Brief History of Plumbing

A Brief History of Plumbing

Or

The Businessification of Healthcare

Let’s take the case of Joe the plumber in Paris.  Paris, Minnesota that is.  Here in Paris when our sink gets clogged we call Joe to come intervene and unstop our sink.  We pay him a fee for a service.  If that service is simple and quick we just pay him a small fee.  If that service is complex and/or time consuming we pay him a larger fee.

The more services Joe performs the more money Joe makes.  Some services are more lucrative than others and try as he might it is tempting for Joe to offer you a service solution that is more profitable for him and one that is less profitable for the client.  Since Joe is a good plumber, he never makes his recommendation on that basis but he knows plumbers who do.  Some of those have even convinced themselves that the service they routinely recommend is really better for you.  But not Joe.

But the central point is the more Joe does the more Joe makes.  Joe faces another moral problem.  Let’s imagine Joe sees that you have a problem in the making.  From his experience and knowledge as a plumber he can anticipate that as time goes by you are going to need to call him for three complicated and urgent problems.  The problem Joe faces is that there is a simple thing he could do today that would prevent those three problems in the future and he would get a small fee for having done it.  But as a result he won’t get the three complex and urgent calls from you in the future.  Being a good and moral man, Joe gives you the information and lets you decide what you want to do.  You on the other hand are a cynical person and wonder if Joe is just trying to get you to let him do something to get money from you today.  Ah well…

The financial world of Joe has other interesting facets.  When he does some work for you he frequently needs some supplies (e.g. pipe, fittings, or seals).   He charges you the retail price of those parts.  The same price you would pay if you went to the store and gave them to Joe to use but without you having to go to the trouble.  But because Joe uses so many supplies his supplier gives him a discount of 10% off the retail price.  So, poor Joe has to watch his moral compass even closer.  Since he makes money using parts (the difference between the retail price for the parts and the price he pays), he needs to be sure in his own heart that he is never tempted to use extra parts. 

Then one day he learns that another supplier says they have pipe that is a little better than the pipe his current supplier has but since he doesn’t do any business with this new supplier he would not get the discount.  It would be easy for him to say, “I bet that new pipe isn’t really better and besides I know the pipe I am using now and it works just fine.”  But he doesn’t because Joe is a good and moral man.

At some point the new supplier calls Joe up and says Joe I am pleased that you have started buying your pipe from us but I would like to talk to you about my supplying your other parts as well.  Can we meet?   Well, says Joe, I really don’t have any time during the day to meet with you; I have lots of sinks to repair.  Well says new supplier, how about we meet in the evening, and since that is when you would normally have dinner I will buy you dinner for going to the trouble of letting me explain why I think your customers would be better served with my other parts.  Joe goes to dinner.

It won’t come as any surprise to learn that when Joe needs to rent equipment to work on your plumbing he passes that charge along to you without any markup at all.  As a matter of fact, professional plumbers are such an important part of the rental shop’s business that once a year they throw a party and invite all of the professional plumbers to it.  Joe would never consider renting equipment just to make sure he is on the invitation list to the party.  To suggest that he would is insulting.  And those free pens with their name on it don’t ever influence him either any more than the free pens the Holiday Inn puts in your room.  He doesn’t stay at the Holiday Inn because they leave free pens in the room.  That is really insulting.  He stays there because they offer nice rooms at a fair price.  While the cynics among you will say that Joe is rare I don’t think that is true. 

If that was the whole story it would be little more than a defense of the moral practitioner of plumbing.  But wait, there is more. One day Bill the business man came to Paris..  Bill decides that the plumbing business looks like a good business since everyone has sinks.  He doesn’t know anything about plumbing himself and doesn’t really want to lay down under smelly old sinks on his back.  What Bill does is to go to some of Joe’s friends and say to them that he suspects that keeping the books and managing the business is something they don’t enjoy. Boy did he get that right.  However that is something that Bill not only enjoys but does  very well.  Why don’t they let Bill take over those nasty old business tasks for them?  Then they could have more time to expand their client list which would make them a lot more money than Bill will charge them for running the business.  It makes perfect sense and what harm could it do?

Some of the plumbers in the area take Bill up on his proposition.  As time goes by Bill helps out even more by making sure they have all the parts they need in the storage room at the shop.  And since Bill has several plumbers he is helping out, he arranges to buy the equipment they used to rent and just charges them the same rate the rental shop used to charge.  Or actually, he charges the clients because now the invoices come from Bill since that is part of the ugly old business stuff he takes care of.  But even though they don’t get an invitation to the appreciation party at the rental center no one notices because there is the company party that Bill throws instead.

Bill now is buying a lot more supplies and has been able to negotiate an even bigger discount.  He doesn’t see why that is any business of his plumbers, that is his business.  That savings should and does accrue to Bill.  To get an even bigger discount, Bill negotiated a long-term agreement that prevents the plumbers from changing supplier for an extended period of time.  But not to worry, the clients are still getting billed only the retail rate for those parts.  Or at least somebody’s retail rate…

Being the conscientious manager he is, Bill forms a quality assurance team for their plumbing services.  That team is charged with helping to make sure the plumbers that Bill serves are delivering quality services.  They formulate, with guidance from Bill, a number of important quality metrics.  A disturbing finding of that team was that not all plumbers are the same.  Believing that the plumbers all want to deliver quality perhaps they just need to be guided.  So it was that the plumbers that Bill helps whose performance was in the lower 25% on this metric begin to get letters from him that go something like this…

We have recently had some concerns raised about quality of services delivered.  In the course of our investigations we have come across some worrisome facts.  We notice for example that you replace fewer pipes when you fix a sink than your colleagues.  The possibility that you are leaving defective pipes in homes that will just cause problems again is concerning.  We have initiated a monitoring program to ensure that the proper pipe replacement rates (based on the amount of parts used) are maintained in the course of fixing sinks.  We are sure you join us in this effort to improve our services.

Well certainly none of the plumbers wanted to be singled out as delivering poor service so they did their best to improve their pipe replacement rates.  Clearly they must have been making errors in judgment and when a pipe was questionable it should be replaced.  Perhaps even when it might become questionable it should be replaced.  Of course the customers had to be charged for the additional pipe as well as the labor, after all this was a business and Bill couldn’t be expected to absorb the cost of what was surely better quality.

The encouraging news is that many of these plumbers improved their performance.  The discouraging news is that now there was a new group in the lower 25% who needed guidance.  Quality is something that must be pursued with dogged persistence.

These improvements to the plumbing industry were quantifiable.  It is true that the customers didn’t have any fewer repairs.  It is true they didn’t get any faster service.  It is true they didn’t get any cheaper service.  But the quality data confirmed they were getting better quality as a result of Bill’s diligence.

Since the plumbers didn’t have to spend time doing all that business stuff, each plumber was able to repair more sinks.  So in fact, they made more money than they had before.  Just to simplify things even further, Bill eventually hired the plumbers to work for him rather than him working for them.  The security of having a guaranteed income and the better benefits programs was a welcome change for our tireless plumbers.

One very surprising thing did happen.  Even though the plumbers with Bill were doing more services the other plumbers in the area kept their service volume steady as well.  So the community had an increase in the total plumbing services.  This was reflected in an increasing percent of GDP spent on plumbing but the citizens deserved nothing less.  Besides, this reflected the will of the people since this was free enterprise at work.  

Oh yes, the previous pipe supplier and the equipment rental business both went bankrupt.  Fortunately Bill was able to arrange it so that plumbers who didn’t work for him could rent equipment from him but he had to charge a higher rate (which they passed on to the customers the way it always had been).  Clearly, the defunct rental company had gone under because they had set their prices too low.  Being a fair and rational man, Bill realized that to be equitable he needed to charge his own customers the same new higher rate as well.

And that is how plumbing entered the industrial age.  This is how independent providers like Joe began to disappear from the land.  Theirs was a time that had come and gone.  When it comes to progress, resistance is futile.