Brava, Maureen!

I was out of town when President Obama made his recess appointment of Don Berwick to head CMS, and when the Institute for Healthcare Improvement announced that Maureen Bisognano would take over as CEO. This article from the Wall Street Journal gives more background about Maureen's qualifications and intentions.

Regular readers have often seen Maureen's name on this blog. Her suggestions, for example, have made a huge difference in the way we have made our ICUs more patient- and family-centered.

I think Don would readily admit that she has been the not-so-secret ingredient that has led to IHI's success. I can't think of a more worthy person to take charge of this important organization. Congratulations!

Lupine carpets

And, a more peaceful scene from the Iceland travelogue.

There are many beautiful wildflowers, most living very close to the ground in the windy environment. But there is one vertical exception. At this time of year, the hills are covered with lupine. Even from miles away, they appear to be coated with a blue carpet. A short video follows from the base of the mountain next to Skagaströnd, called Spákonufell.

Click here if you cannot see the video.

There is wind, too

(Continuing the Iceland travelogue.)

Lots of wind, in fact. You can look up real time weather conditions throughout the country. Click on this map to get the local wind velocity and pattern. An example of my locale on one of the northern peninsulas, here.

This is an important service because sometimes the wind is too strong to drive on the roads. Before you head out, it is good to know if you can get there.

A short video below of what it feels like at ground level when the speed is between 20 and 30 meters/second, or over 50 miles per hour. It took my full strength to walk against the wind. If you walk with the wind, it makes you run. If you park your car wrong, the wind will whip the door out of your hands and almost off the hinges.

Recently, a man was blown off a cliff to his death when he approached it standing up on a gusty day, rather than lying down.

If you can't see the video, click here.

Fishing in Iceland

I'm just back from a short vacation to Iceland, where my biggest personal accomplishment, under the watchful eye and keen instruction of my friend Jacob, was to learn how to catch trout in one of the local rivers. Here are the before and after pictures of the unlucky fish.

I had been to Iceland before on a business trip, but this time I hung out in Skagaströnd, a fishing village of about 550 people on a peninsula in the north part of the island. There is an old house there where the fortune-teller works (really), and there is a great collection of household items from the very early 1900's. The items show the self-reliance and frugality of the people. Here, for instance, is a plate that someone dropped and cracked over a century ago. It could not be easily replaced, and so you can see how it was reconstructed using supplies that would be available in an isolated village. First, holes were very carefully drilled, a milk-based glue was applied to the joined edges, and then twine was used to hold the plate together. It is still holding.


This town has a great sense of civic pride and lots of interesting stuff going on. Notwithstanding its small size, it hosts an artist residency program, drawing painters, sculptors, and writers from around the world. Each group is welcomed with a pot luck supper provided by local residents. The town is also famous as the home of Hallbjorn Hjartarson, the "Cowboy of the North," Iceland's best known (and maybe only) country Western singer. It hosted a huge annual music festival for many years.

Finally, at the most local level, the teenagers are employed by the town to do local clean-up and beautification work during the summer months. Here, for example, a couple of girls are hand trimming the grass under and next to a fence.

They signed this

I'm taking a blogging break for several days (including no way to post your comments till I start up again) and want to leave you with a treat. Every year, the Boston Globe publishes the Declaration of Independence on its editorial page to remind us about this document. I am doing the same here. Although I take patriotic pleasure in the Declaration, I also present it as one of the finest examples of political argument that exists. Please read it in that way: A group of upstarts trying to persuade established political leaders across the ocean that they have the reason and right to declare independence from one of the world's powers. Also, they are trying to build confidence among their own population that their cause is just.

It is a marvelous piece of writing and worth studying for its form and substance. It is also worth noting that it was signed. (The version above and below, the Dunlap broadside, only has two signatures, but the original had those of all the delegates assembled.) In so doing, people were putting their lives and property at risk -- their own and their families -- setting a firm and clear example of the responsibilities of political freedom and public discourse.

In Congress, July 4, 1776.
A Declaration
By the Representatives of the
United states of America,
In general Congress assembled.

When in the course of human Events, it becomes necessary for one People to dissolve the Political Bands which have connected them with another, and to assume among the Powers of the Earth, the separate and equal Station to which the Laws of Nature and of Nature’s God entitle them, a decent Respect to the Opinions of Mankind requires that they should declare the causes which impel them to the Separation.

We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness—-That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or abolish it, and to institute a new Government, laying its Foundation on such Principles, and organizing its Powers in such Form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient Causes; and accordingly all Experience hath shewn, that Mankind are more disposed to suffer, while Evils are sufferable, than to right themselves by abolishing the Forms to which they are accustomed. But when a long Train of Abuses and Usurpations, pursuing invariably the same Object, evinces a Design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future Security. Such has been the patient Sufferance of these Colonies; and such is now the Necessity which constrains them to alter their former Systems of Government. The History of the Present King of Great-Britain is a History of repeated Injuries and Usurpations, all having in direct Object the Establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid World.

He has refused his Assent to Laws, the most wholesome and necessary for the public Good.

He has forbidden his Governors to pass Laws of immediate and pressing Importance, unless suspended in their Operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the Accommodation of large Districts of People; unless those People would relinquish the Right of Representation in the Legislature, a Right inestimable to them, and formidable to Tyrants only.

He has called together Legislative Bodies at Places unusual, uncomfortable, and distant from the Depository of their public Records, for the sole Purpose of fatiguing them into Compliance with his Measures.

He has dissolved Representative Houses repeatedly, for opposing with manly Firmness his Invasions on the Rights of the People.

He has refused for a long Time, after such Dissolutions, to cause others to be elected; whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the Dangers of Invasion from without, and Convulsions within.

He has endeavoured to prevent the Population of these States; for that Purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their Migrations hither, and raising the Conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary Powers.

He has made Judges dependent on his Will alone, for the Tenure of their Offices, and Amount and Payment of their Salaries.

He has erected a Multitude of new Offices, and sent hither Swarms of Officers to harass our People, and eat out their Substance.

He has kept among us, in Times of Peace, Standing Armies, without the consent of our Legislature.

He has affected to render the Military independent of and superior to the Civil Power.

He has combined with others to subject us to a Jurisdiction foreign to our Constitution, and unacknowledged by our Laws; giving his Assent to their Acts of pretended Legislation:

For quartering large Bodies of Armed Troops among us:

For protecting them, by a mock Trial, from Punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all Parts of the World:

For imposing taxes on us without our Consent:

For depriving us, in many Cases, of the Benefits of Trial by Jury:

For transporting us beyond Seas to be tried for pretended Offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an arbitrary Government, and enlarging its Boundaries, so as to render it at once an Example and fit Instrument for introducing the same absolute Rule in these Colonies:

For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with Powers to legislate for us in all Cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our Seas, ravaged our Coasts, burnt our Towns, and destroyed the Lives of our People.

He is, at this Time, transporting large Armies of foreign Mercenaries to compleat the Works of Death, Desolation, and Tyranny, already begun with circumstances of Cruelty and Perfidy, scarcely paralleled in the most barbarous Ages, and totally unworthy the Head of a civilized Nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the Executioners of their Friends and Brethren, or to fall themselves by their Hands.

He has excited domestic Insurrections among us, and has endeavoured to bring on the Inhabitants of our Frontiers, the merciless Indian Savages, whose known Rule of Warfare, is an undistinguished Destruction, of all Ages, Sexes and Conditions.

In every stage of these Oppressions we have Petitioned for Redress in the most humble Terms: Our repeated Petitions have been answered only by repeated Injury. A Prince, whose Character is thus marked by every act which may define a Tyrant, is unfit to be the Ruler of a free People.

Nor have we been wanting in Attentions to our British Brethren. We have warned them from Time to Time of Attempts by their Legislature to extend an unwarrantable Jurisdiction over us. We have reminded them of the Circumstances of our Emigration and Settlement here. We have appealed to their native Justice and Magnanimity, and we have conjured them by the Ties of our common Kindred to disavow these Usurpations, which, would inevitably interrupt our Connections and Correspondence. They too have been deaf to the Voice of Justice and of Consanguinity. We must, therefore, acquiesce in the Necessity, which denounces our Separation, and hold them, as we hold the rest of Mankind, Enemies in War, in Peace, Friends.

We, therefore, the Representatives of the United States of America, in General Congress, Assembled, appealing to the Supreme Judge of the World for the Rectitude of our Intentions, do, in the Name, and by the Authority of the good People of these Colonies, solemnly Publish and Declare, That these United Colonies are, and of Right ought to be, Free and Independent States; that they are absolved from all Allegiance to the British Crown, and that all political Connection between them and the State of Great-Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm Reliance on the Protection of the divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.

Signed by Order and in Behalf of the Congress,
John Hancock, President.

Attest.
Charles Thomson, Secretary.

Verve and optimism versus caution and pessimism

Many people involved in hospitals wonder how it can be financially prudent for investors to put their money into for-profit ventures that buy non-profit hospitals. (Examples here and here.) After all, the argument goes, the newly privatized entities will have to pay taxes, issue taxable rather than tax-exempt debt, lose the benefit of philanthropy, and otherwise be at a competitive disadvantage compared to their antecedents.

In answer, some might make the case that for-profit firms will run hospitals more efficiently. But this is an unproven and unreliable basis for such transactions. Even if there were some efficiency gains, they would be unlikely to offset the additional costs listed above.

No, the answer lies in the risk-reward expectations of equity investors and of purchasers of high-yield taxable debt.* Those expectations are quite different from purchasers of the municipal or other tax-exempt bonds that support the capital needs of non-profit hospitals. It is the difference between a forward-looking, optimistic view of the world and a backward-looking, cautious view of the world.

Let's start with the tax-exempt debt market, one characterized by risk-averse investors focused on debt coverage ratios and other protections built into indenture agreements. The rating agencies who serve these investors look at the past performance of the non-profit hospitals and ask, "What could go wrong in the future that might put debt service at risk?" There is a highly limited pool of people interested in such debt, and when ratings fall to near or below investor grade, the number of investors becomes smaller still.

Contrast this with people willing to risk their money in the for-profit world. They are sold on the potential for financial gain, not on the proposition of protecting principal. Those offering this paper present business plans and pro forma's based on what might be. Sure, due diligence allows an assessment of the downside, but this pool of investors has hedged their bets by building a diversified portfolio.

How does an equity investor make money in this kind of transaction? Leverage is important. The capital structure of theses deals includes equity, but also a significant component of debt. If the hospital throws off enough cash to pay down the debt, the equity holders see a growing opportunity to earn a current cash return. And hospitals do throw off enough cash -- even hospitals with low or zero margins.

Why? Because the income statement includes a substantial non-cash expense, depreciation. It is the earnings before depreciation that are most meaningful to these investors. As long as immediate capital needs do not exceed available cash, debt will be serviced and equity will likely be rewarded as well on a current basis.

The real payoff, though, occurs when the properties are flipped to another purchaser after a few years.** By then, debt levels have been reduced, and the proceeds from the asset sales enure mainly to the benefit of the shareholders.

We are currently in a phase of capital markets in the United States in which there is a virtually insatiable demand for equity investments of this sort, and also for high yield debt that supports each deal's overall financial structure.

We are also in a period in which non-profit hospital boards and tax-exempt investors are worried about the future. In an odd divergence of perspectives, non-profits worry about decreased reimbursement levels resulting from the national health care reform law; they therefore fear that they will lack capital for renewal and replacement of physical facilities and clinical equipment. For-profit investors, in contrast, see the new law as enabling an increased number of insured citizens to show up as patients in their hospitals; they therefore look forward to growing cash flows to reward their risk-taking.

Mark Twain said, "It is difference of opinion that makes a horse race." Here it is the verve and optimism of the equity markets compared to the caution and pessimism of the non-profit sector. Expect a huge influx of investment capital to change the face of the hospital world over the next two years.

---
* High-yield bonds bear a greater resemblance to equity than they do to traditional tax-exempt debt.
** Or, when the private equity firm sells the venture to a broader group of investors with an initial public offering.

Is it plugged in?

Submitted by a friend of a friend. It is from a cancer patient's on-line journal. This did not take place at our hospital. It could happen almost anywhere, I'm guessing.

In our hospital, this situation would have prompted a "Trigger" because the low oxygen saturation is a Trigger standard, as is "marked nursing concern." Would our Trigger team notice the root cause?

I thought I'd wait until I'd left the hospital to recount this story. One evening, my friend was visiting and the nursing assistant came in to take my vital signs. My level of blood oxygenation (02 saturation) was lower than normal, and so she called the nurse, who turned up the level of oxygen I was getting through my nose from 3 liters to 6 liters. It didn't seem to help. Then the Reiki lady came to give me my "sample" Reiki treatment (which I liked). Afterward, my oxygen level was no better.

The nursing shift changed and the new nurse was concerned about my "sats". She called a doctor, who couldn't see anything wrong, but was concerned, since I clearly should not have been "desatting". She gave me an EKG. She gave me another EKG. She called another doctor. She ordered a portable chest X-ray. She gave me a nebulizer treatment. This all lasts until nearly midnight.

By this time, I am getting anxious (no matter how hard I try to breathe in deeply through my nose and out through my mouth, I can't seem to get the sats up). So she is also giving me ativan. She suggests to the nurse that she call respiratory therapy and ask them to bring up a mask, so that I can breathe in through both my mouth and my nose. The respiratory therapy guy comes, but before he gives me the mask, he firmly attaches the oxygen tubing to the oxygen source on the wall. It had come loose. No one else checked.

So, I had two doctor visits, two EKGs, a chest X-ray and a nebulizer treatment because it wasn't plugged in.

It's funny.....now.