greater eastLong road ahead for single-payer health care system

In short, fully rationalizing a balkanized system even in a tiny state like Vermont is as tough a problem as anyone could find. Yet, if the state takes the responsibility for taking care of everyone without have a firm grip on the costs then Vermont would end up with a financial problem like it has never seen before. Doesnt that argue for abandoning the whole idea?

On the other side of the coin is the prospect that if Shumlin and the dream team can build a cost-sustainable system, then the ERISA companies would be crazy not to jump into it. The big U.S. employers like IBM, GE, John Deere, Citi Bank and others, formed the so-called Leapfrog Group years ago to figure out how to get health care costs under control, and there is no evidence to date they have done so.

Cutting off legs is pretty dramatic, of course, but the same dynamic works across the system, from messed up appointments to misdiagnosis, to all manner of errors and unnecessary care. Mistakes in the system get paid for by the public, not by the health care providers. Markets dont generally work like that; if a system does work like that, it isnt a market at all.

Geographic complexity. Any single payer system finally adopted by Vermont could only cover the state of Vermont, at least in the fully legal sense. But there is bound to be tremendous leakage in and out of the system from neighboring states. Fletcher Allen, for example, gets a significant chunk of its business from northeastern New York. Much if not most of the tertiary care delivered to eastern Vermont goes to Dartmouth Hitchcock, which is in New Hampshire. Patients from Bennington County often get specialized care in Albany, N.Y. If the single payer design gets built on the principle of capitation, then management of this structure will get very complex.

The answer to controlling costs is to shift from disease management to wellnessto changing peoples lifestyle away from such self-destructive habits as smoking, overeating and too little exercise. Reshioning peoples lifestyles would definitely take costs out of the system, but dont hold your breath waiting for it to happen. It would take years, if not decades, to effect significant change, and in the meantime the obesity rate in the United States is increasing and the cost engine roars on. For the foreseeable future, doctors and hospitals will be treating disease, not focusing on wellness.

Given that the lower utilization rates tend strongly to show up in areas with the most sophisticated and high quality care, it is a reasonable inference that a significant volume of the care in the higher use-rate areas is unnecessary. And a major contributor to the health care cost problem.

The reality is that Shumlin might have to simply carve the ERISA companies out of the plan, if they insist on going. That would definitely cause a problem for Anya Rader Wallack and the designers of the systemthey would have to replace to revenue flows from the IBMs and GEs. However, the only stronger commitment than single payer that Shumlin has made is to job growth and preservation and losing an ERISA employer wouldnt do much for that.

read the story by Jon Margolis) looked bad but probably wont have a lasting effect. Still, effective reform will almost certainly put heavy pressure on physician incomes as well as requiring them to begin taking responsibility for the performance of the whole system, which will mean shifting the whole medical culture. The design team will have to watch this issue closely going forward.

The cost problem is the ult of the insurance companies. It isnt. The principal reason the health insurance industry looks so bad is the rate at which the costs rise in the system. The insurance companies have been expected to control costs in the system, but they have no clue how to do that. What they can do is try to slow down the cost engine by building in bureaucratic requirements, which simply adds expense.

In health care reform there are two phrases which precede the death knell for significant change: &8220;It&8217;s very complicated&8221; and &8220;it needs more study!&8221; Let me add a third which Governor Shumlin has thrown into the obstructionist mix: &8220;I won&8217;t go forward unless the costs can be constrained!&8221; These are all transparent attempts to hoodwink the electorate. Given Shumlin&8217;s disasterous budget which targeted the most needy, I won&8217;t be surprised to see the Governor doing a one eighty on single-payer. After all, he is a proudly proclaimed fiscal conservative and, as everyone knows single-payer is a Marxist, Commie, Stalinist plot to undermine corporate profits. Seriously, single payer has been studied to death (see the Lowen Group Report of 2001 or Dr, Hsio&8217;s successful effort in Taiwan) not to mention about twenty countries in the developed world which have had similar systems for decades. The so-called complications such as ERISA and federal waivers are being used by the anti-reformers to sabotage any momentum single-payer may have. Like those who wanted to cut social programs to fill the deficit, rather than tax the wealthy, the anti-single payer crowd sound dire warnings about IBM leaving the state right behind those millionaires. But as &8216;deep throat&8217; said in the Watergate afir, to understand what&8217;s going on: &8220;Follow the money!&8221;

In 1966 when the federal government took responsibility for providing health care to the poor and the elderly, costs in the system amounted to a little more than 6 percent of our total national output. That figure is approaching 17 percent today and is heading steadily toward 20. Its a cost engine that reaches into virtually policy corner of American life. Some 50 million people in the United States have no health insurance; many millions more are underinsured. In Vermont, 47,000 people are uninsured; another 160,000 are underinsured; the total encompasses just under one-third of the states population. Even those who are well insured may pay huge monthly bills.

The exchange and the insurance issue. In a true single payer, private insurance isnt an issue. One payer pays all the bills. In the original legislation, the Shumlin administration proposed to begin backing insurance companies out of the state before the full system has been designed. This effort not surprisingly upset the private insurers, but it has also brought the business community into the fray. Business firms are concerned that competition in the insurance will disappear before its clear that their costs wont climb even ster than they have been.Many small and intermediate firms now manage their health care costs by scrambling yearly to switch their coverage from one company to the next, trying to chip a little off the bill by taking advantage of the insurance company competition. It doesnt really workthe cost increases are still brutal&8211;but its all they have. The Shumlin team said that federal law obliged them to establish the exchange now. They did not oppose the Senate amendments increasing the number of insurance firms that can operate in the state.

Since the Legislature is close to final passage of a bill authorizing the program development process, its worth asking what other hurdles are out there. VTDigger.org will examine each of these in detail over the next several weeks, but for now here are just some of them:

If Vermont could get its costs under control, it would be a major boon to the big state employers as well as the rest of the employer community.

In the late 1980s, Davis served as chairman of the former Hospital Data Council, and in 1988 to 1990, he was special counsel to former Gov. Madeleine Kunin for health policy. As a member of the Vermont House of Representatives, he was a conferee on Vermonts first health care reform bill; he also served on the late Gov. Richard Snellings blue ribbon commission on health care reform. In the mid-1990s, he was a member of the senior management team that directed the integration of the Medical Center Hospital of Vermont, University Health Center and the UVM medical college into Fletcher Allen Health Care.

Editor&8217;s note: The headline for this story was changed at 7:30 a.m.

First, it is good to read a Ham Davis piece again. Obviously, he has a fundamental handle on the health care tiger, but he also writes and synthesizes well.

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The big ERISA companies. Federal law guarantees that companies that insure their own employees cant be interfered with by state governments, the so-called ERISA (dont ask) law. It may be possible for the administration to look for some kind of waiver, but that doesnt mean it would be smart. The elephant in the middle of the room in this issue is IBM, but there are others that are critical also. IDX corporation, now a part of General Electric, is one. Lockheed Martin is another. But IBM is the key employer in the state. It has been the catalyst that brought the Vermont economy into the modern era, and it would be devastating to the state if IBM left.The company itself has denied considering this, but Shumlin cant ignore the possibility. Moreover, the health care bill cant be looked at in isolation. Shumlin led the drive to shut down Vermont Yankee, which concerned IBM because its Es Junction plant is such a big electric power user. There was a lot of whispering in the Chittenden County business community that Shumlin would reverse himself on Yankee, but any possibility of that went glimmering when the tsunami in Japan revealed the catastrophic risks posed by shaky nukes.

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Generally speaking, Vermont has tracked the national trends in the rapid growth of health care expenditures. Comparing Vermont to other states and to national averages is complex. In the 1970s and 1980s Vermonts costs tended to be comparatively low, but over the last two decades Vermont has grown more rapidly than the country as a whole. Irrespective of how such analyses play out, it seems clear that the Vermont cost inflation is not sustainable.

Government cant run health care, single payer is socialized medicine. Well, its true that government cant run health carethe problem is that no one else can either. Anyone who thinks that insurance companies can manage health care isnt paying attention. The Shumlin Plan at this point contemplates how to pay for the care. How the money gets spent is for the dream team to figure out.

The key piece of evidence that the above scenario is valid is the technique, developed in Vermont by Dr. John Wennberg, called small area variations. In the early 1970s, Wennberg, then at the University of Vermont College of Medicine, began collecting and then publishing data showing that medical use rates varied dramatically between communities n the state. At that time, for example, 60 percent of the kids in Stowe had had their tonsils removed; in nearby Waterbury, the figure was just 20 percent. The rates of gallbladder surgery varied between hospital services areas by three times, and hysterectomy varied by four.

What he has found is a stubborn, overwhelming, and embarrassing degree of inconsistency in what we do, Gawande wrote. His research has shown, for example, the likelihood of a doctor sending you for a gallbladder-removal operation varies 270 percent depending on what city you live in; for a hip replacement, 450 percent; for care in an intensive care unit during that last six months of your life, 880 percent.

Per capita health care spending increased by 8 percent between 2004 and 2008, at a time when the underlying rate of inflation in the economy ran around 2 percent. There is no way Vermont state government can keep raising major revenues at that rate for long.&8221;

Per capita health care spending increased by 8 percent between 2004 and 2008, at a time when the underlying rate of inflation in the economy ran around 2 percent. The difference of about 6 percent could be called the unsustainability rate. There is no way Vermont state government, or any government, can keep raising major revenues at that rate for long. And that performance has been going on for 40 years.

Over time, Wennberg, who soon moved to Dartmouth Medical School, steadily expanded his data analysis to other states; today, these data are regularly published in what is now known as the Dartmouth Atlas of Health Care. This document is one of the foundation sources for any assessment of health care in the United States today. In his book Complications, Atul Gawande, a surgeon at Brigham and Womens Hospital in Boston, cited Wennbergs work as evidence for the baleful influence of variation in medical practice in the United States.

Doctor attitudes. No stakeholder group in the single payer issue is as important as doctors. At the end of the day, they run the health care system and any reform that they perceive to come between them and their patients cannot stand. Anyone who doubts that need only look at what happened to the health maintenance organization or HMO movement in the mid-1990s, which was full of promise in the early part of the decade but by 1997 was in full retreatby that time, movie audiences around the country would boo if an HMO was mentioned in film.The recent kerfuffle over a survey of doctor attitudes about single payer (

The answer is Health Savings Accounts, a vorite of conservative ideologues. Health Savings Accounts can be a useful piece of an employers insurance plan in the current environment, but they have no chance of solving the cost containment problem. The idea that a sick patient is going to go shopping for cheaper treatment like a used washing machine is absurd.

The above are just some of the components of the design challenge cing the Shumlin team. There are some areas where they dont need to waste much time. Call them the myths of the health care debate.

Also in the NewsAnya Rader Wallack, H.202, health care reform, single payer, Steve Kimbell, universal health care

greater eastLong road ahead for single-payer health care system,For the second time in 15 years, the state of Vermont is a concerted effort to rebuild its health care system. The odds were long for the mid-1990s campaign, which iled, and they are equally long now. That is not to say that the drive toward reform initiated by Gov. Peter Shumlin is doomed, only that it is a very long shot.

And a much tougher question than that: who decides which of the elements of the care in the whole skein is good, very good, kind or poor, unnecessary, incompetent?

In some ways the program recently adopted by the Legislature is considerably more r-reaching than the earlier try. The aim now is a single-payer system, which almost certainly cant be fully achieved, but which does at least pinpoint the two central issues: the need to provide health care coverage to everyone in the state and the need to control costs in the delivery system, which routinely rise at 6 percent to 9 percent above the underlying rate of inflation.

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The health status of one community can differ from another, of course, but the main indicator of a significant difference is a difference in age and Wennberg adjusted for age. No one was ever able to make a straight-ce case that those kind of variations were driven by anything other than doctors dealing with similar problems in radically different ways. The small area variations analysis was particular striking in Vermont, which is quite homogeneous in its populationmostly white, with a few small urban areas and the remainder suburbs and rural settlements.

In ct, the business community probably had a case to make in the short term, but they might be wise to keep in mind the long term. No insurance company can manage a fragmented health care systemVermont business needs successful reform as much or more than anyone else. Still, the Shumlin team will have to manage a fractious business community over the next few years and it probably wont be easy.

More resources means competition and thus lower prices. In a market, yes. In health care, no. The extensive research on this question goes under the heading Supplier induced demand. It is why historically costs in Boston with a wealth of medical resources, are much higher than in New Haven, Conn., where much of the care is concentrated at Yale New Haven system.Heres an early example from the Wennberg data on Vermont: In the early 1970s two local hospitals in St. Albans, which competed aggressively, merged into the Northwestern Medical Center. Competition gone. In one year, utilization rates for that hospital service area dropped in half, and stayed there.

It isnt theoretically impossible for a Vermont single-payer system to solve this problem on the way to controlling costs, but it wont be easyat all events, nobody has figured it out yet. The core difficulty even if you had a pure single payerstate governmentit isnt clear how you could divide up a shrinking pile of money among the various unconnected nodes of the system. How much of the pie goes to our patient Johns primary care doc, and how much to the array of specialists, sub specialists, community hospitals, local medical centers, like Fletcher Allen and Dartmouth-Hitchcock, and how much to the out-of-state centers for really tricky stuff? One could argue that the doctors and hospitals could figure that out for themselveswhich is actually a very good idea, but theres no way to do that in the absence of hard-wired connections between the various elements in the delivery system.

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The long answer is: Anonymous comments dont support our mission. We are a nonprofit news organization dedicated to enhancing democracy through in-depth journalism. Our role is to foster a civil online discourse, and one very and effective way to do that is to require commenters to identify themselves. This isnt a new idea, of course. This is the way newss have treated letters to the editor since time immemorial.

Consider a patient, call him John. He wakes up one morning and feels badly. He goes to see his primary care physician, Sally Jones. Dr. Jones examines him, makes a diagnosis, and prescribes treatment. This process could include lab tests, imaging like x-rays or scans, and possibly a course of drugs. Possibly this regimen works. If not, Dr. Jones could refer him to a specialist physician, or a local hospital.

Costs rise as rapidly as they do because the population is aging. In ct, the population is aging, but its worth asking whether the rate at which it is aging is anywhere close to the rate at which medical costs go.

Its a really big challenge.

The single most important reason, however, is the strange, almost perverse way the health care system is wired, or more accurately, not wired together. While many policy makers talk about trying to utilize market forces to control costs, health care is nothing like a market.

For the last several years, major employers in the U.S. have been moving toward replacing a defined benefitwe pay for employees health careto a defined contributionwe pay part of the cost and the employee pays the rest. IBM might be more generous than some other ERISA firms, but its clear that many middle class employees of large organizations who have gold-plated health plans still pay a sizeable chunk of their paycheck for health care.

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Low cost equals bad care. Wrong. Bad care is way more expensive than high quality care. This is a complex issue, but for now, doubters might look at Olmstead County, Minn., where all the care is delivered by one organization the Mayo Clinic, arguably the finest standalone medical operation in the world. Per capita costs there are consistently among the very lowest in the United States.

No one in the United States has figured out how to solve this dilemma. And it isnt for lack of trying. The federal government and the governments of the various states have been trying to put the brakes on health care costs since the early 1970s, once it became obvious that Medicare and Medicaid had increased demand at a much more rapid rate than anyone had anticipated. There were certificate-of-need programs to limit growth in capacity and for system costs,rate setting in many states, and a raft of alphabet soup programs, PROs, and PPROs, and DRGs the landscape is littered with the smoldering hulks of these programs. Nothing worked: fee for service medicine defeated them all.

The new physicians, or the local hospital, carry out the same procedure, at a more elaborate level of sophistication. Maybe that works. If it doesnt, the specialist could refer John to a subspecialist with narrower but deeper expertise; he could also send him from a community hospital to a tertiary medical center nearby. The specialists and the staff of the medical center carry out the same diagnosis-treatment regimen. If John cant be cured at this level he may be referred to very sophisticated physicians out-of-state, to Pittsburgh, say, for a heart transplant, or Boston for high-level cancer treatment, or the Mayo Clinic for a stubborn illness that has frustrated diagnosis.

The folgreater eastLong road ahead for single-payer health care systemlowing analysis of the latest attempt to reform Vermonts health care system is the first story in a series Davis is writing for VTDigger.org.

Some top officials from IBM met with Shumlin early this month to press their case that they should be able to continue to manage their Vermont health costs as part of their national system. They said they had learned to control their costs and the governor was quoted as saying he agreed with that. There is probably less to all that than meets the eye. Its r more likely that what IBM controls is its health care contributions rather than the actual total health care costs for their employees. An IBM employees group seemed to suggest that when they held a pro-reform press conference several weeks after the Shumlin meeting with top IBM officials.

Second, regarding his mythical patient &8220;John&8221;: I am glad he called him a patient instead of a &8220;consumer.&8221; Just as Ham wrote that there is no real market in health care, I have trouble labeling folks as health care consumers. No one wakes up in the morning and makes the conscious decision that &8220;Today, I am going to consume a coronary.&8221;

Hamilton Davis is a veteran Vermont journalist. He was the managing editor of the Burlington Free Press in the 1970s. He is also the author of Mocking Justice: Vermonts Biggest Drug Scandal, and two chapters of the book, Howard Dean: A Citizens Guide to the Man Who Would Be President.

Well, no. Because the other side of the coin is equally valid. Failing to get a grip on the costs and quality in the system will be damaging to our whole society in the ways that weve laid out above. It would probably be better if the problem were to be tackled at the national level, but it doesnt look like thats going to happen any time soon. If Vermont is willing to step up, we might find our way to higher ground.

Medical system connectivity. In Vermont, there has historically been relatively little cross-community medical management. Most local medical communities have been fiercely independent. They will refer patients back and forth, but anyone who thinks, for example, that the physicians at Rutland Hospital think they need help from Fletcher Allen in managing their medical afirs simply hasnt been paying attention. This situation is changing somewhat, probably under the lash of accelerating pressure for structural reform. Fletcher Allen and Central Vermont Medical Center, for example, have recently adopted a joint structure that looks like a merger. There have also been discussions between Fletcher Allen and Southwest Vermont Medical Center in Bennington. There has been no major work, however, on a full rationalization effort among the states 14 hospitals that would eliminate excess capacity and force the states physician to take direct responsibility for both costs and quality in the whole system.A group of health policy people gathered together in the 1980s by the Windham Foundation put forward a rationalization plan that called for two umbrella organizations: the one in west would have been led by Fletcher Allen and would have included community hospitals in St. Albans, Middlebury, Rutland and Bennington, Montpelier and Morrisville. The second would be led by Dartmouth Hitchcock and would subsume Newport, St. Johnsbury, Windsor, Brattleboro, Springfield and Grace Cottage. The reaction of local hospital CEOs to this idea could be irly described as virulently hostile. The reaction from Rutlands CEO was volcanic. The idea died a rapid death.

Moreover, Vermont policy makers, most importantly the governor himself, understand that no reform effort can survive unless the costs can be brought under control. Shumlin has been pressing for a single-payer system for several years now, but among the thousands of words hes expended on the issue, none were more important than his statement that he wouldnt go forward with single payer unless the system costs can be constrained.

There are many reasons why the health care issue is one of the gnarliest the country has ced in the last half century. One is that physical health is vital to every single person. This ct invests health care with enormous importance: emotionally, socially, financially. Another is that it is technically complex, well beyond the reach of most people. It takes 10 years to train a brain surgeon. Even the most intelligent, well-educated patient has no chance to figure out difficult medical questions on his or her own.

Steve Kimbell, commissioner of the Department of Banking, Insurance, Securities and Health Care Administration. VTD/Josh Larkin

The damage is not limited to individuals. Medicare (for the elderly) and Medicaid (for the poor and lower income workers) play a major role in both federal and state budget deficits. Those pressures in turn foreclose investments in such critical areas as education and physical infrastructure, like bridges and roads. And medical inflation saps the competitive fiber of American business firms, large and small.

And it has powerful purely medical effects also. American doctors always take responsibility for their own patients. But they hate taking responsibility for what other doctors do. So if John gets unnecessary care or poor quality care no one is responsible for repairing the situation. Anyone who doubts this should read the Institute of Medicine report issued in 1999 showed that hospital errors in the United States kill as many as 98,000 people per year, three jumbo jet crashes worth per day.

, is tough and knowledgeable about state government. Shumlin has called them a dream team, and that isnt hyperbole. An added plus: When the final design comes into the legislature next year, it will be managed in the House by Shap Smith, the most adept Speaker since Ralph Wright.

Lastly, one little nit. Ham wrote, &8220;&8230; doubters might look at Olmstead County, Minn., where all the care is delivered by one organization the Mayo Clinic&8230;.&8221; Actually, Mayo is not the only organization to deliver health care in Olmstead County. The Olmstead Medical Center, with roughly 140 clinicians, 1,100 employees and a 60-bed, level IV trauma hospital, exists right in Mayo&8217;s shadow. (My brother-in-law is a physician at Olmstead;greater eastern primary health my niece&8217;s husband is a doc at Mayo.) From what I understand, many Rochester environs residents prefer to use their local clinic, the OMC, instead of deulting to the Mayo system. Also, Mayo tends to serve patients from well beyond the normal catchment area given its international reputation. It might be interesting to study the interaction between the two.

Davis has been studying health care reform in Vermont and the United States for 30 years. In the early 1980s, he produced a long television documentary on John Wennbergs small area variation work in Vermont; he subsequently extended this research to several other states, including Maine, Massachusetts, Iowa, and California.

Thanks, VTDigger, for bringing Ham Davis into the fold.

Third, while Ham refers to the 1999 IOM study on medical errors, folks may want to view David Classen&8217;s recent presentation on adverse effects in health care. See: Dr. Classen and his collaborators maintain that the IOM study significantly understated the actual number of such events.

The clear need for reform is an obvious asset for the Shumlin administration going forward. There are some other promising auguries. One is the staff the governor has assembled to manage the program. Anya Rader Wallack, whom Shumlin has retained on a contract, is a national class health policy analyst. Steve Kimbell, the newly-appointed commissioner of

It is also possible for John to pick and choose his route through this maze. He can pick his own specialist and subspecialist. He can choose one hospital over another, and patients do, all the time.

END NOTE: This overview of the health reform issue has attempted to touch on the major issues and hurdles cing the reform effort. Over the course of the development process, VTDigger.org will elaborate on several of them, discussing the analysis in more depth and laying out the research and data that undergird them.

One of the most intriguing ideas in the light of the current reform atmosphere is whether it would be possible to go beyond even the Windham Plan through an alliance of some sort between Fletcher Allen and Dartmouth Hitchcock. Both are high quality, but small tertiary medical centers. An alliance between them would accomplish two important results. One would be to give them a greater mass than they now possess and they could do some things they cant now manage. Neither, for example, have a large enough patient pool to enable them to train doctors in specialty pediatrics. Combining their operations might give them a big enough population base. More importantly, a joint Fletcher Allen/Dartmouth-Hitchcock structure might exercise the kind of domination over the whole state that could enable the kind of cost and quality controls that will be necessary in a reformed system. Significant ties between the two big centers that serve Vermont may be a bridge too r, but still it would be interesting.

Well return to this issue in future articles, but for now, a single example from real life: A college professor in Vermont with an income of $90,000 pays $10,140 for health care, between contributions to the college plan and out-of-pocket expenses. Part of that is tax deductible, but the after-tax hit is still more than $6,000 per year. The employee, in other words, is picking up a major chunk of the inflation rate in health care costs.

That does not mean that all, or even most care, in the United States or in Vermont, is bad. Much of it is excellentindeed some of it approaches the miraculous. But there are no financial incentives for brilliant care or even fully-up-to-standard care. The incentives, in ct, run in the other direction. If you go to the hospital to have your right leg cut off and they cut off the left, your payer will end up getting charged for cutting off two, since you still have to cut off the left. A few years ago the Henry Ford health care system in Detroit decided not to bill for two procedures in such a case, a departure so striking that it made the front page of the Wall Street Journal.

The critical point here is that these nodes in the system are normally financially and professionally separate from one another. Whoever is paying for Johns health insurance just has to keep paying the individual bills. If there is duplication of effortrepeated imaging or lab work, for example, or unnecessary carewell, that still has to be paid for. No one is responsible for Johns total care; there is no single price. The driver of this process is that most doctors and hospitals get paid on a fee-for-service basisthe more things they do, the more they can bill for. That reality is an engine that drives cost.

So, given the pressing need and the assets assembled, why are the odds so long?

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