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Marketplace with host Kai Ryssdal produced and distributed by American Public Media focuses on the latest business news both nationally and internationally, the global economy, and wider events linked to the financial markets.
The only national daily business news program originating from the West Coast, Marketplace is noted for its timely, relevant and accessible coverage of business, economics and personal finance.
Tuesday, March 11, 2014 4:05am
Pharmacy giant Walgreens recently announced it has begun using predictive software to help guide patient treatment. It’s just one of the latest efforts where healthcare hopes to standardize day-to-day operations.
With estimates that hundreds of billions of dollars is wasted every year on redundant or inefficient services, many industry leaders think healthcare needs to be more like Burger King, where a sandwich in Santa Fe tastes a lot like the sandwich in Seattle.
For some the path to slowing health costs may mean medical care has to look more like factory work.
As far as Walgreens executives are concerned, they think they may be on to something. The pharmacy chain is working with the IT firm Inovalon which, using data from more than 100 million patients, has developed algorithms to predict health problems.
Heather Helle who oversees Walgreen’s clinic business, says that data helps guide a nurse practitioner during a patient’s visit.
“You can think about it almost like a decision where if the answer to a particular question is ‘no,’ the system will guide the nurse practitioner down one particular path," she says. "If the answer to a particular question is ‘yes,’ the system will intelligently guide the nurse practitioner down the second path."
Let’s say a patient’s record shows he’s got multiple symptoms for diabetes but no official diagnosis. The computer flags that, and the Walgreens nurse practitioner zeros right in.
“We are able to streamline the visit, we’re able to reduce variation and we are able to deliver incredible value,” she says.
Whether it’s this predictive modeling, patient safety protocols at Johns Hopkins, or a Camden doctor’s office using new scheduling techniques, many in healthcare say the industry must industrialize. This may sound like some healthcare version of painting by numbers, and former Denver Health CEO Patricia Gabow says executives can over do it when it comes to standardizing care.
“It’s not just any routine, could be a routine that’s very wasteful. Or a routine that doesn’t yield high quality,” she says.
Another concern is if the rules are too rigid, patient care could suffer. But right now, Harvard Business School Professor Clayton Christensen says a lack of doctor routines is threatening patient safety and driving up costs.
Routines – like Walgreen’s algorithms – may sound scary, says Christensen, but they are really just a way of sharing decade’s worth of doctor’s knowledge with people you don’t have to pay like doctors.
“Nurse practitioners can do even more consistently what doctors do today,” he says.
Christensen says healthcare costs will go down as lower-cost caregivers do more and more.
Tuesday, March 11, 2014 3:08am
It’s been three years since the Fukushima disaster prompted Japan to try weaning itself from nuclear power, though that’s a position it now seems poised to reverse. In the U.S., four new reactors are under construction after a long lull.
Don’t call it a nuclear renaissance: The economics of nuclear power are a tough sell, especially in a time of cheaper natural gas.
"The idea that public fearfulness or the resistance of environmental groups is what killed nuclear power in the U.S. has always been nonsense," says Peter Bradford, a former member of the Nuclear Regulatory Commission.
Bradford says nuclear plants are expensive to build and hard to finance. Plus, electricity demand is lower than expected.
Monday, March 10, 2014 6:22pm
Marketplace listener Blake Waller from Denmark, South Carolina asked us what retailers like Wal-Mart, Kmart and other big box stores do with items they don't sell. We went off in pursuit of the (complicated!) answer.
When it comes to food, retailers throw away around 45 billion tons each year. That's about 10 percent of what's on the shelves. A lot of stores donate food that hasn't perished. Walgreens, for example gives away about 5 million pounds of food a year to charity according to Reuben Slone, who runs supply chain for the company.
But when it comes to clothing, household goods or anything with a brand name, it gets a little more complicated.
James Merwin can attest to that. It was 2008 and he had a problem. Actually, he had 30,000 problems.
Merwin was working for a bathroom fixture company at the time. This was when the housing bubble had just burst. People stopped building houses -- and they stopped buying toilets to put in them.
"You go very quickly to almost bursting at the seams with product everywhere," Merwin says. "We had to not just fill our own warehouses; we paid a premium to store it somewhere else because we didn’t have space for it."
This is something that happens in varying degrees to almost every retailer -- from a pharmacy to a big box store. It’s called the "Bullwhip effect," and it means you ramp up to meet what you think demand is going to be, and then demand falls off. It’s at its worst with seasonal stuff like plastic Christmas trees or clothes that go out of fashion.
Mark Barratt teaches operations and supply chain management at Marquette University. He says the first thing stores do is cut the price.
"Target has a pretty clear schedule of how long the product is sitting on the shelf before it gets discounted."
Barratt says big box stores like Target systematically cut the price until it’s roughly 70 percent off.
"If it's still unsold from there, they are likely to liquidate it or in some cases donate it," Barratt says. "Or sell it to one of these discount stores like T.J. Maxx or Marshalls."
But brands can be sensitive about their products ending up in outlets or in resale shops.
"The primary concern is the impact on the brand. Suddenly it’s, ‘Hang on a minute! We’ve spent all this time and money creating this image that we’re an upscale retailer, and now suddenly you can buy our products for 20 percent of the price if you’re just prepared to wait long enough and go to a different outlet store.”
And that same problem pops up with donating.
The trouble is, if you’re not careful, what you donate might end up on a Manhattan sidewalk sale, competing with you in front of your own store.
So many companies choose to shred, incinerate or simply throw away the stuff they can’t sell. That maybe part of the reason nearly 21 billion pounds of textiles end up in landfills each year, though a lot of that comes from us customers.
Barratt says the best way to deal with unsold merchandise is to not have much of it in the first place.
That’s why the most powerful weapon in the corporate arsenal is logistics.
Walgreens sells 18,000 different things at 8,200 different stores. That means they have to make 160 million predictions about how much merchandise to order and put out every week. Obviously, they use computers, but they also have some pretty complex data to crunch with those computers.
“What we’re trying to do is predict human behavior,” says Reuben Slone, who runs supply chain for Walgreens. “Everything that we do is based on a forecast, and that forecast is based on history.”
Take cough syrup, for example.
"We use a lot of factors," Slone says. "Everything from weather reports to adjacent product that’s purchased. For example, if there’s a spike in aspirin and toothbrushes, that might be an indication there’s an outbreak.”
They start predicting a year ahead of time, monitoring incidences of flu around the country.
"I tell people it’s like rocket science," Slone says.
The key is having lots of history and data. And Slone says they’ve learned some fun tricks about demand this way.
"On Christmas Day we sell more bacon than anyone else in the United States. We even have a bacon report for the Christmas holiday to monitor that."
New products or fashion lines are what really involve some serious guesswork. But for any supply chain, one wrong move or bit of bad luck, and you can have a stack of 30,000 toilets on your doorstep. Just ask James Merwin.
"It’s as much an art as it is a science," Merwin says. "And it’s a rodeo, or as I like to say, it’s a roller coaster."
Whatever analogy you choose, you’ll be happy to know that Merwin did sell all of his toilets after all. He just had to discount them. No crushing or crumbling required.
Monday, March 10, 2014 5:21pm
Classified Ventures, a consortium of newspapers and media holding companies, is trying to sell Cars.com for a cool $3 billion.
Cars.com started as an experiment by traditional media companies in the late 1990s who saw falling ad revenue from classifieds as people started using online sources for both buying items and doing research.
"That was the time we saw that move from print to online," says Bernard Swiecki of the Center for Automotive Research. "It was also when the online sources of information were gaining traction as reputable."
Because Cars.com snatched a great web domain name, and because it came along at just the right time, it was able to grow into a major presence in online car research. It became profitable primarily because it was able to capture a very specific demographic: people who are interested in buying cars. Advertisers and car dealers are very interested in targeting that group, for obvious reasons.
Monday, March 10, 2014 5:12pm
Fyffes plc may not be a familiar name in to U.S. consumers, but it means "bananas" in Europe, and the company is the world's fourth-largest purveyor of the fruit.
And despite the impending bananapocalypse, as discussed on our show last week, U.S.-based Chiquita Brands has purchased the company, creating a $4.6 billion empire (which also includes pineapples, melons, and other fruits).
The companies say they expect to save $40 million by the end of 2016, a number that sounds low to Brett Hundley, a senior equity analyst who watches agribusiness for BB&T Capital Markets. He thinks consolidation will give the new company more leverage with both suppliers and with supermarkets.
"It will provide them more power at the negotiating table each year," he says.
That's been a problem for companies like Chiquita in recent years, says Edward Evans, an economist at the Center for Tropical Agriculture at the University of Florida. As supermarket firms consolidated, he says, "They were able to say, 'Well, we're going to pay you less for the bananas.'"
September 13, 2013