricing and they have been unemployed since the Soviet Union fell.   

Friday, March 22, 2013

Euro insecurity yet again

Just when we thought the Euro was safe along comes the tiny island and economy of Cyprus. I am not entirely sure as to why Cyprus has attracted such a large bolus of assets in its banks, whose assets dwarf the size of the economy of the island. Perhaps it has to do with the absurd rates of return promised on capital parked there. The Cypriot economy is just 02% of the Euro zone total but the timing is clear. At this point in time the Germans are not willing to bail out their southern European partners. While there are predictions of dire consequences, there appears to be little support among the Germans to continue bailouts of their spendthrift southern partners without extraction of some sort of penalty.

I see potential future parallels in the United States. Certain states, most notably the state of Illinois, have been blatantly irresponsible in terms of managing their own financial affairs. They have played all sorts of games with budgeting, pensions, and stiffing creditors. I can only imagine that their trump card is to assume they will be bailed out by the Federal government. They are no alone in their shenanigans and they are being encouraged in some sense by the Federal government to engage in such budgetary idiocy. In the short term being financially conservative at the state level appears to be operating not in the best interest of the citizens of the state. The Federal government provides financial inducements to spend money no one has but at least in the short term when other states accept the funds hurts no one except those who don't play along.

I suspect that the game looked just like this in southern Europe in the early 2000's. Get easy money from the EU, play fast and loose with internal budgets, and the hell with financial discipline. However, you cannot create real wealth and real productivity with irresponsible spending, poor investment, and fiat currencies. It may look good for a while but inevitably the party comes to an end.

No one is great at prediction in the short term. The world is so complex and interdependent that that moment to moment predictions are impossible. I cannot imagine that the fate of the world's economy hinges upon tiny Cyprus. However, I can imagine that the Euro could become unwound based upon this crisis. The Germans should stick to their guns as should the Cypriots. Cypriot banks can go under, the Russians will take a haircut and someone will come in and buy up the pieces.