Innovation Ecosystem

A CEO reality show audition for future ideas how to grow Rhode Island

The jobs summit as theater, as told from the bosses’ point of view

Photo By Richard Asinof

Gov.-elect Gina Raimondo, her transition team leader, Joy Fox, and Stefan Pryor, her nominee to become the head of CommerceRI, at an impromptu news briefing at the Dec. 16 jobs summit. The event took place at the University of Rhode Island's Providence campus; the photo was taken under a poster advertising careers in clinical laboratory science, a sector that, ironically, was left out of the conversation on jobs.

Photo by Kris Craig, Providence Journal, as tweeted by John Kostrzewa of the Providence Journal

Stefan Pryor, left, the new nominee to head CommerceRI, and Gov.-elect Gina Raimondo, talking with Jacky Beshar, right. In the background is Marcel Valois, the current director of CommerceRI, unidentified in the caption, and unacknowledged by Raimondo.

Courtesy of Jules Feiffer and Jean Albano Gallery, Chicago, posted online as part of an auction by American friends of the Tel Aviv Museum

A dance to spring, 2004, by cartoonist Jules Feiffer.

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By Richard Asinof
Posted 1/5/15
The theatrical presentation on Dec. 16 that was billed as a jobs summit by Gov.-elect Gina Raimondo was a masterful bit of stagecraft. But no one – reporters and participants – seemed to notice or be bothered by the fact that the health industry sector, the largest private employer in the Rhode Island, was not part of the conversation. The biomedical industry sector and its research engine were also not targeted. Yet, come Jan. 7, health care policy and spending will be front-and-center in Raimondo’s budgetary challenges.
When will health care and health innovation be integrated into Rhode Island’s economic policies and job creation strategies? What is the economic equation needed to calculate the cost savings and the ROI by addressing the externalities – the social and environmental drivers of population health outcomes, such as housing, food and nutrition, transit and employment? Can the R.I. General Assembly calculate how many jobs will be lost as the result of proposed cuts in Medicaid spending? Why did Raimondo’s transition team treat Christine Ferguson in such a shoddy manner? When will Stefan Pryor, the incoming head of CommerceRI, be made available for an interview by Raimondo’s communications team? Will a complete list of all the invited participants who attended the jobs summit be made available?
Many top business leaders of Rhode Island may have paid for the privilege to be part of Gov.-elect Raimondo’s job summit through their generous contributions to her campaign, but the underlying concept – that CEOs are the smartest people in the room and have the best ideas – lends credence to the belief that the rich and the powerful are somehow pre-destined.
The model of the jobs summit seems to have borrowed the idea that the Rhode Island Foundation, working in partnership with CommerceRI, and coordinated by the out-of-state consultant, The Fourth Economy, used to develop its action plan for Rhode Island’s future economy. Get business leaders in a room and have them discuss their ideas in a facilitated conversation.
In terms of health care, that same top-down approach is evident in the new “compact,” organized by Sen. Sheldon Whitehouse and Rhode Island Foundation President and CEO Neil Steinberg, first reported on by ConvergenceRI in its Dec. 1 newsletter. The compact recently sent its official letter to Raimondo, Matiello and Senate President Teresa Paiva Weed.
The work undertaken by the compact to reform the health care delivery system and move away from fee-for service toward global payments, shared savings, and population health is critical in efforts to reduce health care costs. The compact calls for the creation of a statewide stakeholder group to help manage the process.
The question is: in the new patient-centered and patient-directed world of health, what role will the patients get to play? Are they merely consumers? Do investments at the front-end of the health care delivery system in prevention, nutrition, housing, wellness and community health create a greater return-on-investment, to use Raimondo’s phrase about HealthSourceRI? The same question applies for job creation: do investments in creating healthier children, healthier students, and healthier employees yield a higher rate of return?

PROVIDENCE – Rhode Island’s Gov.-elect Gina Raimondo staged her own theater of great expectations on Dec. 16, inviting some 100 thought leaders – mostly the CEOs of Rhode Island’s biggest firms and institutional nonprofits – to join in a jobs summit to audition their ideas on how to grow Rhode Island’s economy.

As stagecraft, it was brilliantly executed: an audition for the best ideas, a series of moderated discussions where the bosses could dish their thoughts, which were then carefully noted and written down, to be issued later, as a report [no doubt destined for a shelf, next to RhodeMap RI?].

Imagine watching an invitation-only audition to a new reality show – call this one “Comeback, Little Rhody” – focused on how to create a thriving Rhode Island economy, from the bosses’ top-down view of the world.

“It’s time for us to grow,” Raimondo said, in cheerleader fashion, to kick off the event, from the state in the auditorium at the University of Rhode Island’s Providence campus on Washington Street.

Raimondo gave the thought leaders their marching orders for the evening’s dialogue, in the form of a series of questions. “How do we leverage what works?” she asked. “What is your best idea?” Don’t filter your good ideas, she continued, urging the participants to give it their best shot. “It’s time to think differently,” she said, closing with: “Do we have the will to do it? Absolutely.”

The bosses accepted their role as actors, eager to play a part in the debut of Raimondo’s new reality show. In the actual auditions, the bosses often stumbled, as amateur actors will do, stepping on each other’s lines, not comfortable with sharing the stage or the spotlight, convinced of the rightness of their own ideas.

With her newly announced choice for secretary of CommerceRI, Stefan Pryor, by her side, Raimondo wandered in and out of the small group discussions, much as the director and stage manager, assessing the talent. The targeted topics were narrow and traditional: infrastructure, manufacturing, workforce, tourism, and small businesses. Most of the CEOs participating already knew each other on a first-name basis.

In reality, it was meta focus group, creating the illusion that the participants’ opinions were important, that they were being heard, and that Raimondo and her team were listening, and what the bosses had to say really mattered and would make a difference in her policy decisions.

The news media, at first excluded from the discussion and then included, had their own role to play in the performance piece. They served as theater critics, or perhaps, better yet, as  fashion critics on the red carpet, describing the show, the “palpable” excitement in the room, and the two standing ovations for Raimondo [for which they enthusiastically joined in].

From a public relations point of view, it worked. A week later, on Dec. 23, Jim Hummel, who once described himself to ConvergenceRI as an “equal opportunity ambusher,” sounded  smitten. Hummel gushed about the event on talk radio, using “palpable” again to describe the excitement at the jobs summit, while at the same time deriding outgoing Gov. Lincoln Chafee. It was a rave review for a great piece of theater. [Hummel, by the way, was granted a sit-down interview with Raimondo on Dec. 30.]

Two weeks later, in a New Year’s message solicited by reporter Kathy Gregg at The Providence Journal and published on Dec. 29, Raimondo stayed spot on in her marketing message: “My jobs plan calls for an inclusive approach to five strategic areas: advanced manufacturing, workforce development, infrastructure, tourism, and small business/startups.”

What ain’t we got? [Scene 1]
What was missing from Raimondo’s economic equation and her orchestrated public theater performance? Health care. It was, inexplicably, not one of the targeted topics of moderated discussion, given its centrality to driving future job creation in Rhode Island.

Health care is the largest sector of private employment in Rhode Island; health care has generated the largest increase in jobs in the last five years, in the period following what’s known as The Great Recession.

Not to include health care – and health innovation – in a conversation about future job growth in Rhode Island was more than a slight miscalculation, or a mere omission. It gets to the heart of what’s missing from Rhode Island’s economic development planning.

The facts are damning:
• Rhode Island spends about $9 billion a year on health care expenditures, larger than the current state budget.

• The greatest barrier for small business expansion in Rhode Island is not taxes or regulation but the cost of health insurance for employees.

• There is a consistent flow of about $250 million in research dollars a year to the academic medical research engine in Rhode Island, the fuel for the state’s innovation ecosystem.

• One-third of Rhode Islanders – about 330,000 – will be receiving their primary care through patient-centered medical homes, as part of the efforts to transform Rhode Island’s health care delivery system.

[For sure, there were a few health care dignitaries in the crowd – Dr. Timothy J. Babineau, president and CEO of Lifespan, and Constance Howes, executive vice president of Women’s Health Care of Care New England. Howes appeared to have been invited to join the conversation more because of her role as chair of the R.I. Governor’s Workforce Board, as evidenced by her comments to the news media about workforce development.]

To leave health care out of the public conversation at the jobs summit and her jobs plan appeared to be not an accidental omission but a willful policy decision.

In private, however, Raimondo seems more than willing to meet to discuss her future health care policies.

She recently met privately with an association representing with Rhode Island dentists to hear their complaints about Dr. James McDonald at the R.I. Department of Health and their desire to have him removed.

McDonald, the chief administrative officer of the Board of Medical Licensure and Discipline at the agency, has been the point person in developing new regulations on addictive prescription painkillers and how they are prescribed, amidst the current epidemic accidental overdose deaths that claimed the lives of more than 200 Rhode Islanders in 2014.

The dentists left the conversation happy, according to one participant, assured that Raimondo had heard their gripes about McDonald in a favorable fashion.

Come Tuesday, Jan. 6, when Raimondo is inaugurated, there will be another day of choreographed, staged celebrations, a kind of mid-winter “dance to spring” in the best tradition of Jules Feiffer, where all things seem possible for a brief moment.

But, when Rhode Island wakes up on Wednesday morning, Jan. 7, with a new governor, there will be no ignoring, forgetting, eschewing or dancing around the policy issues of health care in Rhode Island.

I’ve got the horse right here [Scene 2]
The biggest challenges in next year’s state budget – the $200 million deficit in the current budget and the projected $400 million deficit in the FY 2016 budget, as Raimondo defined the costs from the stage on Dec. 16 – involve Medicaid spending, which is about one-fifth of the total state budget.

As much as Raimondo said that Rhode Island can’t cut its way out of the deficit, when it comes to health care, that’s the message she’s given her new nomination to head the R.I. Executive Office of Health and Human Services, outgoing Lt. Gov. Elizabeth H. Roberts: Rhode Island will become the national leader in controlling Medicaid costs. [See link below to ConvergenceRI story.]

On stage Dec. 16, Raimondo promoted her “can do” attitude. One of her top transition team co-chairs, in response to a question about difficulties Raimondo faced in cutting Medicaid spending, said that “can’t” wasn’t in the governor-elect’s lexicon.

But, in an interview with WPRO’s Steve Klamkin posted on Dec. 27, Raimondo tempered her message: “I’m walking into a crushing budget deficit. It’s bad, I’m not going to lie, it’s a bad situation,” promising only to go to work every day, working as hard as she can.

R.I. House Speaker Nicholas Mattiello, in an interview with RIPR, put a big target on alleged too-generous benefits such as Medicaid spending as the best way to curb the state’s structural deficit, saying: “We’re going to have to cut our expenses back. We’re going have to get in line with where our neighbors are. We’re not going to raise taxes, and we’re going have to look to see what our neighbors do. If we spend more money in certain social services areas than our neighboring states, we’re going to have to cut back to what they do. We’re going have to get more efficient within those areas.”

Of course, Mattiello didn’t say what the course of action he would recommend if the neighboring states were more generous than Rhode Island, which, it turns out, is exactly the case.

A study by the Economic Progress Institute released on Dec. 17 demonstrated that Mattiello’s claim about generous benefits was inaccurate, urban myth: “Contrary to the oft-cited claim that Rhode Island has among the most generous public benefits, working families’ eligibility for child care assistance and health care coverage is lower than for residents in other New England states.”

On Medicaid [RIte Care] spending for child eligibility limits, Rhode Island is ranked fifth out of the six New England states, more than $10,000 below Connecticut, New Hampshire and Vermont, and about $8,000 below Massachusetts. Only Maine is lower.

On Medicaid [Rite Care] spending for parent eligibility limits, Rhode Island is again ranked fifth, some $12,000 below Connecticut and the same as New Hampshire, Vermont and Massachusetts. Only Maine is lower. [See link below to study.]

However, at the 20th annual Celebration of Children’s Health, held on Nov. 24, 2013, Mattiello pledged publicly to champion the goal of having 100 percent of all children in Rhode Island covered by affordable, comprehensive high-quality health insurance. Will Mattiello keep his promise? [See link below to ConvergenceRI story.]

The reality is that if Raimondo cuts back on managed Medicaid spending – the most efficient health-care delivery system in terms of costs and outcomes – it will result in cut backs in jobs in the Rhode Island economy, as well as an escalation of health care costs.

Your never give me your money, you only give me your funny paper [Scene 3]
Mattiello also told reporters that the case has not been made to keep HealthSourceRI a state-run enterprise, calling into question whether it has been run in the most cost-efficient manner.

The first hint of what happens to HealthSourceRI under the Raimondo administration was delivered through a well-placed “exclusive” leak on Dec. 23 to Ian Donnis at Rhode Island Public Radio, apparently from Raimondo’s communications transition team headed by Cara Cromwell: Christine Ferguson, the current executive director of HealthSourceRI, would be replaced by Anya Rader Wallack, who lives in Little Compton, and who had been managing Vermont’s $45 million state innovation model, or SIM plan, under a $100,000-a-year consultant contract.

Wallack and her husband, Stanley Wallack, a professor at Brandeis University, run a health care consulting business, Arrowhead Health Analytics, based in Fall River, Mass. Current clients include The Rhode Island Foundation; past clients included the R.I. Office of the Health Insurance Commissioner.

A week later, on Tuesday, Dec. 30, Raimondo’s office officially released a statement confirming that Ferguson was out and Rader Wallack was in. Raimondo’s message: “We need a leader who can establish HealthSourceRI as a sustainable and affordable organization that provides clear return-on-investment to Rhode Island families and employers.”

The key question, unasked and unanswered, is: what is the economic equation by which you determine and define return-on-investment?

Pennies in a stream [Scene 4]
Wallack comes to Rhode Island state government with her own baggage as a result from her work in Vermont, as detailed in a series of stories by vtdigger.org.

Her $100,000 consulting contract, set at a $200-an-hour rate, was a controversial no-bid contract. Wallack, who had played a key role in writing the federal grant proposal that resulted in the $45 million award, became the program’s manager. Wallack's Rhode Island salary has not been made public yet.

During her tenure as manager of Vermont’s SIM program, Wallack also accepted a consulting contract with the Dartmouth-Hitchcock Medical Center in Dartmouth, N.H., to work on health care payment and delivery cost containment,

In an article written by Morgan True on April 22, 2014, it was revealed that OneCare Vermont, the state’s largest Accountable Care Organization, which is co-owned by Dartmouth-Hitchcock, would benefit financially if its members achieve shared savings through the ACO program Wallack helped to design under the Vermont SIM program.

Throw ‘em a fake and a finagle [Scene 5]
Here are a few observations about what can be learned from Raimondo’s style of governing revealed by the leaked story:
• Neither Raimondo nor her transition team had sat down and talked with Ferguson following the election.

• Leaking the story before the actual announcement, before even having a conversation with Ferguson, seemed calculated to embarrass Ferguson. What advantage did Raimondo gain by leaking the story two days before Christmas? That's cold.

• Indeed, Vermont Gov. Shumlin told a news conference on Dec. 30 that he was limited in what he could say about Wallack’s departure by “an embargo” placed on the announcement by Raimondo.

• Did Raimondo approve the leak? Given her penchant for command and control of media, it seems difficult to imagine that she didn’t know or approve of it. Is this the way she will conduct business in her administration? If not, will the leaker be fired?

• It was the second time that such a story had been leaked exclusively to Donnis, who has proven to be a willing conduit to carry the water for the Raimondo transition team.

Step right up, everybody’s a winner [Scene 6]
It’s worth returning to the scene of the reality show audition, held on Dec. 16. There were three telling moments in the small group breakout discussion on manufacturing – moments that captured the disconnect in Rhode Island’s past and future economic policy.

First, one of the participants, in response to a question by the facilitator of the small group discussion, spoke about the need to promote SHOP, HealthSourceRI’s program to enroll small businesses and their employees to buy health insurance through the state’s health insurance benefits exchange.

The program enables employers to get out of the business of managing health benefits. For the first time, it makes insurance rates transparent to small business owners for an entire year, allowing them to plan out their expenses and make choices. It also allows employees to become shoppers, choosing their own plans, rather than having the boss choose a one-size-fits-all plan.

The session’s facilitator didn’t know what SHOP was – and she asked for an explanation. The participant attempted to respond, explaining the value of employees being able to choose their own health insurance and employers having transparency in negotiating the costs.

Cheryl Merchant, president and CEO of Hope Global in Cumberland, stepped in before the other participant was finished talking, to change the topic away from a discussion of SHOP in order to promote her own ideas of what was needed to make Rhode Island great again. Merchant had been the star of The Rhode Island Foundation’s “It’s all in our backyard,” TV advertising campaign.

For Merchant, the idea that was working and needed more investment was researching what was currently being manufactured in Rhode Island, particularly for textiles, and creating a database.

That was the extent of any discussion about investing in SHOP and HealthSourceRI as a job creation tool by cutting health insurance costs in order to grow manufacturing.

Second, Rich Horan, senior managing director at the Slater Technology Fund, attempted to talk about the long-term, “very high” value of investing in good-paying jobs in the biomedical sector. Horan cited Amgen and Bard and Alexion Pharmaceuticals as examples. Once again, the conversation moved quickly onto other topics. Investments in the state’s biomedical sector as the future source of good jobs and talent attraction does not appear to be a visible priority of Raimondo’s economic agenda.

Third, Jacky Beshar, vice president at Groov-Pin, a manufacturer in Smithfield, her voice rising with emotion, said that Rhode Island’s problems stemmed from trying to find new customers, rather than sticking to its existing customer base. Rhode Island, Beshar said, needed “to stick like white on rice” to its existing customer base, a fascinating use of an idiom for the state’s future economic development focus.

When Raimondo visited the small group discussion, she greeted Beshar with a kiss, and then she sat on a table, Pryor by her side, listening. A Providence Journal photographer snapped the photo, with Raimondo talking with Beshar, and Pryor listening. In the background, unnoticed [except by the photographer] was the current executive director of Commerce RI, Marcel Valois, looking forlorn.

Raimondo did not acknowledge Valois. Nor did the newspaper identify him in the caption that ran with the front-page story [perhaps a result of the current owners moving copy editing to a hub in Austin, Texas]. The image, better than any words could, captured the ascendancy of Raimondo and the diminishing role of Valois.

In the earlier impromptu news conference, when ConvergenceRI asked Raimondo whether she planned to bring on a whole new team to support Pryor at CommerceRI, she said yes. Was there a future for Valois in her administration, another reporter asked as a follow-up. Raimondo hedged her bets, saying it was possible.

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