CEOs Weigh in on Employment in 2010
Posted on | December 10, 2009 | No Comments
More of America’s largest companies will reduce their staff as compared to hiring in the next six months, according to the latest survey of their CEOs from the Associated Press.
“Nineteen percent of the CEOs expect to expand their work forces, while 31 percent predict a decrease in the next six months, according to a quarterly survey from the Business Roundtable released Tuesday. That’s slightly better than the 13 percent who expected increased hiring three months earlier. At that time, 40 percent forecast cuts.”
“The CEOs also expect the overall U.S. economy to grow by 1.9 percent in 2010. That would mark a slowdown from the 2.8 percent pace in the third quarter of 2009. Last quarter’s growth followed a record four straight quarterly declines and was the strongest signal that a recovery from the recession had started.”
Economists say employment at large firms is likely to remain flat through much of 2010, since many companies already made targets. The largest group of CEOs (50 percent) expect employment to remain unchanged in the next six months. Unless there is a big change in operating structure, most large companies are holding to their current staff.
Small business may be the only hope for those job seekers in 2010.
Among Obama’s incentives for small business to hire are: a proposed new tax cut for small businesses that hire in 2010; an elimination for one year of the capital gains tax on profits from small-business investments; and an elimination of loan fees to small businesses, combined with federal guarantees of those loans through the end of next year.
TARP Funds for Small Business
Posted on | November 18, 2009 | No Comments
“As the financial system has stabilized, banks have repaid the government more than $70 billion,” said Treasury Secretary Tim Geithner. “We have earned more than $12 billion from those investments. And we are now in the process of winding down and terminating some of the extraordinary government programs put in place last fall.”
Although SBA weekly loan volume is up more than 75 percent since the beginning of this year, small businesses are still facing a challenging credit environment. Sen. Sherrod Brown, D-Ohio says, “If we can find ways to inject TARP money into community banks, this can really matter for producing the kind of jobs that will get our economy back on track”.
It is important for small business owners to remain optimistic, but not overly so. Educate yourself about government programs and funds available that could help your business ride out this economy.
Health Reform’s Impact on Small Business
Posted on | November 6, 2009 | No Comments
On Nov. 3rd, 130 small business owners from around the nation met with lawmakers to address the impact of health insurance costs. “Senator Tom Harkin, the Iowa Democrat who heads the Health, Education, Labor and Pensions Committee, held a hearing on rising health insurance costs for small companies” (NY Times).
The reform bill, which is said to cost $894 billion over 10 years, includes a government-run health insurance option alongside private plans,. It would expand Medicaid eligibility and caps annual out-of-pocket spending. If the reforom is passed, small business owners with payroll less than $500,000 a year would not be required to provide health insurance to their employees.
Small businesses provide the majorty of jobs in the U.S. These businesses are having to hire part time workers as the cost of offering health insurance to their employees is too high. In general small business owners agree that reform would alleviate their health insurance costs.
Unicare to leave Illinois & Texas Markets
Posted on | October 29, 2009 | No Comments
According to a Crain’s Bussines article, “Unicare Inc. plans to pull out of Illinois’ health insurance market by year end, potentially creating an influx of new customers for Blue Cross & Blue Shield of Illinois Inc”. Unicare is the 6th largest health insurer by number of enrollees, in Chicago. Unicare is also leaving the Texas market.
“Unicare said in a written statement that all of its 180,000 Illinois members will be guaranteed coverage if they sign up with Chicago-based Health Care Service Corp., Blue Cross’ corporate parent. The replacement coverage will offer similar benefits and rates in most cases. Unicare will continue to serve Illinois customers enrolled in stand-alone products, such as dental, vision and disability plans, and Medicare-related products, a spokesman said.”
For those small businesses who are currently covered under Unicare, the company has stated it is still financially sound and will pay claims for which it is liable. Blue Cross Blue Shield is one option, but it is important especially during this time for small businesses to make themselves familiar with all available options. There are traditional and non-traditional markets that many businesses and even brokers are unaware of; our business clients have been able to save several thousands of dollars by being exposed to and transitioning to programs that a few weeks ago, they never knew existed. If you are a small to medium sized business and are currently covered by Unicare, let Daviron show you all options including BCBS so you make the best decision for your company and employees.
How Much is Your Health Insurance Worth?
Posted on | October 22, 2009 | No Comments
What would happen if each of us is either mandated to purchase health insurance or pay a fine? Which would we choose? The responsible answer is that we would each purchase health insurance.
But, consider the healthy person who can’t afford health insurance and would rather pay the cheaper fine. In the bill the Senate Finance Committee approved on Oct. 13th there would be no fines for not purchasing mandated health insurance in the first year the mandate is in effect, which is expected as 2013. In 2014 this same individual will pay a $200 penalty, going as high as $750 in 2017, according to the bill. Can you blame this individual for choosing the non-responsible option and paying the fines as compared with an average annual yearly premium of $5,000 (figure provided by Businessweek)? Experts in Washington are trying to figure out how high the penalties should be to encourage responsibility and discourage individuals from selecting the attractive fine option.
Massachusetts requires its residents to purchase health insurance. According to Businessweek, In 2007, the first year of this mandate, the penalties were $219. After only two years, this fine has increased in $1,020. Although more people have purchased health insurance as a result of this mandate there are still many who try and scheme the system. Individuals are reported by the state as taking coverage for a few months to pay for expensive medical procedures and then dropping coverage. Obviously these individuals’ health care claims are significantly higher than the average cost of claims. This is a pressing issue favoring the implementation of higher mandates.
But, couldn’t having a penalty that is significantly higher cause financial hardships for many low income individuals? Although done with the best intentions how high is too high? What happens when individuals can’t afford even the penalty?
A Culture of Risk Management
Posted on | October 15, 2009 | No Comments
Having developed enterprise risk management frameworks for several fortune 500 companies, I noticed an overwhelming trend; large companies paid us anywhere from $50,000 to $300,000 to identify, prioritize, and assess risks and then implement strategies to mitigate the key risks. But all too often, what these companies paid for was a thick report which showed our findings but unfortunately sat on someone’s desk. One would think, after paying so much money, that the person who championed this risk management project would want to distribute summarized findings and start developing a culture of risk management throughout their organization. There are reasons why these reports have stayed buried under a pile of binders; in my experience the two main reasons cited have been that the project was a Board mandate or the organization’s culture was not compatible.
For small businesses, it is important to instill a culture of risk and safety management from the opening of your business. This will hold all employees accountable to certain standards and encourage this culture as your business grows. Other organizations will want to do business with your company, knowing the value you place on risk management and safety. Also, your organization will be better prepared to manage current risks and be able to identify future organic and external risks.
Too often companies fail to fully consider risk management in business and strategic planning. The result of this can be detrimental to your small business operations. I’m not talking about monte carlo or high tech scenario analyses. I’m talking about having knowledge of and understanding all operational, strategic, financial and external risks that can affect your business today and those that could impact your business tomorrow based on the direction of your company.
Small businesses have a significant advantage, in my perspective, for starting a culture of risk management and ensuring its presence in all aspects of operations and business decisions. It can sometimes get too cumbersome to implement this or take several years to do so in large organizations because it is hard to hold employees accountable for certain risk management activities not directly related to compensation.
So, how can the small business owner instill a risk management culture? The answer is different for every organization. It is not practical or even cost effective to mitigate all risks. What is practical is to know what risks exist that could both help and hinder your business and understand what you can live with as an organization if it did occur and what would shut your business down. Once you know this, you are the best person to decide what can and should be done in a realistic timeframe while utilizing effective and appropriate resources to mitigate the effects of a risk, whether it’s happening now or if it is potential risk.
Some generic risks exist for all small businesses. Some are more industry specific. General small business risks include: not having appropriate insurance coverage; not having appropriate documentation of policies and procedures; not fully understanding and assessing the impacts of a merger and whether it fits your business model; not taking appropriate care of your most valuable asset, your employees, by providing them excellent health and benefits coverage. The list goes on.
Bottom line, it pays to start thinking about risks early and ensuring that everyone in your organization is doing the same on a daily basis, whatever role they play in your company
Small Business Struggles to Pay for Increasing Employee Health Benefits Costs
Posted on | October 6, 2009 | No Comments
Two examples of what small business are doing in the wake of rising healthcare costs:
Boeggeman, George & Corde, a New York law firm pays full health insurance coverage for each of its 23 employees and their families. But, the partner does not know how long this will last. The firm’s insurer, Health Net gave the firm a 22% rate increase. To keep the policy affordable this year, the firm agreed to higher deductibles for doctors’ visits and prescriptions. Even with the concessions, the firm will pay about 9% more this year—close to $200,000. (Source: Quoted from BusinessWeek).
Not all firms are as generous and as such are asking their employees to share more in health insurance costs (Following example is quoted from Businessweek) :
About three years ago, Hoglund Transportation, a family-owned school bus operator in Monticello, Minn., switched from paying half the premium for comprehensive coverage to paying the full cost of a high-deductible plan offered by the same insurer, Medica. The cost to the company was about the same, leaving Hoglund paying over $44,000 annually for its six covered employees. But Medica quoted a 26% increase at the end of September, which would raise the premium to $55,800, according to Kari Kounkel, who runs the business her grandfather started in 1947.
Kounkel says she will discuss three options with her employees: Keep the current policy, but ask them to start paying part of the premium; increase the deductible from $5,000 to $9,000; or agree to a plan where employees would pay 20% of their medical costs even beyond the $5,000 deductible—which could cost someone with a catastrophic illness many thousands of additional dollars. She doesn’t like any of the choices. “I’ve just been appalled by this entire process for the past two years,” she says.
There are non-traditional options in the marketplace that companies are unaware of and even their brokers do not have access to. It is in the best interest of small businesses to not just blindly enter a renewal because there was either no time to shop for other options or their broker has been with them for several years. Many new products and programs are now available in the marketplace that allows small businesses to have more of a reserve rather than paying up front a significant amount to their insurance carrier.
Companies that we have worked with have been exposed to different options and other markets and have realized a significant savings.Some of the non-traditional programs may not be for every small business, but it does pay to explore and at least see if it could make sense for your business.
Cloud Computing Could Help Small Business
Posted on | October 1, 2009 | No Comments
If you don’t know what Cloud computing is, the youtube video gives you a great overview. According to businessweek, cloud computing could help small business owners. Cloud computing encompasses many areas of technology, including software as a service, a software distribution method pioneered by Salesforce.com about a decade ago. It also includes newer avenues such as hardware as a service, a way to order storage and server capacity on demand from Amazon and others. What all these cloud computing services have in common, though, is that they’re all delivered over the Internet, on demand, from massive data centers.
So far only an estimated 2% of businesses with fewer than 100 employees are using cloud computing, according to a May 2009 report by Forrester Research. “The most common way that small business is using this already is for Internet-based services,” says Frank Gillett, vice-president and principal analyst at Forrester. “It is at the level of [software] applications.” An additional 2% said they planned to implement cloud computing in the next 12 months, but 37% say they are interested in learning more about it.
Key reasons for adopting cloud computing into your small business are:
(Source: Alsbridge cloud computing survey 2009)
1) Demand for Flexibility in scaling IT services Up and Down
2) Ability to roll out new services rapidly without the time and cost associated with setting up physical infrastructure
3) The ability to reduce and manage costs
4) The benefit of reliability
5) The ability to prototype and experiment rapidly and at low cost
Although there are still uncertainties about cloud computing, in general those who support it seem certain that any kinks will gradually lessen or disappear giving rise to the new era of IT infrastructure that all companies will inevitably use.
For more on cloud computing follow the link below to read Ramesh Loganathan’s blog:
Cloud Computing… It Depends on Who You Ask
Quality of Care & Cost Containment: Doctors Central To Healthcare Reform
Posted on | September 27, 2009 | No Comments
With so much talk centered around improving care quality and cost containment, few people (including those who are attempting to fix our fragmented healthcare delivery system) understand who controls medical expenditures and quality.
Physicians, together with their patients, make most decisions regarding utilization of resources. Insurance companies, legislators, govenrment officials, or hospital administrators do not drive these two fundamental variables. This basically is the underpinning of our medical care expenditure and outcome.
Massachusetts, where the legislation took the bold step of a comprehensive, near universal healh isurance coverage, had to find ways or a method to contain rising costs. A special state commission on healthcare payment envisions the creation of new, undefined medical managment entities, that it calls accountable care organizations (ACOs), which would organize physicians into multispecialty teams with strong primary care staffing (Relman AS, 2009).
In an earlier blog, the concept of ACOs for bridging the quality chasm was outlined. There, we blogged about the need for the fragmented care delivery system to transform into an integrated model via a team care approach for reducing costs and improving quality.
Free market economies do well with a well orchestrated competitive landscape; in our healthcare reform process, both the existing private insurance option and the proposed public health insurance option would serve this purpose.
Under this scenario, the ACOs would be expected to take risk for their performance, while the private and public insurers would hold insurance risk for their contratual engagements with ACOs (which could be hospitals, health systems, or multispecialty group physician model contracting with hospitals).
Payments for services rendered for an episode of care or medical condition would follow a pre-determined formula (via comparative effectiveness research findings or based on a basket of cost index for such a condition or episode), with adjustments for severity and complexity of patient health status. Such a fixed reimbursement methodology for comprehensive services would reduce duplicity, redundancies, waste, errors, and abuse of the payment process.
Tracking and documenting facility and physician resource utilization and physician evaluation and managment (via an improved RVU, in the seamless, coordinated, multidisciplinary care delivery value chain) would effectively break the bundled payment into components for distribution along the value chain. This of course would be a contentious issue, and a consensus, for a formula, is required, which can be acceptable by all providers of service.
Reference:
Relman As. 2009. Doctors as the key to healthcare reform. N Engl J Med 361; 13: 1225-1227
Crossing the Chasm:Fragmentation to Integration
Posted on | September 21, 2009 | No Comments
Fragmented care delivery breeds poor performance and dysfuntion. Dismantling inertia requires courage, reslience, stakehoder’s buy-in and efficient framework for delivering high value care. New infrastructure should promote well defined accountability, for improving quality of care and controlling costs. It must also motivate and encourage healthcare professionals, clinical and non-clinical, to align themsleves into multidisciplinary, effectively coordinated, care delivery teams creating value for consumers and the healthcare organization.
To sustain long term operating viability and consistent quality of care, requires simultaneous realignment of the payment system, which rewards quality and efficiency and not quantity.
Even before a robust healthcare reform, legislative package has garnered enough support in the House or Senate, and with signs of things to come, CMS recently proposed a bundled payment of $128 for each dialysis session. Fee-for-service payments create incentives to provide high volume rather than high value care. This is an area of major duplicity, redundancy and escalation of costs without optimum outcomes. As such, bundled, episode-linked payment, with adjustments fo severity and complexity of patient’s condition and potentially avoidable complications/costs of each patient visit, would greatly enhance transformation of care delivery from fragmentation to accountability. This would create a new generation of accountable, specialty team coordinated care delivery organizations, providing and sustaining high quality care.
An evidence-linked case rate (ECR) would become a patient-based budget for a case episode. ECRs would include all covered services related to the care of a single condition. Such would include, but not limited to, hospital, physicians, laboratory, pharmacy, radiology, rehab facility, etc. A care delivery process, with a multidicsiplinary team care approach and a seamless migration of patient information, from pre-service, to point-of-service to post-service, would be a precursor to a highly effective and efficient healthcare delivery model.
It is time to radically dissect and transform the inefficiencies in the care delviery mechanism of service and payment so we can steadily climb the ladder of quality care at the most affordable costs, in comparison to other developed and some of the developing emerging markets.
One of the models, The Promestheus Payment Model aims to foster outcomes-focused collaboration among otherwise unaffiliated providers and offers a bridge from our fragmented system to a more integrated, accountable one. This article was featured in the Septemeber 10, 2009 edition of The New England Journal of Medicine 361;11: 1033-1036.
There is also an interesting article posted by Maggie Mahar disussing the humongous savings via healthcare reform: Healthcare Reform Would Save Billions.