The writing is on the chalkboard. Wanted: scientists, technicians, engineers and mathematicians.

Jim Jardon was able to build a company virtually from scratch. In 1990, he founded JHT Inc., which began as a small business that developed training programs for the Department of Defense and affiliated agencies. Since that time, JHT steadily has expanded services and grown from its Orlando roots to reach 30 states. Read more

One solar step at a time, Robert Reynolds and Solis Energy can help light the way for aspiring entrepreneurs everywhere.

Robert Reynolds readily concedes he once knew little about solar energy. So he went to school, almost literally.

Reynolds had agreed to team with his teenage son on a summer project that involved creating a solar unit to generate power in their home’s Florida room. Reynolds bought the requisite solar panels and batteries. He Googled and asked business associates. And he goofed up, a lot. Read more

While the debate over reform continues, an analysis of key economic factors reveals fractures, strains and general weakness. The diagnosis: no easy Rx but maybe a glimmer of hope.

As our leaders in Washington look to overhaul our healthcare system, it’s clear the challenge they face is daunting. That is, if you want to call increasing coverage, containing (and ideally reducing) costs and improving the overall quality of care daunting. Yet, when you hear the politicians and pundits debate and spin the issue, their arguments all too often have the substance and efficacy of my teenage sons’ Yankees/Red Sox debates.

Still, something must be done. The cost of healthcare nationwide is on an inexorable, and unsustainable, rise. So, in an effort to fight through some of the noise, it may be worth investigating some of the main economic factors that frame the healthcare debate.

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Big Price Tag

Healthcare expenditures account for roughly one of every six dollars spent in this country. This means that more than 16 percent of the money spent in our economy goes for services that, all things being equal, people would rather not buy. This proportion is roughly twice that of the rest of the developed world. A claim can be made that nothing is as important as health, so paying more for better care is a worthwhile expense. And, arguably, the best healthcare in the world is available in the United States. At the same time, in the aggregate, our system isn’t the best performer. Care is uneven at best. By many metrics, our healthcare system is actually less effective than those of other countries. For example, looking at infant mortality, survival rates after heart surgery and life expectancy (a pretty big metric), the United States is below the average of the industrialized world.

Thus, as a nation, we pay more for substandard service.

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Why So Much?

Our current healthcare architecture creates unique drivers that contribute to the spiraling costs. Domestically, healthcare is paid largely through employer-provided, private health insurance. This is a distinctly American phenomenon. In the rest of the industrialized world, the government picks up the bulk of the healthcare tab. As it happens, there was no grand design in implementing our system. It developed from World War II–era wage controls, as firms were compelled to offer benefits in lieu of pay raises to retain and attract employees. Through the years, tweaks to the tax code have solidified this arrangement.

From an economic standpoint, the system has numerous shortcomings. When workers depend on their employer for health insurance, labor mobility is suppressed as many are deterred from seeking new job opportunities, ultimately resulting in a less productive, more stagnant workforce. In addition, the tax deductibility of employer-provided insurance premiums distorts the true cost of the service. Much as the tax code drives up the cost of housing through mortgage interest deductions or the prices at upscale steakhouses get inflated through the deductibility of business dinners, the ability of business to write off health insurance premiums results in the ramping up of prices. An economically unfair twist is that those who pay for their own insurance are, therefore, forced to pay artificially high premiums yet receive no tax break. And when employer-provided health coverage premiums rise, wages get depressed.

Alas, most of these cost drivers are well concealed, a situation that economists would find to be other than ideal.

Another factor affecting cost is the industry compensation structure. Doctors are paid on a fee-for-service basis. As such, they have a clear financial incentive to prescribe numerous, often expensive and sometimes unnecessary procedures. Certainly, this isn’t always the case, and quite often the doctor recommending treatment doesn’t personally benefit. But, generally speaking, this structure inevitably leads to extra services and higher cost of care.

When the insurance company picks up the tab, patients typically pay only a small amount out of pocket. Therefore, they have no real incentive to question, or limit, the recommended services. In addition, since bills are sent directly to the insurance company, most patients have no idea how much their care costs. Inevitably, they’ll consume more than they would otherwise. It’s the buffet effect. Diners at an all-you-can-eat buffet eat more than they do in a restaurant where they have to order each course from a menu. Patients in the United States consume more medical service than their counterparts elsewhere in the developed world. And the typical insurance plan, with its small copay, is the medical buffet.

The insurance industry is often able to pass along these elevated costs via the higher premiums they charge to businesses. Since the premiums are deductible, firms are less likely to fully scrutinize the costs. Consequently, the tax code often makes business, the primary consumer of health insurance, a poor consumer, far too willing to pay full retail for the service.

To sum up, we have a supplier (the doctor) with a distinct financial interest in offering numerous and often excessively premium services, an end user (the patient) who has no real incentive to limit consumption of these services and a buyer (the business) not particularly inclined to seek out competitive pricing to drive down costs.

It’s no wonder that costs spiral out of control.

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More Cost Factors

Another cost driver is the depressing, and rising, share of the population that has no health coverage. According to the U.S. Census Bureau, 46 million people in this country are uninsured. One in four Floridians has no coverage. Many of these people are young and healthy and choose not to obtain coverage — which, given the audacity of youth, is not a surprising choice. (Young people, you should at least get catastrophic coverage!)

Most uninsured people, though, don’t have the means to pay high private insurance premiums. Some, the very impoverished, qualify for Medicaid. A huge swath of the populace, though, is at an income level where paying $12,680 per year for healthcare (the average cost per U.S. family in 2008) is just not feasible. All too often, they face this decision: food and shelter, on the one hand, or go to the doctor, on the other.

In reality, they are covered by society, just not efficiently. The emergency room all too often becomes a well-care facility for the uninsured, and properly, in my view, hospitals do not turn away the sick that show up at the doorstep. But there’s a price to be paid in this scenario.

Hospitals, doctors and whoever else cares for the uninsured ultimately have to pass on the cost of that care to their paying customers. And, typically, by the time an uninsured person gets to the doctor or emergency room, the problem, and the bill, have mushroomed far beyond what they would have been if treatment had been provided earlier. This stealth cost is considerable, and it tends to feed on itself. As costs rise, many of those paying their own insurance, as well as many small businesses, are forced out of the private health system, swelling the ranks of the uninsured. Increasing numbers of uninsured patients show up at the hospital, and the cost of care gets spread across a smaller base of paying customers, which further drives up the price of insurance. As the ranks of the unemployed swell and more and more people lose health coverage, which we’re experiencing in the current economy, this effect gets exacerbated.

The cost of malpractice insurance is also a significant driver. Doctors and hospitals pay a staggering amount to insure against liability. We’ve all heard of some of the outsized monetary awards handed down by juries, many of which seem to defy economic logic. The threat of malpractice suits naturally (and understandably) causes doctors to practice defensive medicine. To shield themselves from potential jury scrutiny, they’re inclined to recommend extra testing, extra medication — extra everything — ultimately overdoctoring many cases. This amounts to a second incentive for doctors to recommend additional care.

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Pain Prescriptions

So, we now have something of a diagnosis. But what is the Rx? One area to pursue is an emphasis on preventive medicine.

Healthy people consume less healthcare than sick ones. Three-fourths of costs in the system result from four conditions: cancer, diabetes, cardiovascular disease and obesity. Much of this is preventable. Many companies have made efforts to rein in their healthcare expenses through implementation of “preventive maintenance” programs for their employees, giving them incentives to lose weight, to stop smoking and to exercise. These efforts have significantly reduced these companies’ healthcare costs. Some form of national rollout of this idea appears to be in order.

The structure of compensation for healthcare providers can be addressed. Clearly, the fee-for-service model creates perverse incentives and results in excessive treatment. Most doctors are not paid a fixed salary, and even fewer are rewarded for performance. Perhaps a system should be instituted of paying doctors a fixed salary (and I’d argue they deserve a handsome wage because we need the best minds to be attracted to the field) along with bonuses based on performance metrics. From an economic perspective, this would align their financial interests less with volume of service while maintaining a focus on quality of care.

Another obvious target in combating runaway costs is a serious effort at tort reform. It’s encouraging that the federal government has shown a willingness to address reform in malpractice lawsuits. If a cap on awards could be implemented, particularly the amount granted for pain and suffering (this amount is, by nature, completely subjective and, as a result, awards are very unpredictable), the costs of malpractice liability coverage could be reduced. At present, roughly half of malpractice awards go to lawyers and overhead costs. Malpractice suits serve a legitimate purpose, but as currently employed, they’re a huge drain on the system.

Opportunities exist in technology that could reduce costs. One proposal is a national patient database, which would introduce significant efficiencies into the overall system. Countless hours are wasted on redundantly providing basic medical history to multiple caregivers. Why can get a complete diagnostic history on a used car from CarMax, but I have to update the same information every time I visit a new doctor? Implementing this database would require a significant upfront investment, but eventually it would save patients’ and doctors’ time and money, as well as reduce numerous errors and omissions. (As an additional benefit, fewer errors would result, one would think, in fewer malpractice suits.)

Technology also could be used to conduct studies to determine the most effective methods of treatment for many conditions. This information could then be more efficiently disseminated throughout the entire medical industry.

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Taking Control

Our current model, relying primarily on private health insurance, has fundamental flaws. When you think about it, isn’t there an over-reliance on using insurance for healthcare? Is there any other service in the economy where insurance is utilized to pay for virtually every expense? Shouldn’t insurance be purchased for large, catastrophic healthcare expenses, and more routine care be paid out of pocket? But perhaps that’s a discussion for another day.

Private insurance companies have a duty to their shareholders to maximize profit. To that end, their mandate is to maximize premiums and minimize claims. They shouldn’t be faulted for that; that’s what a free market is all about. But there exists no economic model by which a private insurance company will choose to cover a person with a pre-existing condition and no realistic ability to pay the premium. Economically speaking, with our current private structure, a reasonable percentage of the population is uninsurable.

Addressing this dilemma brings us to the most controversial debate: the introduction of some sort of public healthcare option to help provide universal coverage. What eventually comes through the legislative process, particularly with respect to this issue, is anyone’s guess. Those opposed to a public option argue that any sort of government competition will eventually crowd out the private insurance industry. A tangent to that viewpoint is that the government generally mismanages most of its functions. This argument seems a bit inconsistent: Why is it that the government, which some people contend can’t run anything, is suddenly going to drive private insurance out business?

Devising a public health plan that accomplishes the goals of increasing coverage, driving down costs and preserving the innovation that comes from private industry is a heck of a challenge. As proposed by the Administration, the public option is meant to be just that, an option. It would provide basic and catastrophic care to a wide swath of the population. Those with private health insurance could keep it. Proponents claim that the government, through economies of scale, can drive down many of the costs in the system, ultimately reducing the cost of private insurance. Opponents claim that this unfair competitive advantage will drive out the private insurers, eventually leading to greater costs and substandard care.

A popular, and certainly legitimate, fear of a public option is that it will produce a sclerotic system in which important decisions are made by bureaucrats. That said, anyone who has had the pleasure of wading through the Byzantine process of dealing with the claims department of a private insurer knows that sclerosis is not confined to government bureaucracies. Critical medical decisions are currently being made by bureaucrats, but they’re just not in Washington.

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The Prognosis

The cost of healthcare is an issue that has been at the forefront of the nation’s attention seemingly forever. Essentially, nothing has been done, and the situation has only gotten worse. Clearly, our current healthcare structure does not allow free market principles to work. And, in reality, healthcare in America is not a true free market enterprise. Free markets work when there is choice, accountability, competition and transparent pricing. Our current system fails in those regards.

The privately uninsurable is one hurdle for our private insurance–based system. Another is the nature of the industry. In most businesses, consumers will shop for better value alternatives, shopping at Wal-Mart for some goods rather than at Macy’s. Yet, when it comes to healthcare, there’s very little market information and transparency. A higher-priced doctor sends a clear market signal, inferring superior quality. That may or may not be the case, but who’s going to choose the cheaper alternative when it comes to their health? In my view, private industry is not ideal for every enterprise. The military is one example. Perhaps a solely private health industry is not the proper solution, either.

The idea of changing something as vital as healthcare is understandably frightening. But the reality is that our current system, in many ways, is just not working. In my view, doing nothing is untenable. Any argument against a specific proposal should not just oppose but should also offer a better alternative. Sacrifices will need to be made throughout the system, from the patient on up. We will not get something for nothing. A drastic solution is required.

Unfortunately, it appeared in early December that any bill that ultimately makes it to the President’s desk, if any bill actually does, will not fundamentally change the economic inefficiencies of our uniquely American healthcare system. Lobbyists for the drug companies, insurers, device makers, hospitals and doctors have effectively deflected any big systemic changes from being incorporated into the proposed legislation. The dream of a complete overhaul, in which an efficient economic model is applied to the entire industry, is just not realistic.

So, I’m reasonably certain that our friends in Our Nation’s Capital will not devise a perfect, unassailable remedy. There’s no black-and-white answer, only gray.

But a demographic time bomb lurks just around the corner, as the baby boomer generation races toward retirement. As Peter Orszag, director of the U.S. Office of Management and Budget, puts it: “The ‘long term’ keeps getting closer and closer.”

I, for one, am tired of having this issue come up every election cycle, only to see nothing change. In fact, the economics only get worse. Hopefully, the dire circumstances will force action, ideally with an effective, thoughtful, nonpartisan compromise. Hopefully, this time, our elected officials will have the wherewithal to make the really tough choices. Hopefully, they can devise a reasonable system that dramatically increases the coverage universe and reins in the spiraling costs, but retains the free market principles that drive innovation and improved care.

We need to have hope, right?

Craig Gile, formerly a managing director at Citigroup, is a 12-year veteran of the banking and finance industry.

A look back, a look ahead.

Unemployment under 3 percent and a surge in new jobs and population as people sought to experience the economic boom — that was Orlando in 2006. The housing boom peaked later that year, and the economy began to slow. Fewer jobs were being created and unemployment rose slightly, but all was still OK.

Then the boom turned to bust, followed by a crash. Read more

Locals know that the City Beautiful also is the City Entrepreneurial. So, what does the rest of the world think? And how did we become such a fertile breeding ground for startups in the first place?

by Sarah Sekula

Zappos!

A zippy little word, indeed, and a worldwide phenomenon for the apparel and footwear obsessed.

For the ranks of the uninitiated, it’s a nontraditional kind of company — inspired by the Spanish word for shoes, zapatos. Consumers choose from a vast selection of products ranging from Manolo Blahniks to high-tech baby joggers to aviator-framed sunglasses. Read more

Despite the global economic downturn, the popularity of organic foods has more than maintained its roots. The challenge now is keeping up with sprouting demand.

Hop off the Washington, D.C., Metro at the Smithsonian stop and head toward the corner of 12th Street and Jefferson Drive. There, on the National Mall you’ll find the “People’s Garden.” Jam-packed with hordes of organic romaine lettuce, vibrant arugula and jalapenos (plus a handful of bats serving as natural pest eliminators), it’s a six-acre beacon of the sustainable agriculture movement.

Read more

The legendary life of Arnold Palmer is one of giving, gratitude and all-around greatness. It’s a charmed existence with a style that is, no doubt, highly contagious.

Arnold Palmer is a worldwide golfing icon; that goes without saying. Take a deeper look, however, and you’ll see why the world loves him for more than his overtorqued swing.

Consider this: In addition to racking up four Masters, seven other major championships and 62 victories on the PGA Tour from 1955 to 1998, Palmer, a.k.a. “The King,” is also a licensed pilot; CEO of Arnold Palmer Enterprises; designer of 300 golf courses worldwide; Wheaties box poster boy; humanitarian; cancer survivor; and, as sportscaster Red Smith once said, “the deity of the 1960s,” a man who possessed “that special personal quality that can move his idolaters to rapture.”
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1. Palmer has flown with the Blue Angels, the U.S. Navy’s highperformance jet squadron, several times.
2. He was the first person to reach $1 million in career earnings on the PGA Tour.
3. On his 70th birthday, Sept. 10, 1999, Latrobe (Pa.) Airport was renamed the Arnold Palmer Regional Airport.
4. Last year, he earned more than $30 million to rank No. 5 in the Golf Digest 50, a list of the top earners on and off the course.
5. During Palmer’s five decades of playing in the Masters Tournament, he took 11,248 shots in 150 rounds and played 2,718 holes.

Read more