Being an Old Man in a Technological Golden Age

We live in a truly remarkable age of technological "miracles." As I think about what's happened in my little orbit in just the last month it gives me pause to reflect upon a few of those miracles.

It might be useful to describe my definition of "miracle" in this context, since the word gets tossed around a lot without the needed context. If we were to discuss the miracles of Jesus, like turning water into wine, walking on the water of the Sea of Galilee or raising Lazarus from the dead, we would say they are events without a logical explanation.

What I am talking about here is something akin, so stunning based upon technological advances that they also defy explanation. My finite simple mind likens them to "miracles" as a way to explain them.

In the last six months my vision has deteriorated rapidly due to cataracts that have developed in both eyes. I was warned a year ago by my optometrist that I needed more than an adjustment to my optical prescription for glasses. Now, she said, I needed to schedule an appointment with an ophthalmologist to have the cataracts removed surgically. But like most things in life I suppose I tend to let things slide until they reach crisis stage. Especially when they involve someone slicing into my eyeballs with a laser.

Crisis stage was finally reached with advancing double vision and blurred vision, and my glasses rapidly became obsolete. An impending date with the eye exam for a driver's license renewal also started pressing down upon me because I knew I couldn't pass it even with my glasses. Such are the realities of old men.

One of my favorite missionary companions was Phil Hoopes. We were only together for one transfer over Christmas way back in 1967, but we made the most of our time together in West Hartlepool on the northeast coast of England. Today Phil is a renowned eye surgeon practicing here in Salt Lake City. Even though we hadn't seen each other since then, I sought him out. Gratefully, he remembered how I'd shared my Skippy peanut butter (a rare commodity in those days). How old is OLD? I asked his eldest son to perform my eye surgery, since Phil Sr. has "retired" from cataract surgery.

Acrylic MICS-IOL in holder

I'm halfway there at this writing. Phil Jr. performed an intraocular lens implant on the worse of the two cataracts about a week and a half ago. Post-op exams have confirmed my youthful 20-20 vision has now been restored. My glasses are gone. The whole procedure took about seven minutes and I was awake throughout. On Wednesday of next week I'll have the same thing done on my other eye. The contrast today between the two eyes is stunning. I feel to say, like the young man Jesus healed, "One thing I know, that, whereas I was blind, now I see." (John 9:25).

So I would call that a modern-day "miracle," defying a logical explanation from one like me who has no knowledge of the scientific explanation.

Another example. Some of our sons have suffered from male infertility. Through means of a grant the University of Utah Medical Center is now conducting a genetic study on our family to see if they can help unravel the mystery of male infertility not only in our family but also in the larger population.

This month one of those sons with the aid of in vitro fertilization has announced he and his wife have been successful with their second pregnancy. Their first was a "miracle" birth defying all the medical odds they would conceive naturally on their own. Certainly, by my definition of having no scientific knowledge of "how" it is done, the ability to replicate the natural sequence of events scientifically outside the womb to produce a viable fertilized egg, then to implant it into the mother's womb to produce another living soul is a "miracle." (In this case they may possibly have TWO living souls - time will tell on that). It's nothing short of "miraculous" to an old man like me who never had a moment's difficulty in fathering thirteen healthy children.

And finally, a third example. I have never considered myself a tree-hugging liberal on social issues, nor do I give much credence to global warming enthusiasts. I think Al Gore is nothing more than a money-grubbing opportunist playing on people's fears. However, that said, I am becoming increasingly more aware of my ability to reduce my personal carbon footprint and this week I made a decision to give up style for practicality. I am no longer in love with those interlocking four rings of silver on the front of my Audis. That alone would qualify as a "miracle," but I am now speaking about reducing my consumption of gas by 50% (at least) with the aid of modern technology.

2012 Toyota Prius

Another son and his wife gave us an old Saturn they had outlived several months ago. It finally gave up the ghost at the top of Parleys Summit on Monday morning at 187,000 miles. As I said, I tend to wait until the engine blows up before seriously considering a car purchase decision. In a rapid chain of events, working through our good friend and "adopted son" Clint Page at Western Fleet Sales, we found a more "politically correct" vehicle, a 2012 Toyota Prius. Give Clint a call whenever you're looking for a used car solution. Why would anyone ever buy a new car if they know Clint? He's the best.

What led to that decision was the shining example of Packsize's CEO, Hanko Kiessner, who perhaps owns the largest private fleet of Prius cars in the US. The Packsize portfolio of cars has been growing over the years, but now totals around 70 on any given day. Hal Johnson, who runs the fleet internally, told me all they've done in the way of major repairs is to replace a fuel valve at around 200,000 miles on average. Other than oil changes and tires, they are essentially maintenance-free and Packsize consumes as little gas as possible. The fleet policy was to drive them until they hit 200,000 miles, then trade them in, and now they've extended that to 250,000 based upon their favorable performance. Anytime you can benefit from a sample size that large, it's hard to ignore. At least it was for me. I find it amazing! We just turned over 300,000 miles on our Audi A-6 wagon, but I replaced the engine and the transmission on it. Because I'm not "on the road," I don't qualify for a company-owned Prius, but this was an e-mail I sent to Hanko yesterday summarizing my first week's experience in driving one:

"So, here are some interesting data points you asked for. I bought this 2012 Toyota Hybrid Prius (non-electric) for $19,900 through a friend who buys direct from the auto auction here in SLC. That price includes the leather and heated seats kit he is adding for $1295. It had 27,852 miles on it, and now it has 28,360. When he delivered it to me on Tuesday this week, it didn't have a full tank of gas in it. I’ve driven 508 miles, used 8.5 gallons, and that translates into 59.76 miles per gallon! [Hanko cautioned it will likely be reduced in winter conditions to about 46-50 mpg]. I drive about 100 miles per day up and down Parleys Canyon. There is no loss of power going uphill. I’m stunned at the early returns. Now I’m wondering why everyone on planet Earth isn’t buying the Prius."

Hanko's been buying new cars with a fleet discount through the Larry H. Miller Group, but when I told him about Clint my guess is he's going to rethink spending significantly more than he needs to on new ones. I still haven't bought gas this week, and the range indicator says I've still got 63 miles left to go on this partial tank. And by the way, it's not "cute." The Prius has to be one of the ugliest vehicles on the road. But you've got to love the efficiencies in the hybrid technology. I have become a true believer, and I've swallowed Hanko's Kool-Aid.

In case you missed it, here's his explanation of his sustainable business model.

So, once again, this old man is still learning lessons about modern-day miracles. My knowledge of cars and what makes them tick is limited. I know how to put gas in them, change the oil and buy new tires. That's about it. How that hybrid engine works to produce twice the mileage on a gallon of gas, effectively reducing my consumption by 50% or more is nothing short of miraculous.

I'm an old man in awe of what technology hath wrought.

Hanko Kiessner Defines What a "Sustainable" Business Model Looks Like

It has become very fashionable in recent years to use the words "sustainable," and "green," and "lean" as marketing buzz. Like most things in business, however, one must sift the chaff from the wheat to discern the difference between business leaders who are sincere about it and others who merely want to jump on the marketing bandwagon.

There is an ongoing robust national debate about man's impact on this planet over whether we are good stewards of our environment or merely consumers gone wild with little or no accountability. No matter which side of that debate you land on, it makes perfect sense to become more aware of how much we consume as individuals and how much we conserve. We can all do better, and in the aggregate we can make a difference with even modest changes in our own individual behavior.

In the domain of politics, often legitimate efforts toward global change for the better get diminished because the politicians tend to cheapen everything to a point where words lose their meaning. The words "global warming" spring to mind. Without any government mandate to do so, there are some business leaders who simply "get it" because of the way they conduct themselves in private and in public by the way they live their lives and set an example for others to follow.

I've been able to observe a good corporate citizen up close and personal in recent years. Hanko Kiessner is the genuine article, an inspiration to those of us fortunate enough to know him personally as well as professionally. I am posting an interview conducted in-house recently by our Packsize blogmeister, Jacob Low, who asked Hanko to spell out his philosophy and more importantly his commitment to sustainability. He defines it more precisely than anyone else in my world. Perhaps his words will inspire others as he does all of us.

The Rainmaker 

Hanko Kiessner

In its July 2013 issue, DC Velocity named Packsize’s founder and CEO Hanko Kiessner one of their 2013 Rainmakers for his contribution to logistics and for advancing the industry. I had the chance to catch up with Hanko and ask him a few questions. Our conversation touched on sustainability, public policy, and good business practices.

Jake: You’ve just been named one of DC Velocity’s 2013 Rainmakers. Could you briefly explain the significance of this and why you’re being awarded with this achievement? 

Hanko: The Rainmaker Award is for high-impact and high-transformational change projects, individuals, or organizations. So I see this as receiving it on behalf of Packsize and all the team members and employees here for having a tremendous impact when it comes to sustainability, efficiencies within the fulfillment industry, and particularly the shipping supply chains. At Packsize, we are helping customers reduce their shipping volume by 40 percent or more — depending on their previous packaging situation — and that has a tremendous impact when it comes to the fossil-fuel consumption of trucks, freight planes, delivery vans, etc. This is an industry changing project that we at Packsize have undertaken. Given that, it has been very humbling to receive this nomination.

Jake: One thing I love about you personally and the way you run this company is the way you practice what you preach. “Green” and “sustainability” aren’t just marketing buzzwords here, but they are one of our core competencies and a huge part of the way you personally live your life. Why are you so invested in these causes? 

Hanko: When we started Packsize, it was always my goal to create a company that does not wreck the planet as it serves its customers and creates a profit for its investors and other stakeholders. It’s an unsustainable practice to run a business while over-utilizing all sorts of resources along the way just for the sake of creating a profit for the business. I just saw this being practiced too frequently in too many companies, and I concluded that if everyone acted that way, it would be completely unsustainable. We would not be leaving a livable, habitable world for our kids and their kids to come. So I wanted to prove that it is possible to do the right thing and at the same time run a profitable business. That’s always been on my mind. It’s been a lot of fun, and we’ve proven that running a sustainable business that is also profitable is possible. From today’s perspective, I would even go one step further and say that sustainable practices actually drive more profitability as well. In fact, if it’s not sustainable, one might as well not do it all, because you cannot do it forever, you can only do it for a brief period of time, and usually at the expense of others. Someone always pays the price of the lack of sustainability. Let’s look at pollution for instance: Someone inhales those particles that are being emitted. Someone pays for their healthcare. There is a cost for every unsustainable practice. It’s just not tracked in todays’ economic system.

Jake: Oh, that’s a good point I hadn’t thought of. How would you deal with this issue?

Hanko: My vision for a completely sustainable economy which I’ve started to contemplate is fully-burdened supply chain accountability. That means that every step along the supply chain — every emission, waste stream, everything that exits as a result of conducting the business, and all the negative impact as a result of running the business — all of these costs ought to be burdened into the very product that was created from these emissions. At that point, you would have to include the total, fully burdened costs of the cleanups, healthcare, and social expenses that come from that pollution. You would then have a really have a fair — and actually quite sustainable and exciting — economy that actually rewards the leanest and most sustainable product. At that point, you would have a self-regulating system where you don’t need a government anymore to regulate this or that because you would have every waste stream, every emission, the cost thereof would be factored into the cost of producing the product or service. So once again, I call this “fully-burdened supply chain accountability.” And I think we have no choice but to go there, as a society, in the long-term future. For instance, if you take a look at the copper mine over there [Packsize's headquarters is located across the valley from a copper mine], the entire health impact from all their operations — from all the dust particles, the emissions, the red air alert days — that cost should be factored into every ounce of copper they’re mining over there. At that point, you would have fully burdened supply chain accountability where the cost of the product already covers what is already spread across the rest of society. I mean, you’re really not adding anything to the costs anyway, because the costs are already there today. Today, the people who are not accountable for the infringement are the ones paying for it. It’s you, me, all of us, paying in the form of sick days and healthcare. But the price should be paid through the product. Only then you’d have really fair, sustainable, market equilibrium I know that’s pretty far-reaching, but at that point, the government would only have to make this one rule. Then you wouldn’t need to regulate much else, because the market takes care of it. So that’s my vision of how the entire economy should be working. You know, today, emissions are free. It’s free to emit. But there’s a high cost to those emissions. So that’s like socialism, right? You take wealth from someone and spread it across the rest of the country. Here, you’re taking the emissions of a few and you’re spreading it across the population. So in a way, it’s not a free market economy, like you’d have in a fully-burdened system.

Jake: That is something that I always did think was so cool about this company: It was a profitable company that is also green, and it’s a win-win-win situation. We’re making money, but the people who are using our solution are also saving money, and the customer who is on the receiving end of that solution gets an added benefit as well. 

Hanko: That’s really true. And they should also save money because they can purchase a more competitive product in the market, and spend less money having it shipped to them. I think in the future we’ll see one of the biggest drivers of profit is sustainable behavior. But it only works if everyone participates in that system. If we have a few polluters who are not participating, then they can take a short term advantage of the market. That’s where the regulators need to set the rules of the game, and then we’ll all play by the same rules. In my mind, the only rule we need in this context is that every product or service carries the fully-burdened cost of all of its operations.

Jake: That’s a tall order. 

Hanko: And I fully realize that with Packsize, we aren’t 100 percent compliant with that ourselves. For instance, our trucks that we use to ship corrugated are burning diesel, and we are not paying a premium on the fossil fuel consumption there. But we are holding ourselves accountable wherever we can control it. All of the power we use here at our headquarters, for example, comes exclusively from renewable sources. So where we can control our emissions, we will do that. And we will also choose a sustainable transportation method as soon as battery, natural gas, or bio-fuels become available. We have not achieved that goal completely, but with every decision, we are taking that into consideration and choosing the best available solution.

Jake: Other than using Packsize’s machines and solutions [wink, wink, readers], what advice would you give to someone who would like to increase the sustainability of their business? Where are some easy places to start? 

Hanko: I would say to question the status quo. There is always a more sustainable way of doing it. Sometimes, the choices are very easy to implement. In many cases, they’re also cheaper to implement than to go conventional way. The high-impact, low cost, or obvious ones include transportation, power generation, and shipping of supply chain. There are carbon neutral choices now available through many carriers. There’s the EPA sponsored program called the Smartway Transport Partnership, and we are members of that. And also to live the example. That’s always good leadership — to not just talk about ideas, but to actually do them yourself.

Jake: Without giving too much away, what are you most excited about in regards to the future of Packsize LLC? 

Hanko: What I’m most excited about is that we can scale up the impact that we’re having. We’ve proven our systems now for many years. We have some incredibly exciting new developments that have begun to hit the market and will continue to hit the market. These developments will provide incremental improvements for our customers, as well as quantum leap improvements. We consider ourselves founders of the On Demand Packaging® industry, and this industry is now in full gear. So what we started eleven years ago as a startup is now moving at light speed with hundreds of fulfillment buildings that want to be lean and have a lower cost structure. That inflection point that we are seeing right now is what I’m most excited about.

Jake: It is super exciting! Thank you for your time Hanko. 

Hanko: Thank you, This was fun.

Are You a "Rowan" or Just Another Soldier?

Funny how things that happen today can put your mind in reverse and call back a distant memory. Elbert Hubbard wrote a classic essay I have recaptured below. He called it "A Message to Garcia." The history behind the story is outlined here if you're interested. The setting of the account is the year 1898 during the Spanish-American War in Cuba. Its message is as timely today as it is timeless. See if you don't agree if you're reading it for the first time..

I was first introduced to the story during "goat week" as a Sigma Chi pledge yearning for initiation into what we all considered the best boys club on campus. We were admonished to live our lives in such a way that we could be considered a "Rowan." In Rowan's own words, here's his account of HOW he did it.

Perhaps others have encountered the story in other settings. When I first heard the story it made a lasting impression. The lessons to take away from it are numerous, but the author sums it up better than anyone who has moralized its value since then.

A Message To Garcia

IN ALL THIS CUBAN BUSINESS there is one man stands out on the horizon of my memory like Mars at perihelion. When war broke out between Spain and the United States, it was very necessary to communicate quickly with the leader of the Insurgents. Garcia was somewhere in the mountain fastnesses of Cuba — no one knew where. No mail or telegraph could reach him. The President must secure his co-operation, and quickly.

What to do!

Someone said to the President, "There is a fellow by the name of Rowan will find Garcia for you, if anybody can."

Andrew Summers Rowan

Rowan was sent for and given a letter to be delivered to Garcia. How "the fellow by name of Rowan" took the letter, sealed it up in an oil-skin pouch, strapped it over his heart, in four days landed by night off the coast of Cuba from an open boat, disappeared into the jungle, and in three weeks came out on the other side of the Island, having traversed a hostile country on foot, and having delivered his letter to Garcia — are things I have no special desire now to tell in detail.

The point I wish to make is this: McKinley gave Rowan a letter to be delivered to Garcia; Rowan took the letter and did not ask, "Where is he at?"

By the Eternal! there is a man whose form should be cast in deathless bronze and the statue placed in every college of the land. It is not book-learning young men need, nor instruction about this or that, but a stiffening of the vertebrae which will cause them to be loyal to a trust, to act promptly, concentrate their energies: do the thing — "Carry a message to Garcia."

General Garcia is dead now, but there are other Garcias.

No man who has endeavored to carry out an enterprise where many hands are needed, but has been well-nigh appalled at times by the imbecility of the average man — the inability or unwillingness to concentrate on a thing and do it. Slipshod assistance, foolish inattention, dowdy indifference, and half-hearted work seem the rule; and no man succeeds, unless by hook or crook or threat he forces or bribes other men to assist him; or mayhap, God in His goodness performs a miracle, and sends him an Angel of Light for an assistant.

You, reader, put this matter to a test: You are sitting now in your office — six clerks are within call. Summon any one and make this request: "Please look in the encyclopedia and make a brief memorandum for me concerning the life of Correggio."

Will the clerk quietly say, "Yes, sir," and go do the task?

On your life, he will not. He will look at you out of a fishy eye, and ask one or more of the following questions:

Who was he?

Which encyclopedia?

Where is the encyclopedia?

Was I hired for that?

Don't you mean Bismarck?

What's the matter with Charlie doing it?

Is he dead?

Is there any hurry?

Sha'n't I bring you the book and let you look it up yourself?

What do you want to know for?

And I will lay you ten to one that after you have answered the questions, and explained how to find the information, and why you want it, the clerk will go off and get one of the other clerks to help him find Garcia — and then come back and tell you there is no such man. Of course, I may lose my bet, but according to the Law of Average I will not.

Now, if you are wise, you will not bother to explain to your "assistant" that Correggio is indexed under the C's, not in the K's, but you will smile very sweetly and say, "Never mind," and go look it up yourself. And this incapacity for independent action, this moral stupidity, this infirmity of the will, this unwillingness to cheerfully catch hold and lift — these are the things that put pure Socialism so far into the future. If men will not act for themselves, what will they do when the benefit of their effort is for all?

A first mate with knotted club seems necessary; and the dread of getting "the bounce" Saturday night holds many a worker to his place. Advertise for a stenographer, and nine out of ten who apply can neither spell nor punctuate — and do not think it necessary to.

Can such a one write a letter to Garcia?

"You see that bookkeeper," said the foreman to me in a large factory.

"Yes, what about him?"

"Well, he's a fine accountant, but if I'd send him uptown on an errand, he might accomplish the errand all right, and on the other hand, might stop at four saloons on the way, and when he got to Main Street would forget what he had been sent for."

Can such a man be entrusted to carry a message to Garcia?

We have recently been hearing much maudlin sympathy expressed for the "down-trodden denizens of the sweatshop" and the "homeless wanderer searching for honest employment," and with it all often go many hard words for the men in power.

Nothing is said about the employer who grows old before his time in a vain attempt to get frowsy ne'er-do-wells to do intelligent work; and his long, patient striving after "help" that does nothing but loaf when his back is turned. In every store and factory there is a constant weeding-out process going on. The employer is constantly sending away "help" that have shown their incapacity to further the interests of the business, and others are being taken on. No matter how good times are, this sorting continues: only, if times are hard and work is scarce, this sorting is done finer — but out and forever out the incompetent and unworthy go. It is the survival of the fittest. Self-interest prompts every employer to keep the best — those who can carry a message to Garcia.

I know one man of really brilliant parts who has not the ability to manage a business of his own, and yet who is absolutely worthless to anyone else, because he carries with him constantly the insane suspicion that his employer is oppressing, or intending to oppress him. He can not give orders, and he will not receive them. Should a message be given him to take to Garcia, his answer would probably be, "Take it yourself!"

Tonight this man walks the streets looking for work, the wind whistling through his threadbare coat. No one who knows him dare employ him, for he is a regular firebrand of discontent. He is impervious to reason, and the only thing that can impress him is the toe of a thick-soled Number Nine boot.

Of course, I know that one so morally deformed is no less to be pitied than a physical cripple; but in our pitying let us drop a tear, too, for the men who are striving to carry on a great enterprise, whose working hours are not limited by the whistle, and whose hair is fast turning white through the struggle to hold the line in dowdy indifference, slipshod imbecility, and the heartless ingratitude which, but for their enterprise, would be both hungry and homeless.

Have I put the matter too strongly? Possibly I have; but when all the world has gone a-slumming I wish to speak a word of sympathy for the man who succeeds — the man who, against great odds, has directed the efforts of others, and having succeeded, finds there's nothing in it nothing but bare board and clothes. I have carried a dinner-pail and worked for a day's wages, and I have also been an employer of labor, and I know there is something to be said on both sides. There is no excellence, per se, in poverty; rags are no recommendation; and all employers are not rapacious and high-handed, any more than all poor men are virtuous.

My heart goes out to the man who does his work when the "boss" is away, as well as when he is at home. And the man who, when given a letter for Garcia, quietly takes the missive, without asking any idiotic questions, and with no lurking intention of chucking it into the nearest sewer, or of doing aught else but deliver it, never gets "laid off," nor has to go on a strike for higher wages. Civilization is one long, anxious search for just such individuals. Anything such a man asks will be granted. He is wanted in every city, town and village — in every office, shop, store and factory. The world cries out for such: he is needed and needed badly — the man who can "Carry a Message to Garcia."

Detroit, Bankrupt, and For What?

This past week a new chapter in history was written in America, and it's not a happy chapter. The once-proud Motor City of the 50s has become the poster child for the biggest Chapter 9 bankruptcy of a municipality. The city fathers managed to run up $18 billion in debt that could not be repaid.

Many will clamor for the federal government to bail out Detroit. By the way, the "federal government" here should be translated - YOU! Taxpayers will soon come to realize it's really THEIR money at stake here whenever the topic turns to "bailout." I'm wondering if finally someone in Washington will draw the line in the sand and say, "No. We will not bail out ANY reckless spending by cities, counties or state governments." Then, having set THAT precedent, we might be able to establish a precedent for the federal government too.

Detroit’s bankruptcy filing is only the latest chapter in a long slow-reading book that has been written over a period of decades, but it should serve as a model for what NOT to do if you're running a city government. We used to study GM in business school as a model for American ingenuity and good old fashioned know-how when it came to making automobiles in the post-World War II era.

But Detroit's greatest strengths (its workers) became Detroit's greatest weaknesses (the unions those workers belonged to). The manufacturing decline in America had its roots in the factories of Detroit. The basic economic math became immutable as the city once bristling with economic wellness lost more than 60 percent of its population (2 million down to 800,000) because it gave exactly the wrong response to the manufacturing decline. On a grand scale we've seen Barack Obama doing the same thing at the federal level.

Detroit’s city fathers, as Mitt Romney documented so well in his campaign for the presidency, attempted to do the impossible by shifting resources from the private sector to the public sector. It's straight out of the socialists' play book. It's never worked ANYWHERE, and least of all in America. The leaders in Detroit failed to realize people who worked there would react predictably when they raised taxes and increased regulations, simultaneously growing their city government like the consequences would never come home to roost.

The tragedy here was the city was following the lead of a doomed GM, Chrysler and Ford. Rather than implement sound financial and economic policies and promote a vibrant private sector to help rejuvenate the city, Detroit's leaders did exactly what the Big Three automakers were doing - growing their city government through generous promises to their workers with unaffordable future pension and health care benefits. Just as the auto unions drove the Big Three to their knees, by far the biggest portion of Detroit’s debt comes from these unaffordable promises: $6 billion in health and other post-employment benefits for retirees and $3 billion in pensions. Mind you, these are public employees unions who won their concessions through collective bargaining, again mirroring their brothers in the private unions. They ignored the warnings of the past that public employees should never be granted collective bargaining powers.

Governor Scott Walker, Wisconsin

Wisconsin's Governor Scott Walker taught the nation a powerful lesson when he stood up to the public unions in his state. Detroit's failure is only an endorsement of Walker's approach to responsible government having to take principled and difficult stands. By doing what he did, Walker helped Wisconsin avoid a similar fate.

Today I read an interesting article about which states are running down a fast track to financial oblivion. You might want to check to see if your state is on this list. Do you want to guess which states headline this list?

For many decades, Detroit had sustained itself by bad fiscal management: unaffordable borrowing, state grant schemes, raising taxes, and deferring public pension contributions rather than cutting city spending. And now the end has finally come. The piper always demands payment. With all tax rates close to their statutory max and dismal public services that discourage individuals and businesses from remaining in or coming to Detroit, the city simply cannot continue to fund its operations and service its debt. The population voted with its feet, and the population is who pays the taxes. As Margaret Thatcher once accurately warned, "The problem with socialism is eventually you run out of people to tax." And once the population vacated Detroit, there was no way to keep its promises to the public employee unions. It used to be Economics 101 where I went to school.

It is likely Detroit’s creditors and pensioners may receive pennies on the dollar to what they are owed. That is the sad but irreversible reality. Certainly there will be cries of “unfairness.” But a federal bailout in which we the taxpayers who live in fiscally responsible cities and states have to pay for the services and promises made by city and state governments that waived such discipline for decades, would be the height of "unfair." The "pooling of risk" is a principle applied to insurance policies, where through no fault of their own premium payers can expect to be covered from the larger pool of policy owners when tragedy strikes. Such is NOT the case, and must NEVER be the case here.

Let's be honest, Detroit is not the only city facing serious financial trouble. By setting the precedent of offering NO help for fiscally mismanaged municipalities, it is hoped the representatives of the taxpayers in Washington could learn a lesson from Detroit and begin to put their own fiscal house in order. I am aware this may be wishful thinking and nothing more, but let's start here in Detroit. Further, remember all that bailout money that was spread around in 2009? If it had been helpful, wouldn't every state now be on a more firm financial footing? Bailouts for smaller governments by BIG government simply don't work. PERIOD.

In Utah, a state where leaders are routinely lauded for good management because they are good stewards, any idea of bailouts for cities as poorly managed as Detroit would be punitive and would fail to achieve the intended goal to force local governments to confront and deal with their own mismanagement. If that kind of discipline is required and demanded of the average citizen, is it too much to expect that our public officials should be required to do less? Facing the natural consequences of our poor choices is a childhood lesson, one it seems government officials at all levels seem loathe to learn.

Washington must learn by embracing and valuing what has happened in Detroit. Total national debt is over $17 trillion. For your convenience, I am tracking it day by day here at The Goates Notes (see the window on the right). That debt load is larger now than the whole U.S. economy. It is unsustainable. It is reckless. The profligate spending will ruin this once-great country if allowed to continue in the name of "stimulating the economy."

Look at the factors that drove Detroit into bankruptcy, as I outlined above. Beyond escalating growth in nearly all federal programs, future spending will be driven to the breaking point by our own federal retiree spending programs — Medicare, Medicaid, and Social Security. You can add Obamacare to that list now.

It won't be enough to draw the line in sand by discouraging other troubled state and local governments from seeking federal bailouts. They must be compelled to put their fiscal houses in order through their own best efforts at reducing spending.

And those we placed in control in Washington must establish a good example by fixing their own fiscal problems.

The "Random Audit" Power of Obamacare Enforcers

These pages have documented my disdain and abhorrence of Obamacare since its inception, all to no avail. Today's guest blogger is my brother, Jon, who wrote in November 2012 on election eve about his concerns for the implementation of Obamacare and its impact on the small family group practice where he is the Chief Executive. 

Today he updates us with another real-life example of the impact of the enforcement arm of Obamacare and what seems to be the Obama administration's scheme to extract penalties through audits from the healthcare practitioners who have complied in good faith.  

He writes:

The double standard of the current administration is all too obvious… the business of healthcare has become dirty politics.

Dr. Obama knows all

Whether we know it or not thousands of doctor’s offices throughout America are now considered corrupt institutions according to the Obama administration. Recently, I was made aware that a local medical group of about 15 dedicated physicians were notified that an audit of their corporate books is in their immediate future. This medical group is a reputable institution with an excellent reputation for appropriate medical care to their patients. 

Like many of their peer organizations they qualified for Meaningful Use incentive payments for the proper use and configuration of their electronic medical record (EMR) system. The incentive performance payments are directly tied to quality standards and regulations as dictated by the administration (who know nothing about dispensing medical care) as a way to streamline, automate and create quality benchmarks – all in an effort to lower the cost and improve the quality of healthcare. 

These incentives are offered to physicians during a four-year period. The original intent was to put enough incentive money in the hands of physicians to facilitate the purchase of new servers, networking, printers, scanners, laptops or iPads and to pay IT professionals to configure the new systems. No doubt many of the classic medical group activities are improved through the adoption of an EMR as a direct result of the annual payments to each physician that can range from $5,000 to $18,000.  

There are severe financial penalties beginning in 2015 for physicians who do not adopt an EMR. One of those major penalties that could be imposed is an exclusion from the Medicare program at a time when, according to AARP, nearly 8,000 new people per day qualify for Medicare.

In addition to the Meaningful Use incentives, Medicare has a similar approach in that they will incentivize physicians to adopt new ways of reporting (e-file claims instead of faxing or mail) and transmitting secure prescriptions (known as e-prescribing) directly to your pharmacy. In Medicare’s incentive package they structured it to be a 2% add-on to the claim reimbursement for the first year; 1.5% the second year; and in subsequent years Medicare would deduct up to 2% if physicians could not demonstrate that they had fully adopted the new transmission technique. Essentially, if you don’t adopt the only way we have given you to participate, you will be penalized.

Back to the medical group of 15 physicians. After having worked hard to navigate through the numerous and stringent Meaningful Use regulations, carefully measuring their hourly compliance to the mandated quality standards, logging hours of analysis of performance reports by physicians, changing daily behaviors in how and when the physicians treat their patients, they submitted their results to the administration and expected payment for their compliance. 

Payments were received within six weeks. Fast-forward about six months from receipt of payments, and this same medical group has now received a certified letter from a local regulatory agency with the news they have been selected for a “random” audit. They were selected as part of their 10% compliance requirement from the current administration. 

Healthcare insiders have come to understand the word “random” in these types of letters is really bureaucratic doublespeak for the real meaning of “show me the money” and, “did you do what we think you ought to do with it?”

The incentive payments had been received and funds disbursed to the physicians, IT professionals, hardware vendors and staff. All the appropriate payroll and income taxes were paid on the incentive funds. When the monies were placed in the bank account of the medical group there was no mention or stipulation that Uncle Sam would be lurking about to see what they would do with the money, nor were there any rules that stated the funds received must be funneled through only authorized ledger line items of the private corporations who met all the criteria. 

In similar instances to the receipt of the audit notice of the 15 physician medical group, regulatory auditors will often times arrive with a scope of work in mind and they draw their own subjective conclusions to a medical group’s compliance that may be much different to the understanding that the EMR software vendor had when they created the code for the often ambiguous regulation and/or the understanding that a physician uses to measure his compliance to new behaviors during the attestation periods. 

A medical group being audited has no appeal against the mandate of the old adage: “He who owns the purse strings makes the rules… according to his own desires.” 

While the final chapter has yet to be written in the case of the group of 15 physicians who have received their notice of “random” audit selection, many other similar groups, ours included, have been examined under the “random audit” nomenclature and been required to refund to regulatory agencies cash that was rightfully and honestly earned.

The overreach of these “random” audits are routinely conducted under the justification that the administration holds the right to enter any private corporation in America with the intent that we all “follow the rules” according to those who preside over and pay for mandated compliance. How many times do we hear from Mr. Obama’s lips that everyone has to follow the same set of (his) rules in order for (his) plan to work – and then when our vote against (his) rules does not match-up to his we must suffer his scorn at the bully pulpit? 

Once inside the doors of Main Street businesses like your doctor’s office, regulatory compliance auditors will often jump the fence of the original scope of their audit to request additional records and therein find other subjective infractions of the “rules” that may or may not apply to the initial audit scope. Refusal is a futile effort, since the physicians who received incentive funds with honorable intent did their best to comply to the often-shifting regulatory definitions of Meaningful Use as defined by the current administration. 

The obdurate juggernaut of social policy-making from inside the beltway has now spilled over into the exam rooms of our local doctor’s office, whether we like it or not.

While the final chapter of the audit has yet to be written for the medical group of 15 physicians even though they reported to the regulatory agency their honest effort at full compliance to Meaningful Use regulations, they are certain they will be forced to forfeit some of the funds they earned under the guise of an incentive payment from the government for what once purported to be a "cost-reduction" piece of legislation now known derisively as "Obamacare." Once those funds were dangled in front of them to become more automated and efficient and they complied in a good faith effort, the threat now exists they will be reclaimed through a regulatory power play. All in the name of decreasing medical costs and improving quality. Yikes!

With my eyes wide open that I may be next for a “random” audit …

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Let's hope the NSA isn't reading The Goates Notes, Jon - we'll see if free speech in America is still a valid 1st Amendment right or if you're pushing the envelope of freedom a little too far.