http://www.huffingtonpost.com/2008/04/29/obamas-reverend-wright-pr_n_99215.html
So how many ministers of major political figures do we really know? Not many. A bit of interest background on ministers. They typically work in not for profit organizations. These organizations rely on contributions. And, these contributions are an outcome of people knowing about the organization.
Which leads us to the opportunity afforded to Reverand Wright. Reverand Wright has no reason to be quiet. In fact, he has every reason to remain in the press as long as he can, as long as Obama is in the Presidential race certainly.
If Wright were to go away quietly, he may be helping a former member of his congregation, but he would not be working in his own best interests. He would not be "maximizing" income.
So, Obama wants him to hush, and pretty much said that this week in his comments separating himself from Wright. However, that means that Wright most likely has to work even harder to stay public, again maximizing his income.
It would seem, that the best outcome strategy for Obama might actually have been to quietly go to Wright and give him a post in his campaign if he kept quiet. His best strategy may have actually been to get closer to someone that he really wants to be far from.
Tuesday, April 29, 2008
New Entrant to the Space
41 of the 50 states plus D.C. outsource the administration of the Medicaid program. This means that they hire a company to act as the system provider, the provider (doctors, dentists, pharmacists, hospitals) relations support, key claims, and perform other functions.
Of the 41 states that outsource, 18 are served by our main competitor, EDS. We (ACS) serve 16 states. The remaining 7 are split among 5 other companies.
EDS and ACS enjoy a very strong position in the market. And, we are very competitive with each other. Up until 10 years ago, our solutions were virtually interchangeable. It was not uncommon for us to take over one of their systems or they take over one of ours. Key staff in each organization, including me, have worked for both companies. There are very few secrets between the two firms.
About 10 years ago, we started to diverge some. EDS' strategy steered toward technical leadership and they became very contract focused. Meaning they established quite sophisticated approaches to manage their accounts very carefully by the contract. EDS also focused on doing the specific functions of the contract well. So, they started to occupy a certain space.
During that time, we focused more on value added functions. We added new clinical management tools, fraud detection tools, and pharmacy management systems. Our space was to put in less attractive technical solutions, but to add value through these other capabilities.
This went well for several years. And, we saw a very clear spacial model between the two types of offerings and the two types of customers.
Five years ago, a new entrant came in offering a technically advanced solution. It was a solution fully based on web technology, it showed extremely well, it had all of the right buzzwords, and it shook up the industry. This small company, that had never implemented a single system in our market, was able to convince the whole market that this new technology was required. This company won 3 states over those 5 years. They also convinced other states to change the requirements in their RFP's to include their type of technology. EDS and ACS had to react. We started developing new systems. Bid prices for states have risen from $20M to $40M. It was almost as if someone dropped a hammer in the middle of the spacial pricing model.
The result is this:
- That little company has been kicked out of 1 state that they won. They are 2 1/2 years late in another. They have yet to successfully implement this new technology.
- ACS and EDS are now offering better solutions. We still occupy our respective spaces, but our solutions are better.
This past 5 years has been quite disruptive. And the lesson is that even when companies occupy their space, that space needs to be maintained and protected, because the equilibrium of that space can be impacted by other vendors, even medicine men.
Of the 41 states that outsource, 18 are served by our main competitor, EDS. We (ACS) serve 16 states. The remaining 7 are split among 5 other companies.
EDS and ACS enjoy a very strong position in the market. And, we are very competitive with each other. Up until 10 years ago, our solutions were virtually interchangeable. It was not uncommon for us to take over one of their systems or they take over one of ours. Key staff in each organization, including me, have worked for both companies. There are very few secrets between the two firms.
About 10 years ago, we started to diverge some. EDS' strategy steered toward technical leadership and they became very contract focused. Meaning they established quite sophisticated approaches to manage their accounts very carefully by the contract. EDS also focused on doing the specific functions of the contract well. So, they started to occupy a certain space.
During that time, we focused more on value added functions. We added new clinical management tools, fraud detection tools, and pharmacy management systems. Our space was to put in less attractive technical solutions, but to add value through these other capabilities.
This went well for several years. And, we saw a very clear spacial model between the two types of offerings and the two types of customers.
Five years ago, a new entrant came in offering a technically advanced solution. It was a solution fully based on web technology, it showed extremely well, it had all of the right buzzwords, and it shook up the industry. This small company, that had never implemented a single system in our market, was able to convince the whole market that this new technology was required. This company won 3 states over those 5 years. They also convinced other states to change the requirements in their RFP's to include their type of technology. EDS and ACS had to react. We started developing new systems. Bid prices for states have risen from $20M to $40M. It was almost as if someone dropped a hammer in the middle of the spacial pricing model.
The result is this:
- That little company has been kicked out of 1 state that they won. They are 2 1/2 years late in another. They have yet to successfully implement this new technology.
- ACS and EDS are now offering better solutions. We still occupy our respective spaces, but our solutions are better.
This past 5 years has been quite disruptive. And the lesson is that even when companies occupy their space, that space needs to be maintained and protected, because the equilibrium of that space can be impacted by other vendors, even medicine men.
Healthcare and the Paretto Frontier
A classmate in Econ made a statement about Paretto efficiency when referring to our healthcare system. And, seeing that I pretty much got dusted in one of our negotiation exercises, but was still Paretto efficient, I think his statement ran very true.
If we consider the players in our healthcare system as the Providers, the Patients, and the Payers, we have a negotiation where each party is trying to achieve some benefit.
The Providers want to maximize profits. They want to be paid the most they can for the services they render.
The Patients want qualified service and to pay as little as possible.
The Payers want to maximize profits by paying as little as possible for those qualified services.
Here is where the rub is. In our system, the Patient and the Payer are different. So, the consumer of services is not the person applying price pressure on the market.
This means that the negotiation is between the Provider and the Payer (Insurance company). The consumer, the Patient, may use services beyond their normal ability to pay because they aren't paying. This leads to esalating costs for the Payer.
If the Patient had more of a financial responsibility for services, were are able to connect the consumer and the payer, then the pressure would narrow the ZOPA for services, and would shrink the efficient outcomes.
If we consider the players in our healthcare system as the Providers, the Patients, and the Payers, we have a negotiation where each party is trying to achieve some benefit.
The Providers want to maximize profits. They want to be paid the most they can for the services they render.
The Patients want qualified service and to pay as little as possible.
The Payers want to maximize profits by paying as little as possible for those qualified services.
Here is where the rub is. In our system, the Patient and the Payer are different. So, the consumer of services is not the person applying price pressure on the market.
This means that the negotiation is between the Provider and the Payer (Insurance company). The consumer, the Patient, may use services beyond their normal ability to pay because they aren't paying. This leads to esalating costs for the Payer.
If the Patient had more of a financial responsibility for services, were are able to connect the consumer and the payer, then the pressure would narrow the ZOPA for services, and would shrink the efficient outcomes.
PacMan Jones Negotiation
http://sports.espn.go.com/espn/wire?section=nfl&id=3369580
Adam "Pacman" Jones is an NFL cornerback that has been in alot of trouble. Until recently, he was the property of the Tennessee Titans. He was also suspended from playing in the NFL due to his legal issues.
Recently, the Dallas Cowboys traded for Jones. This is an unprecedented move in that no player, under suspension, has been traded in the NFL.
The Cowboys obviously wanted Jones. But at what price? Jones may not be cleared to play by the NFL. Jones may jump back into his bad behavior. Many things can kill this investment by the Cowboys.
There are several key ingredients to this pie.
- Dallas gave up a 4th round draft pick in this year's NFL draft and a 6th round next year; not much of a price for a player that they are going this far to obtain.
- If Jones doesn't get cleared to play in this upcoming season, the Cowboys will get a 2009 4th round pick, or if Jones is reinstated but gets into trouble again, the Cowboys will get a 5th round pick.
- The Titans in this deal are getting advanced use of the 4th round pick. And they are getting something for nothing. They had pretty much written Jones off.
According to the Cowboys, Jones "fills a need and he could be had for less than his talent is worth." So, the Cowboys see this as a relatively low-cost investmetn with a considerable upside.
This is a negotiation game that has many more parts that are included here. There is Jone's contract in which he had to make many concessions, including returning parts of a bonus, and contributing money to youth organizations. The players union, is watching for precedence here. If a player in a weak position can be muscled into making these concessions, does this open the door for better bargaining by owners in the future?
It will be interesting to see if Jerry Jones gets an ROI on Pacman Jones.
Adam "Pacman" Jones is an NFL cornerback that has been in alot of trouble. Until recently, he was the property of the Tennessee Titans. He was also suspended from playing in the NFL due to his legal issues.
Recently, the Dallas Cowboys traded for Jones. This is an unprecedented move in that no player, under suspension, has been traded in the NFL.
The Cowboys obviously wanted Jones. But at what price? Jones may not be cleared to play by the NFL. Jones may jump back into his bad behavior. Many things can kill this investment by the Cowboys.
There are several key ingredients to this pie.
- Dallas gave up a 4th round draft pick in this year's NFL draft and a 6th round next year; not much of a price for a player that they are going this far to obtain.
- If Jones doesn't get cleared to play in this upcoming season, the Cowboys will get a 2009 4th round pick, or if Jones is reinstated but gets into trouble again, the Cowboys will get a 5th round pick.
- The Titans in this deal are getting advanced use of the 4th round pick. And they are getting something for nothing. They had pretty much written Jones off.
According to the Cowboys, Jones "fills a need and he could be had for less than his talent is worth." So, the Cowboys see this as a relatively low-cost investmetn with a considerable upside.
This is a negotiation game that has many more parts that are included here. There is Jone's contract in which he had to make many concessions, including returning parts of a bonus, and contributing money to youth organizations. The players union, is watching for precedence here. If a player in a weak position can be muscled into making these concessions, does this open the door for better bargaining by owners in the future?
It will be interesting to see if Jerry Jones gets an ROI on Pacman Jones.
Sunday, April 13, 2008
A sad negotiation game
This morning as my wife and I were leaving for church, there was an altercation in the street outside of our house. A woman was walking down the side of the street and was being harassed by a woman driving a car. I pulled along the lady that was walking and asked if she needed help. She said no. But it was clear she was afraid. So, I stayed and watched. At least to deter any physical encounters between the two. The lady in the car, kept harassing the other lady, and she finally came over to me and asked for help. During this time, the lady in the car was saying unfriendly things to me and making unfriendly gestures. I called the police. They came and difused the situation.
While the police were there, the aggressor lady yelled at the other lady and asked, "do you want to work this out or do you want this?" indicating the police. At that point, it dawned on me, this has the elements of a negotiation game.
This started as a 2-party negotiation between "A" the lady walking and "E" the agressor in the car. As long as this was a 2-party negotiation, A was at a disadvantage and would continue to be harassed by E. Once my wife and I entered, the negotiation changed, mainly because E lost credibility in some of her threats, such as violence. A also now had a potential strategy of leaving the negotiation. As it happened, E took A's phone, so she had no way to communicate to friends or family. Once the police came, the negotiation changed again, and E had no power. A was then free to leave the negotiation.
When E asked if A wanted to work this out, she was actually trying to return the negotiation back to a 2-party effort, where she clearly had the upper hand.
My wife and I gave A a ride to her mothers. I don't know if she will choose to remain away from the negotiation or not, it is her choice. That being said, I saw game theory where I didn't expect it, in a hostile, domestic dispute.
While the police were there, the aggressor lady yelled at the other lady and asked, "do you want to work this out or do you want this?" indicating the police. At that point, it dawned on me, this has the elements of a negotiation game.
This started as a 2-party negotiation between "A" the lady walking and "E" the agressor in the car. As long as this was a 2-party negotiation, A was at a disadvantage and would continue to be harassed by E. Once my wife and I entered, the negotiation changed, mainly because E lost credibility in some of her threats, such as violence. A also now had a potential strategy of leaving the negotiation. As it happened, E took A's phone, so she had no way to communicate to friends or family. Once the police came, the negotiation changed again, and E had no power. A was then free to leave the negotiation.
When E asked if A wanted to work this out, she was actually trying to return the negotiation back to a 2-party effort, where she clearly had the upper hand.
My wife and I gave A a ride to her mothers. I don't know if she will choose to remain away from the negotiation or not, it is her choice. That being said, I saw game theory where I didn't expect it, in a hostile, domestic dispute.
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