Commentary from Dave Durenberger

October 26, 2009

NATIONAL NEWS

BACK TO BUSINESS AS USUAL
A year after Lehman Brothers was sacrificed, the world lost confidence in credit markets and the corporate bailouts began, we appear to be back to business as usual. Only worse. Banks are not making real estate loans except at most favorable rates. They are back to suckering everyone into consumer credit with "no over-the-limit fees" and then socking them with shorter and shorter time to pay bills and higher and higher fees and interest on "late payments."

Worse than that is the record compensation being paid the executives of this unbelievable industry. Twenty-three top investment banks, hedge funds, asset managers, and stock and commodity exchanges will pay $140 billion to execs in 2009. In 2007, they paid $130 billion to these guys and only $117 billion in 2008 while you and I were bailing them out. Their revenues this year are $437 billion compared with $345 billion in 2007. So why not? They're making it while you and I are not. Blackstone comp averaged $4 million per employee (up 40%) and Goldman Sachs, a.k.a. the U.S. Treasury Department, paid $743,112 per employee, also up 40% over last year.

N. Bendavid captures public reaction in the Wall Street Journal: "They (we) see a unified elite pursuing one big swindle, as government takes taxpayers money and bails out powerful companies who turn around and line their pockets while withholding benefits from taxpayers."

Paul A. Vocker is a man I will always admire. He was the Federal Reserve Board chair who, more than anyone else including President Ronald Reagan, designed the path for turning the inflationary economic recession around in 1980-82. Volcker wants the nation's banks to be prohibited from owning non-bank businesses like those that trade in high-risk securities. He would have banks trade securities for their banking customers, but not for themselves. The Wall Street/D.C. opposition argues, as it has for decades, that the U.S. will be disadvantaged in global banking competition if it can't make money in the stock, bond and commodities markets.

TOO BIG TO CARE
Wells Fargo used to be a nice Minneapolis bank called Norwest where a young banker named Richard Kovacevich got his start and sailed west as Wells Fargo. Kovacevich recently passed his baton to John Stumpf, a boy who was raised up in Pierz, MN. So I make certain assumptions about local and small town boys. Like they think about their mom and dad and neighbors in small towns before they take advantage of ordinary folks.

We all know that millions of middle class Americans are drowning in credit card debt for which they may well be responsible. Leave out the enticements and the unsolicited promises that reeled them in. In light of the near-collapse of America's financial system, and the taxpayer bailout engineered by Wall Street and its Washington, D.C., farm team, came limits on credit card interest increases.

Wells Fargo beat the deadline for congressional enforcement by jacking up its rates. I was tempted to call my St. John's Prep School classmate, Floribert Spanier, from Pierz, whose daughter is married to John Stumpf. Flip, as we have always called Spanier, retired a few years ago as president and CEO of the Catholic Aid Association, a fraternal financial association that, I suspect, was much more understanding of their "members."

by John Sheffius

AFGHANISTAN
Tom Friedman's op-ed on the subject. Chasing Bin Laden in Afghanistan was the job Bush never finished right after 9-11-01 when it could have ended this particular terrorist cell. Instead, Iraq gave carte blanche to Islamic fundamentalists to use terror and the name anywhere in the Islamic world. Afghanistan is much less relevant today.

Republicans insist Obama hold the line on the campaign promise, since restated, that our goal in Afghanistan is to "get" Bin Laden and Al Qaeda." This is not a strategic mission for 340,000 boots on the ground or drones. That was the U.S. military mission in Somalia until the October Sunday in Mogadishu in 1993 called "Blackhawk Down." Our strategic purpose in east Africa was to find a warlord named Mohamed Aideed who was responsible for resisting U.S./UN efforts. I helped Clinton find him (and change our mission) - quite by accident. Isaias Afwerki, the president of Eritrea (to this day) gave me Aideed's phone number at the Serena Hotel in Nairobi, Kenya. Clinton decided on a phased withdrawal from Somalia shortly thereafter.

Both the notion of state-sponsored terrorism in the Middle East and "safe havens" for terrorism, and the notion of "boots on the ground" solutions are no longer good tactics to end the threats which are alive and well in east Africa, Indonesia and the Philippines, to say nothing of south and central Asia and the Middle East. The exception is Iran, which is an interesting fact everyone misses because of our history of trying to destroy "bad guys" rather than to turn them.

GENERALS PETRAEUS AND MC CHRYSTAL
I was at breakfast a couple weeks ago across from the Opus College of Business where I worked when I met Avis Vessey of Garrison, Minnesota, and her husband, retired General Jack Vessey. Jack joined the MN National Guard in 1938 and retired 50-plus years later after serving a term as Chairman of the Joint Chiefs of Staff - the top job in the nation's uniformed services. We'd met 25 years ago after I published my first book - on national security policy. I was critical of the then-new Apache helicopter which Vessey championed and his son was then flying as an army major.

I helped myself to their breakfast and discovered their children had popped for a limo so they could travel the 250 mile round trip to hear the Minnesota Orchestra perform their favorite Tschaikovsky's 4th Symphony. Of course I asked about Afghanistan. General Vessey's reply was succinct: "Both Petraeus' and McChrystal's fathers worked for me - one in Korea and one in Viet Nam. So I admire them both. But one needs only read the history of Afghanistan and the fate of those who presume to know what's best for Afghans to understand why the president has to make impossibly difficult decisions."

WHERE IS THE CZAR RICHARD HOLBROOKE?
Both the Wall Street Journal and the New York Times on Wednesday show Senator John Kerry (D-MA) whispering in the ear of Afghanistan President Karzai before Karzai announces his willingness to re-run the presidential election. It is highly unusual for a president to use a member of Congress for such critical missions. Especially when he and his Secretary of State have agreed to give the most delicate relational national security challenges to "czars" like Holbrooke.

FAITH-BASED DISCRIMINATION
President Obama has fulfilled his promise to continue President George W. Bush's promise to fund the social service programs of religious organizations. But he has not kept his promise to prohibit faith-based recipients of federal funds from discriminating against employees on the basis of their religious affiliation. Religious organizations should be required to abide by the same anti-discrimination guidelines as does the Catholic university that employs me. Especially now, when it is one short step from religious affiliation to requiring employee adherence to the political views of church leaders.

A JOB FOR MICHELLE BACHMANN
Minnesota's 6th District Republican Congresswoman is making a name for herself as Washington's answer to Alaska's Sarah Palin. Most recently, Michele Bachmann demanded "a strong investigation" into nonprofit organizations in the wake of the allegations against ACORN. "Without government money they would not be in existence." If that is her measure, then let's turn her loose on all the religious nonprofits as well. And how about the many conservative foundations funded with tax-deductible contributions from right wing zealots who help fund the causes that are making Ms. Bachmann the darling of the latest "you either love em or hate em" Congress member?

RUSH LIMBAUGH MEETS THE N.F.L.
The blowhard of right wing radio was told by the owners of the National Football League that people who use their bully pulpits to bully others, especially the president of the United States and professional athletes, aren't welcome in a uniquely American business. No surprise that a man without a shred of humility or accountability reacts with "It's not about me, it's about the left in America resenting the mainstream of conservatism."

RANKED CHOICE VOTING
AKA Instant Runoff Voting is on the ballot in St. Paul November 4. The debate on its efficacy goes on in the community power structure, and the Minnesota GOP remains the only party opposed to it. GOP State Chair Tony Sutton did, however, use it as a "straw ballot" delegate preference for MN governor at the party's state convention October 3. The chairman says he asked delegates to state their first and second choices "so more than one candidate could emerge with bragging rights." That's a step in the right direction, Tony: Recognizing that democracy requires giving as many people as possible an opportunity to present their credentials to as broad an audience as possible. Ranked choice voting is a commitment to give voters the same opportunities that candidates should have.

SAINT DAMIEN DE VEUSTER - THE LEPER
On October 11, Pope Benedict XVI officially declared Father Damien, born Jozef De Veuster in Belgium, a saint. It was a brief occasion for stories about the curable nature of a disease which had made people the world wide pariahs to be shunned until death.

No one has captured this incredible story of inhumanity as well as a St. Paul novelist (The Wheatfield, Saint Mudd, The Weatherman, Moon Over Lake Elmo) - Steve Thayer. In The Leper, a novel published in 2008, Steve tells the story of WW I vet John Eric Severson, a teacher at Harding High School in St. Paul, who falls in love with a student. The story begins with Marine Captain Severson leading his lost company over the French-German border into a leper colony.

While teaching at Harding, Severson is diagnosed with leprosy, chased from the school, and ends up near the end of the Mississippi River at the worst of America's leper colonies in Louisiana. He escapes, returns to the search for the love of his life, and ends up in Molokai where he becomes the sheriff - and a living legend to rival the famed Damien.

I found it riveting. The Cleveland Plain Dealer once called Steve Thayer "an author who is not afraid to take chances." This is what they talk about. Thayer spent years researching the history of leprosy in America for the novel. His national publisher told him that the book, like leprosy itself, wouldn't sell. So St. Cloud's North Star Press published Thayer's superlative work. One hundred twenty years ago a Belgian priest gave his life for those whom medicine chose to ignore while centuries old public loathing and ostracism destroyed lives, love and families. A really fine novelist, Minnesota's own Steve Thayer, makes understanding this a fascinating read.

HEALTH POLICY

by R.J. Matson

INSURANCE POLICY REFORM THAT SAVES MONEY NOT COMPANIES
I think President Obama's making a mistake in attacking "health insurance companies." He is making the last couple months of reform harder than it needs to be. There are long-time health insurance companies like the Blues, Aetna and Cigna, newer companies like United, state-based companies, and a big HMO like Kaiser-Permanente with whom Congress could negotiate national rules by which they would all play, including a new set of rules for Medicare and Medicaid Advantage. But AHIP is more than 1,300 very different companies, including a lot of individual indemnity plans that have too long masqueraded as insurance. The bulk of them can't compete on a level playing field. Negotiating with AHIP will never get to real insurance reform and real cost savings of which some in the industry are capable.

AHIP'S COLUMBUS DAY DISCOVERY
Watch the tip of the health policy reform iceberg in Washington and you risk heading prematurely for the life boats. America's health insurance plans (AHIP) warned us - of how they view the price we will pay for passage of the Senate Finance Committee bill. Is this warning an expression of self-interest, or is it in the public interest? Democrats who have struggled to get the reform ship this far were quick to condemn the warning of what's below the water line as "Harry and Louise" self-interest. Republicans played "I told you so" and headed for the boats.

Members on both sides of the aisle, especially the Snowe-Collins team of seagoing Maine senators, might take this as an invitation to revisit, with the help of the House, just how much insurance reform we are getting for our money. And leverage their votes for coverage expansion and more efficient tax subsidies on real insurance reform, not just "take all comers" pre-existing conditions rules.

We are clearly past the point where this reform legislation can finance universal coverage out of payment changes in Medicare, Medicaid and private insurance. Rather than leaving that to future CMS or Congress to try and effect. Administrative savings, fraud and abuse, even some tort reform are one-time deals, not permanent systemic reform. So that leaves Congress with maximizing savings from insurance. Getting national rules which turn health insurance into a truly competitive industry where delivery system cost reduction is rewarded is a prize worth negotiating. It's not too late to do so.

AHIP BLEW IT
Washington's inside-the-beltway rumor mill says AHIP's CEO Karen Ignani paid for the Price-Waterhouse-Cooper blast at the Senate Finance Committee bill, but wanted the U.S. Chamber of Commerce or the Business Round Table to take public credit for it. An enterprising journalist supposedly caught Karen in the act of shopping the report, so she had to beat his/her story to the punch by releasing it herself.

HOW ABOUT ABOLISHING HEALTH INSURANCE ANTI-TRUST PROTECTION
Some Democratic senators propose to make health insurance more competitive by abolishing its anti-trust exemption. Sounds great, but it won't work. Abolishing McCarran-Ferguson Act protection against national regulation or rules will. These anti-trust advocates believe that the dominance in some states of one or two or three health insurance companies reduces competition and choice and increases prices. Sounds logical, but it's not true. Take a look at the states like North Dakota in which one nonprofit BCBC plan has a 76% market share and North Dakotans benefit from the lowest premium costs and some of the highest quality medical care in the country. Same is true of Hawaii, where two nonprofit plans divide the state.

by Chris Weyant

SENSIBLE SENATE HEALTH POLICY
In a serious test of whether this health reform bill makes sense, the Senate this week refused to support a so-called "fix" of the Medicare Part B physician payment formula. Because it wasn't funded. I've commented frequently on my authorship, along with Senator Jay Rockefeller (D-WV) of the 1989 Part B formula, and of the faulty volume performance adjuster installed in 1997 called the Sustainable Growth Rate (SGR). For years Congress has failed to allow the SGR to reduce Medicare payments to doctors or, much better, to replace the SGR formula. The ideal replacement would reflect improved payments for physician practices which reduce excessive utilization of unneeded services. But that runs up against medical politics in many areas of the country.

Part B payments account for about 21% of Medicare dollars spent annually. BUT, doctor decisions account for 87% of all spending and that's what makes changing the over-utilization incentives in Part B critical to health reform. I warned the administration at the start of this reform effort that its failure to persuade Congress to reform and re-incentivize Part B would make the difference in whether this was a genuinely "reform" bill.

BUSINESS IS TOO BUSY TO DEMAND HEALTH CARE REFORM
Sad but true. Almost every politician will tell you that health care reform is critical to restoring the health of the U.S. economy and the competitiveness of American business in the world economy. Every Republican politician will tell you he or she opposes President Obama's version of reform because it will kill business in America.

So - then - where is the business community on health care reform? According to Washington Post pundit David Broder, it's focused on cap and trade, bailing out the financial industry, saving the medical industry, fighting off regulation to prevent future banking collapses, opposing taxes, but hardly a blip on the national health reform radar. That, according to GOP house leader Roy Blunt (R-MO).

There was a time not so long ago that corporate CEOs were very active in coalition efforts to curb cost increases at both community and national levels. Much of that work has been delegated down to the benefits folks and the C-suiters aren't working the issue in Washington. The $2.5 trillion medical industry, 50% of which they finance, are. And therein lies the hopelessness of funding coverage expansion from delivery system savings.

HEALTH CARE PRICES ARE GOING UP FAST
America's health plans have announced that the premium prices of Medicare Advantage plans will rise about 20% next year. Then the government announced that the premium we pay for Part B of Medicare will rise 10% next year, going over $100 per month for the first time. Hewitt and Associates says the same will happen to the employee share of employer-provided health insurance in the coming year. Employees will see a 15% increase in the amount they pay in cost-sharing for insurance coverage. Is the medical industrial complex suffering? Not much. Two multi-billion dollar drug mergers so far this year, much the same in the device and the health I.T. arena. There have been 707 such "deals" in 2009 and 13% of all "deals" have been in health care. Hospitals and insurance companies seem to be the only ones about which investors remain skeptical.

ANOTHER MINNESOTA FIRST
National wire services announced that three pigs tested positive for H1N1 at the Minnesota State Fair this August. The first pigs in the country to do so! No word yet as to the significance of this event although it's said likely the pigs caught the disease from human carriers. Like so many things Minnesotan, it may have been we are the only state testing for the disease.

AARP MEMBER BAROMETER
Each time we head into a major national effort at health care reform, we see headlines about AARP losing membership. In 2003, 1.5 million AARP members dropped out to protest the "partisan" nature of prescription drug support. In 1988, 2 million members dropped out to protest the upper income means-testing in Medicare Catastrophic. But membership keeps increasing over time.

The nation's most influential older persons association does not shirk responsibility for shaping health policy, and this year is no exception. What's less well known is the process by which AARP develops positions and the degree to which members are informed and their opinions solicited all the time and during the reform process. The decision a few years ago to establish state offices has assured local education and policy development. Michele Kimball, who once served on the Ways and Means staff of the House and on AARP national staff, is the Minnesota executive.

She reports having involved 47,000 of us in five tele-town hall meetings with plans for more. AARP members are age 50 and older. We all want to see reform of the health system as we know it. We want to lower the cost of health care and we favor guaranteed insurance coverage public or private. We are evenly split on the issue of a public plan competition with private insurance. Of course, we oppose any cuts in Medicare, want the Part D "Donut Hole" closed and Medicare made solvent and frauds, waste and abuse eliminated. Most of us are upset with the way in which health insurance plans treat the under-65 population on coverage decisions - either denials or extra charges for over age 50.

VERN WECKWERTH -- ONE OF A KIND
No one works health care in Minnesota without being challenged by Vern Weckwerth to answer a question that no one else would think to ask. Vern founded the ISP Off-Site Executive Study Programs in Healthcare Administration in 1969. ISP is the oldest continuing distance education program for health care administrators in the nation. Read more…

EX-ALLINA CHIEF MAKES A SOLO TRANS-CONTINENTAL BIKE TRIP IN 26 DAYS
Dick Pettingill left Allina in Minneapolis July 1 and was in Vancouver by the first of September ready to bike to the Mexican border. It took him just 26 days to complete the trip unassisted with a one-day break in the middle with all his family in San Rafael, CA.

MINNESOTA MEDICAL ENTREPRENEUR IS GOLD-MEDAL MOUNTAIN BIKER
Bill Wenmark is as unusual a person as you will ever meet. You have to read his bio to appreciate what I mean. He's run 94 marathons with a PR of 2:49:34 and just won three gold medals in men's age 60-64 mountain biking at the World Senior Games in St. George, Utah. Wenmark is a Marine Corps vet of Viet Nam who developed home care programs for kids with respiratory diseases, and a flourishing urgent care company he recently sold to North Memorial in Minneapolis. He also has an island in Rainy Lake from which he fishes when he's not preparing for an endurance race or a tempting health care or education policy challenge.

LOCAL BOY MAKES HEALTH CARE LEADERS LIST
Thirty-six year old Ben Koppelman was just recognized as one of Modern Healthcare's "national leaders of the future." I called Ben to find the secret of leadership in health care. Raised in Mankato and Albert Lea, MN, Ben received a B.A. from Concordia College in Moorhead and found a job with Catholic Health Initiatives (CHI), one of the really big systems in the country. Read more…

WHAT'S UNIQUE ABOUT EUROPEAN SYSTEMS?
Ask any European how his/her health system works and they will explain it to you. They know exactly what they do, what doctors do, what you can expect and when, and what it will likely cost.
Ask any American and they can't.

UPCOMING EVENTS

Clinically Integrate with Your Doctors. Have You Signed Your Informed Consent?
Webinar Panelists: Jim Reinertsen and Jamie Orlikoff
Date and Time: October 23, 2009 11 AM Eastern
Price: $295 for 90 Minutes with live Q&A
Register here: https://orboardworks.webex.com
Presented by Jim Reinertsen and Jamie Orlikoff, the seminar will focus on some critical questions that hospital and physician leaders should address when considering the creation of any major moves toward alignment or integration, whether structural or "virtual." For more information, contact Anders @ 305.924.0992 or anders@reinertsengroup.com

University of St. Thomas, Minneapolis, MN
Schulze Auditorium
Nov. 6, 2009
UST Executive Conference on the Future of Health Care, Where Innovation and Quality Will Take Us, sponsored by Executive Education at the University of St. Thomas in partnership with LarsonAllen LLP and Fredrikson & Byron, P.A. The conference will feature keynote speaker George Halvorson, Chairman & CEO, Kaiser Foundation Health Plan and author of Health Care Will Not Reform Itself (2009).

ICSI's 2009 James L. Reinertsen Lecture -Evidence-based Medicine for the 21st Century
November 19, 2009
Bloomington, MN, Ramada Mall of America
David Eddy, MD, PhD, Archimedes, Inc. will discuss evidence-based medicine and the role it will play in an age of health care reform, and care delivery and payment redesign.
View Web site for more information

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