Danny and the doctors have something in common

Russell
Russell Wangersky
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Danny Williams is going back to business — a land that has made him a multimillionaire, and that has built much of his personal mythology.

But as he leaves public life and returns to the private arena, it’s well worth using his success in a little bit of what you might call comparison shopping.

It has to do with how we view — and lionize — one group, while demonizing another.

The groups? Businesspeople on one side, and the province’s doctors on the other.

Think about this: Williams spent a lot of time and a considerable amount of cash — along with a modicum of good luck and good timing, like many successful businesses — building Cable Atlantic. He’d later sell the company for whacks of money.

By the numbers

Cable companies usually sell based on a multiplier of the number of customers: you take your number of customers, and bargain over how much you should get for each one. The prices vary: you can see a fair amount of what Williams wanted by reading a judge’s verdict in an obscure case in Ontario, where a financial adviser, Christopher Henley of Henley Capital Corporation, successfully sued Cable Atlantic for not paying for his work.

As the judge in the case describes it, Cable Atlantic’s Dean MacDonald got in touch with Henley to see what he thought of “Rogers’ offer of $2,400 per subscriber. What did Henley think? Would he do an analysis of that offer? Henley said he did a price analysis and prepared a spreadsheet. He told MacDonald he thought Cable Atlantic should be valued at about $3,000 per subscriber.”

After a new bidder came in offering $2,800 per subscriber, Rogers came back with a new offer: $3,050 a subscriber.

In other words, Williams used the possibility of someone offering more money to dramatically increase the bid value of his company, and to dramatically increase the amount of money he was paid for his majority share of Cable Atlantic. He took the highest price he could in the marketplace, and he didn’t accept a discount because his company happened to be in Newfoundland and Labrador. The whole concept that he might have to accept less merely because Cable Atlantic was here is absolutely ludicrous. He was a shrewd businessman.

On the other hand

Now, contrast that with the doctors.

What are doctors?

In their own way, they are also businesspeople, whether they are fee-for-service physicians or salaried doctors or specialists. They have made a considerable up-front investment in both sweat equity — their own time and hard work — and put up cash or financing as they work their way through the many years of college, medical school, internship, residencies and further specialized residencies to learn particular advanced specialties.

They’ve gambled, like a businessperson does, that their investment will pay off at some point in the future — that the same supply and demand equation that made Danny Williams a ridiculously rich man will also work in their favour.

With luck and good timing — and also the requisite interest and caring — they could end up in a specialty or sub-specialty that many different jurisdictions require, and that would be willing to bid higher and higher to obtain.

Right now, doctors in this province are negotiating to get their salaries out of the basement in terms of physicians’ pay in this country. They’ve been offered a large increase, to be sure, but it’s still miles behind what other medical professionals can make.

Now, you can argue that one is a private-sector transaction, while the other one involves workers in the public sector — that’s true, but we’re the architects of that situation. We’ve chosen to allow doctors to only work in the public sector. Would we really prefer them as private businesspeople, charging us whatever the market will bear to do a diagnosis and remove a gallbladder?

Critical care

Certainly, people’s lives hang in the balance with doctors — but, you know, lives hang in the balance with a whole bunch of businesses. Drug companies make huge profits on live-saving therapies and don’t charge us less because we’re a province with tight purse strings.

The companies that make CAT scanners and MRI machines make millions for their equipment, let alone the gravy they make on service contracts and necessary software upgrades. No one is saying to an MRI manufacturer that they will make less money when they sell equipment to Newfoundland and Labrador, and more when they sell the same piece of gear to British Columbia.

And don’t even get me started on the concept of successful weapons businesses. Face it: captains of industry are lauded for wringing the best price possible for their skills and products, regardless of the business they’re in.

Danny Williams put his skills into learning the cable television business — doctors put their skills into learning medicine.

So why on Earth is Danny Williams a savvy super-businessman, while doctors doing the same thing are classed every day as money-grubbing leeches?

Russell Wangersky is The Telegram’s editorial page editor. He can be reached by email at rwanger@thetelegram.com.

Organizations: Cable Atlantic, Henley Capital

Geographic location: Newfoundland and Labrador, Ontario, British Columbia

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Recent comments

  • Richard
    December 05, 2010 - 09:28

    I didn’t used to read Russell Wangersky’s columns. They are tedious and obviously very one-sided. But lately I have begun to read them online. It’s not that I like them anymore than I used to, but because I love to read the follow up comments, especially from FINTIP. His posts are much more interesting, clear minded and well written than the column itself. I don’t know if he is a writer but he should be. His comments are always level headed and objective. His reply to Wangersky’s take on the mass resignation of fourteen doctors is spot on. They may not earn as much as they would like but they are guaranteed a very respectable living. His point is that people in business get no such guarantees, which makes Wangersky’s analogy totally erroneous. It is also interesting to watch those people who feel compelled to write in to defend Wangersky whether he is right or wrong. Todays example is from Tony Bennett (the singer I presume) who says FINTIP is wrong in saying doctors are on the top rung when it comes to prestige and standard of living. How is that condescending Mr. Bennett? Where would you put them or where do you think they put themselves? Have you any idea just how many people in this province live from payday to payday. My guess is that 95% of the people in this province would have to look way, way up from where they are to see most doctors. Like FINTIP, I don’t begrudge them their salary but, as noted by another commenter, people in government have to strike a balance and a 33% raise is more than a fair balance. Keep it coming FINTIP. I always learn something from your comments. Maybe Wangersky will as well.

  • james
    December 05, 2010 - 08:10

    ontario is a have not province the last time i checked nl is not check you facts danny must have written it for you

    • Andre
      December 05, 2010 - 11:09

      Ontario has more revenues that NL. Have or have not status has nothing to do with it. Equilization transfer payments are based on a complicated calculation. Talk a stroll down bay street or around parliament in Ottawa and tell me Ontario is have not. Also, NL is have not this past year but oil production is going to drop soon and those expenses given in salaries that are incurred year over year are may not be sustainable if they go too high when the oil revenues take a big dip in a couple of years. Good try though james. Keep on trucking.

  • TONY BENNETT
    December 05, 2010 - 00:11

    Russell, I can understand and respect your opinion, and analogy. Fintip respects your opinion, I hope, but doesn't understand your analogy and from what I can determine, he doesn't understand his own analogy!! To say in his first sentence, that he doesn't agree with the doctors being viewed as "money grubbing leeches", is all fine and dandy!!! But in his last two, he classifies doctors as being privileged, and they reside at he top rung of the ladder. To me, that is very condesending, and negates what he was trying to imply. Russell, you were comparing your own, and citizens opinions, on this topic, and nothing more!! Leave it to Fintip, to once again, make a mountain out of a molehill and shoot himself in the foot in the process. Fintip made great points in his rant and I would guess, most would agree!! But his challenge on your overall analogy of the topic, was certainly no more then a C minus or even an F.

  • sm
    December 04, 2010 - 22:31

    Insurance can cost over 100k. Office rentals (that's why your doctor has her private clinics in a hole on Lemarchant Road) aren't cheap , office staff cost entire salaries. Imagine. As a business person I don't see how most NL doctors break even. The ones who stay here are very generous and giving humans, make no mistake about that. Personally though, if I need anything done, I'll be going south where I can convalesce in 5 star comfort . But I will die here; my Island kin. Morphine is cheap.

  • Andre
    December 04, 2010 - 10:22

    This is not an accurate analogy. A buyer bids on what he/she thinks a business is worth plus a return on their investment. It's based on expected future cash flows of the company. If cable atlantic had more customers, the bid would have been even higher. The fact the company was in NL actually did mean less money because of less people receiving cable. Healthcare in canada is paid for by government, ie taxpayers. NL has less revenues than ontario and the states, so yes, it is unreasonable to expect the same government salaries as ontario or parts of the states. I'm sure the salary of the editor of the telegram is less than the toronto star because the star has more revenues. Government unfortunately has to make salary offers with taxpayer money that are fair, not more than fair. It's not rocket science. Why is it assume if you plucked 15 random people from the population to run government they would not try to strike the exact same kind of balance. Why are people immediately incompetent if you put the word politician in front of their names? You know, if you give more money in salaries (an expense year after year after year), then guess what? That's money that is taken away from something else - new mri machines, nurses salaries, bell island ferries, road repairs, etc. If you believe you can do better - run for office and see.

  • Fintip
    December 04, 2010 - 10:13

    First of all, I don't agree that doctors are viewed as 'money-grubbing leeches'. Nonetheless the mass resignation of 14 specialists is seen by many (including many doctors) as disingenuous. It was a bargaining ploy at best. Almost all of them have since recanted and said they either plan to remain here or very much hope to remain here. They admit implicitly at least that the $350,000 salary they might command in Toronto or Calgary is not necessarily as good as a $300,000 salary in Newfoundland. Quality of Life - not income alone - might explain why you, I and a thousand other professionals choose this province as the best place for our families rather than Mississauga or Saskatoon. Salaries must be reasonably competitive with - but need not match - those on the mainland. And before you shoot back with the standard argument that our politicians are among the best paid in the country - that too is wrong, but two wrongs do not make a right. Finally the other criteria missing from your analysis is RISK. Danny Williams is an atypical example of the financial rewards obtained from entrepreneurship and business investment. Nor did he earn his wealth without a substantial amount of risk and, I suspect, personal sacrifice. For every Danny Williams in business there are literally thousands who muck along working 18 hour days and still barely manage to keep their heads above water. Conversely doctors are guaranteed a very reasonable income by virtue of a public health care system. And yet even within the medical profession there is substantial variability which reflects the popularity of one doctor versus another and how many hours one chooses to work versus another. And before you remind us of the not-inconsiderable expense and sacrifice required to become a doctor - all of which is true - let me tell you that academic achievement is no guarantee of great financial rewards. I personally know of PhDs in this province who barely earn $50,000 a year. All of this to say that while none of us begrudges doctors an attractive compensation package, your attempt to equate the expectations of some of their members with a risk/reward model that allows, very rarely, for the emergence of a Danny Williams is clearly ridiculous. You might as well compare them with last night's lottery winner. As usual, Mr. Wangersky you have employed specious arguments and perverted logic to justify a position that appeals to you on some emotional, personal level (why give up flogging Williams just because he’s left politic, eh?). Elsewhere in this paper, another columnist makes the case that far too many people are being left behind in Newfoundland’s great push forward. There are too many existing on a minimum wage or a marginal fixed income. That is a proposition with which I can agree. But Newfoundlanders cannot have their cake and eat it. Stats Canada’s numbers only recently confirm what we all know – that the poor have been getting poorer in this country while the rich are getting richer. If we are going to help low and middle income families advance in this province, we must accept that we will not always be able to satisfy the expectations of the privileged - people who already reside on the top rung of the ladder. That, for better or worse, includes doctors and newspaper publishers.