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Journal of Plastic, Reconstructive & Aesthetic Surgery (2013) 66, 881e882
LETTER FROM AMERICA
Economic models for evaluating plastic surgeryideas
The Miami Society of Plastic Surgeons has dinner meetingsalmost every other month. Our meetings have two types ofspeakers d visiting professors, sponsored by different na-tional societies, and commercial speakers, sponsored bydrug and device manufacturers.
Growth model
Recently, I attended a dinner at which our commercialspeaker was declaiming the virtues of a product that hadbeen approved by the US Food and Drug Administration in2012. His second slide listed his financial disclosures. Sittingin the back of the room, I could only see two columns oftext, each containing at least twenty rows. I rememberthat, over the past decade, this speaker had praised thepossibilities of a host of drugs, devices, lotions, notions andpotions. His underlying theme, no matter what he wasdiscussing, was that product was “the latest”, “the great-est” or “the safest”.
A few years ago, he showed a graph that plotted potentiallaser procedures over time. I realized that if the graph hadrepresented a commodity rather than a procedure, then itwould have described the projected value of any speculativeasset before it reversed course. In other words, a similargraph could have been drawn to describe the Dutch tulipscraze and South Sea Bubble in centuries past or the dotcomcraze and Florida real estate bubbles of recent history.
An epiphany about things
I realized that there were different ways to appraise thepotential value of things, which frequently concern prod-ucts and procedures that are pitched to us or in which wechoose to invest that most precious form of capital d time.Recently, I wrote about how plastic surgeons could benefitfrom applying medical models to predicting our outcomes.1
Now, we should travel farther afield and use an economicmodel. I had an epiphany. Our recent speaker was using the
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growth stock model, speculating about the future. Incontrast to the growth model, there is another model thatis unfamiliar to most plastic surgeons d the value model.
Oil discovered in hell
A Texas oil prospector goes to heaven and meets St.Peter at the pearly gates. The latter asks him what hedid during his lifetime. The Texan tells him, “Oildiscovery.”St. Peter says, “You are eligible for heavenly residence,but right now the area reserved for oilmen is full, so youwill have to wait in purgatory until we finish newconstruction.”The Texan asks, “Can I say a few words to my buddiesbefore I leave?” St. Peter responds, “Alright, but don’ttake too much time”.The Texan walks over to the oilmen area, cups his handsandbellowsat the topofhis lungs, “Oil discovered inhell!”A subsonic vibration begins that rises to a dull roar.Suddenly a stampede of oilmen develops who are exitingthe pearly gates heading for the nether regions. When itis over, St. Peter picks himself up, dusts himself off, andsays, “There is plenty of room now, go right in and makeyourself comfortable”’The Texan responded, “No, thanks, on second thought, Ithink I’ll go along with the boys. There might be sometruth to that rumor.”
Value and safety
This story told shortly after World War II years ago dem-onstrates the foibles of human behavior and our ability todelude others and even ourselves. It was first told byBenjamin Graham and was recounted by his most famousstudent at Columbia Business School, Warren Buffett.2
Grahamwas born in London in 1894, but when hewas one-year old, he immigrated to New York with his family. After
tiveandAestheticSurgeons.PublishedbyElsevierLtd.All rightsreserved.
882 Letter from America
graduating from Columbia College in 1914, he went to workon Wall Street. Graham pioneered the field of securityanalysis.3 Indeed, “SecurityAnalysis”was the title of his 1934book. He introduced the concept of “value investing” whichmeans recognizing thehiddenworth of an asset that has beendiscarded, demeaned or debased by the market. Graham’sconcept was that it was a sound practice to purchase a stockthat had fallen out of favor or that no longerwas au courant ifit passed certain analytical tests that he had devised.
Security analysis, as described by Graham, consisted oflooking at the balance sheet of the business underlying thestock and comparing the business’ cash flow over a periodwith the dividends from the safest investment available dthe US Treasury bond. Graham also applied what he called a“margin of safety” in his calculations, since security anal-ysis was at best imprecise.
Graham’s principles of security analysis and his conceptof the “margin of safety” are useful in the practice ofplastic surgery. Rather than follow the herd and invest timein the latest fad, one should reflect upon what has fallenout of fashion and why. Some things that have fallen did sodeservedly because they were no more than a passing fad.Others fell because they lacked the cachet of the newestthing and because some individuals need to invest in thenewest thing, to catch the next wave, or to board the trainbefore it leaves the station.
Lessons learned from disasters
How does one analyze value in plastic surgery? How doesone distinguish between something that did or did notdeserve to fall from favor? After the stock market crash of1929, Graham perfected his ideas on security analysis.Similarly, after six months of surgical disasters whentreating military injuries, Gillies formulated his principlesof plastic surgery.4,5
Anything plastic surgical should be rigorously analyzedwith Gillies’ principles. Do the principles support it or not?If the answer is yes, then the out of favor thing has meritand if the answer is no, then the thing deserves to die.
Daily, we plastic surgeons meld Gillies’ and Graham’sprinciples. We take tissue that we have measured to haveless value and transplant it to areas where it has greatervalue. In esthetic surgery, our measurements are solely onan esthetic scale. In reconstructive surgery, our measure-ments should include both functional and esthetic scales.
We have seen how critical analysis is vital for main-taining the integrity of plastic surgery. We have seen how asystematic approach to such an analysis is accomplished by
melding the principles propounded by original thinkers fromtwo disparate areas of knowledge e finance and plasticsurgery. Ironically, the best advise on the importance of notrepeatedly accepting things at face value may have comefrom a former American president, not known for hiseloquence, George W. Bush, who said, “Fool me once,shame on you. Fool me d you can’t get fooled again.”6
Financial disclosure
None.
Competing interests
None.
References
1. Freshwater MF. A medical model for predicting plastic surgicaloutcomes. J Plast Reconstr Aesthet Surg 2012;65:1757e8.
2. BuffettWE.Chairman’s letter. BerkshireHathaway, http://www.berkshirehathaway.com/letters/1985.html; 1985 [accessed 08.02.13].
3. Zweig J. Benjamin Graham (1894e1976) Financial strategist.C250 celebrates your Columbians. http://c250.columbia.edu/c250_celebrates/your_columbians/benjamin_graham.html[accessed 08.02.13].
4. Freshwater MF. A critical comparison of Davis’ Principles ofPlastic Surgery with Gillies’ Plastic Surgery of the Face. J PlastReconstr Aesthet Surg 2011;64:17 [Epub 2010 30 Mar].
5. Freshwater MF. Principles and purpose of plastic surgery d pastandpresent. In:KrizekTJ,HoopesJE,editors. Symposiumonbasicscience in plastic surgery. St. Louis: C.V. Mosby; 1976. p. 3e13.
6. Bush GW. Remarks by the president on teaching American his-tory and civic education. Nashville, Tennessee: East LiteratureMagnet School, http://georgewbush-whitehouse.archives.gov/news/releases/2002/09/print/20020917-7.html; September 17,2002 [accessed 08.02.13].
M. Felix Freshwater, MDVoluntary Professor of Surgery University of Miami
School of Medicine 9155 S Dadeland Blvd.,Suite 1404 Miami FL 33156-2739 USA
Tel.: þ1 305 670 9988; fax: þ1 305 860 0006.E-mail addresses: [email protected],
11 February 2013
