I was a little under the weather this week and had some time to kill, so I followed both Apple’s final earnings call of 2013 and-quite tangentially- the Congressional grilling of HHS Secretary Kathleen Sebelius regarding the startup of healthcare.gov, quite closely. Oddly, I was able to draw many parallels between the two. Maybe it was just too much Nyquil.
Apple, as expected, exceeded analyst’s expectations and had a wonderful 2013. They profited $37 billion, sold in excess of 220 million units of hardware (iPads, iPhones etc.), made 15 strategic acquisitions and a sanguine Tim Cook provided a rosy forecast for the holiday season. Healthcare.gov, on the other hand, launched this month spearheaded by Health and Human Services Secretary, Kathleen Sebelius, and had…….well um………not as smooth of a ride.
I thought it might be interesting to see what things might look like if Tim Cook and Apple had launched healthcare.gov and if Kathleen Sebelius and HHS had to provide an earnings call to Apple shareholders. It is Halloween week, things are not necessarily what they seem, so I indulge you to travel with me, to another dimension. A dimension of not only sight and sound, but of mind. A journey into the wondrous land of imagination. Next stop, Twilight Zone!
Scene 1: The Crash
Rep. Marsha Blackburn (R-TN): Mr. Cook, the entire time we have been sitting here it I have been UNABLE TO LOGON TO HEALTHCARE.GOV! This is UNACCEPTABLE! The American people demand an explanation.
Tim Cook: Thank you, Congresswoman. It is not the site, your wi-fi is terrible in this place. It has been running fine on my iPad all day. Verizon service is among the best. Additionally, we anticipated high volume, doomsday scenarios in the design of the site and developed contingency plans, which would be deployed immediately in case of catastrophic episodes.
Rep. Blackburn: Um, thank you.
Meanwhile on the earnings call……
Apple board member: Madam Secretary could you explain some of the issues surrounding the iOS 7 platform launch?
Secretary Sebelius: We understand iOS 7 did not launch as successfully as we had wished. I take full responsibility, but it never actually crashed. It is functional at a very slow speed with low reliability, but a few customers were still able to purchase things from iTunes, so it never technically “crashed” and went completely offline.
Scene 2: The Numbers
Rep. Henry Waxman (D-CA): Mr. Cook, can you provide the current enrollment numbers for healthcare.gov, as well as costs to date?
Tim Cook: Of course! To answer the enrollment question first, we provided a real time ticker running on the site, so please reference the site. Financially, we are running 3.8% below projected budget estimates and we successfully captured all bug fix costs we knew we would encounter, up front, so we expect to end the launch 3.5%-4% below initial estimates.
Meanwhile in Cuepertino………..
Apple Board Member: Madam Secretary, do have our device sales numbers from Q4?
Secretary Sebelius: Well um, the system isn’t currently functioning so we don’t have reliable data. We hope to by mid-November. But, one of our stores in Kentucky told us they sold 5,000 iPads last month.
Apple Board Member: Madam Secretary, here at Apple, the rest of the board and myself all use iPhones. What type of phone do you currently use?
Secretary Sebelius: A droid based Samsung Galaxy.
DISCLAIMER: This is far from a political commentary. My point is that everything, including individuals, has a business model (how something makes money and keeps making money) regardless if it is government run, privately held, public or non-profit. It is just funny to me that business models which include things like; skin in the game, meritocracy, aligned incentives and innovation seem to work quite well. While models which involve; misaligned incentives, principle-agent issues and moral hazard seem to fail. Happy Halloween!!!