“From Jan. 1, 2004 to July 1, 2006, the pure rates in California have gone down approximately 55 percent on average,” says Warren Meyer, area senior vice president for Arthur J. Gallagher & Co. “It’s a huge difference.”
Smart Business spoke with Meyer about why workers’ compensation costs have dropped so quickly, how the new regulatory environment has attracted more insurance carriers, and what his prediction is for workers’ compensation costs in 2007.
What are the primary reasons why workers’ compensation costs have dropped so significantly in the past couple years?
The primary reason is the passage of Senate Bill 899 (S.B. 899), and specifically several provisions of that bill relating to the guidelines for medical treatment that are now in place. Also, the bill initiated greater employer control when an employee is injured on the job.
Prior to the reforms, employers had 30 days of medical control whereby they could direct an injured worker to a medical provider for treatment of the injury. With the reforms, they have unlimited medical control, provided that they join a medical provider network. The benefit is that employees are no longer opting out after 30 days and getting their own doctors; they must stay within the network and seek treatment.
Will the cost reductions from the regulatory changes in workers’ compensation remain?
The bulk of the cost reductions should remain for a number of years. However, there is some concern about pending legislation that could potentially erode some of the reforms. In addition, a number of cases are up for appeal within the workers’ compensation system that may ultimately need to be addressed by the Supreme Court of California. Those two issues may end up eroding some of the benefits, but the bulk of the benefits should remain.
How has the improved regulatory environment changed the availability of workers’ compensation insurance in California?
The environment has improved significantly over the last 24 months with the entrance of a number of new insurance companies. Prior to the reforms, the supply of workers’ compensation insurance providers was very, very low. Now, because occupational medical costs have come more in line with non-occupational medical costs, insurance companies have a better handle on what the ultimate costs will be and therefore can price their products appropriately.
The passage of S.B. 899 has allowed new insurance companies to enter the market and enabled inactive insurance companies to return to California to underwrite workers’ compensation. Probably the most notable point is that we are seeing a number of multi-line insurance companies offering workers’ compensation once again, whereas in the past, they had for all intents and purposes pulled out of the market for guaranteed-cost business.
Are alternate risk financing programs still a viable tool for companies to minimize the costs of workers’ compensation?
They certainly are, especially for larger companies that have a predictability of losses and can absorb the expense of the alternate programs. However, as guaranteed-cost programs or zero-dollar programs become more competitive, the benefit for these alternate risk programs has decreased. A number of medium companies are now rolling into guaranteed-cost programs to minimize the downside risk of workers’ compensation.
How important is for top management to stay committed to maintaining a safe work environment?
It is very important for management at all levels of a company to remain committed to a safe work environment and to pro-active claims management. Preventing losses remains the No. 1 means of reducing overall workers’ compensation costs. California continues to use an experience modification rating system, so historical losses will continue to affect the pricing of workers’ compensation. Therefore, management should continue to stay focused on preventing losses and aggressively managing claims once they occur.
What is your forecast for workers’ compensation costs in 2007?
At this point, our forecast is that prices will remain flat or go slightly lower. However, pending legislation before the governor could potentially increase benefits for permanent disability and therefore slightly increase workers’ compensation premiums into next year. Overall though, the trend for 2007 looks very positive with a strong supply of workers’ compensation insurance companies that have aggressively priced and solicited new business.
WARREN MEYER is area senior vice president for Arthur J. Gallagher & Co. Reach him at (818) 539-1365 or email@example.com.
All told, about 12 million people are affected by food allergies in the United States, says Dr. Marc Riedl, assistant professor of medicine at the UCLA Medical Center. While no preventive methods for food allergies exist yet, there are some promising possibilities in the pipeline. “There is a great deal of interest in therapeutics because our current treatment is so limited,” says Riedl.
Smart Business spoke with Riedl about food allergies, how you should proceed if you suspect you have an affliction, and what type of research is being conducted in this field.
From a medical standpoint, why do food allergies occur?
Allergic conditions result from a combination of genetic and environmental factors. We think of food allergies as a breakdown of something called oral tolerance an immune mechanism by which our gastrointestinal tract learns to discriminate between harmless things, such as foods, and harmful things, such as bacteria or parasites. When someone has a food allergy, that mechanism is failing and we don’t know exactly why that is. A number of hypotheses have been put forward. Probably the most advanced one is that the microflora of the gut in young children may have changed with our recent hygienic lifestyle.
What are the common symptoms that accompany a food allergy reaction?
The primary gastrointestinal symptoms can be itching of the mouth, diarrhea, nausea or abdominal pain. Often, food allergy reactions are accompanied by skin symptoms such as hives, swelling of the lips or throat, or itching of the skin. Once in a while, respiratory symptoms like shortness of breath or nasal congestion can be observed. With the most severe reactions you get anaphylactic shock, which is accompanied by a drop of blood pressure and lightheadedness.
What is the best treatment?
The best treatment is to prevent the reactions through strict food avoidance measures. That requires a great deal of education and vigilance by the patients. In the event that an ingestion of a food allergen occurs, then treatment is focused on the use of epinephrine or injectable adrenaline.
How should people proceed if they suspect they have a food allergy?
The most important thing is to see an allergist or health care provider who has experience in dealing with food allergies. The history is very important, so patients need to pay attention to the timing and the symptoms that occur after they eat a food that they’re suspicious of. A food diary can be helpful if a patient is uncertain whether reactions are related to eating a certain food.
What kinds of tests are conducted when determining if a food allergy is present?
There are two major types of food allergy testing.
The first is allergy skin testing, which consists of pricking the skin with a small amount of food allergen. If an allergic antibody is present in the immune system, then you’ll get a wheel-and-flare reaction. This is probably the best screening test that we have for food allergies because it’s very quick, efficient and easy for most patients to tolerate.
The other type of food allergy testing is blood testing, which we often call RAST IgE testing. This method involves collecting blood from a patient and sending it to the laboratory where the blood is screened for allergic antibody to specific food allergens.
There are no medications that cure food allergies. What type of research is being conducted in this area?
The first is what I’ll call more traditional medical treatment, which is taking a medication to prevent food reactions from occurring. The two that are in development right now are Anti-IgE and FAHF2.
Anti-IgE is a medication that has been used to treat severe asthma. There have been some early human trials looking at the effectiveness of this drug in preventing food allergy reactions. Unfortunately, there have been some adverse reactions in those clinical trials. As you can imagine, it’s difficult to give food-allergic people the food they’re allergic to without the risk of reactions. FAHF2 is a Chinese herbal formula that has shown some promise in preventing allergic reactions to peanuts in laboratory and animal studies.
The other category of treatments is immunotherapy, which is an effort to teach the immune system how to tolerate food allergens.
MARC RIEDL, M.D., is an assistant professor of medicine at the UCLA Medical Center. Reach him at (310) 794-1745 or firstname.lastname@example.org.
Safeguarding against check fraud both traditional and electronic requires diligence and determination, but new technologies are making the process simpler and more cost-effective.
“Financial institutions offer tools that allow customers to protect their assets for a relatively low cost,” says Lynnell Harris, senior vice-president of Comerica Bank. “It’s very much a win-win situation.”
Smart Business spoke with Harris about methods that can be used to help prevent check fraud, the benefits of Positive Pay and what distinguishes ACH Positive Pay from other fraud-protection products in the marketplace.
What types of companies are most susceptible to check fraud?
All types of companies. In today’s environment, anyone who sends out checks or transacts business with partners or consumers is subject to fraud and should take precautions. Companies across America, regardless of their size, are at risk.
What are some methods that companies can utilize to help prevent fraud?
There are a variety of safety measures and financial tools. For example, employees can help protect sensitive information by making sure items such as checks, account numbers, bank statements and other sensitive financial information are locked up and stored away. A system of checks and balances can be employed within the company to ensure appropriate access and approval authority.
In today’s environment, electronic transfers offer more control, as systems enable companies to set up various layers of authority based on dollar amounts or transaction types. Other tools include online account review and Positive Pay.
How does Positive Pay work?
Essentially, the bank delivers information to the customer regarding checks or ACH transactions that will be posted against his or her account. The customer then has the opportunity to review the information and determine if they are valid items. The customer authorizes the posting of the transactions and notes any unauthorized transactions. When notification is returned to the bank prior to the deadline, unauthorized transactions are returned to the depositing/originating financial institution.
Tools such as Positive Pay significantly mitigate risk for the company without requiring a huge investment in technology.
How can a business utilize ACH Positive Pay to accept or reject ACH transactions before they are posted?
In a manner similar to checks, the bank will present to the customer, before posting, all ACH transactions. The customer then has the opportunity to identify any unauthorized ACH activity. The customer authorizes the posting of the transactions and notes any unauthorized items prior to the notification deadline. The bank will return those items before posting to the customer account.
What distinguishes the ACH Positive Pay service from other fraud protection products in the marketplace?
Typically, most banks are only able to protect companies that write checks. But technology introduced recently enables some banks to protect the customer against unauthorized electronic activity as well. With ACH Positive Pay, the customer looks at all paper and electronic items. It offers more comprehensive protection against fraud.
If a business detects suspect items using either Positive Pay or ACH Positive Pay, what course of action can it take?
The first step would be to contact its financial institution prior to the Positive Pay notification deadline and advise which items should be returned. Typically, the information regarding suspect items is available first thing in the morning. Customers pull information electronically, review it and authorize payment of the valid items. If there is an unauthorized item, they would notify their bank in that response. The bank would then return those unauthorized transactions before they post to the customer’s account.
LYNNELL HARRIS is senior vice president of Comerica Bank. Reach her at (714) 424-3895 or email@example.com.
“I would suggest that a business confer with its tax professional in the month of September, which then gives it a full quarter to implement the changes, assuming it has a December fiscal year,” Pon says.
Smart Business spoke with him about the virtues of planning for taxes early, how to maximize deductions and rules to keep in mind when making year-end purchases of depreciable assets.
How should a business go about planning for year-end taxes?
The first step is to get hold of the information regarding the prior year’s taxes to work up a rough projection of what the current year looks like. Also, some thought should be given to what the numbers might look like in the next tax year. Part of the opportunities of tax planning are to take advantage of when you may be in relatively higher or lower tax brackets and to move income and deductions in a way that you can take advantage of those differing tax brackets.
Why is it so important to start early?
The main reason is that it usually takes time to implement whatever action items are identified. For example, if you decided that you wanted to defer income into the next tax year, the sooner you start that process the more income you can defer. If you wait until the last two weeks of December to defer income, you have fairly limited options.
What are the advantages of deferring income?
First is that even if you’re in the same tax brackets both years, by deferring the income a year, you defer the payment of the tax for a year. Basically, you get an interest-free loan from the government in the form of the reduced taxes.
The second advantage is that often we’re fairly confident of the tax bracket that we’re going to be in this year, but the future is a little bit hazy. It’s conceivable that next year might not be as good as this year, and if so, deferring income into next year at least gives you the possibility that you’ll be in a lower tax bracket.
How can a business maximize deductions?
At one level, you can maximize deductions by accelerating the rate at which you incur discretionary expenses such as advertising, marketing and consulting fees. Even though the government is paying for some of these expenses in the form of reduced income taxes, you’re still bearing the bulk of the costs. So you want to make sure that you’re spending money on things that make good business sense to spend money on. You don’t want to just spend money for sake of reducing taxable income.
What are some rules to keep in mind when making year-end purchases of depreciable assets for tax purposes?
Usually, we’re looking at this in context of the Section 179 election, which allows taxpayers to expense certain types of depreciable assets.
One of the things that should be examined is the maximum amount of capital outlay that you plan on for the current year as well as the upcoming year. Also, you should bear in mind that the depreciation for what the IRS calls listed property, which includes most automobiles, is significantly restricted. Often, purchasing an automobile at the end of the tax year is not a significant tax-saving opportunity. On the other hand, technology is constantly evolving and improving, so if there is some new computer-based or telecommunications equipment that looks very appealing, you might as well get it at the end of the year.
It is important to keep in mind that to take the depreciation deduction, the asset actually has to be put into service. If you buy something and don’t even open the box until the next tax year, technically you haven’t put it into business service.
How does the Alternative Minimum Tax (AMT) affect tax planning?
The AMT adds another level of complexity to tax planning. Individuals who do a really good job of knocking down their personal income tax liability can find themselves with a reduced regular income tax, but they are now paying the AMT in its place. The rules are significantly different for the AMT. For example, some of the items that are deductible for regular tax purposes are not deductible for AMT purposes. It is a good idea to consider both the regular tax and the AMT to make sure that your taxes end up where you plan for them to be.
CARL PON is co-managing partner of Vicenti, Lloyd & Stutzman LLP. Reach him at CPon@VLSLLP.com.
Edward Clift, an assistant professor of communication at Woodbury University, believes it is a mistake to consider communication as a separate entity that exists apart from the fabric of a company.
“Strategic communication seeks to align an organization’s goals with its communication practices,” he says. “It is about creating a coherent mindset that values differences, handles conflict constructively, operates according to larger ethical principles of community, and minimizes the destructive effects of bias and stereotyping.”
Smart Business spoke to Clift about using strategic communication to motivate employees, the importance of having a clearly defined strategy and some of the dangers of poor communication.
What are some effective methods of communication that can be integrated into a company by the CEO?
Communication, even when it’s not the subject of a CEO’s self-reflection, saturates all organizations it is what defines corporate identity. Once the CEO starts to self-reflect about communication practices, then corporate communications can become subject to modification and improvement.
I recommend that they start at the top by learning how to listen, for example, before they lead. Concentrating only on the effectiveness of communication, however, will limit the growth of the company. One should focus instead on maximizing the full potential of all interactions so that the company can find ways to direct its own change.
How can effective strategic communication help motivate employees and increase retention?
The idea behind strategic communication is to align corporate interests with the full range of messages distributed to the public, to employees, to the media and others. Employees want to understand how their labor contributes to the success of a company, and this alone will motivate them and increase retention. You can take that one step further as well.
Because of the flattening of management in the corporate world, employees are increasingly responsible for their own oversight. The employees that survive in such a world are those who grasp the strategic mission of the business and make it their own. An effective strategic communication policy will help employees identify and understand the vision of the company.
How can a CEO or business owner be sure that employees are satisfied with the company’s communication program?
People are satisfied when they feel like they’ve contributed to the environment that they work in, which includes the communication environment. You want to build an organization that is open to the input of all the employees. This can be designed into the corporate communication policy, but it has to begin with the recognition that people are sometimes scared of their own ability to influence the world.
You not only need to create the avenues, but also find ways to encourage participation in those communication practices. Concrete ways to measure how satisfied employees are would include feedback forums, participant observation, anonymous surveys and quality control indicators.
Why is it important that senior management has a clearly defined communication strategy?
No company can compete in the Information Age unless it reflects upon its own communication practices. If you develop a well-defined communication strategy, you can link your corporate goals to your way of knowing and interacting with the world as a business.
The relative success of one business over another is in large part attributable to the communication strategies they choose to implement. This is why many investment professionals choose to buy the management team of a company rather than the product; they want to know that the communication strategy internal to the corporation is aligned with their business goals.
What are the dangers of poor communication in business?
Primarily that you risk appearing crazy when your actions and your words do not coincide. The goal of a CEO is to create a coherent vision of a company that articulates a mission that matches what it is doing. Otherwise you say one thing while doing another and people don’t have trust in you.
This is one reason why many corporate reorganizations and mergers fail: you can’t just make a structural change and expect the communication practices to also change.
The dangers of poor communication do not end at the door of the company. Huge external risks face all organizations, but especially those operating on a global stage. These include natural disasters, forced changes in ownership or management, powerful stakeholders, ideological challenges and direct attack.
Strategic communication dictates that any business become conscious of these potential perturbations to its viability. It should then use its observations to strategically design a robust set of internal and external communication practices.
What is a common communication mistake that business owners make?
Business owners tend to become overly reliant on technology to solve their communication problems. They make the mistake of trying to improve communication in an impersonal manner.
Communication thrives on feedback, collaborative meanings and close personal engagement. The challenge is to balance technology with an appreciation for everybody’s unique insights whether they’re workers inside the company or customers outside the company.
Edward Clift is an assistant professor of communication at Woodbury University. Reach him at (818) 252-5197 or through the university’s Web site, www.woodbury.edu.
Hackers can break into a company’s network and obtain confidential documents or post false information. Spammers can shut down an organizations’ Web site, while viruses can destroy critical data as well as be passed on to other entities.
To combat such activities, many businesses are turning to Internet liability insurance and are re-evaluating their previous policies. “We’re seeing broader exclusions that encompass the Internet because of potential claims that weren’t contemplated in the original coverage forms,” says Julia Murakami, vice president of Sander A. Kessler & Associates Inc.
Smart Business spoke with Murakami about how Internet liability insurance can help protect a company, what aspects should be considered when putting together such a policy and how Internet risks can be minimized.
What types of cyber risks do companies face?
Companies face a lot more cyber risks than you might think. Technology has changed so quickly over the 20 years. Our communication used to be primarily by mail or memos, and now it’s primarily by e-mail. Just the fact that we’ve changed from paper to an electronic form of communication has increased our cyber risks.
Advertising for businesses has changed. Before it was common to hand out brochures or flyers about the business, but now the common question is, ‘Do you have a Web site?’ That has completely changed how we do business. If you’re an e-commerce entity, you think about the cyber risks, but Main Street businesses have exposures that they don’t even think about.
Do traditional insurance products like fidelity bonds or property policies protect a business in the case of Internet attacks?
Some do and some don’t. In the late ‘90s, Y2K exclusions were included on policies because of the fear of what would happen with computers and how bugs could damage not just your computers, but also potentially send out something that would damage other computers. That ended up not just on the property side for your own computers, but also the liability side because of potential damage to others. This has remained on the policies, but now it’s a lot broader than just the Y2K exposure.
How can Internet liability insurance help protect a company?
It fills the gaps in your insurance policy. As a business owner, you think about your own computer equipment, but you might not think about how the virtue of having that equipment could damage someone else’s equipment: Web sites, e-mail viruses, etc. Those are all excluded under regular polices, but the Internet liability polices would fill that gap.
Should a business that does not conduct electronic transactions, but does host an informational Web site, consider purchasing Internet liability insurance?
Absolutely. That’s the hidden exposure that businesses face. The Internet is considered to be like the Wild West. It’s a new technology, and everyone else is doing it, so in order to maintain your competitive edge you need to post a Web site too. It’s the same thing with e-mail. The first thing you ask when you meet a new business associate is, ‘Can I get your e-mail address so I can e-mail you some information about our company?’
What are some issues for a business to consider when putting together an Internet liability insurance policy?
First, you should look at your existing general liability policy to see if it does or doesn’t cover your Internet exposures. One of the things that we are starting to see with greater frequency is the emergence of Internet extension endorsements. This moves the liability from your brick-and-mortar exposure into the cyber world by extending or changing the definitions of your liability policy. Such an extension makes it clear that damage doesn’t have to happen in a specific location or on your premises. Ultimately, anything that derives from a Web site injury or an injury caused by your Web site would be covered.
How can a business minimize its Internet risks?
You have to look at not just the insurance side, but also the risk management side by controlling what you do on the Internet and having an e-mail use policy.
Minimizing exposure on your Web site is very important. Because it’s a new technology and a new environment, people are freely linking to sites they think would be useful for their clients, but it could also expose you to some liabilities. Perhaps you are infringing upon the other Web site owner’s business rights and they might not welcome the association. It’s always safest to get permission before you link.
JULIA MURAKAMI is vice president of Sander A. Kessler & Associates Inc. Reach her at (310) 309-2231 or Julia@sanderkessler.com.
Consisting of bone, muscles, nerves and other soft tissues, the back is an intricate structure with many components that can break down. “The back is an extremely complex organ,” says Dr. Michael Ferrante, director of the UCLA Pain Management Center and a professor of anesthesiology and medicine. “Arguably, the spine is the next-most complex organ outside of the central nervous system.”
Ferrante spoke with Smart Business about what causes back pain, how it can be avoided and how to select quality health care professionals when dealing with back ailments.
What are some common causes of back pain?
I would divide back pain into three large groups. No. 1 would be disorders of muscle. This can occur if you’re out of shape, if you spend a lot of time in a poor posture or if you overuse your back. No. 2 would be disorders of the spine itself and, by spine, I mean the bony structure of the spine. No. 3 is a grouping that includes nervous disorders of the spine. This is usually leg pain where either you have an irritation or compression of a nerve root and it manifests itself as leg pain.
How can back pain be treated?
Sometimes you can do nothing. A classic example of this would be a lower back sprain. You just take it easy and within a few weeks it’s going to get better. The next level up would be getting physical therapy. If something is lasting six months or longer you need to see some physician outside of a primary care doctor who is going to be able to give you a sophisticated diagnosis and sophisticated workup. Acupuncture is another option at any stage because it certainly does no harm and it could very well help. You should be careful, however, that herbal medicines don’t have a side effect with other forms of medications that you may be taking.
How can back injuries be avoided?
First, you have to stay aerobically active, particularly for the low back. People who already have disc disease or knee problems do very well with elliptical systems. Instead of the pounding on the spine and knees that occur with running, elliptical systems take the kinetics and move them forward and backward. Also, back injuries can be avoided by improving posture at work. It sounds like what your mother always told you about having good posture, but it really is a truism. Bad posture puts repetitive strain on ligaments, joints and muscles.
What steps can a business owner take to safeguard against back injuries at the workplace?
Have someone do an ergonomic evaluation. Just by changing some very simple things like how keyboards are placed and how employees sit can prevent injuries. Also, if you get health club memberships for your employees, it not only encourages them to get aerobic activity, but it might also be financially beneficial because employers may get a reduction on the premium of their health insurance.
How can someone with back pain identify a good physical therapist?
You have to tailor the physical therapy to the particular mechanism that is causing the pain. If people are not getting some type of physical therapy that is attempting to eradicate or solve their particular problem, then I would suggest that they look elsewhere for physical therapy. There’s nothing wrong with feel-good maneuvers, but they have to be coupled with things that are going to strengthen the weak muscles and cause postural realignment.
What are some characteristics that one should look for when seeking a back-pain specialist?
Find a doctor who is going to be able to ferret through the vast different diagnoses. Find someone who asks the question, ‘Can I explain this pain and on what basis?’ A lot of practitioners of spine medicine practice template medicine everybody gets one type of treatment. I don’t advise that, because it doesn’t seek to answer the question of what’s causing the pain. Also, it is important that the doctor start off with the least invasive and least complex treatment and then work their way up.
It’s a matter of finding a doctor who is insightful, finding a doctor who doesn’t immediately jump into the most invasive and financially rewarding option for him- or herself, and finding someone who really acts as an advocate for you.
MICHAEL FERRANTE is director of the UCLA Pain Management Center and a professor of anesthesiology and medicine. Reach the Pain Management Center at (310) 794-1841.
“The implementation of Part D is complicated, whether one is advising a physicians group regarding the effect of Part D on its contracting, or simply attempting to advise one’s friends and relatives regarding the choice of an appropriate Part D plan,” says Jonathan Gluck, a health care specialist and partner in Alschuler Grossman Stein & Kahan’s Business Litigation Department.
Smart Business spoke with Gluck about the evolution of Medicare Part D and the legal issues that have arisen since its implementation.
What led to the enactment of Medicare Part D?
The Medicare program, which was signed into law in 1965, was originally designed to cover institutional (hospitalization) and professional medical services for seniors, which are known as Parts A and B respectively. Later, the government decided to allow private health plans to offer Medicare plans (Part C). They may now offer Medicare benefits that include medical savings accounts, managed care plans and private fee-for-service plans. While traditionally some of the private plans offered prescription drug coverage, it was not universal. This led to the creation of Medicare Part D as part of the 2003 Medicare Modernization Act. Part D, for the first time, provides prescription drug coverage for seniors.
What are some of the issues that have arisen during the implementation of Medicare Part D?
The most crucial issue is simply the logistical nightmare of having more than 40 million Medicare members understand and sign up for a plan that offers them the benefits they need.
This problem is exacerbated by the fact that the government expected seniors to do most of their research regarding available plans over the Internet, and many seniors are not computer literate. The number of seniors who did not sign up for a plan is still the subject of debate, and no one now knows, or will know for a while, how many seniors signed up for plans that do not provide them the benefits they need.
In addition, the implementation of Part D has changed the method by which the government calculates its payments to the private health plans, which has an impact on how the health plans in turn pay their capitated physicians groups.
How has Part D affected physicians groups?
Many physicians groups contract with health plans to provide all required care for a plans’ members for a set dollar figure every month. This is known as ‘capitation.’ In many of these agreements, the physicians groups agree to accept as payment a percentage of the premium dollars paid by the government for each member.
Prior to the implementation of Part D, it was simply a matter of calculating the percentage from the total amount paid by the government. Because of the way that the government now calculates the dollars paid to the health plan, however, many health plans are attempting to force their capitated physicians groups to accept their percentage from a smaller portion of the total amount paid by the government. This results in less real dollars for the physicians, even though the health plans will actually receive more total dollars because of Part D.
What is the possible impact of less dollars making their way to physicians groups?
Many physicians groups likely do not realize how these changes will affect their bottom line and may not until the end of the year when they will suddenly find themselves running a deficit and losing money. For anyone who remembers the failures of physicians groups such as MedPartners and KPC Medical Management, and the resulting upheaval and displacement they caused, this should be a cause for concern.
Are there any other legal issues that have arisen?
Many drug companies previously provided some of the more expensive prescription drugs at very lost cost to low-income seniors. Part D, however, has anti-kickback rules which prohibit a drug company from providing a financial incentive to induce someone to use their drugs. Because of this, drug companies claim they can no longer provide drug subsidies without violating the law. This will result in numerous seniors no longer being able to afford some of the more expensive drugs.
While the government is attempting to resolve this issue with the drug companies, so far there has been no resolution.
JONATHAN GLUCK is a partner in Alschuler Grossman Stein & Kahan’s Business Litigation Department specializing in health care law. Reach him at (310) 255-9150 or firstname.lastname@example.org.
Developing a custom intranet site not only alleviates the need for employees to thumb through cumbersome paperwork, it can also help in relaying important information such as revised sales quotas. Of course, only members within the organization are privy to such information.
It is important to note that an intranet differs from the Internet.
“An intranet is a Web site that is inside your network,” explains Hormazd Dalal, president of Castellan Inc. “It functions the same way as the Internet, but is available only to people from inside your network.”
There is no magic formula that makes an intranet desirable for employees to peruse. To make it a part of their daily routine, it is important to provide relevant information that is pertinent to their job description. When managed effectively, it can be a strategic asset that provides a competitive advantage.
Smart Business spoke with Dalal about the benefits that companies can receive from having a custom intranet site, how its applications differ from groupware software packages and what factors to consider when outsourcing the development of an intranet.
How can a business benefit from having a custom intranet site?
There are many uses for an intranet site. It is, in effect, a bulletin board: a place where up-to-date sales figures can be put and where you can post documents for immediate download. It’s a central location where private, personal information that is only available for either certain work groups or the internal company is available. Examples would be a copy of the employee handbook and a calendar of company-related events like paydays, people’s birthdays, important how-to documents and information about the tasks that they perform. Of course, it varies from industry to industry what an intranet is used for.
How does an intranet differ from groupware software packages?
Groupware software packages are based on the user. A user, as a member of a group, can interact with other members in the group. Groupware software packages such as Outlook, with Exchange in the back end, allow you to perform such functions as maintaining public folders and tracking tasks.
An intranet is a Web site, so it typically doesn’t actively prompt a user to do a task. A user can go to an intranet, however, and look at a list of tasks or information.
One of the biggest differences between an intranet and groupware software packages is that an intranet is more passive, although more sophisticated portal products such as Microsoft’s SharePoint are more active.
How secure are intranets?
Intranets are very secure. In fact, they are as secure as any other file on your internal network. They get backed up inside your network, and typically, they are not accessible from the outside. They shouldn’t be, and that is what defines them as opposed to the Internet.
What factors should a company consider when outsourcing the development of an intranet?
Development of an intranet is no different than development of a Web site, so it can be done internally. The one difference between an intranet and the Web page on your external Web site is that the intranet is far more dynamic changes are made to it readily. For example, we have a customer who maintains their entire force’s sales figures on a monthly basis. Someone internally typically needs to have the ability to upload this easily.
The intranet needs to be developed such that it can thereafter be managed by an internal person. Posting information on the bulletin board should not be outsourced; that needs to be done on the inside.
Once up and running, how should an intranet be managed?
Once up and running, you should have one person who is responsible for the integrity of the information on the intranet. It is their responsibility to make sure that is updated and has all of the latest and greatest information such as new hires, birthdays, changes to documents, etc.
What are some of the initial costs of setting up an intranet? In other words, what types of software and hardware components are needed?
If you have any Windows server running in your organization which most businesses do you already have the software and the hardware to run your intranet. The costs of setting it up are just the labor and the service cost of having someone actually build and develop the Web site.
HORMAZD DALAL is president of Castellan Inc. Reach him at (818) 789-0088, ext. 202, or email@example.com.
This type of insurance is a wise investment for businesses of all sizes, says Marc L. Seror, vice president of Sander A. Kessler & Associates Inc. “It doesn’t just apply to public companies, but also for many privately-held companies, as well as nonprofits.”
Smart Business spoke with Seror about what types of claims can be made against directors and officers, how companies can benefit from having liability insurance and what types of coverage should be included when purchasing a policy.
What is directors’ and officers’ liability insurance?
It’s insurance to protect the individuals who serve as directors and officers of a company. The duties of a director and officer really include the duty of loyalty, the duty of care and the duty of obedience. A breach of those duties is what leads to a variety of claims. Many times, this type of insurance can also protect the company itself from a variety of lawsuits.
Who can make a claim against a director or an officer?
Most people think only stockholders can file a claim, but actually, any stakeholder can do so. A stakeholder can be a customer, competitor, vendor, fellow board member and even employee. The Tillinghast 2003 Directors’ and Officers’ Liability Survey states that half of all claims made against directors and officers are made by shareholders while a third of all claims are made by employees. Directors and officers of companies experiencing mergers and acquisitions or divestiture activities are more exposed to claim potential.
What kinds of claims are covered by directors’ and officers’ liability insurance?
The claims can include employee discrimination, unfair employment practices, wrongful termination, disposal of corporate assets without regard to the firm’s ability to pay for or secure the company’s debt, violation of antitrust laws, unfair competition and even improper loans made to directors and officers.
How can a company benefit from having this type of insurance?
It gives an organization the ability to attract a director or officer to serve on their board. Without directors’ and officers’ liability insurance, no one in their right mind would accept a position because their personal assets are at risk for the decisions they make as board members. With the new Sarbanes-Oxley Act of 2002, the cost to the individual may actually be higher.
How has the Sarbanes-Oxley Act affected the liabilities that company leaders are faced with?
The Sarbanes-Oxley Act is the legislative response to the financial collapse of Enron, WorldCom and Global Crossing. This [federal] act targets corporate disclosures and it establishes criminal liability for their misrepresentations. The goal is to eliminate the expense abuses, off-balance sheet investing and other corporate misdeeds. It does this by requiring companies to file reports with the SEC which include reports on corporate governance, financial disclosure, auditor independence and even corporate fraud.
Although the law only applies to public companies, some recent judicial rulings suggest the trend toward greater accountability will apply to privately-held companies as well. For example, a recent Delaware court ruling indicated that independent directors could be held liable for deliberate indifference as well as active negligence.
What basic coverage should be included?
When someone is looking to buy directors’ and officers’ liability insurance, the first thing they should look for is coverage that is ‘pay-on-behalf-of’ rather than coverage that indemnifies. Obviously, one would rather have an insurance company pay on their behalf rather than reimburse them for expenses or claims.
A second item is the limit should be sufficient to protect the company’s assets. There should be full coverage for prior acts, and it should go as far back in time as possible. There should be a broad definition of claim, and they should include coverage for the entity whenever it is available. Punitive damages should be included where they are insurable, though not all states allow it. Also, they should have the most favorable venue wording.
What factors are considered when setting a premium for directors’ and officers’ liability insurance?
The premium is a function of several underwriting factors that include the assets of the company, the company’s prior claim experience, any recent activity like mergers and acquisitions, reorganizations or layoffs. Also, the limit of coverage that is selected and the financial strength of the company are factors that are taken into consideration.
MARC L. SEROR is vice president of Sander A. Kessler & Associates Inc. Reach him at (310) 309-2269 or firstname.lastname@example.org.