Financials and Other Issues - Northstar

Northstar is the name of our local hospital on Ice Lake
Road in Iron River, Michigan.

A municipal bond was authorized and it has been funded
at $23,150,000. The hospital has continuously
experienced a net loss from operations since 2008. We,
in Iron County, should all be concerned.

The second and third quarter reports are available online
at http://tinyurl.com/24os4hw

The reported cumulative loss from operations is identical
for the second and third quarters, standing at $1,087,000.
That probably means that in the third quarter, the hospital
broke even, a significant (positive) advance in their status.
It all depends on how book keeping was done and reported.

The second quarter report contains information provided
by consultants hired to improve the operations of the
hospital. Hiring of a consultant was predicted in an earlier
report in the series. I've read it and recommend it to
anyone who is interested.

The reported increase of the emergency department from
1500 square feet to 9000 square feet seems somewhat
of an overkill. But the purpose here is not to tear the recent
expansion apart because that's a done deal. Current and
future business practices need to be looked at by a cross
section of the community larger than the board of directors.
Unfortunately in the closed setting of such a board of directors,
they are usually spoon fed such information as the CEO and
CFO chose to provide. It would be nice to know more about
how this hospital, such a crucial part of life in Iron County, is
actually operated.

One of the MBA school discussions (master in business
administration) holds that a good manager will supervise
employees by frequent surprise appearances when and
where least expected. A CEO, for example, will come in
through a back door and appear in a production area (in
this case, anywhere that services are provided) without
appearing to notice anything out of line. The mere presence,
and immediate understanding by employees or staff that
their job performance was just reviewed is usually adequate
to instill focus on their individual job related tasks.

When some performance defects are noticed, that information
should be retained by by the CEO, and if improvement is not
noted during later visits, the next higher tier of supervision
should be invited in for a chat with the CEO. The point isn't
to instill fear in employees or staff, but to remind them that
they're part of a larger team that has a mission statement to
live up to.

In reading the consultant review of hospital operations, it
was obvious to me that a corporate culture that grew out
of this hospital beginning as a politically operated entity has
not yet been overcome. Every hospital ought to be operated,
within the confines of the mission statement, as though it were
a profit making business. Good business practices achieve
strengths in those areas that have a demand for services, and
attract their clients through competence.

As a former consultant, I've witnessed companies that hire
expendable consultants for the sole purpose of continuing
business as usual. When the financial situation fails to improve,
the company blamed the consultant, hired an new consultant,
and repeated the cycle several times until a board of directors
either replaced senior management, or the worse case scenario
unfolded and the company went completely under.

The second quarter report can be accessed at:
http://tinyurl.com/2ga55ho

I'm not suggesting that to be the case here and I remain
hopeful that it is not. The next few quarters will tell all of us
whether or not Northstar can become a financially successful
not for profit institution. The economic success of the hospital
is important to our community.

Bill Vajk

Merry Christmas

Data Mining and You

Even those of us who have been involved with
computers long before the general public
became aware of PS's and eventually purchased
one are occasionally surprised by the depth
of the invasion into our personal business
that computers have brought about.

Whose business do you think it is that you
buy certain prescriptions from your local
drug store?

In a recently decided Vermont case, represen-
tative of what's going on everywhere, it turns
out that by the mere act of having a prescription
filled, your information no longer belongs to
you, even if you paid for the product using
cash.

Insurance companies have always gathered
information.We expect that. But there's a
plethora of "data mining" that goes on with
pharmacy information.

Law enforcement regularly reviews the information.
If you are getting more pain controls than they
think appropriate, you're going to be investigated.
Fortunately I've found a non-narcotic medication
to control my back pain. But then, I never did
need enough to raise any eyebrows.

It doesn't end there.

Data mining companies buy the information from
your local pharmacy. It is sold to, among others,
drug manufacturers who then dispatch sales people
to visit your doctor. They're equipped with a full
listing of every prescription your doctor has
written, so they know what drugs to talk your
doctor into prescribing more!

If you're willing to dismiss this as another of
the paranoid "conspiracy theory" sorts of
articles, perhaps you want to take a look at
this court case recently decided in Vermont.

http://tinyurl.com/2eezxoj

"Big brother" isn't very far away.

Bill Vajk

Sticker Shock

It was past time to buy new tires for the
snowplow truck. I always try to reward the
best service oriented businesses with
purchases. That means, in the case of tires,
that I will deal only with a firm that stocks
the items I need and that maintains a large
enough a staff to service all who come in
through the door without relying on making
an appointment for another day.

That's not the way things are done in Iron
County for tire sales. I don't accept a
restaurant requiring me to come back another
day when it is more convenient for them, or
a grocery store, or any other commodity
provider for that matter. I drop firms that
make such demands, and refuse to do business
with them.

If we reward those who provide the best service
on a regular basis, then the entire industry,
whatever it might be, has goals that the
providers can look at as targets. The entire
idea of accepting second best, for the
convenience of a businessman, is self-
defeating over the long haul. We can never
expect better service unless we demand it,
and enforce our demands.

I found that the prices were consist no matter
where I went, a number close to $800 for a
set of four tires, mounted, balances, new
valve stems, and installed. The dealer who
can't get to it till tomorrow because he
doesn't stock the item, or because he doesn't
maintain the manpower to do the installation
today, or whatever excuse he has, charges the
same as the dealer who not only inventories
the product you need but has the manpower
necessary to serve you within a reasonable
amount of time after you walk in his door.

That isn't right in so many ways.

I got my tires and came home thinking about the
experience and the price. President Obama had
announced in September of 2009 that a tariff
would be imposed on tires imported from China.
The first year was taxed at 35%, dropping after
a year to 30% and after 2 years to 25%.

Researching the effect this has had on employment,
the excuse for imposing the tariff, has proved
fruitless. The most recent real numbers I found
available are for 2008. According to the bureau
of labor statistics, there were 21,400 tire
builders employed in the USA and the projected
2008-18 employment change is that this number will
decline rapidly.

If any significant improvement had taken place in
the tire industry we'd certainly have heard about
it from our government a year and two months after
the tariff was imposed. There has been no report
of improvement, or even one of stability in the
industry. Instead the average prices have merely
increased across the board for tires by
approximately 20%.

That means that the on the tires I paid approximately
$800 for, I would have saved about $160 had I bought
them two in August 2009, not very long ago.

Unfortunately few of us outside the US Government
have the information available to determine the
overall effects this huge price increase has had on
us as a country. It seems that in the end, government
has achieved a windfall in taxation, and those
manufacturers who have not exported their high end
tire manufacturing to China have benefited. That
doesn't mean that they didn't ship some of their
manufacturing off shore, only that they didn't send
the work to China, the only country hit with this
tariff.

The odd thing is that the tire industry didn't complain
about jobs going overseas, it was the steel industry
unions that was losing employees as tire manufacturing
moved away.

And apparently it didn't do them any good.

China keeps growing as an industrial power because, at
this moment, they're competitive. In the case of the US
the converse is true, and that, unfortunately, is why
our economy is shrinking.

It is a shame I couldn't buy these tires in Iron County.
There's certainly some competition among our local
providers. But they're all "tomorrow" sales. Not one
is prepared to stand and deliver today with any regularity.

We can never get anything any better unless we demand it.

Bill Vajk

Annual Discussion About Using Christmas in the Name

It is that time of year again. Iron River
will have its "Holiday in Lights" parade
on December 4th. The first year it was called
Christmas in Lights because the objector
wasn't around to quash Christmas in the name.

This year, using the internet, I searched
for communities in our region that use the
word Christmas in the names of their
celebrations. Here's that list I compiled,
doubtless one could find more:

Antigo Bessemer Boulder Junction
Crystal Falls Eagle River Florence
Iron Mountain Ironwood Ishpeming
Rhinelander St. Germain Tomahawk

Just goes to show that it can be done, all
that's necessary is wanting to. The question
is, why doesn't Iron River want to use
Christmas in the name of the celebration? Is
Iron River all that commercial?

Bill Vajk