This has been a memorable summer for utility customers in Chicago and hospital systems in several cities around the nation.
For those of you blessed to live in areas with reliable electric service, we should explain that the Windy City has been hit by a series of power outages. One power loss struck during a deadly heat wave. The most recent outages crippled downtown businesses and financial markets.
The "root cause," as they say in the outcomes biz, of all these failures can be traced to decisions made decades ago. Commonwealth Edison Co., the region's electric supplier, resolved to build the largest nuclear power capacity in the nation. Executives envisioned nearly limitless electricity being generated at dirt-cheap cost.
Of course, it was too good to be true. ComEd discovered that operating the nuclear plants was difficult and expensive. They never achieved the dreamed-of efficiencies. Meanwhile, the utility, preoccupied with the nukes and struggling to keep shareholders happy, neglected to invest in maintenance. The company did not replace the wires and transformers that conducted the power flowing from atomic facilities.
The hospital industry is having system failures of its own right now. Just a few days ago, the Hunter Group stepped in as interim manager of troubled UCSF Stanford Health Care System. That is only the latest in a series of such emergency takeovers this year by Hunter and other turnaround firms (Aug. 16, p. 2).
The difference between ComEd and the hospital systems is that healthcare weaknesses are showing up more quickly. The desire to arm for battle against managed care and to crush competitors led to headlong rushes into dubious mergers and expansions. Now we find the touted efficiencies have not been realized. Only a few years after the fact, these decisions are causing scattered "power failures" from Pittsburgh to San Francisco. The Balanced Budget Act of 1997, while not the ultimate cause, is accelerating the process.
Unfortunately, this is probably not the end of the electric or hospital system failures. We can only hope that the problems are fixed quickly. It's not a good time to be a Chicago utility customer or an executive at some limping hospital systems, but it's a great time to be working for the Hunter Group or another turnaround artist. Let's hope those firms don't overload their capacity.