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Comment by Spooky23 | Hacker News Reader

The entire health sector is rotten to the core. The fate of two of my friends is a great example of where priories lay.

One is a registered nurse. She has seen her overall compensation shrink over the last 5 years as hospitals merge into regional cartels and medical practices consolidate. These cartel entities play rough, breaking unions and shipping in visiting nurses to keep wages low. Fortunately, her husband got a job with better insurance -- her family plan on his insurance costs less than her individual coverage.

The other person is a pharma sales rep. She makes about 2-3x the nurse, gets a car, and usually wins 1-2 vacations to beach resorts or Vegas every year. For awhile it was peddling a viagra competitor, now she has a stable of different drugs to push.

So when I hear about of the money needed for "research", from companies with huge sales forces pulling down $100-150k plus cars, etc... My first thought is "bullshit"

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A sales force amplifies what you are already doing. If a research company can hire a salesman that brings in $1M in additional sales, it makes sense to pay that salesman $900k in salary and benefits, because that's an additional $100k the company can put towards it's research. If you agree with the research, you should be happy they hired that salesman. Saying you agree with the mission of a company as long as it pays it's salesman less than $x doesn't make any sense, unless you somehow know that the salesman is bringing in less than $x.

Why should the employment question for salesmen be, "How generous can we afford to be?", when for everyone else it's "How stingy can we afford to be?"? The whole reason a company hires any employee, at all, is because it's profitable. The question is why employees who don't contribute to the core mission of the firm should receive 90% of the revenue they generate, while those who do receive a fixed salary irrespective of revenue (and also have to work long hours and take few vacations).

Because to the CEO and the board and the shareholders the salesman contributes to the core mission of the firm (bringing in dollars) and the engineer just contributes to the costs.

By that logic, just fire all the engineers - costs go down and the dollars brought in remain constant or increases - hence the company makes more profits.

This happens all the time. Engineering is outsourced or team is moved to another project and the same product is sold for a long time.

I'm certain that the optimal state of our entire economy is for every firm to make absolutely nothing at all -- except sales. Who needs a product with all that money coming in for free?

The reason that top salespeople make so much money is that they're pretty much fungible across industry (they can sell basically anything to anyone), so there is a lot of competition for top salespeople. In industries where profit margins are very high (financial products, enterprise software, pharmaceuticals), these companies fiercely compete to get the best-performing reps, paying almost up to the marginal profit from each rep.

well I really don't believe this to be true. Even a salesman has to have something to sell- without good engineering they can't. imho the profits have to be split...

The impetus of this discussion is that pharma companies are buying rights to drugs. So it seems that, no, they don't need to research and create the drugs to market them.

Except if competitor A hires a salesperson who brings in $1M of sales from competitor B and competitor B hires a salesperson who brings in $1M of sales from competitor A, you now have the exact same revenues at both companies, $1.8M extra in salesperson compensation and an equivalent $1.8M drop in your budget for everything else, including research.

What you describe is a classic example of the prisoner's dilemma. They will all be better of not hiring a salesperson, but if one does it all have to do it to keep status quo.

That said, the real world is not that simple.

That's not how it works. There's no "stealing" sales, both salespeople are just closing in $1M in value of the available market.

And how would your budget drop if the salesperson is bringing in more than they cost? Not having salespeople doesn't mean the same money will still be coming in, rather it would be potential market left uncaptured.

There's the fundamental ethical issue.

The drugs you get prescribed should be based on medical necessity, not which sales chick winks at the doctor, gets the doctor a vacation, or gets the coolest promo into the office.

Ask yourself... Crestor is a multi-billion dollar business. That little yellow pill sells for $5-6/unit. Why are any sold today when generic Lipitor (an identical drug for most uses) is available for 80% less?

I knew a pharma rep once - she was a beautiful, intelligent woman, who spent her days going to doctors offices and trying to convince them to recommend her pharma-co's drugs to their customers. She explained to me, quite matter of fact, that she was literally not much more than a paid prostitute (Germany, where its legal) who slept with pretty much every client in order to close the deal - a fact she had no compunctions with sharing with me over wine, one evening .. actually, it broke her.

I'll never forget her telling me how she felt little more than a hooker, albeit with a much larger list of drugs to peddle, legally and with the backing and support of her company - which expected her to do what it took to get the doctors on their brand. It seems this is not uncommon, either - that pharma-co's hire the youngest, most attractive folks to rep their wares at the front lines of doctors offices.

I think that aspect of the industry has a lot, lot darker side than people are willing to admit. I knew her for a few years, until one day she committed suicide.

Yep. The medical industry is FUBAR'd and needs to be nuked from orbit and started over fresh. It's perverted at so many interdependent layers that it's impossible to unravel the whole thing piece-by-piece. We need to start over and regulate it tightly to keep it sane.

Source: I spend over $1k / mo on medical bills, and I have "really good insurance". In the past my plan had been simply to ignore exorbitant medical costs and my credit got pretty disfigured that way. I've been rehabilitating it the last few years, but if I can get to a place where I don't need credit, you can bet that the first thing I'll do is ignore any frivolous medical billing. We have to stop propping up this disgusting system.

Sales reps make so much because they bring in so much more than they cost. It makes perfect sense for the business to keep retaining them. This is the same in every sector and industry.

> Sales reps make so much because they bring in so much more than they cost.

Almost. Engineers also bring in so much more than they cost.

The real question is if the money they bring in scales with the amount you're paying them. The reason salesmen can make so much money is because you can just pay them mostly on commission and take on practically zero risk of overpaying them. You can't do that with engineers.

You can't do that with engineers.

Why not? Salespeople must have rules for assigning proportional commissions from joint sales. Why not assign proportional commissions to the engineers responsible for the product sold?

Because for product development, the time from starting a project until scalable revenue is very long. Granted, even the sales part can sometimes takes months, even years. But the engineer's work starts much before the sales work begins.

Engineers who want a bigger piece of the eventual profits start companies.

How do you know which engineer(s) are responsible? Maybe Alice and Bob both worked on the product but Bob spent all day on HN and Alice did all the work. And what about Charlie who joined after feature completion but fixed a couple of major bugs and closed a security hole that would have bankrupted the company had it been left open?

It's just unwieldy compared to the salespeople case.

It's just as complex with salespeople. What about Alice and Bob visiting the customer together for two presentations and then Bob closes the deal on the third presentation he does alone. What if Alice lives in Kansas and meets Charlie the Customer in Europe on vacation, should the European sales guy Marco get a piece of the action?

My ex-girlfriend worked on sales optimization and this isn't how it worked at all, at least at her clients'.

Each geographical area had one salesperson and all sales in that area were attributed to that salesperson. It was very easy to calculate commissions.

imho this is not the key point. it is just so much easier to measure their performance. without good engineering a sales rep can't sell anything for long...

The key point is that this is nothing specific about health care nor that it's somehow broken/rotten.

And sales is usually more important unless it's a highly technical situation. There are plenty of terribly engineered but extremely popular products. The important part of staying in business is getting people to buy it.

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