Rising Son

Buying My Grandfather's House

Last October, when my father last came down to visit me, he asked if I wanted to buy my grandfather's house.

My grandfather died in 1986.

He lived in a two-bedroom house in downtown Renton, WA, on Williams Ave, just a block up from the Whistle Stop Tavern. He moved into that house around 1969, just after my grandmother divorced him. As far as I was concerned, that was HIS house, because that's the only house I remember him living in.

Even though I never lived in Washington, I did visit him many times. Everytime I visited him he had fudgsicles to offer me. His house was always a mess because that's what happens when guys live by themselves. His only companion was his father (my great-grandfather), who happened to live right next door. The two of them would spend their afternoons hanging out, smoking and driking screwdrivers.

My grandfather's house is a craftsman style home built in the 1900's. It's got a full-sized basement, it has a "casita" in the backyard, and a greenhouse for growing vegetables.

When my grandfather died, my father inherited it. He fixed it up, and rented it out. He's had the same renters since day one. These renters have government assistance (I think it's called Section 8), where the federal government guarantees the rent as long as my father keeps the rent low. He says these renters take very good care of the house. He actually hires them to do basic maintenance, deducting the cost from the rent.

If I buy the house from him, I'd inherit these renters.

The reason why he wants to sell the house is because he plans to retire this April. He currently has a mortgage on his own house. So when he retires, he's going to lose some significant income, and hence, wants to sell his father's house so that he can pay the mortgage on his own house.

Frankly, I'm not sure I can afford it. Actually, I probably could afford it, but I'd really be stretching things thin. I don't want to see my grandfather's home fall into the hands of someone who wants to tear it down and build something else. I don't want to see these renters get kicked out either; these are very honest and responsible people.

But if I do this, it has to be a wise investment. I don't see myself living in my grandfather's house, at least not in the forseeable future. But I do think that area of Renton is already highly valuable. That downtown area has undergone a lot of renovations, and it's now a great place to shop and take a stroll. Since my father inherited it, its value has increased five-fold.

As far as the rent goes, these renters won't be earning me enough to offset my mortgage payments. In fact, in most cases, rental properties never do. A profit is only made when the owner sells the property.

So here's the conflict...

If I'm buying this house for sentimental reasons, why would I ever want to sell it? That is, I'd purchase something that would actually cost me money each month, and even though the property is appreciating, I'd never sell it. It would just keep burning a hole in my pocket.

That's the problem when emotions and sensibility don't agree.

Labels: Father, Grandparents, Real Estate

Posted: Monday, February 26, 2007
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My Career in Healthcare, and Fair Isaac the Giant

It seems like my family has been associated with the health care field.

My father's mother was a registered nurse. In her last position she was the Chief Nurse at a convalescent hospital in Washington.

My father spent 20 years in the Navy as a hospital corpsman. And then he spent another 25 years working in health insurance companies and local hospitals doing everything from claims handling to patient services.

I also spent 16 years in various positions within the health care industry, but in the area of finance.

I got my start in 1987, when mom helped me get a job at Healthcare Medical Center of Tustin, in Tustin, CA. She was working there cleaning rooms. She knew the Director of Business Services, and got him to hire me as a File Clerk. I routed mail, pulled charts, filed charts, and lots of other odd stuff.

Then I got promoted to a biller-collector, where I called health insurance companies and barked at them as loud as I could in hopes they'd expedite payment to us. I also set up payment plans for cash-patients, and managed their Medicare & Medicaid accounts.

I did this again at another hospital in Stanton, CA, called Midwood Community Hospital. About 8 months later, they converted into a psychiatric hospital. Psych accounts are probably the toughest to bill and collect. First because psychiatric care is not covered under the normal "Major Medical" coverage of health insurance. Rather, they're paid through a separate policy that attaches to Major Medical, and these policies are capped at very small amounts of like $50,000 lifetime.

And by the time a patient is admitted into a psychiatric hospital, the admitted psychiatrist has already used up half of that cap in doctor's visits.

And because these patients are psychologically deranged, they usually don't pay their bills.

And just about all psych patients stay in the hospital for several months at a time, and rack up monster bills costing $100K to $150K. And this was 15 years ago!

Anyways, after that I did some billing and collections work for various clinics and medical groups. Finally, I got laid off, and got a job doing medical bill review.

Medical bill review was quite fun, particular after having worked as a medical biller. Basically, a medical bill reviewer looks over the bills that get submitted to insurance companies. The insurance companies usually hire an outside review agency, like the one I was working for. We'd review each bill to identify excessive charges, unwaranted charges, miscoded charges, duplicate charges, and try to find other reasons why the insurance company shouldn't have to pay the charges.

I did that for about 2 years, and then I went into research and development.

CompReview was a company that built and designed claims ajudication software. The software specifically did medical bill review, but also performed utilization review (which is looking for services that doctors should not have performed). And it also provided electronic data reporting capabilities that interfaced with State agencies.

My job was to research all the state and federal laws and regulations pertaining to claims adjudication, medical bill review, utilization review, medical data reporting, and then write up implementation specs to our software programming team.

We basically designed artificial intelligence that was able to scan electronically submitted health care claims, and identify excessive charges, unnecessary charges, miscoded charges, duplicate charges, and all that other stuff, and then send the insurance company an electronic claims analysis, telling the adjuster how much to pay.

It was tons of reading, writing, and tracking of legistlative changes. I subscribed to probably a hundred different insurance-related journals, bulletins, and newsletters, as well as state registers and the Federal Register. I maintained a library (we had an actual room the size of a living room) filled with every book imaginable on the subject.

I joined national organizations on medical coding, EDI, utilization review, and any other group I felt was necessary to keep us in the loop on current industry trends.

It was a lot of work.

CompReview was bought out by HNC Software, in 1999. HNC developed "neural networking" software. This was scientific stuff that mimicked the thought processes of the brain. By analyzing millions of records of historical data, it could actually predict what would happen. The Pentagon actually used this software to help its guided missile systems learn from its mistakes!

HNC also developed credit card application software. Every time someone applied for a credit card, or any kind of loan, the software could predict your risk. This was actually HNC's flagship product.

Well, I ended up quitting HNC in 2001, and went to work for competitor company, Innovent Technology, which also produced similar automated claims adjudication software. I basically did the same thing there.

By the way, Fair Isaac Corporation bought out HNC Software in 2001, or 2002 I believe. Fair Isaac is the company that invented the FICO Score.

If you think about it, Fair Isaac now owns the claims adjudication system that I helped design. This system has contained in it, about several billion health care claims spanning back to the past 15 years. That's a lot of people, and a lot of health care history.

Then consider that Fair Isaac also own the credit card application software that also contains billions of credit card applications (the software is used all around the world).

This means that Fair Isaac can link the Social Security numbers found on the health care claims to the Social Security numbers found on the credit card apps, and build a pretty impressive profile on just about anyone in this country.