Weekly Thoughts


Weekly Thoughts: Google It?

Here is something that caught our eye this week:

Google It?

When we need to figure out how to do something, typically our first action is to Google it and iterate from there.  It worked when we were trying to buy our first business, and has rarely let us down since.  When we recently Googled “business response to opioid crisis,” we were disappointed to see articles predominantly about big businesses either contributing to or profiting from this growing epidemic.

While not the epicenter of the crisis, we have operations in states that are significantly impacted by the opioid epidemic, and several of our operators have been thrust into situations most only talk about in the abstract.  In a recent report from the White House Council of Economic Advisors, for instance, the authors dive deep into the time value of lost productivity when quantifying the effects of opioid abuse on the economy noting that “the loss of earnings of $50,000 per year for 20 years, discounted at 3 percent, yields a present value of $744,000.”  Researchers then compare these figures to the DOT’s lower bound VSL [value of a statistical life] estimates to evaluate accuracy.

While we do understand the importance of economic research, knowing the VSL for an overdose is not all that helpful when trying to operate a business whose employees are suffering real-time from an ongoing and escalating crisis.  With 70% of employers claiming their workforce has been affected in some way by the opioid epidemic, 29% citing impaired job performance, and 15% reporting a drug-related injury or near miss according to a National Safety Council survey, we doubt we are the only ones who have been frustrated by a lack of tangible, actionable information about how the private sector can develop tactics and procedures to manage this unfortunate reality.

What little information we could uncover indicates a range of strategies.  Some, like Philip Tulkoff of Tulkoff Food Products in Baltimore, adopt a hard-line. From a report in the Bangor Daily News: “That’s why Tulkoff practices zero-tolerance. One randomly chosen employee gets tested every month, ‘and we’re gonna move it to two.’ The costs mount up: He has to hire a third-party company to select the worker, and pay the clinic to conduct tests. Money is wasted training workers who subsequently drop out when they fail the screening.”

Most others are less rigid, concerned a hard-line would result in losing too many people in an already tight workforce.  Given that at least 38% (92 million) of the adult population used prescription opioids in the past year (many of whom presumably use the drugs to treat real medical ailments), one has to wonder how realistic it is for companies to have a zero-tolerance drug policy.  To make things more complicated, it’s not clear drug testing is as effective as you would think.  It is estimated that 40% of employers already performing drug tests do not even screen for synthetic opioids like oxycodone or fentanyl as these substances are generally not included in standard drug tests and must be specifically requested. Worse still, other illegal opioids such as heroin metabolize quickly, making them difficult to detect and impractical to screen for.

Apart from drug testing, which is a reactive form of prevention, we debate what else a responsible employer should be doing from a best practices standpoint? Should we be facilitating recovery programs, or does doing so become a distraction and create undue liability?  Does offering a second chance to a drug user enable the person, or does it save her life?  Does firing an employee in recovery cause her to relapse? Should that be taken into account when you are evaluating her performance?  Are there outlets we can provide to encourage positive changes in employee health and wellness?

These are the questions our companies are grappling with on a daily basis.  At Chenmark, we believe deeply that human dignity and economic prosperity are inherently tied to opportunities for respectable work and career progression no matter one’s background.  Our hope is that our companies are able to provide such opportunities, but when these ambitions are derailed by the impact of the opioid crisis, we struggle with how to respond.  As we continue to experiment with different approaches, we do so with the understanding that there is unlikely to be a blanket solution.  In this case it seems, not even Google can tell us what to do.

Have a great week,

Your Chenmark Capital Team

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