Tad Gage's  Instablog

This is a little off-topic from the usual posts on investment opportunities, but I just had to toss out the concept. Frankly, this has been buzzing around in my head and I think it has a major impact on publicly traded drug companies, healthcare facilities, and doctors. I just haven't seen much discussion of it.

With all the discussion about making healthcare more affordable, who's talking about the pricing structure related to doctor visits and generic meds versus name brand perscriptions? Let me make this simple: you probably have a favorite primary healthcare provider (doctor) and perhaps a few specialists you work with for specific issues. Did you ever price-shop doctors to find the best value? Have you discussed generic alternatives to the perscriptions they prescribe?

Probably not, because one way or another, you're a smart and successful investor and you have some kind of insurance. Did you ever ask how much a particular treatment would cost? Or dicker over the price of an office visit? Again, probably not, because you count on your insurer to hammer your healthcare provider on the cost of everthing from a routine follow-up to a significant medical procedure. Most likely, your doctor will charge something outrageous for a 10 minute office visit and you count on your insurance provider to beat them into submission to an appropriate charge based on market rates.

While there is a lot of uncertainty regarding the US economy, it seems like a lot of companies are espousing the old duck and cover strategy rather than laying out a cogent plan for the future. If you're of a certain age, you'll remember duck and cover from your school days -- drills designed to prepare you for and protect you from a nuclear attack, should one happen. If your school didn't have a designated bomb shelter (a basement), you practiced hiding under your desk and covering your eyes to not be blinded by the aftershock of an atomic bomb. If you were lucky enough to have a basement, you practiced responding to the air raid siren by lining up and proceeding in an orderly fashion to the basement where you ducked on the floor and waited for the nuclear aftershock to pass. You would, theoretically, emerge safe and sound even though your school and neighborhood was reduced to rubble and everything was radioactive. Well, no strategy is perfect.

Of course, we know duck and cover is patently ridiculous, but it seemed comforting to us at the time. But duck and cover is what I'm seeing from a lot of public companies these days. Despite some pretty decent protections offered by various SEC regs covering forward-looking disclosures, a lot of companies seem terrified of publicly discussing opportunities if and when the global economy wobbles toward at least a modest recovery. Sure, it's great to conserve cash and trim operations in lean times. But telling me about this is about as exciting as explaining how you're building your panty of canned food and water to prepare for a terrorist or nuclear attack.

Tough times call for creative, aggressive thinking. In a recession, a lot of companies go under and a lot of businesses emerge as winners. No doubt, economic changes have delivered truckloads of lemons. But if you're a management team and you're not telling me about your plans to invest in sugar and make and market lemonade, I'm thinking your best strategy involves hoarding your lemons until they rot. I'd even listen if you figure out a way to preserve your lemons by pickling, making candied lemon wedges or drying your lemons and preparing to change your business model to become a purveyor of fine preserved lemon products.