Kicking the Can (20 page)

78

S
peaker Bennett pounded on the table for emphasis, causing the water glasses to tremble. Four individuals were seated at the table, a subset of the super committee. They effectively controlled the health care industry. Their tentacles were wrapped around the other teams competing in Donald’s Contest.

“Dammit, I expected more. Your creativity is comical. Optimizing individual interests without structural change is not innovation, you assholes. If I didn’t know better, I’d suspect collusion. US health care is about money. It’s time you show me some.”

Bennett paused to blow his nose into the cloth napkin. He looked at the contents before folding the napkin and tossing it on the table next to his salad plate.

“The ethos of medical doctors is professional independence…their Achilles’ heel. They won’t organize, so they don’t have the financial resources to buy a seat at this table.

“Lewis, health plans have been killing the insured for years by denying treatments. Don’t tell me you have a moral compass. You should be able to cut sixty percent from your bloated overhead and still make tens of millions as CEO. Your stock market multiple is a fraction of
Big Pharma, but it’s still more than one times annual revenues. You should be working with the Blues Association to convert into regional for-profits. You could create one trillion in market capitalization, five times the capitalization of Aetna and United Health Care combined.

“Soros, you guys are even more pathetic. The market capitalization of publically held hospital operators is pittance. If I were you, I’d be acquiring hospitals in large markets with excess capacity and in mid-sized markets without competition. The rest of the industry is focused on keeping patients out of the hospital. You morons are trying to fill the beds. The future is offering treatment in the least costly setting.

“Hutchinson, with one trillion in market capitalization and a multiple of ten to twenty times earnings, you guys win the ‘money grubber’ award. You spend three times your research and development budgets on selling, general, and administrative expenses. No wonder you have to repackage and inappropriately market existing drugs to fill your empty pipelines.”

Bennett’s diatribe lasted less than sixty seconds—he wasn’t finished.

“Any MBA dick from city-college will tell you
integration
is the future. I’d be using Big Pharma’s higher stock market multiple to joint venture with health plans and hospitals. A blended company will allow you to raise more capital. You should take your market cap and start buying physician practices. Pay them one times gross compensation and put them on salary. Over fifty percent of physicians graduating from medical school are women—quality of life and schedule trump compensation.

“Donald’s Contest will be over in ten days. We’ll look like idiots if we don’t have a cogent plan by the time they announce a winner. I sure as hell better see some movement on your part before then. I’m not going to allow you to screw up my bid for the presidency!”

79

S
peaker Bennett grinned and folded the
Washington Post
, placing it under his armpit. Printed on the front page was the House of Representatives’ decision to make him chair of the super committee. The photograph was taken from the interview, minutes after the bomb exploded. Overnight, Bennett had emerged a selfless patriot, defying terrorists and putting the country’s interests before his own safety.
GPG was competent. Perhaps a bonus is in order,
Bennett thought. His luck was changing. Haines was history, and his overture toward Clive Donald looked like it might pay dividends after all.

The ritual—Bennett couldn’t be too careful. Davis was scanned for electronic devices and stepped into Bennett’s limo. Timoteo stepped on the gas pedal, and the limousine lurched forward, cutting off two taxi cabs and a delivery truck, all of which were laying on their horns.

“I have copies of the digital files submitted by the teams participating in the contest,” Bennett said.

“The proposal submitted by Drummond’s team is a hallucination. It’s game-over for the industry as we know it. The other teams’ proposals are good, but they pale in comparison. My fear is Drummond’s proposal will have
tremendous popular appeal. It’s innovative, and their premise is well supported. It’s hard to deflect the truth…if you know what I mean.”

“How’s the Committee’s work progressing?” Davis asked.

“The bastards are holding out on me. They think by colluding the super committee will fail and they can protect billions in profits. Drummond’s proposal will be shock therapy—I’m positive it will motivate them to negotiate earnestly. This information will command a high price. You stand to make millions selling it on the black market to health care CEOs.”

Bennett was observing Davis’s body language when he said “millions.”

“Can you guys handle that sort of thing?” Bennett asked.

“Of course—it’s routine for us. It’ll take a few days to put out our feelers, but if you provide a list of parties to target, we can penetrate their organizations, make it look serendipitous. I trust you’re authorizing me to make contact and sell the information.”

“Isn’t that what I’ve been saying, dickhead?”

“And GPG is entitled to keep the proceeds?” Davis asked.

“Think of it as a ‘relationship dividend.’ So far your work has been top-notch. Any security risks with the Haines incident? The feds must be crawling all over DC looking for clues.”

“The C-4 will be traced to a weapons manufacturer in the Middle East,” Davis explained. “The man they arrested and the new information President Cannon spoke
of will lead them to a dead end. The trail is cold. Trust me.”

“How does the left hand know what the right hand is doing…if you’re coordinating encrypted files between a dozen companies? Have you ever had companies bidding against each other, or worse, killing each other?” Bennett asked.

“Never—fail-safe.”

80

P
eter Lowsley and Chris Drummond were certain that cutting health care spending alone wouldn’t balance the budget.

“Drummond, we can’t move Medicare to pay-as-we-go without increasing revenues.”

“I know…Our problem is seniors think they’re entitled to Medicare because they believe they’ve paid into the system through payroll tax deductions and premiums. They are ignorant. The payroll tax covers Part A, hospital care. The Hospital Trust Fund is forecast to remain solvent for another eleven years—but Parts B and D, covering physician services and prescription drugs, are woefully underfunded. Premium payments deducted from social security checks cover twenty-four percent of the cost. The rest of funding comes out of the General Fund to the tune of seven hundred billion dollars a year, including state funding for Medicaid,” Drummond said.

“The government ought to have been reducing benefits and raising premiums and taxes for the last ten years,” Lowsley said. “Congress has been hiding the truth from the public for decades. They make references to the ‘Medicare Trust Fund’ but don’t tell Americans there’s
no fund to cover physician services and drugs. Medicare is bankrupt unless we raise revenue.”

“What are your ideas?” Drummond asked.

“Implement a means-based scale to determine premiums; wealthier retirees pay more. We also need to implement a payroll tax, like Part A, for physician services and prescription drugs,” Lowsley said.

“What’s the number?”

“Four percent. When US citizens understand our government will no longer subsidize entitlements funded by debt, they’ll change behavior and increase their savings rate. The United States has one of the lowest savings rates in the world. Americans ought to plan for future needs instead of expecting Uncle Sam to take care of them.”

“That’s the plan,” Drummond said.

“Yep. Raise taxes four percent, and start pruning benefits.”

81

I
n a previous century, the self-professed “Gang of Three” would have been outlaws. Instead, they were the CEOs of the most powerful health care conglomerates in America.

“He claims the documents disclose the business plan Drummond’s team has drafted. Proven health care savings of close to thirty percent…None of the other proposals come close. He also said Donald is secretly working with President Cannon. They plan to post all of the contestant proposals on the White House website and have the voting public pick the winner.”

“How did he take possession?”

“It was leaked. He won’t tell me anything more, other than the information could be worth billions to us.”

“Who is he?”

“Skip Davis, CEO of Global Paramilitary Group. They are a private military and intelligence corporation. I’ve checked him out. Davis is a decorated war veteran—solid credentials—former Navy SEAL.

“Mercenaries for hire—a sign of the times.”

“How much?”

“Twenty million asking price. I say we counter at fourteen million dollars but authorize payment of the full fee…peanuts.”

“I’m just spit-balling…Maybe we figure out how to keep the proposal out of the public’s eye. Put yourself in Bennett’s shoes. This proposal won’t serve his interests—or ours. For his party to win, they need to control industry reforms. It’s the only way he can profit politically and financially. Why not hire GPG? Have them dispose of the proposal…take care of Drummond’s team. They do that sort of thing, right?”

82

P
eter Lowsley said, “most health care organizations have already developed key measures for quality. Clinicians respond to data—fast. Clearly spelled out performance measures will be essential.”

“We can also build on Medicare’s Meaningful Use chassis—the electronic health records quality reporting initiative. And reporting on OECD performance measures ought to be compulsory. If our goal is to move US per capita expenditures to the trend line, then we should also benchmark US quality against their performance measures,” Drummond said.

83

C
hris Drummond sat down next to Sheryl Vogel. She had finished lunch and was reading a back copy of
Fortune Magazine,
sipping on a glass of lemonade. Vogel stole an onion ring from Drummond’s plate and popped it in her mouth.

“Did you submit our proposal?” Vogel asked, smiling, her ebullient self.

“Yes—Gupta sent the file thirty minutes ago. We finished four days before the contest deadline. It was all Gupta could do to sit still for fifteen minutes. He’s bouncing off the walls excited about the party tonight.”

“What do you think of the proposal?” Drummond asked.

“I feel good about the regenerative health care business model. The forecast savings seem genuine. I think we’re targeting the right areas for savings and efficiencies, and it’s large enough in scope and scale to make a difference. Statistically—it will pass scrutiny. Jiang’s stochastic modeling corroborated Gupta’s findings…What was the final number?”

“A twenty-seven point seven percent decrease in expenditures with behavioral underwriting and thirty-one point seven percent when we add in the four percent
payroll tax. Future expected growth rate of one point one five percent,” Drummond said.

“You don’t seem confident in your conviction it’s the best work our team is capable of,” Vogel said.

“Why do you say that?”

“We’ve been busting our asses working sixty-hour work weeks, and the final tally is forecast savings of almost one-third. You act like you’re headed to a funeral…What gives?”

Drummond finished chewing a piece of barbecued chicken breast and swallowed.

“Our proposal doesn’t substantively address how to replace cuts in health care with an alternative economic engine. The loss of jobs will be horrific.

“What’s the mean rate of return on invested capital in the US?” Drummond asked.

“Seven percent,” Vogel said.

“We’d need to invest ten trillion to compensate for seven hundred billion dollars in lost GDP, if we assume the same return on invested capital. Plus, we’re imposing new taxes of four percent.”

“A poison pill,” Vogel said.

“I don’t think President Cannon will be able to sell the proposal. Issuing more public debt to fund the public-private partnerships may not be viable.”

“You said developing other economic engines is outside the purview of the contest,” Vogel said.

“It is. But economic growth is critical. I saw its importance in public accounting. It’s impossible longer term to increase earnings per share and stockholders’ equity unless you’re growing revenues. The United States won’t
survive unless we grow GDP. That’s what’s keeping me awake at night. I didn’t have the presence of mind to discuss this issue with the president when I met with him.”

The two sat in silence, looking at the blue expanse of the ocean.

“Too bad the United States has a portfolio of IOUs instead of a sovereign wealth fund (SWF) like Saudi Arabia,” Vogel said. “They have it right. I saw a documentary on
60 Minutes.
The Saudis are using state oil revenues to reposition their economy when their petroleum reserves are gone. They’re making capital investment decisions with a time horizon of two hundred years. That’s the role our government should play…supporting strategic investments with a pro-regulatory environment.”

Vogel stood, placing her hand on Drummond’s shoulder and squeezing it.

“You can’t carry the worries of the world on your shoulders. I’ve been around dozens of Harvard MBA types, but none more capable than you. The team’s done a hell of a job. You have much to be proud of. I hope you allow yourself to validate how special you are and the gifts you have. That software selected you from among seven billion people. It’s time to celebrate!”

84

P
eter Lowsley stood behind the bar counter wearing black leather pants, a matching leather vest, braided leather bracelet, lip gloss, and an earring.

“What’s your pleasure?” he asked. He put down a bottle of tequila and pirouetted so Drummond and Dain could see the full ensemble. On his left bicep was a tattoo of a woman’s face. He flexed his muscle and laughed at his scrawny arm. On his right hand he wore a black glove with open fingers. Drummond recognized it from the weight room. His punked hair, dyed blond, was vertical…Must have taken six ounces of hair spray.