Friday, August 29, 2014

The Veterans Administration and McKinsey and Company

You have probably never heard of McKinney and Company.  It is a very large NYC based consulting firm and also very secretive. it is one of the hardest companies in the US to interview because of corporate secrecy.

It provides consulting services to both medical insurers and government organizations. One of its customer is the Veterans Administration and many high level VA and other agency employees have worked for this corporation. 

That would be people like Bob McDonald, the new VA secretary. Beth Cobert is the new deputy director for management at the Office of Management and Budget.  Tommy Sowers, who oversees the public affairs office and other vital programs for the Department of Veterans Affairs, was a former McKinsey consultant.

McKinsey & Company desires a “very low profile public image.” It has a policy against discussing specific client situations and does not advertise. Members are not supposed to “sell” their services following attorney and accountant traditions from the early 1900s, 

MicKinsey does have medical insurance clients both in the private and public sectors. Many of these corporations practice  the three D's of  insurance claims: "deny, delay and defend" against them. 

If you have  submitted a VA claim, you might begin to understand why the average claim takes about 4.5 years. You might also understand why only 10-11 per cent of claims are appealed. People simply give up.

If you are fortunate enough to prevail in a claim, you will probably run into the fallback gambit;  a low ball rating that does not conform to the disability schedule in 38 Code of Federal Regulations (CFR), Part C.

The VA was established as a charitable organization during the Revolutionary War and greatly expanded  after the Civil War. Claims are supposed to be considered in a non-adversarial fashion. 

Enter McKinsey and Company. 

A 1993 profile story in Fortune Magazine said McKinsey & Company was “the most well-known, most secretive, most high-priced, most prestigious, most consistently successful, most envied, most trusted, most disliked management consulting firm on earth.

According to BusinessWeek the firm is "ridiculed, reviled, or revered . . ." 
The Wall Street Journal said McKinsey is seen as “elite, loyal and secretive" while The News Observer said McKinsey's internal culture was “collegiate and ruthlessly competitive” and sometimes described as arrogant.

Why would an elite company like McKinsey and company, who competes with Mitt Romney's Bain and Company, be involved in the VA? First of all, medical insurance is big business. According to McKinsey the average US household, spends more annually on health insurance than on its home mortgage.
The VA is one of McKinsey's success stories. Or is it?

[It] helped reorganized the Veterans’ Health Administration into 21 networks, each with accountable clinical leadership, across the United States. The program also introduced clinically relevant performance measures, with corresponding rewards, and new information systems, including one for electronic medical records. The VA soon became a leader in clinical quality: for example, the risk of death for men over 65 in the VA’s care is 40 percent lower than the US average. The satisfaction level of patients rose to 83 percent, 12 percent above the national average . . .

However, the new information systems never really worked, a problem that is still plaguing the VA today.  Likewise, the VA needed more major reforms in the 1995-2000 period. 

[T]he Veterans Health Administration (VHA) implemented universal primary care, closed 55% of their acute care hospital beds, increased patient treatments by 24%, had a 48% increase in ambulatory care visits, and decreased staffing by 12%. By 2000, the VHA had 10,000 fewer employees than in 1995 and a 104% increase in patients treated since 1995, and had managed to maintain the same cost per patient-day . . .

Does the VA need corporate sharks as consultants? That is the question. 

Certainly the record of McKinsey and Company has not been perfect. McKinsey had advised a large IT corporation that cell phones would be a niche technology. IT does not appear to be the company's strong suit.

In addition, several civil suits have been filed against home insurance and vehicle insurance companies after the insurers were advised by McKinsey, to allegedly low ball insurees for actual value of the property damage.

McKinsey was cited in a February 2007 CNN article for developing controversial car insurance practices that State Farm and Allstate used in the mid-1990s to avoid paying claims involving soft tissue injury.

State Farm and Allstate  are two of the worst companies in the US for paying medical insurance claims and are well known for their three D tactics.

These are tactics that should not be used by the VA. Or for that matter, in government at all.


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