The war in Ukraine has entered what could be an even worse phase, primarily because Putin cannot afford to admit what has turned out to be a monumental mistake.

Russian rulers that screw up this bad sometimes end up dead – and not by suicide. Most recently Stalin thought he was about to be shot when the Germans invaded in 1941; Czar Nicholas II and his entire family were slaughtered during World War I.

And that, dear reader, is why Russia is “regrouping and resupplying” in preparation for a much-more-limited battle to take and hold territory in eastern Ukraine near the Russian border.

That is NOT to say this will be less intense or awful than what’s already happened – in fact the opposite appears likely. Putin has appointed a leader for his war on Ukraine – a general who oversaw the genocide in Syria, mass destruction of entire cities, towns and villages, and use of chemical and incendiary weapons against civilians.

No, this is going to be worse than we could imagine.

As far as “regrouping” goes, there’s a lot more to this than just getting a couple nights sleep, a hot shower, and some more gas and bullets. The Russians have two basic problems:

1. not enough soldiers and
2. a really bad supply situation.

Soldiers

There’s pretty credible data indicating the Russians suffered about 50,000 to 60,000 casualties so far – in six weeks of fighting. We don’t know precisely how many were killed, wounded, or taken prisoner, but that is a really high casualty count, so high that it renders a lot of the Battalion Tactical Groups that invaded “combat ineffective”.

Other evidence indicates Russia is trying to solve this by:

1. calling up more recruits;
2. using mercenaries (e.g. the Wagner group);
3. stripping troops from other areas; and
4. asking their allies to send fighters (Syria, Chechnya etc).

That’s not going to make much of a difference; recruits need a lot of training or they’ll just get in the way and do stupid stuff that results in them and others getting lost, hurt, in accidents, or killed.

There aren’t enough mercenaries or “volunteers” to make much of an impact.

Soldiers need a LOT of training to become effective, and mixing together units with diverse abilities requires a LOT of careful planning and oversight, two things in which the Russians have been notably lacking.

Supplies

see here.

Strategy

Russia relies on Battalion Tactical Groups, which for non-nerds is a name for a unit that includes tanks, infantry, and artillery – along with support elements (medical, logistics/transport etc). Without getting too deep in the weeds, BTGs have a ton of firepower but relatively few infantry. That’s fine when you are moving fast, but is very much NOT fine when you are stuck on roads and need infantry to protect your vehicles from enemy infantry.

Now that most of the BTGs that invaded are in pretty rough shape, Russia will have to mush together units that haven’t worked, trained, or operated together. This will be a big problem.

The other probably bigger problem is BTGs are NOT what you want to use in urban setting – all those vehicles are sitting ducks, and the lack of infantry makes them even more vulnerable. Since Russia appears committed to destroying cities, this leaves them with one option.

Sit back and level cities with rockets, bombs, and artillery.

Devastation in Kharkiv

This is why things are going to get awful fast.

What does this mean?

There will be a global food shortage that will likely lead to famine in Africa. 

Thanks to the friends, colleagues, and to-be-friends who’ve asked if I have time to meet at RIMS.

I gave up attending the massive P&C event years ago; it was yet another conference among several that were more useful, interesting and focused on work comp.

RIMS is more or a P&C generalist event, covering everything from cyber to terrorism (back when terrorists didn’t invade the Capitol) to marine and D&O – sure there’s a bit of comp but those sessions were pretty thin.

Instead, I find CWCI, WCRI, and NCCI far more productive – but that’s just me.

Also heading back from the Bay Area where I watched my beloved Syracuse University men’s rowing team take on the best crews on the west coast. Here’s our varsity 8 leading last year’s national champion U Washington halfway through the  course…UW won by a second…kudos to the Huskies.

Enjoy San Fran – a terrific and wonderful city.

 

Again my fascination with the minutiae that brings defeat or victory causes me to diverge from managed care stuff to dive into what’s happening in Ukraine, why, and guess what the end result will be.

(Here’s my first post which dives into the why crappy vehicle maintenance and mud season are really helping Ukraine)

The damage Russia is doing to Ukraine and the Ukrainian people is immeasurable.  Yet it pales in comparison to what it is doing to itself, its future, its world standing, its economy . And it will get worse, because

Ukraine is still winning (or perhaps more accurately Russia is not, which is the same as Russia losing), and

The western world is unified as it has never been.

First, the no-fly zone. Unfortunately this is a no-go because:

• Russian planes are not doing nearly as much damage as artillery and rockets – which CANNOT be stopped by a no-fly zone.
• Implementing a no-fly zone would require NATO countries’ airplanes to:
  • bomb Russian ground radar and anti-aircraft assets – some of which are INSIDE RUSSIA
  • shoot down Russian air assets (planes and helicopters)
  • shoot ordnance (missiles, rockets, shells) that might cross the border into Russia)
• Direct confrontation of Russian assets by NATO forces would support Putin’s claims that it’s Russia vs NATO and the west, thereby:
  • solidifying his position in Russia and
  • making the use of nuclear/biological/chemical more defensible  – at least in Putin’s mind and others in Russia.

Also, we (NATO, that is) are about to send some very capable ground-to-air missile systems to Ukraine, systems which Ukrainian soldiers are likely familiar with and will need little additional training on. Some of these systems have the ability to shoot down cruise missiles as well as planes and helicopters.

the contrail is from a Ukrainian rocket about to hit a Russian attack helicopter.

and here’s the helicopter as it hits the ground.

Second, “we should be doing more to help the Ukrainians” Well, like what?

Anti-tank rockets? Drones? Medical supplies? Anti-aircraft missiles?

check, check, check and check.

I’m also guessing our intelligence services are helping a LOT by sending data on Russian military movements to Ukrainian forces, data that those forces use to target precision munitions, identify potential threats, and better understand the tactical situation. Of course you’ll never hear about this.

[note more than two dozen (!) Republican Senators voted against legislation providing $13.6 billion in additional aid to Ukraine, then blasted the Biden Administration for “not doing more” to  help the Ukrainians.]

Okay, here’s what I’ve learned from untold hours of reading twitter feeds from some very well-informed and knowledgeable posters…

Logistics

Russia is having logistical problems – for we civilians, that means their supply chain is in very bad shape. If we don’t get our drill bits, Etsy order, or several pair of shoes to try on, that’s a tragedy.

If an invading army runs out of artillery shells, food, medicine, rockets, medical supplies, and most importantly – fuel – it’s much worse. Hard to fight a war if your:

• soldiers are hungry,
• you can’t patch up your wounded, and
• your tanks, trucks, command vehicles, and mobile artillery run out of fuel.

Which appears to be happening.

Couple issues here –

1. the Russians can’t get the stuff they have on hand to the troops that need it because those Ukrainians who were supposed to welcome them with open arms didn’t get the memo. And,
2. Putin and his generals evidently didn’t stock up on everything a modern army needs because they assumed (1.) above was reality.

There are reports that Putin has been asking China for food, artillery shells, medical kits, and probably everything else. (That’s why President Biden told Premier Xi Jinyang – in no uncertain words – to NOT send military goods to Russia)

Okay, back to 1…

Fuel. 

Its mud season, and melt season, which means many roads are impassable which forces vehicles to go cross country – which means crossing streams/rivers. Armies have specialty vehicles intended to do this, but…

As we discussed a while back, vehicles require roads, which are narrow, can be mined, and offer lots of opportunities for the Ukrainians armed with man-portable rockets to blow them up.

The classic tactic is to destroy the front and rear vehicles, trapping the rest in the middle. Drivers then have a Hobbesian choice-  stay on the road and risk getting blown up by rockets or head off road where they risk getting blown up AND/OR stuck in the mud.

Which seems to be happening.

2. Those fancy hypersonic rockets Putin is using? he doesn’t have that many. And they cost about $100 million EACH. Using them now – against a nation that should have surrendered weeks ago, may be an indicator of desperation.

He’s actually been forced to use anti-ship rockets against land-based targets. Which implies he’s running out of regular rockets. And artillery shells. and lots of other stuff.

Here’s the worst part – Russian casualties – killed, wounded, missing, taken prisoner – are staggeringly high. 

Typically, for every killed-in-action (KIA) there are three wounded (WIA). If this holds here, we’re talking over 50,000 additional casualties.

This is stunning.

By way of comparison, in 9 years in Afghanistan – a brutal war indeed – the Soviets lost 9500 KIA.

So in less than a month the Russians may have almost twice as many KIA than in 9 years in Afghanistan.

“Worst” because many of those soldiers were conscripts with little education, poorly fed and trained, unaware of where they were going and why, but told they would be welcomed with open arms.

Where do we go from here?

1. Will Putin use WMD (weapons of mass destruction)?
   I don’t know – and no one else does either. But I’d say it is likely he does something horrific, because he’s Putin and will likely be shot if Russia fails in Ukraine.
   Chemical is the likeliest as he will try to blame it on Ukrainians blowing up an ammonia or chlorine storage facility.
   Due to massive corruption in Russia it is highly unlikely Russian troops have protective gear. That implies Putin will use chemicals on civilians and do so far from his own troops. Then again, he does not care if his guys get slaughtered and could blame that on Ukraine.
2. Stalemate
   Russia is making some progress in the south, and appears to be stalled in the north and west – if not losing ground.
   It is nearing bankruptcy, has lost massive amounts of equipment, and cannot get critical components to replace that equipment and has suffered more than 50,000 casualties.
   Ukraine’s morale is high, its civil and professional forces are performing incredibly well, supplies are coming and its people are unified yet it has a much smaller air force, is fighting an enemy that does not care who or what it kills.

Where does this end up?

No one knows.

What does this mean?

Support Ukraine. 

Please consider a contribution to Care. Care is a very reputable and highly effective NGO with a rich history of successfully mitigating disasters and helping people. They are doing great work in Ukraine.

Screenshot your contribution and put it in comments. I’ll post it – and my ever-lasting thanks.

As the son of two parents in the CIA who grew up on military bases all over the world, I’ve had a special fascination with the minutiae…the (seemingly) minor and (seemingly) random things that cascade into defeat or victory.

After hours in the TwitterSphere, here’s my totally amateur take on why the Russians are losing despite an overwhelming advantage in military technology and hardware and personnel and the West’s absolutely correct decision to NOT intervene militarily.

stick with me here…the journey is worth it.

You’ve seen lots of photos and video of that gigantic convoy sitting on the road north of Kyiv…one that will ensure the total destruction of the capital and pretty much everyone in it.

Except that column hasn’t moved in three days. Two reasons…tires and rasputitsa.

Tires.

If you don’t keep tires inflated, move vehicles around, and minimize exposure to sunlight, they rot.

If tires fail, what was a HUGE asset – mobility, and a logistics train (supplies of fuel, food, water, ammunition, medical supplies, spare parts) – becomes a HUGE liability…modern armies consume gigantic quantities of everything, and when that runs out, they stop moving, shooting, and surviving.

A military tire expert(!) posted this…

If that column had been able to move quickly, Kyiv and Ukraine would be flying the Russian flag…sure the Ukrainians have done everything humanly possible to slow/stop it, but AK-47s and molotov cocktails are no match for masses of T-90s.

Okay, but it’s just tires, you say?

Rasputitsa

Rasputitsa is the Russian word for mud, which in the steppe country is bottomless. The incredibly fertile and deep soils of eastern Ukraines turn to mud when the spring thaw hits.  Reports indicate Putin bowed to China’s demand that Russia not invade Ukraine until after the Olympics…after the weather had turned just a bit warmer.

The Ukrainian defense, coupled with lousy Russian vehicle maintenance, likely caused breakdowns at the head of the column. So, the Russians had to get off the road to make any progress.

But…

Tires that work really well on roads have to be de-pressurized to get through mud, and when you lower the pressure, sidewalls flex, crack, and fail, and gazillion-rouble mobile air-defense vehicles, troop carriers, and fuel trucks get stuck.

Which allows very mobile, incredibly brave, and highly motivated Ukrainians to either fix and then use them to fight Russians or destroy them.

So, the rest of the convoy is stuck on the roads, where it runs out of fuel, food, water, and esprit de corps.

 

Well…Russia’s still got a huge and deadly air force…right?

Good question.

If the Russians didn’t take care of tires, what else did they ignore? Modern military equipment is incredibly maintenance-intensive. US fighter jets need more than 30 hours of maintenance per flight hour. 

The Russian air force has 4 times more planes than the Ukrainians, yet hasn’t achieved air dominance over Ukraine – a situation that has puzzled every “expert” pundit.

While I haven’t seen any current insights into Russian air force maintenance practices, there have been a LOT of problems of late, problems due to crappy maintenance, inexperienced crews, and a lack of training.

Net is, there’s a lot more to fighting and winning than lots of troops and fancy equipment.

Back story

There’s a LOT more to this, as in why the Russian military is so poorly maintained, trained and led (hint – Putin’s buddies are oligarchs that get huge contracts to provide tires to the military, contracts they fill by using cheap, crappy Chinese knock-offs so they can spend the rest on superyachts and apartments in London).

What does this mean?

Support Ukraine. 

Please consider a contribution to Care. Care is a very reputable and highly effective NGO with a rich history of successfully mitigating disasters and helping people.

Screenshot your contribution and put it in comments. I’ll post it – and my ever-lasting thanks.

Equity markets are getting hammered, the bond market is up substantially, and energy prices and assets are zooming.

Those are the immediate effects of Russia’s invasion of Ukraine.

What will happen now is anyone’s guess, but here’s how I see it.

• Putin is all in.  Attacks are hitting cities hundreds of miles from the Donbass and eastern Ukraine, signifying Putin’s intent to take over the entire country.
• The western countries – Europe and North America, as well as some Asian nations will rally around severe penalties for Russia – blocking access to the SWIFT system, banning trade in Russian debt and equities, and instituting a broad ban on exports to Russia.
• This isn’t going to end anytime soon.
• Ukraine will be very hard-pressed to hold off Russian forces; the Ukrainian military is much smaller, has fewer armored vehicles and airplanes, and isn’t positioned well to fend off attacks from the north and southwest.
• China is a bit of a wild card; it
  • consumes a lot of Russian foodstuffs, gas and oil,
  • sees Russian aggression as a not-very-big-deal,
  • likes the strategic problems the invasion creates for the West (China could move aggressively on Taiwan), but
  • knows Russia’s financial situation is going to deteriorate quickly,
  • has tens of billions invested in Russia, and
  • understands that Putin is playing with a fairly weak hand.

So, I’d expect:

• energy prices will jump – a lot
• interest rates will increase;
• equity values will drop;
• investment activity will halt while investors try to figure out what the future holds.

On the scarier side, expect Russia to launch cyber attacks in retaliation for Western sanctions, attacks that will very likely target financial institutions, infrastructure and commercial entities.

What does this mean for you?

Uncertainty breeds stasis…until we see where this is headed, expect interest rates to rise which will increase the cost of debt and reduce private equity investment.

Science denial – or perhaps a total absence of common sense – is nothing new – if anything it has gotten more pervasive of late.

Here are a few examples of willful ignorance guaranteed to make you smack your head (I hope…)

This from Scott Galloway…

I

Here’s the map they use…

Belief in Evolution

Belief in creationism

This is NOT a Right vs left, Liberal or Conservative issue.

an almost-comprehensive view of the many, many examples of nonsense…

What does this mean for you?

Apologies for lack of posts this week; this was the annual father-son hunting trip, and work is strictly banned.

Here’s what happened this week…

News hit the wire that Enlyte (aka Mitchell Genex Coventry) is for sale. Owner Stone Point Capital (deep experience in workers’ comp) is reportedly “exploring a sale” of the company which is generating about $450 million in earnings (I’d be a bit careful about that figure as sellers almost always include stuff in “earnings” that doesn’t usually “count” as such.)

There aren’t too many potential buyers for a deal this big as we’re talking a “multi-billion dollar” deal.

HomeCareConnect was bought by Paradigm – more on this later, but my initial take is this is a smart move by the big cat case management company as it brings a well-regarded DME and home health provider into the fold, allowing Paradigm to capture all that revenue and margin on their financials.

Research –

The fine folk at WCRI have just released a very helpful report on the use and reimbursement of telemedicine in work comp.  The report is free to members; non-members get their copy for a nominal fee.

From WCRI; the report addresses:

evaluation and management and physical medicine services. It investigates the patterns of telemedicine utilization among these services in workers’ compensation during the early months of the pandemic (primarily March–June 2020) across 28 states. It also examines the actual prices paid for the most frequent services delivered via telemedicine versus in person across the study states.

NCCI researchers collaborating with various other agencies published a summary report on the impact of COVID on workers comp. Download a copy at the link…

Key takeaways include:

• Covid claims are cheap – as in a LOT less costly than non-COVID claims
• There’s a “new” claim category – “Indemnity only” that accounted for a plurality of claims.

Interestingly,  more and more insurers have stopped waiving member payments for COVID treatment.

Oh, and costs varied a LOT across states – $49k for non-complex hospitalizations in Maryland vs $129k in New Jersey. That’s likely largely due to Maryland’s very smart hospital charge regulation policies.

from FairHealth

The median length of complex hospitalization declined from a peak of 13 days in April 2020 to 7 days in July of this year…which is likely a big contributor to lower treatment costs.

What does this mean for you?

The investment community’s fascination with workers’ comp will be put to the test.

If you get COVID, you’re gonna pay a lot for your care – if you go into the hospital. 

The many, many good friends I’ve made over 30+ years in this business…people I would not have met if I hadn’t somehow stumbled into and stayed/got stuck here.

The passion many have to do the right thing and the privilege it has been and is to work with companies and organizations with that central objective.

Readers who challenge, confront, correct, applaud, cheer, and debate and have been doing so for 17 (!) years.

The mistakes I’ve made over the last few decades, for what they have taught me about hubris, assumptions, lack of diligence, and the power of experience.

My family – Deb, the most positive, joyful person on the planet who’s somehow tolerated me for 34 years; Erin who’s become an amazing mom, fierce advocate for her patients, and incredibly strong person; Molly whose intensity in competition is matched only by her love for and dedication to family; and Cal who has persevered in the face of overwhelming difficulties, always pushing through and never giving in.

A lot about our world is less than great these days, so it’s more important than ever to keep the good front and center.

Be well.