As an avid runner with an equal love for team sports, I frequently draw parallels between business and athletics. These comparisons are made often in business because of their validity. Very few businesses take off like a rocket. For most, the race is not a sprint but an endurance race. Setting vision, developing a plan, and having the determination to march toward that goal requires a marathon mentality. As an American textile company that has been in business for more than 40 years we know this to be true. On the trail and in the office, I have learned the following through victory and adversity.

Be Committed. Signing up for the race is the first step. It is also the action that unleashes your potential. A commitment to compete, to set a goal, to develop a new product, or to pursue a new strategy is followed by a sense of obligation and urgency. A company, like a runner, must be committed to where it is going.

It’s a Process. I have run races on a whim, and have run races with preparation that followed a training program. Can you guess which led to the best result? To be your best as an individual or as a company, you must have a plan. Getting fit doesn’t happen overnight, neither does implementing a new strategy. There will be set backs and it will take time. But having a plan will lead to positive change (some that you perhaps did not envision). Schedules will change, bad habits will be exposed and eliminated, you will improve systems, and become more efficient.

Embrace the Challenge. Most people avoid suffering. But in deciding to train for and run an endurance race you know suffering in some form will be in your future. The best teams, the best athletes, and the best employees accept suffering as a necessary ingredient in achieving their goals. Staying late to finish a project, arriving early to prepare for a meeting — at times you will be inconvenienced or spend weeks doing things you don’t enjoy. Embrace the process and compete — you and your team will benefit.

It Feels Good. Having a healthy body and clear mind feels good. Crossing the finish line and knowing you succeeded feels great. Those feelings result from commitment, planning and embracing challenge. The endurance mentality will do the same for an individual, team, or company. You will have direction, you will improve processes, and you will overcome challenges. The end result will be a healthy, fit, successful company. It will feel good. Bayard Collins, HBD’s Vice President

CHINA UPDATE- JAN 2016

What’s with China? Its exports are declining.  Its markets are in turmoil.  Its growth goals are regularly lowered.

We made a bunch of predictions in late 2014. All but one (we predicted continued
food inflation) turned out to be correct.  So we’ll make some more observations about        China’s future over the next few years.

Most observers are still optimistic – too optimistic in our view. They believe China will make the transition – albeit bumpy – from an export to a consumer economy.

China has lots of problems that make this unlikely to us:

• A huge real-estate bubble.
• Endemic corruption.
• Bad and worsening environment.
• Overcapacity and the threat of deflation.
• A weak banking system and high debt levels.
• An aging population supported by too few workers.
• Huge income inequality.
• A disastrous imbalance between males and females.
• Vested interests of the military.

These problems are daunting. But they mask two even greater and more basic problems:

• The middle-income trap.
• Hubris in the Chinese Communist Party

The Middle Income Trap

China’s rise from backwardness to the world’s second largest economy in 25 years is           incredible and unprecedented. But the process is relatively easy compared to continued      future growth.

Why? Saving any institution involves relatively few, basic decisions:  Cut costs; become the low- cost producer; reinvest in infrastructure, plant and equipment.  The Chinese took or bought land cheaply; sold it to make money to invest in infrastructure; made sure            Chinese labor remained abundant and cheap; managed the currency; limited foreign       competition; and insisted on foreign technology transfer.

The Chinese also postponed expenditures on pollution abatement and environmental renewel. They spent little on healthcare or on developing a legal system.

These actions helped create the Chinese export juggernaut and keep it going. But to        advance further, many more sophisticated allocation issues must be addressed.  No       centrally planned economy has ever successfully navigated these shoals.  The markets, messy as they are, become the only way forward.

This leads to the second basic problem:

Hubris in the Chinese Communist Party

Until 2008 the Chinese were content to be our junior partner. But the Great Recession    convinced many Chinese that their system of command economics is better.  Their track record convinced them they could continue to guide the Chinese economy forward.

The last four days show the folly of their over-confident hubris. The market turmoil, capital outflow, and showing internal and declining export growth are reflections of problems that have been growing for years.

The Chinese government reminds you of the Japanese and USSR in the 1980’s. Remember when MITI, the Japanese central planning arm, was going to rule the world?  MITI was sure it could guess the future.  Instead it led to over two decades of Japanese economic          stagnation.

Remember when Gorbachev thought he could “reform” Russian Communism by tweaking it?   He couldn’t – no one could – and the whole house of cards came tumbling down.

The Chinese can’t tweak their way to success either. Fundamental reforms are necessary if they are to avoid stagnation or worse.  Anything less could trigger huge problems, with negative implications for China, its neighbors, and the world.

Richard Levy

Richard Levy, HBD’s President, studied East Asia and economics. He has travelled to China over 40 times since 1994.  He speaks regularly to bankers, business people, China officials and China experts.

Give us your views. We would like to publish them, using your initials and where you are from.

This blog is about healthcare economics- factors that drive costs.  It is NOT about the Affordable Care Act (“Obamacare”). Your opinion, whatever it is, is at least as good as mine.

Five factors are the main drivers of healthcare pricing:
• Demand
• Supply
• How compensation is determined
• Cost shifting
• Pricing opaqueness

Let’s look at each of these a little closer.

Demand.
If you add, say, 10 million people to the health rolls, especially the less healthy, demand for services and drugs has got to increase. Unless there is slack in the system, prices would be expected to rise.
Supply.
This upward price pressure can be lessened by increasing supply through, say, increasing the number of hospital beds or practitioners (doctors or other). Supply can also be increased relatively by reducing the number of hospital days required for specific events, or by inventing drugs or less invasive methods of treatment.
How compensation is determined.
Much compensation is based on “fee-for-service”. This creates reverse incentives for providers, who are paid for procedures, not for outcomes.
Cost shifting.
Hospitals and providers do not have to charge everyone the same for the same services. This creates a system where some customers, like the Federal government or Blue Cross Blue Shield insurers, enjoy pricing that is often unprofitable, and others are charged more to make up the difference.
Pricing Opaqueness.
Most providers, especially hospitals and surgical centers, do not quote prices in advance, even for routine procedures. This makes it impossible for even the best informed consumers to make rational choices.

In addition, at least two other factors cause major inefficiencies:
• Each state regulates its own insurance. Therefore, there are not national insurance plans. Instead, there are 50 different plans for each national provider, and then many different forms.
• The government is currently prohibited from negotiating with drug companies over  pricing. Consumers are prohibited from buying their drugs by mail-order from other countries, where the same drugs often cost much less.
Whatever your views, these are the main factors affecting healthcare costs. There are  other, philosophical issues, but these are the primary economic factors.
I hope this helps clarify the issues for you as the debate continues.

Richard Levy is President of HBD, Inc. He studied economics and has been involved in the healthcare industry for over 30 years.

Give us your views. We would like to publish them, using your initials and where you are from.

Sadly, as a group they are not.  For decades a majority of hospitals have used disposables that clogged landfills.

This has been a result of three primary factors:

• Using hospital space for a laundry is inherently wasteful and inefficient, resulting in efforts to reduce laundry space and use.
• EPA regulations have allowed users to define goods as recyclable even if they are disposed of in landfills if they are made of recycled material.
• Local landfills generally do not charge more for waste that is simply dumped.

Additionally, most textile products are not made from recycled material, so hospitals can seem greener by using say, plastic made from recycled material, even though it is used only once and discarded into a landfill.

Finally, these factors that underlie the wasteful use of disposables are being eliminated:

• Central laundries have changed the economics of hospital laundries, making reusable’s more than competitive with disposables.
• Now EPA regs only allow something to be called recycled if, in addition to being made of used material, it will likely be disposed of in an environmentally satisfactory way.
• States and municipalities are beginning to outlaw plastic bags or to charge extra because of the cost of disposal.

Also, many hospitals see “green” as something positive, and so are genuinely interested in recycling.

HBD is the leading independent supplier of reusable bags for hospitals.  We worked for two years to develop bags made of 100% recycled material.

We are proud to announce the introduction of EnvironShield hospital laundry bags.  These bags are made of 100% polyester fabric produced from discarded water and soft drink bottles.

The bags come in 70 denier or 200 denier versions, both barrier and non barrier.  HBD currently offers EnvironShield bags in blue and yellow, though we can produce other colors specially.

Only HBD offers bags that help reduce the clutter of discarded plastic bottles and are made from 100% recycled fabric.

Call us about it today.