Wednesday, November 21, 2007

The Wrap: Know Your Wary Supplier

The Bush administration's import safety expert recently advised consumers to know their supplier. HHS Secretary Mike Leavitt encouraged people to buy from organizations they trust. He essentially reiterated the old maxim "buyer beware".

Two stories highlight different aspects of this modern dilemma. First, how does the consumer get information about the firms selling them goods, especially companies that aren't publicly traded. The British have a plan to address the problem of secretive private equity firms. CNN Money reported:

Private equity firms doing business in Britain should publish an annual report that details their structure and portfolio or keep this information updated on their Web site, according to the rules. Public companies bought for more than £300 million or firms that change private hands for more than £500 million should provide information about their ownership, as well as disclose details about the performance of their business. The guidelines are voluntary, but buyout firms that do not comply with them will be obligated to explain why they have not.

If a firm plans on shorting the consumer on quality goods or services, it seems they would be happy to stiff the general public as well. How does a consumer get the information they need to fulfill Mike Leavitt's advice?

The second dilemma is more difficult. What if you really trust the organization where you shop? Let's say the Church of Wall Street has some fine looking crosses to sell. Staff there believe they've been made in Italy, a fine Christian nation. But low and behold, it turns out that maybe Communist market worshipping heathens produce the Christ laden crosses in a modern day sweatshop. Trinity Church's supplier is investigating the conditions under which their products are made.

Investors who purchased high risk mortgages bundled by big Wall Street firms are now trying to find out what's of value in the whole mess. Similarly retailers today can't seem to speak for the goods that rest on their shelves. Which ones actually meet the contractor's specs and which one's have freewheeling substitutes inside that cause varying rates of harm? Who is degraded in the whole process of ever growing profits, the employee, maybe even the consumer?

Tuesday, November 20, 2007

Strange Coalescence of Bush Operatives

It seems each new story on The Carlyle Group's planned purchase of giant nursing home provider ManorCare reveals another six degrees of Kevin Bacon to the Bush White House. Consider recent announcements: 1) Fran Townsend, White House Homeland Security Adviser announced her resignation yesterday. Mrs. Townsend did a huge favor for The Carlyle Group after Hurricane Katrina. She omitted the private equity underwriter's brand new affiliate, LifeCare Hospitals and their 24 long term, acute care patient deaths from the White House Lessons Learned report. In 2006, LifeCare invested over $500,000 in lobbying services. Did any of that go toward influencing the White House to not weigh in? As for Fran's reason for leaving, it's to enter the private sector, doing risk management for a large bank or investment company. Or maybe a huge private equity firm? 2) Capital Hill hearings on the deal focused on concerns regarding patient care and patient safety. One might expect Carlyle's clear track record of failing patients in a time of disaster to be pertinent. With this Congress and Executive, that's apparently not the case. If Carlyle can fail patients in one of twenty one LTAC's, what might they do with 550 mostly nursing homes? 3) Having encountered some resistance to the deal, Carlyle put its lobbyists in gear. Guess which group landed squarely on Carlyle's side? The American Health Care Association/Alliance for Quality Nursing Home Care and its contracted lobbyist, Tom Scully. Tom happens to be a General Partner for a different private equity firm, Welsh, Carson, Anderson and Stowe. But he currently hangs his hat at Alston & Bird, alongside Bob Dole and Tom Daschle. Tom Scully served under President Bush as the head of Medicare/Medicaid. He designed the Medicare Prescription Drug benefit before cashing in big in the private sector. A recent article mentioned Tom's lobbying to prevent cuts in payments to long term hospitals (like Carlyle's LifeCare Hospitals). Chambers USA said of Alston & Bird, "the firm is particularly good for healthcare lobbying.” 4) Another ex-Medicare/Medicaid chief under George H.W. Bush, Gail Wilensky will pocket $790,000 in options and stock appreciation rights from the sale of Manor Care. Her 27,205 shares of owned stock at $67 per share bring her total take to $2.6 million. Her capital gains tax savings due to Bush Jr.'s tax cut could amount to $130,000. Note that over two thirds of Manor Care's 2006 revenue came from Medicare and Medicaid, Gail's prior responsibility. (Ms. Wilensky is also a director of Cephalon, Inc.; Gentiva Health Services, Inc.; Quest Diagnostics Incorporated; SRA International; and United HealthCare Corporation.) 5) The Service Employees International Union claims to take the high road on behalf of health care workers. Yet, their claims ring hollow as union President Andy Stern already called employer sponsored health insurance "dead." Andy has his eyes on being a huge group contractor for employees having to buy their own health insurance (this is from a Republican and Democratic plan offered in Feb. 2007). Mr. Stern wants to manage those billions in health insurance funds in a strangely Carlyle like echo. 6) President George W. Bush served on the Board of a Carlyle affiliate, CaterAir in the 1990's. 7) While the American Health Care Association pushes for the Carlyle sale to go through, it's also targeting members of Congress in the Fall 2008 elections. Why are they giving Republicans a free pass on the issue AHCA uses to rake Democrats over the coals? The Alliance for Quality Nursing Home care continues to spend money on Tom Scully's services at Alston & Bird. Time will show if Fran Townsend ends up with as good a job as Tom Scully, but she clearly will make yacht loads. The question is will it be for The Carlyle Group? They'll have just made a killing in China from the IPO of China Pacific Life. Unfortunately, real death happened in LifeCare and Tenet hospitals after Hurricane Katrina. Between the two health care companies, they spent nearly $1.9 million in lobbying services for the year Katrina struck and the following one when Fran produced her investigative report. Somehow they managed their risk well enough to warrant not a mention. Yes, Fran's global risk management skills could come in handy, for the right firm.

Saturday, November 17, 2007

Where's Ombudsman on Carlyle/ManorCare Deal?

The Carlyle Group's purchase of huge nursing home provider, ManorCare, needs an ombudman. Where's the impartial third party capable of investigating patient quality problems and holding a health care company's feet to the fire? The long term care consumer advocate wrote the Toledo Blade on how she can help patients and their families.

As the state long-term care ombudsman, my role is to resolve problems for long-term care consumers wherever they live, facilitate public comment on long-term care issues, and monitor and comment on public policy.

The problem is the ombudsman is needed on the deal itself. Carlyle has a past failure to long term acute care hospital patients that has never been addressed. After Hurricane Katrina, Calyle affiliate, LifeCare had the largest hospital death toll. George Bush's White House couldn't even put this fact in its Lessons Learned report. That whitewash proved his and foul mouthed Fran's inability to act as an ombudsman.

Anyone who has a question or concern about long-term care services should contact an ombudsman at 800-282-1206. We can provide information about regulatory surveys, family and resident satisfaction with facilities, and verified complaints.

Who failed as an ombudsman in regard to the treatment of long term acute care patients post Katrina and its bearing on the Carlyle/ManorCare merger? Both Texas Senators, Rep. Mike Conaway, The White House, the Department of Justice, the FBI, the Federal Trade Commission and the Joint Commission for the Accreditation of Hospitals.

If Carlyle can fail one of twenty one long term acute care hospitals in time of crisis, what can they do with 550 mostly nursing home facilities? Afterwards, expect them to blame the feds and throw their clinicians under the bus. They have a clear history of both with LifeCare. Why this has gotten zero attention is simply amazing. (Update: Santa delivered ManorCare to Carlyle according to a December 24th Washington Post article)

Friday, November 16, 2007

Studies Predict Widespread Health Care Cheating Under Bush P4P Plans

Researchers found that do gooders frequently became the worst cheats. A new study shows how a sense of moral superiority can lead to unethical acts, such as cheating. This can be exacerbated by structural elements that encourage competition.

American stockholders suffered mightily from widespread executive cheating on stock options. Some 30% of publicly traded companies fudged the dates of the option grants to maximize their incentive compensation. The Bush administration wants to spread the toxin of incentive compensation to health care, a field rife with do gooders. The AP article stated:

A competitive playing field, whether at a university or business, can also motivate cheating behaviors. "Cheating is a way to get ahead in a competitive environment where there are rewards for winning or getting ahead of others," said Daniel Kruger, an evolutionary psychologist at the University of Michigan.

It's spreading like wildfire in education and coming to healthcare. Hold on to your hats because an ill wind is ready to spread through the land of do gooders.

Herb Kohl's Statement on ManorCare/Carlyle Deal Laughable

The Washington Post did a story on Capital Hill hearings related to The Carlyle Group's acquisition of huge nursing home provider, ManorCare. Of course there is no mention of the private equity underwriter's failure to patients in its LifeCare hospital after Hurricane Katrina. LifeCare had the largest number of hospital patient deaths.

One might expect regulators to consider a firm's track record owning health related companies. Not this Executive or Congress. The Post piece closed with a quote from Senator Herb Kohl, D-WI, "Often the only way to ensure the improvement of any entity is to bring its failings to light." Great advice, Mr. Kohl, if only you and your committee would follow it.

The White House already showed its incompetence in this regard. One might expect the hospital with the largest patient death toll post Katrina to warrant a mention in Bush's Lessons Learned report. Nope, nada, zippo, not one word. I bet the boys at Carlyle were most grateful for the White House pass. They're likely all smiles if the Capital Hill hearings made a similar omission.

Thursday, November 15, 2007

Bush's Measurement Errors on Health Savings Accounts

What would you think if you read the following "3.2 million covered by HSA type insurance plans"? Need help with the definition of an HSA? It's a health savings account where an employee or individual sets aside money tax free for uncovered or out of pocket health care costs. They can only be opened in conjunction with what's known as a high deductible health plan.

Now are you ready to answer the question? The phrase makes it sound like 3.2 million people have high deductible plans and have set aside money for those possible future expenses. Yet, the statement on the Department of Treasury website doesn't mean that at all. It means 3.2 million people are covered by high deductible plans.

How many actually have a health savings account? That's a horse of a different color. While 3.2 million are covered by HSA type insurance plans, only 26% or 820,000 have any tax free money sitting in an account. Nearly 2.4 million potentially joined the ranks of the underinsured, where they stand at risk should a major illness or traumatic event occur.

Low income workers likely don't have $2,000 to $4,000 to meet the individual or family deductible, much less the annual out of pocket limit, at least $1,000 dollars higher. So what do they do when faced with a health problem? Many likely go without.

That brings up back to the bigger Bush record on health insurance coverage. While he waved HSAs as his signature solution for the ills of the health care marketplace, the number of uninsured rose from 43.5 million in 2004 to 47 million in 2006. From the time he implemented high deductible health plans, more people lost insurance than rode his magic bullet.

The jury is out for the latest year, as 1.3 million more enrolled in "HSA type insurance plans." That brings the total to 4.5 million living under high deductible health plans. If only 26% still have funded HSAs, then the free market purchasing power of 1.2 million consumers with ready tax free cash to spend can be unleashed to drive down high health care prices.

If American businesses covering 176 million lives can't stem the hemorrhaging of high medical costs, I don't think a mere 1.2 million thrifty shoppers will do much. The other 3.3 million with high deductibles and zero balances in their HSAs likely are praying they don't get sick. Just remember the President's other signature solution for health care problems, "go to an ER." Be sure to send the bill to 1600 Pennsylvania Avenue.

That Measurement Loving Bush Administration

How many times has the Bush administration unfurled a change with fanfare, only to flounder at the most predictable question, the size of its impact? Early in his first term, President Bush offered his support for measurement, "Annual measurement is a special concern of mine. I understand it's crucial. It's a crucial part of a solid reform package. But the good news is, I'm not alone." Actually, George may be alone as many of his staffers can't produce data, numbers or projections. Consider today's announcement intended to stratify air travel into the haves and have nots:

SECRETARY PETERS: ....And I'm sorry, how many more planes, Nancy?

MS. KALINOWSKI: We're not -- we haven't done those statistics, so we just feel like we know how much traffic we're going to have for the holiday season and we're just going to get them out of the New York area quicker, especially

Later in the conversation the concept of airline ticket pricing arose, especially the impact of pricing people out of the peak flying time periods:

Q If you get this bump in compensation, and you go to congestion pricing, won't the airlines pass these new costs on to their ticket buyers?

SECRETARY PETERS: They will pass some costs on, but the fact is, the customers are paying the price today with lack of reliability, lack of predictability, lack of knowing if they can get there on time.

You know, when I worked in the private sector before I came to this position, people in my company traveled the day before always, because we couldn't count on getting there the same day. That was an enormous price. But the other thing is, as we open up additional capacity, through congestion pricing, prices will even off, we'll see a leveling, so we don't see a long-term increase in prices.

No projections on volume increases and no projections on price changes? This is typical George W. Bush. Did you read between the lines on who will pay more on total costs? Those priced out of peak period individuals will pay more while businesses save. This segways nicley to his shifting the cost of health insurance away from the employer and to the worker.

None of his signature proposals, like health savings accounts, stopped the dramatic increase in the number of people without health insurance. The number of uninsured rose over 6 million on his shift, that's even with help from timely Census Bureau reformulations. What did his staffers have to say in the past?

Q Hi. I also have two questions, the first regarding this year's version of the health care tax credits. You say that the President has revised the policy because he's a believer in HSAs. And I'm wondering if you have any estimates as to how many people might be able to take advantage of this reconfigured tax credit? And also whether there was a fiscal component to the decision to not pursue the broader tax credit the administration has been interested in, in prior years?

DIRECTOR HUBBARD: I'm sure we have those numbers available. I don't have the numbers at my fingertips, in terms of what the Treasury estimates in terms of the take-up. Will that be in the budget that -- I don't know what's actually in the budget. But, again, the President is a big believer in HSAs, and that's why he made the decision to make these tax credits apply to HSAs.

Q Okay, is the take-up rate something that you could check on today?

DIRECTOR HUBBARD: Roy, can we -- I don't know where we stand on that.

MR. RAMTHUN: We can check.

DIRECTOR HUBBARD: Yes, we can check.

Check, check? When announcing a brand new effort intended to make a major impact, Bush staffers show up with no data? It raises more than the question of incompetence, it surfaces the ugly head of original intent. George Bush's understanding of health care became crystal clear when he referred anyone with coverage to an ER for care. I suggest anyone who follows his advice to put 1600 Pennsylvania Avenue as the address for the responsible party.

As someone who was a road warrior prior to 9-11, I avoid air travel at all costs. The airline industry is a direct reflection of the sorry state of customer service in America. I won't pay a premium price to fly peak hours, not if I can drive. I've made my own list and it's titled "Don't Want to Fly." Care to join?

Today's Hearing on ManorCare/Carlyle Deal

Capital Hill will hold a hearing today on the acquisition of huge nursing home chain, ManorCare by the politically connected private equity underwriter, The Carlyle Group. Just down Pennsylvania Avenue from The White House sits Carlyle's headquarters. It happens the occupants of 1600 Pennsylvania Avenue left out their neighbors when writing the Lessons Learned report after Hurricane Katrina. Carlyle's LifeCare Hospitals had the largest patient death toll in the storm's aftermath.

It is highly likely that today's choreographed testimony will omit Carlyle's startling failure to safeguard twenty four patients in a time of disaster. Yet the private equity firm's legal defense adds to the malodorous emanations, which continue seeping from the event. Carlyle blames medical providers from Tenet Healthcare, when LifeCare clinicians clearly had a responsibility to their patients.

News reports indicate a LifeCare administrator abandoned the hospital's patients in a time of need. While their employee went below deck in Joseph Hazelwood fashion, Carlyle tried to turn a doctor and two nurses into crazed criminals. Jurors didn't buy it in a criminal trial, casting doubt on the PEU's ability to win with this defense in civil wrongful death lawsuits. Now Carlyle blames the federal government, claiming LifeCare patients became wards of the federal government as soon as FEMA evacuation teams set up in New Orleans.

If Carlyle failed patients in one of twenty one long term acute care hospitals in a disaster, how might they perform with 550 mostly nursing homes? The question is relevant based on Carlyle's history with health care acquisitions, yet no one will ask it on the Hill today. At least that's my guess.

Lying to Customers-Airlines and PEU's

Two news stories show the extent corporations are willing to lie to customers to get their business. Airlines had the worst on time record in history this past year. The Bush approach to voluntary regulation has airlines craming the most popular departure times with flights, such that they have no realistic expectation of leaving on time. That throws arrival times off.

Add too many planes landing in a short window and gate access for deplaning becomes a problem. So why haven't airlines solved the problem for themselves, in voluntary free market fashion? Because none want to give up the juicy flight times.

The co-founder of The Carlyle Group, David Rubenstein just confessed to a similar practice. Instead of being honest about future returns as he competes head to head with other private equity underwriters for investment capital, he fudges.

"Clearly, when I'm fundraising I probably emphasise that we can probably do as well as we've done in the past, but the truth is it's probably unlikely." This PEU doesn't want to slow his firm's huge capital inflow. Greed isn't pretty in the air or on the ground. But in the future more ka-ching will get you the preferred departure time, at least that's what Transportation Secretary Mary Peters said when she referred to "pricing people out of the peak periods."

Tom Tancredo Runs Carlyle Group Commercial with Mall Bombing

Rep. Tom Tancredo's political ad depicting a hooded man leaving a backpack in a mall could serve more than one purpose. In a test of wits, does the corresponding explosion indicates:

1) That an illegal alien wormed his way into the American Heartland to detonate a device.

2) That a company that sells exception detection surveillance survices will soon have a huge boom in sales and profits.

Time will show if one or both are true. However Tom's commercial came at the right time for Carlyle affiliate ARINC, which makes "advanced video surveillance technology that uses 'exception detection' software to pinpoint suspicious activities, such as unattended packages and suspicious persons." They also have a stake in another firm that makes robots capable of removing bombs.

News reports indicate the Maryland Transit Authority as ARINC's newest customer. Might they also target malls? If so, will Rep. Tancredo get a commission for the sales leads his commercial generates? Pay for performance is the poison that distorts everything, that is if Tom can become any more toxic. Now they just need a few bombs to scare up more business...

Monday, November 12, 2007

CNN to Cover Three Estates in What World?

CNN announced it would cover the three estates in what virtual world? Did they say they'd set up shop in the hallowed halls of an online world where people interact within a programmed framework? Is that the computer world of Second Life or the virtually invisible world of good 'ole boy politics, influence, and money changing?

Having long avoided the latter, CNN dives head first into Second Life. There Newt Gingrich and Rudy Giuliani can ditch their wives for new girlfriends at a fraction of the cost in Washington, D.C. Similar savings can be had on virtual clothing, futuristic transportation and on cartoon prostitutes.

The good news is The Carlyle Group's reputation is stellar in both virtual worlds, Second Life and inside the Beltway. Only a handful of people know how Carlyle failed long term acute care patients in New Orleans after Hurricane Katrina. More would know, but George W. Bush left this important fact out of his term paper, otherwise known as the White House Lessons Learned report. Good thing George didn't write that for a virtual grade. I'd score it an F, for missing the absolute basics in an investigation.

In Second Life CNN won't have to cover Carlyle's sale of two aircraft operations firms to Dubai Aerospace. They sold 50 airport facilities to the Middle Eastern government after the Ports fiasco and before the NASDAQ row, yet not a peep from our diligent media.

But the most amazing parallel between a fake computer world and private equity are the mind boggling numbers participants can rack up, only PEU's (private equity underwriters) get to count real money. While it looks like they can skate away with the loot at will, it's really the result of a program written by the U.S. Congress.

So cover away in your virtual world, CNN. Leave the rest of us schleps to untangle the bloated, money gorging, government industrial monstrosity and its numerous beneficiaries.

Dubai Aerospace Buys Again, This Time Publicly

Just months after Dubai Aerospace purchased two aircraft operations from the Carlyle Group to no fanfare, the same government owned company bought planes from Boeing and Airbus. In August, Carlyle sold Landmark Aviation and Standard Aero to the United Arab Emirates owned company. The silence over the deal was odd given the earlier uproar over Dubai Ports buying six U.S. port operations and the later concern over selling part of the NASDAQ market to another Dubai firm.

Why would selling aircraft maintenance and flight operations centers at 50 U.S. airports not be a concern? Why wouldn't it warrant public comment and government oversight, like other deals? The difference is this sale involved the Carlyle Group, forever vigilant in protecting their good name. Spreading lobbying grease to the tune of $400,000 via Landmark didn't hurt. Carlyle added another $460,000 in part to lobby on "issues related to CFIUS."

Saturday, November 10, 2007

Bush Shows How to Deal with Overheating Light Helicopter Pickup

President Bush scoffed at concerns expressed over the Army's new Light Pickup Helicopter Unit, intended to help in disasters. Recent tests of the twelve L-PUHU's delivered thus far indicate overheating. George W. Bush said "All you got to do is roll down the window, then everything's hunky dory. It's a good helicopter pickup, especially good for carting around VIP's like German leader Angelo Merkel. She requested I give her another shoulder rub. As for payload, I can fit a bunch of uninsured people in the back, if they keep their head down. Forty seven million? Maybe not that many. But there's lots of ways to get to an ER. One is to fly this baby in 80 degrees with the window rolled up! So do like me, roll down the window and quit poo-pooing the L-PUHU. Did I tell you one of my nephews lobbies for the manufacturer?" (The aforementioned quote is as fictional as the L-PUHU, should anyone be curious)

Harmful Toy Industry No Fun & Leaders Are No Help

Toy manufacturers have a clear responsibility to design and sell safe toys to children, regardless of country. Western toy companies usually contract out production to Chinese manufacturers which operate in a much lower labor cost environment. Yet, the contractor must assure the quality of the toys, later sold under their various brand names.

Of the myriad of recalls, some have been due to poor original design, others to the improper substituting of cheaper, dangerous supplies in the manufacturing process. American consumers are not impressed by the finger pointing between the big brand manufacturers and their cheap producers.

Until U.S. companies, their contract manufacturers and the federal government can get their act together to ensure quality goods reach American households, I'm afraid it's buyer beware. Bush's consumer product safety guru's recent Ask the White House online chat on import safety didn't quell any of my doubts.

We have a crisis in leadership that cannot be solved by simple teamwork. It requires new knowledge, that happens to be old. Dr. Deming's system of profound knowledge provides the light in the tunnel. The problem is American political and corporate leaders don't know they're stumbling around in dark.

The Chinese remain clueless as well as heavy handed. How free will employees feel to raise quality issues with criminal penalties, including death, looming over their heads? It's starting to look like the perfect storm with China driving in fear and U.S. corporations importing more food, feed, drugs and medical devices. Hold onto your barf bags and health insurance cards just in case! And don't go for the Chinese pacemaker unless Dick Cheney gets one!

Friday, November 9, 2007

Army Buying 322 Helicopters that Overheat for Homeland Security?

If anything reflects the current state of our government, it's the Army's purchase of 322 Lakota helicopters intended to rescue people. Twelve helicopters have been delivered by manufacturer EADS. One Congressman expressed serious reservations about the capability of the lighweight helicopter to provide the kind of assistance needed in a disaster.

The first problem is the cockpit overheats in eighty degree weather. That means air conditioners need to be installed at additional expense. The craft is only capable of transporting one critically ill patient at a time. It cannot accomodate the clinical staff needed to care for two patients en route.

Due to these limitations, Rep. Duncan Hunter, R-CA is recommending the purchase of BlackHawk helicopters instead. While reading the piece a number of questions popped into my head. Why is the Army buying these instead of Homeland Security? Was this part of a planned budget or an inserted earmark? And who has an interest in steering business their campaign contributer's way?

Why the Army? The program is part of the Army National Guard, which clearly has a Homeland Security role. Oddly the description on the manufacturer's website had the copters role as drug interdiction. I wasn't aware the National Guard hunted drug smugglers. The press release stated:

UH-72A Lakota aircraft will be operated primarily within the U.S. for homeland security operations, medical evacuation, passenger/logistics transportation and drug interdiction missions. Many of them will be assigned to Army National Guard units in locations throughout the country, allowing older-generation helicopters to be retired and freeing up larger rotary-wing aircraft for assignment to other duties including deployment to Iraq and Afghanistan.

This blurb raised another question. Where will the other helicopters be assigned if they're not in an Army National Guard unit and outside the U.S.? Customs does drug interdiction, but if that's the case, the program begins to look like a hydra with multiple heads.

While I suspected earmark, the program seems planned, but surprisingly fluid as earlier information indicated. Consider what GlobalSecurity said about its mission:

When the operational need arises, the LUH will facilitate the commander’s ability to conduct disaster relief operations, civil search and rescue, augmentation of UH-60 MEDEVAC aircraft, counter drug operations, conduct of Homeland Security, and other mission requirements such as catastrophic emergencies and support to civilian agencies against internal threats or national emergencies if directed by the President.

So who benefits from this potpourri of helicopter purchases intended to meet various and sundry needs? EADS makes the Lakota and they contributed to Congress during the 2006 and 2008 election cycles. Rep. Duncan Hunter's name is nowhere to be seen on their contribution list. However, Mr. Hunter is well supported by two other helicopter makers, Lockheed Martin and United Technologies. United Technologies makes the BlackHawk, Rep. Hunter wants substituted.

I certainly don't want the government to purchase equipment incapable of meeting our citizen's needs. And I certainly understand the need to quickly move sick and injured people away from a disaster area. But I'm not sure I'm comfortable with our overstretched/contracted out Army coordinating the program, even if they've subbed it out to one of their former members.

My retired military friends say the U.S. military is virtually all soldiers now, with everything else outsourced to private companies. Those wouldn't be the same companies charging America's new stinking rich $50,000 a year for rescue services, would they? Whose equipment will they maintain and supply first?

At this point I don't know enough other than to say I'm uncomfortable and have more questions. They grew as I read more about the program. While it's marketed for its rescue and patient transfer capacity, I continue to be surprised by EADS' own revelations:

Other UH-72As are performing VIP airlift and transport duties at Ft. Eustis/Ft. Monroe in Virginia’s Hampton Roads region.

The Bush administration certainly knows how to take care of VIP's but unfortunately has a poor track record addressing my past concerns and needs for information. I'd like to think they will do better in the future, but I already have data on their process incapability.

Bush Determined to Defend PEU Manager's Preferred Tax Status

President Bush made it clear he would veto a bill requiring millionaire private equity fund managers to pay taxes on "income" vs. "carried interest." The House narrowly passed the measure 216-193, ensuring any Bush veto would stick. The measure faces greater difficultly in the Senate.

So why the threatened veto? George W. Bush stated he would veto any measure funded by increasing other taxes. Republican rhetoric would leave one to believe it's just the same old "tax and spend" Democrats. But why cater to the fat investment houses? Because they fund many Congressional campaigns, Republican and Democrat. A Bloomberg report had the following:

The vote was a defeat for hedge funds and private-equity firms, which have spent $6.1 million this year lobbying against a tax increase. The bill would more than double the tax rate on so- called carried interest, the compensation that executives at buyout and venture-capital firms, as well as real estate partnerships, receive for investment services. The House measure also would require hedge-fund managers to pay tax on income they defer in offshore accounts. The two provisions would generate $49.5 billion over the next decade.

However, the vote is only a temporary defeat as the Private Equity Council, a lobbying group for private equity underwriters (PEU's) gears up for a Senate fight. My guess is they own enough Senators to turn the tide their way. If not, the President already said to his rich friends down Pennsylvania Avenue, "Don't worry. I've got your back." Meanwhile the President shows 300 million Americans his backside.

Sony Learns Lesson Twice?

Sony Chief Executive Howard Stringer implied his company's Blu-ray DVD format could end up in the same place as its prior videotape format, BetaMax. When a CEO uses the word "stalemate" that's a bad sign. It generally means losing.

Consumers who recall the VHS vs. BetaMax wars are experiencing similar joy with competing DVD formats, Sony/Blockbuster's Blu-ray vs. Toshiba/Microsoft's HD DVD. I'm sure many people recall spending their hard earned money on a machine that only plays one format, having to junk it later if the consumer guessed on the wrong technology.

So what tipped the scales in favor of Toshiba's HD DVD format? It turns out the player costs half as much, $200 for Toshiba's vs. $400 for Sony's. But Howard blamed the recent switch of Paramount Pictures for the scale tipping toward his rival. Paramount left Sony's coalition of the willing, dropping Blu-Ray for HD exclusively. Ever the magnanimous loser, the Sony CEO said it was mostly a matter of prestige whose format wins out in the end.

"It doesn't mean as much as all that," Stringer said. He added that he believed there was an opportunity of uniting the two camps under one format before he became CEO, and he wishes he could travel back in time to make that happen.

I bet the customers who purchased your Blu-ray players, Mr. Stringer, want to make that same trip back in time and buy a HD player instead. To them it means $600, the $400 they wasted on losing technology and the $200 they must shell out to buy the winner. To a rich CEO $600 may not be all that, but to someone scraping by, it's significant. Will they have any income left to by your PlayStation for their kid?

The next time Sony or any other company gets in a format war with new technology, remind them of BetaMax and Blu-Ray and Howard's rueful stance. Decide on one format and then compete on quality, price and features. Grow the market as firms compete for share.

Competing formats postpone and impede market growth. One would expect Sony to know this by now.
(January 2008 update: Sony gets Warner Brothers to commit to Blu-Ray, while Toshiba sells a boatload of HD DVD boxes through Walmart. It's the classic chicken vs. egg? Will studio's bend to boxtop purchasers and deliver the format they can use, or will consumers be stuck with another useless piece of technology, made obsolete long before its time? The best response to the Sony/Toshiba battle is to not buy, boxes or movies. The risk for those old enough to remember is an unusable BetaMax player with no movies to play. Let the companies play alone, since they can't cooperate to grow a market.)

Mike Leavitt's Ignorance Palpable

I thought Health and Human Services Chief Mike Leavitt's ignorance applied to health care. It turns out it extends to product safety as well. Sec. Leavitt just hosted Ask the White House where he addressed import safety.

"Not too long ago, our import safety procedures were adequate for the imports we were receiving. But now we are importing so much more from many more countries, and it has taken time for the full impact of that change to be felt."

Translation, the system changed and the administration didn't adjust. However, President Bush has long made it clear he prefers "voluntary measures". What role did this shift to manufacturers ensuring compliance have in the new inadequacy? My brother-in-law works for the largest small appliance company in North America. All products for the U.S. are made in China. They do not own the Chinese plants but simply contract out production to their specifications. It is between his company and its subcontractors to work out the quality measures and methods for ensuring American consumers receive value for their money. If the system is voluntary and this leg is performed poorly or fraudulently, the consumer is at risk.

"Our product safety standards have been among the highest in the world for a very long time, and they have always applied to imported products as well as products produced domestically."

Standards mean nothing if producers don't have capable processes. One can set a standard of zero airplane accidents but if airlines hire unqualified staff and don't properly maintain their equipment, accidents are a predictable consequence. One could require George W. Bush to ride his bike at the same level as Tour de France winner Lance Armstrong, but the President is incapable of performing at that level. The key is producer's processes/systems and their focus on continual improvement. Mr. Leavitt mentions aspects of this in an almost laughable comment:

"A better way is to build safety into products from the beginning. That requires a global consensus on safety and quality and close collaboration between trading nations to maintain high standards. In a global market, safety is a team sport. It requires a culture of collaboration, not just within the borders of a country, but within the economic community. We have begun the necessary collaboration with China. "

Dr. Deming spoke of driving out fear as critical ingredient for quality. Where there is fear there will be fudging of figures. The Chinese recently executed a government official for quality problems in its drug industry. They plan to enforce improved quality with criminal charges, jail time and fines. These efforts will likely encourage more falsification of data.

"We are also in the final phases of negotiation on two more agreements with China, one on food and feed and another on drugs and medical devices. We hope to sign both agreements in December."

Hold on to your medicine bottles, Chinese drugs may be headed our way. The pharmaceutical industry is in a profit depression and needs cheaper production to get income soaring again. As for food and feed, my guess is Americans don't want any food from China. Our pets and livestock may not have a choice, but they do have eyes, a nose and taste buds. They too will make a judgement. As Dr. Deming said "the consumer is a quick judge."

"With these agreements (food, feed drugs and medical devices) in place, much of the work of ensuring product safety will be done by the Chinese, who have every interest in meeting our standards."

Recall the admonition to drive out fear? Yes, most of the product safety work will be done by the Chinese who face criminal charges, fines, jail time and even death. This is cluster **** from the get go, Mike. I can't wait to see him hooked up to pacemaker made in China. Given the Medicare price setting regulations he implemented for cardiac devices, such an act would be karma.

"The vast majority of our imports are safe. They are safe because most producers know that consumers won’t buy what they can’t trust. The market itself rewards producers of safe, high-quality products and punishes producers of unsafe or poor quality products."

Yes, Mr. Leavitt and the vast majority of airplanes land safely, yet we do our best to prevent accidents and not via voluntary measures. As for the market rewarding producers, there are fresh examples of one huge recall putting a company out of business. The consumer gets no chance to act until its too late. As for recovery for damages incurred, that becomes more problematic when the company's gone bankrupt. But Mr. Leavitt didn't speak to consumer's rights in those circumstances.

"... here’s my advice: Buy from people you trust. That’s a very serious recommendation. I’ve been with major retailers who have told me the process they go through to assure that they’re not in a position where they have unsafe products on their shelf. So my suggestion is shop with people you trust."

Tell that to the parents who purchased Aqua Dots, date rape laced toys from Toys 'R Us or Target, both well respected retailers. Buying from people we trust is a very shallow recommendation. It's an underhanded way of saying, if you don't, then it's your fault. You get what you deserve.

Mike's comments add up to continued "Buyer beware." Businesses and the government have roles in presenting safe and useful products to the American public. Both need to do more, but a critical start is learning more about quality. It doesn't come from decrees, high standards or inspections. It comes from profound knowledge and its application. Start learning Mike, before the consumer (who are also voters) get fed up with the sorry state of leadership in our country.

Leaders Deride Process

The current White House has long disdained process, instead preferring command decisions that seem to fail in implementation. This derision of process was reiterated by a hopeful occupant, Republican Presidential candidate Mike Hukabee in reaction to Rev. Pat Robertson's endorsement of Rudy Giuliani.

"Some people have become more process-focused than they are principle-focused," Huckabee said Wednesday in Cedar Falls, Iowa. "It's pretty disheartening to see that it's not necessarily based on people saying, `Gosh, these guys have the right principles.' "

The political process in America is fraught with hyper-competition which results in suboptimizaiton. Dr. W. Edwards Deming taught a comprehensive system of management with Japanese leaders. its most committed proponent. President Bush loves to talk about the Japanese political transformation from enemy to friend, but never mentions the author of their economic resurgence post World War II.

While consumers cringe over the latest harmful item imported from China, we recall and continue to purchase high quality goods provided by Japanese manufacturers. The products don't have to be made in Japan, driven home by Toyota's passing Ford as the third best seller in the U.S. Many of their vehicles are made domestically.

A return to profound management is critical for American business and governmental leaders. Once we address the heavy losses, the U.S. can be a force for positive change in the world. It doesn't have to occur via heavy handed, violent measures. Bush's example of Japan shows just that. They studied Dr. Deming and made a profound recovery. So can we.

Entrepreneurial CEO's Make Substitutions

American CEO's and their Chinese counterparts have something in common, a desire to maximize company profits and their personal income. Both are skilled at substitution. U.S. businessmen replaced American jobs with cheap foreign labor in an effort to improve profit margins. Nearly one third of publicly traded executives backdated stock options, otherwise known as cheating to maximize their compensation. They granted the award on the lowest stock of the quarter instead of the specified date, costing shareholder's dearly.

What do Chinese executives substitute? It turns out they grant themselves the freedom to replace ingredients with lower cost versions, saving the company much in expenditures. Paint with lead is much cheaper than the lead free version. The latest example is a glue used with a beaded toy. The maker was supposed to use 1,5-pentanediol, a non-toxic compound found in glue, but instead contained the harmful 1,4-butanediol, which is widely used in cleaners and plastics. An AP news report had this to say about the ingredient:

The Food and Drug Administration in 1999 declared the chemical a Class I Health Hazard, meaning it can cause life-threatening harm. Both chemicals are manufactured in China and elsewhere, including by major multinational companies, and are also marketed over the Internet. It's not clear why 1,4-butanediol was substituted. However, there is a significant difference in price between the two chemicals. The Chinese online trading platform ChemNet China lists the price of 1,4 butanediol at between about $1,350-$2,800 per metric ton, while the price for 1,5-pentanediol is about $9,700 per metric ton.

It appears the Chinese have caught on to the American version of leadership. Where's the customer in all this? No where to be seen. U.S. employees expect to have a good, fair paying job. Shareholders want executives to follow established policies even when it involves their compensation. And mothers want their kids to play with toys without life threatening harm. American and Chinese business leaders are clearly intelligent enought to deliver on all three, they just employ theory and methods that do the opposite. It's time they got educated.

Clueless Mike

Funny, my Congressman Mike Conaway can't figure out why President Bush vetoed the water bill? At least that's what he told a Standard Times reporter in a piece on the veto override. It didn't take me long to find a possible explanation.

The Carlyle Group just announced a $1.15 billion infrastructure fund, targeted in part, to water projects. Well, here's a thought. Like health care, George doesn't want government provided infrastructure, but instead prefers projects financed by the private sector. Consider the BizJournal news report:

"Carlyle's Team co-head Robert Dove said: “US public infrastructure requires $1 trillion in funding over the next five years. The private sector has a role to play, as seen in Europe, and can be a proven means of helping to satisfy such dramatic funding needs. We are grateful to our investors for the confidence they have placed in us and we look forward to expanding the use of public-private partnerships in the US and Canada.”

One would expect a CPA who gets donations from other Carlyle affiliates' PAC's (like Vought Aircraft Industries) to speak intelligently on this. But this isn't the first time Mike's tried to pull the wool over West Texans' eyes. And George W. Bush served as a Board member of a Carlyle affiliate in the 1990's.

Can Carlyle Float ManorCare Deal?

With the credit crunch in full force, major lenders and buyers are balking at the mortgage backed debt The Carlyle Group plans to use to finance their acquisition of ManorCare and its 550 facilities, mostly nursing homes. If the deal goes through, it will be because the bonds got floated at higher interest prices. Larger interest costs must be covered, from health care price increases or operational cost cutting. Many groups have raised the question as to the future impact on patient care from such moves.

Should the deal fall through, it will because of the toxic credit environment, caused by a flood of mortgage backed securities failures. Ironically, Carlyle failed real hospital patients in a different toxic gumbo, Hurricane Katrina. Their LifeCare Hospitals unit in Memorial Hospital had the largest number of patient deaths post landfall.

One can cite their bad luck in purchasing LifeCare just weeks before Katrina sideswiped the Big Easy, but the management of the aftermath has been pure Carlyle. They blamed the patient deaths on a doctor and clinical staff from Memorial Hospital. Where were LifeCare clinicians and administrators? They had a legal, moral and ethical obligation to care for their patients in such a disaster? Why did they abandon them to Tenet providers?

They did more than paint a doctor as a Joseph Hazelwood. Carlyle's blame deflector turned toward the federal government, claiming patients became wards of Uncle Sam as soon as FEMA teams set up in New Orleans. If individual character is measured by behavior in times of extreme difficulty, that should apply to corporations as well. If Carlyle failed 24 patients in their time of need, the stand up thing would be to admit it and make things right. Not this private equity underwriter (PEU).

Carlyle already sued Tenet for its share of the liability. The judgement remains sealed, under lock and key for those currently trying to get fair treatment for the loss of their loved ones. Anyone expecting the feds to call Carlyle on the carpet might want to read President Bush's Lessons Learned report on Hurricane Katrina. Be sure to look hard for references to LifeCare's 24 patient deaths. Search for Memorial Hospital, the facility with a combined 36 deaths between Carlyle and Tenet. What? You couldn't find any in the whole tome. That's odd, isn't it?

Ironically, the ManorCare deal may be sunk but not for any other reason than Carlyle couldn't float the bonds. If they do pay more to push the debt, ponder this. If Carlyle could fail one out of twenty one long term acute care hospitals, what can the PEU do with 550 mostly nursing home facilities in a disaster?

Thursday, November 8, 2007

Carlyle Founder Challenges SEIU

Carlyle Group founder, David Rubenstein said the Service Employees International Union is more interested in growing union members than improving patient care. David should know as American businesses and unions have strategized to do just that. Here's the plan. Employers dump their health insurance to the individual employee who then needs a huge group purchaser to get competitive insurance bids. In comes the union.

One only need look at the last round of automotive contract negotiations which put in place such a structure. With all those billions in premiums, what will unions do? Might they self insure and invest the reserves with a firm like Carlyle? Andy Stern, SEIU President already called employer health insurance dead, history, going and not coming back. One might expect the head of a union of health care workers to be the last to capitulate, but no, unions see more members and more money.

Given their long term alignment on one issue, why the current contention over ManorCare? The SEIU claims to be concerned about patient care and they're absolutely correct. If there is a limited pool of money to care for our nation's institutionalized elderly, then a chunk of it will be diverted to cover huge increases in interest costs. That's clear for anyone with a modicum of financial acumen to project.

What's not being talked about is Carlyle's failure to care for patients in another health care division, LifeCare Hospitals. After Hurricane Katrina 24 patients died on the LifeCare unit in Memorial Hospital. One can mark that up to bad timing as Carlyle purchased the long term acute care chain just weeks before landfall. However, that doesn't explain why Carlyle's defense focused on turning a caring doctor who didn't abandon patients into a Joseph Hazelwood.

It also doesn't shed any light on the private equity underwriter's (PEU's) innovative defense of blaming the federal government. Carlyle has the audacity to claim patients became "wards of the government" as soon as FEMA set up evacuation teams in the New Orleans area. They blame the same feds who were kind enough to give the PEU a free pass in their White House Lessons Learned report.

This all speaks more to Carlyle's ability to stand up and do the right thing in a disaster. Their manipulating the aftermath of their Katrina failings shows the firm cannot be trusted to come clean, admit mistakes and make things right to those harmed. Do you want your grandmother or mother cared for by such a firm? That has much more resonance amongst the American public than interest expense or union membership, yet it gets zero play.

Of course I submitted my patient safety concerns to the Justice Department's Anti-Trust division as soon as the merger was announced. No response. I also contacted the Federal Trade Commission. No response, other than an e-mail confirmation. So what kind of review is the government doing if they don't contact people with unique information and legitimate concerns? The founder spoke to the regulatory approval process in his comments:

David Rubenstein said on the sidelines of the conference that the Manor Care transaction is on track to close in the fourth quarter. There are a couple of regulatory approvals that are in the process of being obtained," Rubenstein told Reuters. "The deal will close in the near future, in my view."

While Carlyle's founder spoke at The Deal's 2008 M&A Outlook conference in New York, Carlye's media guru Norman Pearlstein was the keynote at the Media and Money conference in that same Big Apple. Norm is charged with keeping Carlyle's good name and results to date are most impressive. Welcome to media and government heavily influenced, if not controlled by private equity. Why did George Bush veto the Water Bill? Rep. Mike Conaway said "I'm hard pressed to figure out why the President vetoed the bill." Could it have anything to do with Carlyle's just announced Infrastructure Fund, specializing in water and waste water facilities?

Wednesday, November 7, 2007

Carlyle's Launches Billion Dollar Infrastructure Fund

The next time local, state or federal government wants to add or rehabilitate key U.S. infrastructure, The Carlyle Group stands ready to fill the bill via their new infrastructure division and its $1.15 billion fund. The news reported:

Carlyle Infrastructure Partners will primarily invest in U.S. and Canadian transportation and water infrastructure projects, generally ranging from $100 million to more than $1 billion in enterprise value.

Carlyle Infrastructure Partners was established in March 2006 and has 14 investment professionals in D.C. and New York. The fund will put money into transportation, water and wastewater facilities, including roads, bridges, tunnels, airports, maritime ports, transit projects and other public improvements

Team co-head Robert Dove said: “US public infrastructure requires $1 trillion in funding over the next five years. The private sector has a role to play, as seen in Europe, and can be a proven means of helping to satisfy such dramatic funding needs. We are grateful to our investors for the confidence they have placed in us and we look forward to expanding the use of public-private partnerships in the US and Canada.”

Get ready for more privatization, for more indefinite delivery/indefinite quantity contracts from Uncle Sam, and record profits for The Carlyle Group, all courtesy of the American (and now Canadian) taxpayer. The pattern is well established in defense, but that's not good enough from the politically connected private equity firm. They want to be a one stop shop for government contracting given the breadth of their portfolio, health care, education, infrastructure, intelligence, homeland security, technology, energy, media, real estate, retail, automotive, and manufacturing.

CHS/Triad Buyout Update

Community Health Systems released its financial results for the third quarter. On July 25th the company closed on its deal with Triad Hospitals, the parent of San Angelo Community Medical Center. At the time I noted the large amount of debt used to finance the deal and its prominent impact on interest expenses.

For the quarter, interest expense rose from $27.5 million to nearly $140 million, yet the merger costs fell mostly in the last two months, August and September. With Community Health's ongoing 125 hospitals, the additional interest expense amounts to $900,000 per hospital. Including the special interest charge and it registers well over $1 million and that's just for the third quarter! Annualized that becomes a serious burden.

The same happened with HCA, albeit on a larger scale, with its buyout. The Carlyle Group plans to buy ManorCare in a deal similar in size to Triad's. Just from changing hands, billions in new interest expenses are added to our already costly health care system. Apparently being "levered up" is one of the benefits of private health care, about which President Bush speaks so eloquently.

Tuesday, November 6, 2007

Yahoo Needs Carlyle's China Protection

While the House Foreign Affairs Committee ripped Yahoo's CEO and attorney for being complicit in human rights abuses in China, I could only envision the red carpet treatment they would've gotten from the same committee if they were an affiliate of The Carlyle Group. Consider China's high priority in the eyes of the politically connected private equity underwriter (PEU) with the Pennsylvania Avenue address. How has the federal government treated the PEU in the past, other than sending boatloads of government business to their affiliates? Let's see:

1) Between all the outrages of selling American ports and stock exchanges to Dubai based firms, Carlyle sold two maintenance and service companies with operations at over 50 North American airports to Dubai Aerospace. Yet, not one word hit the media. Senator Chuck Schumer ruffled his feathers over the NASDAQ sale but not a peep on Dubai Aerospace's closing on Carlyle affiliates Landmark Aviation and Standard Aero just weeks before.

2) The White House Lessons Learned report omitted any mention of the LifeCare Hospital of New Orleans, the facility with the largest patient death toll. Carlyle purchased LifeCare just weeks before Katrina struck.

3) LifeCare attorneys claim the federal government (which was so kind as to leave them out of the LL report) did it in their wrongful death civil lawsuits. The defense asserts their long term acute care patients became "wards of the government" as soon as FEMA evacuation teams set up in the New Orleans area.

4) While Carlyle failed patients in one of twenty one LTAC hospitals, this has zero bearing in their planned purchase of ManorCare with 550 facilities, most of them nursing homes. One might expect the government to closely examine the purchase given Carlyle's poor track record of caring for patients in a time of crisis.

5) Calryle's David Rubenstein recently said there is nothing more important to his company than China. They clearly plan on making yacht loads of money there, regardless of human rights conditions.

If Yahoo were part of the infamous private equity firm, Rep. Tom Lantos might not swing so hard. While defending human rights across the globe is important, the dress down looks shallow as Congress works to pass telecom immunity for their role in government spying on its own citizens. Why should these U.S. companies get off Scott Free for illegal information requests when Yahoo is taken to task? We should be raising the bar internationally, not lowering it.

Congress has no credibility when it trashes other countries for its own offenses, illegal spying, torture, and refusing to produce evidence regarding questionable behavior. Both corporations and our elected officials should raise the bar on ethics, even at the short term expense of profits. Yahoo-China, Chevron-Myanmar, U.S. Telecoms-America, The Carlyle Group-The White House & Congress.

Extrinsic Rewards Distort Facial Features in Pakistan

Like democracy, the U.S. wants to export our "best practices". Bonuses, stock options, and pay for performance are common in American business, but they've spread to Pakistan. Extrinsic rewards have a clear history of distorting management behavior. Despite this, the Bush administration wants to spread them into health care and deeper into education.

Stock options in the late 1990's caused leaders to take greater risks, to swing for the fence on every pitch. During their twelve year run, nearly 30% of publicly traded companies cheated on their stock option grants through back dating. Few of these SEC violations have been prosecuted, despite George Bush's "zero tolerance" for thieving. Apparently it doesn't apply to stockholders. Even the President's Uncle Bucky benefited from such malfeasance, although the act was likely committed by an enterprising ESSI executive.

Pakistan picked up on the external motivation tool in its oppression of 12,000 lawyers and judges. Under martial law due to an Islamic extremist threat, President Pervez Musharraf continues a brutal crackdown on the third leg of democracy, an independent judiciary that guarantees basic human rights. Pervez knows how to motivate his officers according to a CNN report:

Police earned cash bonuses for beating and arresting hundreds of lawyers Monday who had gathered outside of Lahore's courthouse, police sources said.

External rewards are temporary, requiring more and more over time to get the same short lived boost. They also suboptimize the organization by causing people to focus on maximizing their pay. This was proven by widespread American CEO cheating under stock option grants, promoted as the most pure system of reward.

The junta in Pakistan now uses Western motivational tools to crack down on its citizens. How much do they get for breaking a nose? Does it double for a good skull cracking? What about an arm and a leg?

Will the generals in Myanmar offer similar bonuses in their next Buddhist monk crackdown? If so, Chevron and Total SA may need to up their production sharing payments to the junta to fund the worldwide export of "pay for performance".

Why not do as Dr. Deming said, "if you want people to do a good job, give them a good job to do." That includes paying people fairly, then focusing on the work, not money. Extrinsic rewards distort, in more ways than one. Ask the Pakistani lawyers needing facial reconstruction. As for the promised January election, Dr. Deming's words are also instructive. "Wherever there is fear, you'll get wrong figures."