Skip to main content

I have access to a research library which has a database of Wall Street Journal articles going back to the 19th century.  Just for laughs, I decided to see what if anything may have turned up in the Journal about the younger Mitt Romney.

On December 2, 1983, he was quoted in an article about medicare reimbursement rates: "Hospitals Scramble to Track Costs As Insurers Limit Reimbursements" by Burt Schorr (Dec. 2, 1983, p. 31).  

In December 1983, Romney was 36 years old and he was working for Bain Capital's parent company, the management consulting firm Bain & Co.  He was what I would call a meta-consultant: he was a consultant who consulted with consulting firms.  He was working with Travenol Management Associates (a division of the pharmaceutical firm Baxter Labs.)  In October 1, 1983, Medicare began reimbursing hospitals based on standard costs for 467 different treatment categories: if a hospital did a procedure for less than the cost, it could keep the excess as profit.  

Under Romney's guidance, Travenol discovered something which others have discovered many times in the 3 decades since 1983: treatment costs vary from one hospital to another.  Travenol also discovered that hospitals can save money by cutting back staffing and paying healthcare professionals less.  Romney and Travenol worked with a hospital in Ohio which:

ended over-staffing of its delivery-maternity unit by putting 40% of the assigned nurses on standby status. The nurses get only two hours' pay a day but are available for duty on short notice.
This is what the Journal had to say about the young Mr. Romney, who a few months later would be picked to run Bain Capital:
Hospital administrators say Travenol's method of comparing treatment costs at different hospitals, part by part, takes hospital cost analysis a significant step further. Among other things. lt provides a composite "best demonstrated cost" for a particular hospital treatment, derived from the lowest-cost parts from all the institutions.

The idea originated with Bain & Co., a Boston management consulting firm. "We'd
done this on toothpaste, aluminum and blue jeans." says W. Mitt Romney. a Bain employee now assigned to Travenol, " but we didn`t know whether the concept would work in a hospital setting."

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site