Some call them clients, others guests or customers. Costco (Ticker: COST, revenue $141B) calls them members, a term that makes you feel like you're part of a special club. It's a club that will not sell you junk*. They do not exaggerate. Theirs is not fake-Enron-style-ethics-bragging, and they actually list shareholders' interests last. Focus on the … Continue reading Costco: Lessons from Member Obsession.
Financial valuation uses multiple approaches to estimate the value of a company, whether a shoe factory, a chain of Tex-Mex restaurants, a software company, a bank, or a law firm. The questions are framed around what a firm is worth relative to cash flow, book value, relative to similar assets, recent industry transactions, or others. … Continue reading Medical Bankruptcies in America
Businesses love metrics. One form or novel way (a 5 on the hack prowess scale) is to find the perfect metric that makes the future a little more predictable. The eager student tells the elderly person, "Teach me to be wealthy, only quicker" to paraphrase C.T. Munger. A year after the financial crisis of 2007-2008, … Continue reading On RVs and Write-Offs
$4,537 can buy a lot of Skittles*. Or it can buy you the average single deductible for an unsubsidized enrollee with healthcare coverage on the Affordable Care Act (ACA) exchanges. At 3.4x less, the $1,350 average deductible for the 152 million who get their insurance through an employer looks benevolent. In spite of having the word "affordable" … Continue reading The $4,500 Deductible
Today the cost of healthcare landed on the front page of The Wall Street Journal, just below a story on bond yields, and next to the dancing UK Prime Minister, Teresa May. The angle of the story is how the cost of family healthcare premiums in the United States now approaches $20,000. The genesis of … Continue reading The $20,000 Price Tag: Insights into the 2018 Kaiser Family Foundation Employer Survey.
Price opacity is one of the grievances people have with healthcare in the US. Hip replacement price variation is an oft-cited procedure, yet another example where hoarding information and obfuscation is the norm. In one city, prices can vary by a factor of 3x or more. Price transparency is a laudable goal and progress is … Continue reading How Outlier Stories Stain Healthcare
A couple of weeks ago I was with my family in Guanajuato, a beautiful and historic colonial city in central Mexico. Imagine a hillside version of Venice with winding alleys and colorful buildings. We arrived and settled in the rented apartment. We met Don Chava, owner of the corner store, and then ventured out to … Continue reading The All-You-Can-Eat-Healthcare-Buffet
The Holy Grail scene in Indiana Jones and the Last Crusade shows the closing piece of the riddle to find the cup of Christ. Walter, businessman-turned-scoundrel, outsourced his decision on which cup to choose to Elsa, the archeologist. Caught by his lust for power, he drinks from a beautiful golden cup. “He chose poorly,” and … Continue reading Business, Statistics, and the Carpenter’s Cup
People who work on the business side of healthcare often wish that companies would think about healthcare more often, or even concede that they are in "the healthcare business." I suppose part of this is the law of the instrument, which even if not said by Mark Twain, sounds like Mark Twain: "To a man … Continue reading Is The Cheesecake Factory in the Healthcare Business?
Shopping for medical care, like reducing food waste, or understanding the adage that half of advertising is wasted*, is an exercise that first starts with disbelief (and even outrage), but a closer look keeps you grounded in reality. Simple observations are cheap. Some key findings and structural limits can guide us through why price transparency … Continue reading What is Medical Price Transparency Worth?