Meredyth McKenzie

Any type of dispute, whether big or small or one that lands in court, can be a disruption to your business. It can cost you time, money, energy and other resources to pursue or defend the claim. Your reputation may also become tainted or you may develop bad relationships with vendors due to claims.

You need to be prepared, so assemble the right team — one that will handle the dispute and litigate on behalf of (or defend) your company. A good team consists of legal counsel, company representatives, a financial expert if appropriate, and industry or other experts to address specific portions of the lawsuit.

“Litigation can be an out of control process,” says Rebekah Smith, CPA, CVA, CFFA, director of dispute advisory and forensic services at GBQ Consulting LLC. “Assemble a group of experienced advisers that understand the litigation process. Your advisers can help you control costs and the process.”

Smart Business spoke with Smith about how to assemble the right group of advisers to handle your dispute and the importance of involving a financial expert.

Whom should business owners turn to at the first sign of trouble?

Legal counsel. Don’t take threats of litigation or indications that someone has a dispute with you or your company lightly. Take potential claims seriously and contact your legal counsel, rather than just assuming it will go away. Legal counsel can help assess the validity of a potential claim or a claim that has already been made and determine a plan of action. There are also certain legal requirements with respect to retention of data that your legal counsel can help you navigate.

What types of disputes require assistance from a financial expert?

A financial expert becomes involved when there are financial issues as well as legal issues. Financial experts are typically involved in complex commercial litigation where economic damages or lost profits are at issue. They are also involved when the cases requires forensic accounting skills such as in a fraud or embezzlement case or the value of a business is at issue such as in a shareholder dispute. A financial expert may also be called upon to explain an accounting, tax or financial issue to the judge or jury.

A financial expert may assist legal counsel in identifying the particular financial issues related to this case. Financial experts may also assist legal counsel in creating discovery requests, preparing for depositions of financial witnesses, or assisting with trial exhibits.

The financial expert can also assist in settlement negotiations. Many cases settle before reaching the courtroom, and a financial expert can assess whether a particular settlement option makes economical sense or not.

Why is it important to put the right group of advisers together and get a financial expert involved?

Putting together the right group of advisers can give a litigant some perspective as the case progresses regarding risks and strategy. Having the right advisers also ensures that all aspects of the case are covered. For example, many legal counsels involve a financial expert early in the process to assess the cost benefit of proceeding with litigation. From an economical standpoint, spending $150,000 to pursue a claim worth $50,000 might not make sense. A financial expert can help you and your legal team make a determination of the possible range of recovery before incurring a substantial amount of fees pursuing a claim.

It is also important to get the financial expert’s input on creating discovery requests. Some of the most critical steps of the litigation have to do with the discovery process. It’s important to obtain the appropriate data for the relevant time period and well-crafted discovery requests can ensure you have asked for the right information. Unfortunately, some times the financial expert is called in to assist after the discovery process is closed and data that would have been relevant and potentially helpful to the analysis was not obtained.

The financial expert should become involved sooner than later in order to ensure that all the financial issues are identified and the related documents obtained. Accountants and financial experts know what reports should be available and how to ask for them. For example, asking for a company’s ‘financial information’ may get you different results than making a more specific request such as ‘balance sheets, income statements and cash flows, on a monthly basis for the prior 36 months.’ Also, asking for an electronic back-up of the company’s books and records (if they use common software such as QuickBooks) can provide a wealth of information.

What should a business owner do to make sure this process goes smoothly and the advisers have all the necessary information to handle the dispute?

You need to be as forthcoming as possible with your attorney during this process. For the most part, a litigant has attorney/client privilege with their attorney, meaning they do not have to disclose their communication with their attorney to the other party. Even if there are facts that you think might hurt you, you need to share them with your attorney so he or she has all the information in advance and can be prepared to deal with it. If a bad fact comes to light very far into a case, it’s difficult to deal with it at that point.

Also keep in mind that you don’t have that same attorney/client privilege with a CPA or financial expert. Thus, communications with your CPA or expert can be discoverable.

How can business owners be prepared for future disputes?

Many attorneys will consult with companies on litigation readiness and to assist owners in assessing where their company might be vulnerable. From a financial standpoint, if the dispute involved some type of financial misconduct or embezzlement, there may be some internal control processes that are weak and need to be remediated.

Rebekah Smith, CPA, CVA, CFFA, is the director of dispute advisory and forensic services with GBQ Consulting LLC. Reach her at (614) 947-5300 or

While travel is an integral component for continued business growth, there are risks to be aware of. Travel puts employees in unfamiliar environments where incidents may occur. They may be in locations where they stand out from the local population and are unfamiliar with the local health risks, culture and customs.

Travel risks affect not only your current employees but also future employees and your company’s security and operations. It’s important to be prepared for any type of risk that may happen and to manage those risks appropriately.

“There is much more emphasis placed on health and safety procedures in the permanent workplace than on travel, even though travel brings a greater risk potential,” says Tracy DeBarr, a corporate account manager at Professional Travel Inc.

Smart Business spoke with DeBarr about how to develop a travel risk management plan and communicate it to your employees.

What risks can you run into while traveling?

There are five risks to be aware of:

  • Risk to personnel — Crime, civil unrest, terrorism, illness and weather conditions.
  • Risk to corporate reputation — Failure in duty of care, unethical behavior by employees and misuse of travel expenses.
  • Risk to data/equipment/productivity — Protecting data carried by employees while traveling; lost, damaged or stolen baggage, equipment or personal items; protecting employee’s personal travel data; and failure to meet immigration requirements.
  • Legal risk — Duty of care, data protection regulations, failure to comply with tax laws and illegal activity by travelers.
  • Financial risk — Penalties for legal risk and misuse of travel expenses.

Are employers responsible for travelers?

It is your legal duty to protect your employees, whether they’re working in your facility or traveling off site. New laws, such as the Corporate Manslaughter Act, hold you responsible for anything that happens to your employees while on business in Europe. It provides a more effective means to prosecute companies for corporate manslaughter in England, Wales and Northern Ireland and corporate homicide in Scotland. The law punishes corporations for failure to properly manage the health and safety of employees and toughens the duty of care responsibility toward employees. The organization is held responsible for travel incidents instead of individuals within the organization. This applies to any work-related death or injury, regardless if the company is based in the United Kingdom or not, and is not limited to business travel.

What benefits will you see from the right approach to travel risk management?

The six benefits you’ll see are:

  • Effective travel budget management.
  • Better tracking of travelers.
  • A plan of attack that allows you and your employees to respond quickly and effectively.
  • Reduced liability and lawsuits.
  • A more secure future. There were 24 employees from one company on the flight that went down in the Hudson River in January. If that event were fatal, it would have caused a catastrophe for that company.
  • Employees know you are concerned about their safety.

How do you develop a travel risk management plan?

Many companies have a risk management department or policy, but oftentimes, it does not include travel. You need to mitigate travel risks and assist travelers so they are able to do their jobs. First, assess the risk levels of all scenarios associated with travel. Then determine which threats you can handle internally, which you can transfer to an outside company, such as an insurance agent, which you can eliminate, and which you can tolerate with little risk to the company. From there you develop a travel risk management plan that will be effective for your employees, corporate image and bottom line.

Your travel management company should play a crucial role in your plan. It should assist managing, communicating and enforcing your travel policy as well as maintaining traveler profiles to track and assist in case of an emergency. It should also provide pretrip, destination-specific, traveler-specific, high-risk destination and intelligence reporting to employees.

How do you communicate the plan to your employees?

The plan should be readily available through your intranet, employee handbook, human resources department and department managers. Everyone should be clear on what his or her responsibilities are. Depending on the level of crisis management, the plan may need to be rehearsed ahead of time to make sure it runs smoothly. You don’t want to realize that kinks need to be worked out during an emergency. Meet with your employees after a rehearsal to gather feedback on the process to make sure situations are handled correctly in the future.

Review your travel policy and travel risk management plan at least once a year. With constant changes in the travel industry, your business, and economic, social and political issues around the world, what worked last year may not be the best practice for this year.

What are other ways employees can prepare for travel to unfamiliar places?

Be aware of your surroundings. Don’t wear expensive jewelry or carry expensive luggage. Also, don’t let anyone meeting you use a card bearing your name, company name or logo. Choose your luggage carrier and cab driver yourself, and always look for the nearest exit in case of emergency. Research your destination prior to arrival. Being prepared is always a good thing. Finally, do not carry more cash or credit cards than necessary and never check valuables or travelers checks in your luggage.

Tracy DeBarr is a corporate account manager with Professional Travel Inc. Reach her at or (440) 734-8800 x4096.

Starting a job with your company can be difficult for new hires, with new people to meet, policies and procedures to learn, and a company culture to fit into.

By offering a mentoring program to help them adjust, you can make them feel more comfortable and welcomed, allowing them to settle in and be productive more quickly.

“Research has shown that when employees develop good relationships quickly, they’re more likely to adapt to their new roles and stay with the organization,” says Wendy Marcinkus Murphy, Ph.D., assistant professor of management with Northern Illinois University. “You’ll reduce your turnover rates and increase productivity and performance.”

Smart Business spoke with Murphy about how to develop a mentoring program and what you can do to ensure it succeeds.

How has mentoring changed over the years?

Mentoring has become more widely adopted as a human resources strategy over the years. Early research talked about how important mentoring was for young executives in developing their careers, which drove a lot of formal programs.

Today, more than 70 percent of Fortune 500 companies in the U.S. have a formal mentoring program. Mentoring has changed dramatically from an individual perspective because of how different career paths are now. The traditional career, in which employees stayed with one company for 30-plus years until they retired, doesn’t really exist anymore. Instead, most employees will work for multiple employers throughout their careers.

As a result, research has moved beyond the traditional mentoring relationship, in which a senior, more experienced individual is paired with a young, new or high-potential employee. New hires are now encouraged to develop relationships throughout their organization and professional field. This developmental network approach allows them to get the support they need from multiple people as their careers develop, instead of just that intense, one-on-one relationship.

Why is mentoring important?

Relationships are one of the most important developmental tools a company can employ. The amount of learning that happens cannot be underestimated.

Both parties have something to learn from one another. Protégés get insight from their mentors in terms of skill development, new techniques and approaches to work, and obtain knowledge about the organization. And mentors learn about the perspective that employees from different areas of the company have on what goes on in the organization.

How can business owners develop mentoring programs?

Mentoring programs reflect the culture of the organization. You need to make encouraging developmental relationships — both informally and formally — an integral part of the culture of your organization.

It’s essential to have top-down support so that mentoring is recognized as part of the formal human resources strategy. Research suggests that the more upfront investment, time and resources that organizations commit to formal mentoring programs, the more successful they are. Both parties need training to set expectations for their relationships.

Typically, the relationships last one to three years, depending on the developmental needs of the parties involved. However, they could be ongoing and change over time into a colleague relationship instead of a mentor/protégé relationship.

The employees may continue to talk to each other as their careers develop but might not have the same needs from the relationship as they did when they started.

How can you ensure your program succeeds?

Successful programs involve overlap in interests or skills between mentors and protégés, and participation by both in the matching process. One way to assess the success of a program is to get feedback from participants. It’s important that both parties are satisfied with the experience. You want to ensure that mentors feel like they’re making a difference and that the investment of their time is worthwhile in their own career development.

Mentors are finding opportunities to give back, reconnect and learn for themselves how to better manage employees from different backgrounds and age groups. Satisfied mentors are more likely to participate in the future, so you create a virtuous cycle of mentoring as part of professional development.

Successful protégés who have been in good mentoring relationships are more likely to seek and initiate new developmental relationships that fulfill different and new needs for their own development. They’re also more likely to act as mentors for both their peers and for other employees.

What is the future of mentoring programs?

Organizations are experimenting with new and different forms of mentoring. There’s a lot of work being done on mentoring circles, which pair a more senior employee with several employees from different levels in the company to develop a group mentoring relationship. People get exposure to several different perspectives on developmental issues.

There’s also a movement to incorporate peer coaching by matching co-workers who are at similar levels of development but who might be on slightly different tracks with different experiences to share and contribute to each other’s learning.

Technology has changed the way mentoring occurs because you can have electronically based mentoring relationships, which eliminate geographic and time barriers and increase flexibility. However, participants still appreciate the chance to meet face to face or talk on the phone once to create a sense of connectiveness. These blended media relationships have been shown to be as successful as more traditional relationships. Technology has broadened opportunities for individuals (and organizations) to develop and maintain mentoring relationships that flourish.

Wendy Marcinkus Murphy, Ph.D., is an assistant professor of management with Northern Illinois University. Reach her at (815) 753-6320 or

Tuesday, 23 February 2010 19:00

Take control of health care

Many companies are looking for ways to save money on insurance costs. An increasingly popular option is a self-funded health plan.

With these plans, you pay the claim costs incurred by your employees. These plans offer tremendous flexibility and the ability to customize plan designs based on the specific needs of your business.

“In a self-funded environment, your health care costs are much more transparent,” says James Repp, vice president of sales with AvMed Health Plans. “You can use this information to better understand what medical conditions, procedures or pharmaceutical drugs are driving claim costs and then develop programs and benefit designs to positively impact these costs.”

Smart Business spoke with Repp about self-funded plans and how to make sure they are well managed.

What is the difference between fully insured and self-funded plans?

Fully insured plans provide a fixed premium that doesn’t change over the contract period, regardless of whether the claims are substantially more or less than projected. It’s essentially winner takes all. The insurance carrier benefits if claims are less than expected, and the employer benefits if they’re more than expected. Typically, fully insured plans provide a standard set of services that are included in the premium and the employer does not have the ability to customize these services.

In a self-funded plan, the employer contracts with a company to provide administrative services and the employer takes on all claim liability. Most groups that self-fund also purchase stop loss insurance to protect against claim liability that may be above acceptable levels. Self-funding, with the appropriate stop loss coverage, is generally appropriate for groups with at least 200 employees. One of the biggest challenges of self-funding is the fluctuating risk in a group. The smaller the group, the less predictable the future experience.

What is stop loss insurance?

There are two different categories of stop loss insurance — specific stop loss and aggregate stop loss. The specific stop loss limit is set at the individual member level. Amounts range based upon the size and risk tolerance of the employer, but commonly this amount is between $50,000 and $100,000 per contract period. The employer’s liability for any one member would be set at this limit. For example, if a member has a $1 million claim, the employer would only be liable for the first $50,000 of the claim, and anything above that would be covered under the insurance policy. The aggregate stop loss limit is set over the entire plan at a percentage of expected costs. For example, typical aggregate stop loss would be set at 125 percent of the expected cost level. You would pay everything up to 125 percent on an aggregate basis, and anything over that would be protected under insurance.

What are the cost differences between self-funded and fully insured plans?

There’s a lot of variability from an employer cost standpoint, but there are some standard differences in terms of the components included in the costs. Self-funded plans do not have risk margins, because you’re paying the claims regardless of the level. Fully insured plans have risk margins built in to the premium to cover claim fluctuations. Self-funded plans also typically have lower administrative costs, and provide greater flexibility around benefit design, which drives premium level. You’re also not subject to state mandates, but to ERISA rules at the federal level.

Depending on the group size, the premium development for fully insured plans is blended in with all of the other businesses in an insurer’s business book, so your premium could be subsidizing the premium of other employers with higher costs. In a self-funded plan, you pay the claims your group incurs.

What steps can you take to make sure the self-funded plan is well managed?

The first step is to select a claims administrator with a successful track record of paying claims accurately. You want to make sure your partner has a strong provider network, both from an access and a cost standpoint. Employees should be able to use broad networks and receive competitive discounts from providers. You also have to focus on the capabilities of an administrator around medical management. The administrator should have robust programs for complex case management and disease management and be able to identify employees that would benefit from these programs. Employees that better manage chronic diseases reduce claim costs for self-funded plans, which reduces overall plan costs. Administrators should also be able to assist employees and ensure that they are receiving the right care, in the right setting, at the right time.

How can you restructure your plan if you decide to switch to a fully funded plan?

This can get challenging. The decision to enter into a self-funded arrangement should not be looked at as a short-term solution. There can be many challenges when transitioning back into a fully ensured environment. When you self-fund, you’re liable for all claims incurred prior to moving back into a fully insured environment. This liability can continue for quite some time, and you’ll have to pay the fully insured premium, plus run out costs when you move back into the fully insured environment. You can substantially increase your monthly costs during this transition period.

There are many elements to consider when evaluating the viability of implementing a self-funded health plan, and it really needs to be part of an overall long-term benefits strategy. Many employers have discovered that implementing a self-funded arrangement has allowed them to take control of their health plan and, more importantly, take control of their health care costs.

James Repp is the vice president of sales for AvMed Health Plans. Reach him at (800) 592-8633 or

Tuesday, 23 February 2010 19:00

In the public eye

We are all afforded publicity rights to protect the commercialization of our name, image and likeness, whether famous or not. Businesses that use individuals in merchandising, packaging or marketing have to be aware of these publicity rights and must secure the proper rights and licenses before using an individual’s image or persona, or they can face hefty penalties.

“Protecting your publicity rights and carefully negotiating for the use of one’s likeness will maintain the value of the overall brand, and may even increase the brand’s value over time,” says Nick J. G. Sanchez, attorney with Theodora Oringher Miller & Richman PC.

Smart Business spoke with Sanchez about key things to understand when dealing with publicity and privacy rights and how the Internet has affected these rights.

What problems do businesses deal with regarding privacy and publicity rights?

There are two competing business interests here: the obvious and traditional business interest, as well as the individual’s business interest. For example, Toyota may use the name and likeness of a professional football player in a marketing or advertising campaign. The obvious business interest is Toyota, but the professional athlete has a business interest as well — the value of his brand.

More and more companies are turning to celebrities and athletes for ad campaigns, merchandising and packaging, but companies are not always careful to secure the appropriate publicity rights. It’s critical to obtain those rights (usually through a licensing agreement) at the outset, so proper permission is granted to use the person’s likeness in accordance with specifically negotiated parameters. Both the individual and business should negotiate for the use well in advance to avoid any trouble or expense, especially when working with tight production deadlines.

Individuals also face problems. For example, a celebrity may permit the use of her likeness but may want to reserve the right to approve images and how they are used. An individual must carefully examine the rights being granted and whether there should be restrictions or limitations on the scope of the use by time, project, location, etc.

What are some key things businesses need to understand about publicity rights?

Use of a person’s image, voice, signature, photograph or likeness in connection with goods or advertising is often mistaken as solely a trademark issue, but it’s not. Publicity rights in most states are governed by state statutes, and in states where no statues have been legislated, common law remedies endure to protect publicity and privacy rights. In California, publicity rights are governed by California Civil Code section 3344 (although the common law doctrine still exists).

Publicity rights remain after death — 70 years under California law.

It also should be noted that publicity rights protect more than a visual likeness and extend to a person’s signature, gestures, mannerisms or other elements that create an unequivocal association to a specific personality.

Businesses also should keep in mind that a national advertising campaign must comply with the publicity rights laws in jurisdictions where that campaign reaches. For instance, a Los Angeles-based company must comply with Indiana’s progressive publicity rights laws if the campaign reaches Indiana.

How can businesses develop agreements to protect privacy and publicity rights?

Businesses should consult with an intellectual property attorney to identify issues or troubleshoot problems before they arise. This is also true for individuals, especially high-profile personalities who have developed a brand around their image.

Publicity rights are almost always governed by a licensing agreement, and I suggest that individuals and businesses consult with counsel before executing the agreement. Counsel can assist in preparing a standard license for a particular enterprise that easily can be modified as circumstances demand.

Businesses (or licensees) also should consider whether a morals clause would be appropriate in the agreement. This may allow the licensee business to terminate a contract and recover fees when a celebrity or athlete is involved in unseemly conduct that may diminish value.

How has the Internet affected privacy and publicity rights?

Advertising often drives revenue for Internet sites, and more and more companies are turning to online advertising and marketing campaigns or at least incorporating online campaigns with more traditional advertising.

Advertising images and content can be shared on the Web in a fraction of the time compared to more traditional avenues. That means a failure to secure publicity rights can have a greater and more immediate impact, exacerbating potential problems and requiring increased awareness. Given the speed and availability of the Internet, a mistake can be repeated and disseminated many times throughout the world in mere seconds.

What legal ramifications are associated with publicity rights?

Infringing on a person’s publicity rights can be an expensive mistake. There are a number of remedies available to a plaintiff whose publicity rights have been compromised. First, a plaintiff can recover the greater of $750 or actual damages sustained as a result of the violation. Damages might be measured by the loss of value or dilution of the individual’s brand.

A plaintiff also may recover profits gained from the unauthorized use. In fact, the plaintiff need only prove gross revenue, while the defendant carries the burden of establishing deductible costs and expenses. Punitive damages and attorney’s fees are also recoverable.

It should be noted that a publicity rights claim may also constitute a false endorsement claim under the Lanham Act, which provides additional remedies for plaintiffs.

Nick J.G. Sanchez is an attorney with Theodora Oringher Miller & Richman PC. Reach him at or (714) 549-6200.

Tuesday, 23 February 2010 19:00

Global impact

When doing business overseas, the quality of products and services may differ from those in the U.S., companies may have little control over business processes and insurance policies issued here may not offer the same coverages internationally. Businesses also may face cultural differences and language barriers.

As a result, business owners need to be diligent in their risk management practices and insurance coverage to ensure that everything runs smoothly when entering into international business transactions.

“Insurance purchasing and risk management programs should be built around a thorough global assessment and should fit the company’s specific risk,” says Terrence Parks, CPA, senior account executive, Aon Global Client Network, part of Aon Risk Services Central Inc. “Failure to manage these risks can result in unwanted and potentially significant financial consequences.”

Smart Business spoke with Parks about the key things a business leader needs to understand when doing business internationally and how to develop and use a global risk assessment.

What do business owners need to understand about doing business internationally?

There can be a lot of differences within the global supply chain system. All companies are challenged to find low-cost ways to do business while producing high-quality products.

It’s easier to control and monitor the quality of products incorporated into finished products in the U.S., as many parts of the developing world don’t follow the same quality control procedures. This introduces a whole new set of risks, especially when you’re dealing with time, distance and cultural issues. A company may believe that all procedures are being followed but then discovers a problem when the product is delivered.

Business owners need to include additional steps in the supply chain process to mitigate this risk, including requiring vendors to supply products that meet specifications, requiring independent verification of the product and applying appropriate contractual terms that assign responsibility for damages. They should also have the proper insurance in place to protect the company in the event of a claim. The goal is to insulate the business and prevent losses due to other people’s negligence, but insurance is intended to respond if those mechanisms fail.

Regulations are also different in emerging markets and should be closely monitored. For example, building standards are different in other countries and should be carefully reviewed before constructing a new building or leasing space in an existing building to ensure that both the people and property will be protected in case of an earthquake, fire or other disaster.

What should be included in a global risk assessment?

Relying on other parts of the world to purchase or manufacture products introduces companies to significant vulnerabilities, especially if the company relies on a sole supplier. Part of the global assessment is to identify where the vulnerabilities lie and either establish business continuity plans or prepare alternative supply sources.

Even if there is no immediate solution, business owners should still identify this and work to mitigate any business interruption.

What should business owners be aware of when doing business in Europe?

There is the new Environmental Liability Directive (ELD), which places additional responsibility on potential polluters and environmental damages they may be responsible for. Traditionally, these damages were limited to pollution to water, including groundwater, or someone’s property, but the ELD takes it one step further and includes damages to the habitat. There could be lingering effects to a particular habitat — whether it’s a species of bird, animal or vegetation — that may take years to recover.

This places a higher burden on companies doing business in Europe to be careful of any possible environmental damages, particularly if they are dealing with materials that may potentially damage the environment. Insurance is one of the possible solutions to address this increased liability.

How does directors and officers liability insurance come into play when doing business internationally?

In terms of compliance, D&O liability insurance has traditionally been purchased at the corporate level. While it’s always intended to cover the directors and officers on a worldwide basis, there are various legal requirements in any given country that may prohibit the indemnification of a director or officer through a ‘nonadmitted’ policy.

The actual structuring or arranging of D&O liability insurance needs to be carefully managed to make sure it’s compliant with admitted insurance requirements and will respond to potential liabilities. Directors and officers can be held personally liable and their personal assets can be put at risk if this is not well managed.

How can business owners mitigate some of the risks associated with employee safety when doing business internationally?

There are a number of sources that contain information regarding the political environment and stability of a particular region. The U.S. State Department provides a list of danger hot spots and travel restrictions on its Web site, and this should be one of the first steps when considering travel abroad.

The theme is prevention. Business owners should avoid putting an employee in harm’s way. But, if there’s an absolute need to travel to one of those danger spots, proper insurance, such as kidnap and ransom coverage as well as advance security measures, should be in place to resolve and/or prevent problems that may arise.

Terrence Parks, CPA, is a senior account executive with Aon Global Client Network, part of Aon Risk Services Central Inc. Reach him at (248) 936-5268 or

Tuesday, 26 January 2010 19:00

Promoting good health

With more and more of the population focused on wellness and healthy lifestyles, health plans are doing what they can to provide and promote quality among members.

Plans are working to identify risk factors and potential problems among members, while educating them on how to access the right care at the right place at the right time.

“Plans should make sure members are focused on wellness and prevention on the front end, so they are educated and learn how to control a disease,” says Sandra Brower-Stenger, RN, MSN, the senior director of medical operations at AvMed Health Plans.

It’s worth it to encourage prevention, adds Brower-Stenger, because early treatment is much less costly and less detrimental to a member’s livelihood and quality of life.

Smart Business spoke with Brower-Stenger about how to take advantage of the quality care initiatives health plans have put in place.

What are the risks of not focusing on quality care or taking advantage of these initiatives?

Employers should encourage their employees to focus on wellness and health care from the onset of their employment. Then, employees will know how to access care and services at the appropriate times. If health related problems arise, these problems can be quite costly, even if the employee has insurance. Costs come back to the employer in the form of an experience rating, and to the employee in the form of high deductibles or high co-insurance.

Taking advantage of preventive measures on the front end is usually less expensive. For example, early detection of breast cancer via a mammogram has a lower cost and much higher success rate for survival; it can be more costly and possibly fatal if the cancer goes unchecked.

Which measure in quality care is the most important?

All measures of quality are important, but quality care measures that focus on prevention, such as immunizations, early detection or wellness, should be a strong focus. Initiatives that encourage the identification of poor lifestyle or behavior choices and then change those behaviors in order to eliminate high-risk conditions are also important.

There also needs to be a heightened awareness about measures and activities that can help members avert crises. For example, there are many diseases that people can control. Crises can be averted by educating people on how to control and live their lives within the parameters of the disease. Show them what they should and shouldn’t do, and what types of preventive services to access, i.e., obtaining specific health screening procedures or tests.

Employers can be supportive of employees who need to have preventive tests done a couple times a year. Still to this day there are not a lot of physician offices open after hours or on Saturdays. Employees oftentimes have to take time off work for these appointments if their employer is not supportive of these preventive initiatives. This can make it more difficult for employees to access these services and get the right care.

How can employers and plan members receive information on health plan programs?

Health plans educate in a multitude of ways. One way is through newsletters, which can be tailored to the specific audience. A member newsletter may talk about different disease processes, how to better understand the health care system, and what preventive activities are scheduled based on their age, gender and high risk factors.

Employer group newsletters could be geared toward items such as wellness programs, activities and initiatives to implement for the entire employee population. Employers should be educated on the health plan’s offerings, as far as wellness and prevention activities. Studies have shown that employers who support wellness and prevention activities have a much higher participation rate of employees that are engaged in wellness activities than employers with a hands-off approach.

How do plans manage costs by coordinating care?

Health plans should have different types of programs to address a variety of different issues, such as case management, complex case management or disease management programs. Disease management looks at populations of individuals with a specific disease and helps the identified members learn about their disease. For example, a health plan can look at all of the diabetics enrolled in the health plan and identify the biggest opportunities for improvement. This could be getting them a certain test, controlling test results or mass education. It’s understanding the individuals and giving them the right tools so they can better manage the disease.

Case management is a more high touch program. A member may have more complex needs, and may have challenges navigating the health care system, utilizing unnecessary resources if he or she doesn’t receive attention from the health plan. Case management works with the member and his or her physician to coordinate care so inappropriate or unnecessary services are not being delivered.

How do plans get non-compliant members involved in health care services?

Health plans should get individuals with chronic illnesses engaged in understanding their diseases and health care needs by educating them on the importance of the care, helping them understand what will happen if they do not receive this care. They should also understand how this would affect their quality of life now and in the future.

Another way to motivate members is through incentives. Members can be rewarded when they achieve a specific goal or change a certain behavior. Incentives can be money, gift cards, prizes, drawings, or even a partial reimbursement for services.

Sandra Brower-Stenger, RN, MSN, is the senior director of medical operations at AvMed Health Plans. Reach her at (305) 671-5437 or

Tuesday, 26 January 2010 19:00

What are your numbers?

People have many numbers to remember but the most important may be those needed to live a healthy lifestyle — weight, blood pressure, tobacco and alcohol use, and a healthy amount of exercise. These factors contribute to the majority of health issues in the country today, including heart disease and diabetes.

One way to learn your numbers is through a health screening, which can be done online, on paper or even at an employer work site. Health screenings also provide feedback on how to live a healthier lifestyle.

“Health screenings are a good self-awareness tool because, oftentimes, people don’t get a chance to examine where they are in life and how they are behaving, except during a physical exam,” says Robert Van Eck, associate vice president of employer services and population management at Priority Health. “Employers can also use aggregate employee reports to implement wellness activities and initiatives within the workplace.”

Smart Business spoke with Van Eck about how to use health screenings to promote a culture of wellness within your company.

What kind of information is collected during a health screening?

The first type, a health risk appraisal, looks at three main areas of information: demographics, clinical and behaviors. The demographics area looks at age, gender, sometimes ethnicity, existing conditions and other basic background information of the individual.

Clinical topics assess weight, height and cholesterol levels. The health behaviors area reviews a person’s tobacco use, dietary patterns and exercise habits.

Another source of information is the biometric screening, during which a health professional compiles an individual’s vital statistics. This usually involves measuring weight and blood pressure, and sometimes getting a cholesterol or glucose level.

These screenings collect information more credibly and reliably but have fewer points of information. This can oftentimes be done at an employer’s work site. Screenings should typically be done once a year.

Screenings are an important way for employees to receive feedback. They will either receive responses online, or have someone go over the results following the screening. This gives them information on their greatest health risks and conditions.

What is the advantage of offering health screenings at the work site?

Having somebody on site walk through a process engages employees better. It’s easy to do a paper and try to buzz through it, but there’s not a lot of interactivity. On-site biometric screenings are a great way to engage employees with people who are knowledgeable about health, who are understanding and who can gently convey messages such as letting them know they’re doing a good job or that they need to develop a plan. It’s face-to-face accountability, discussion and an opportunity for employees to ask questions.

It also creates a better social environment for that culture of change. Health screenings are often done in a large room where employees are going from one station to the next, and they’re seeing their colleagues, so there’s a social factor. Employees start talking about their numbers and risk levels, and asking colleagues to take part in future health activities with them. It goes from a self-awareness tool to an activity, culture and social environment.

Why is it important for employers and employees to know their numbers?

Employees should know these numbers because they will impact their health, quality of life, longevity and health care costs. People with five risk factors cost double what people with only two risk factors do to a health plan.

Employers won’t see individual statistics; rather, they receive an aggregate report from the health risk appraisals and biometric screenings. They may receive information on what percentage of their employees are obese compared to the national or plan average, or what percentage smoke or exercise three or more days a week.

Employers can then use these numbers to implement the appropriate activities and initiatives to help employees get better and decrease health care costs.

How can you use an aggregate employee health report to encourage changes within the employee population?

You should definitely act on the information. It doesn’t make an impact if you have the information and do nothing with it. Promote wellness by getting classes and challenges, or by offering incentives to employees involved in certain health activities.

Some employers might be hesitant because they believe employees might wonder if they will be judged by their numbers. You should ensure employees that you do not have specific information, and you should also engage them in some point of the health planning.

You might want to develop a health or wellness committee to discuss the results and decide what wellness activities to implement. It’s important to get employees involved, so activities are planned in the context of creating a culture of wellness.

How can you encourage employees to take advantage of health screenings?

People don’t typically take health screenings just because they want to, so you need to dangle a carrot out there. You might want to give a simple incentive for employees taking a health risk appraisal or biometric screening. Incentives are mainly financial rewards, but can also include gift cards or other goods.

It can also be built into other incentives that you establish for taking part in wellness activities.

Robert Van Eck is associate vice president of employer services and population management at Priority Health. Reach him at (616) 464-8204 or

Tuesday, 26 January 2010 19:00

Fifth Third Bank on seeking a loan

Now is a great time to become a homeowner or to consider selling your current home and purchasing a new one. Low mortgage rates, low home prices and tax credits have more people considering buying or selling, making this a good time to get into the market.

But before you buy a home, it’s important to consider some of the recent changes in the mortgage environment.

“The product offerings and many of the details within those have changed substantially,” says Tom Stoll, senior vice president and head of mortgage at Fifth Third Bank. “There are significant changes, especially when it comes to self-employed borrowers who have the credit quality, may have the equity and down payment, but still cannot meet some of the income criteria based on the allowed tax treatment for their earnings.”

Smart Business spoke with Stoll about how the mortgage environment has changed and how new tax credits and regulations have aided those changes.

How has the mortgage environment changed?

Not a whole lot has changed as far as acquiring a loan — you still need to supply the lender with a W2 or pay statement — but many product offerings have been removed from the market. Many of these options were ones that consumers may have been confused about or didn’t have to verify the same information required for traditional loans.

Now, predominately, you have the conventional market, Federal Housing Administration loans and some state-administered bond programs that you can look at when considering a mortgage. The conventional and FHA markets make up 90 to 95 percent of loans being taken out today, and the process is still the same as it was before.

Everything is also back to full documentation and verification. The government heard consumers complaining that lending was too easy and that the terms to qualify for a mortgage were not stringent enough.

Any mortgage product that is not full disclosure or verification has been removed from the market.

What impact has the first-time homebuyer tax credit and current homeowner tax credit played in the mortgage market?

This has been significant. First-time homebuyers, typically looking at a little lower average home price, have been the most active buyers and have been shortening the inventory supplies. The National Association of Realtors was reporting close to 12 months or more of inventory several months ago, but the most recent reports have put it at seven months in the Greater Cincinnati area, which is a more typical market. The sales are also more traditional and not mainly foreclosures and short sales, so it’s helped with determining appraised values. This may have offered price stabilization and confidence to move up buyers thinking of selling their existing homes and trading up.

This is the third version of this program, and it’s one of those scenarios where, if you can enjoy the low rates, get the incentive and it’s on sale, there’s nothing stopping you from purchasing.

How important is tax preparation in obtaining a mortgage?

When lenders ask borrowers to sign an IRS Form 4506, they’re granting the lender permission to receive a tax transcript of what was sent to the IRS. This is the same as lenders looking at a pay stub, W2 or a verification of employment. You can’t do that with self-employment, so the secondary verification can be the retrieval of tax information with permission from the borrower.

Receiving gift money for a down payment is another area that lenders will pay special attention to. Lenders want to know who that money came from and want a copy of that check and the deposit ticket.

Sometimes lenders want to make sure that the deposit came into your account without any debt. All they can see is the money in your account, but not if there’s any corresponding debt. The paper trail is also important so lenders know the source of the funds and that no other debt is attached.

What is the new Real Estate Settlement Procedures Act law that went into effect Jan. 1?

This holds the lender accountable to what he or she disclosed to the borrower at the beginning about how much it will cost to fund that mortgage transaction. Before, there was no responsibility on the lender’s part of what he or she shows the buyer or that he or she has a legal obligation for these numbers to be exactly the same at closing.

The new regulation provides more responsibility for lenders to refund any difference and that the numbers can only be changed under particular circumstances. The government heard way too many times that consumers received a very attractive number, but something else was shown at the closing table and it could not be changed.

The consumer can now make a claim against the lender because he or she did not accurately and fairly represent the true cost associated with that transaction.

The new settlement statement also includes more details and has boxes that say the consumer is specifically paying this to the bank in order to get the loan. This provides clarity, because there were many complaints about how confusing the settlement statement was.

Tom Stoll is senior vice president and head of mortgage at Fifth Third Bank. Reach him at (513) 358-5634 or

Saturday, 26 December 2009 19:00

The cost of incivility

Bullies are not just on the playground anymore, as bullying in the workplace has become a growing problem. Research shows that about 37 percent of the work force has been bullied, with about 75 percent of that bullying done by bosses.

“Bully bosses cause all sorts of problems,” says James Burton, assistant professor of management at Northern Illinois University. “They cost organizations across the U.S. an estimated $24 billion a year due to the resulting lost productivity, absenteeism and tardiness among their employees.”

Workplace bullying can also lead to stress, depression and lower self-esteem. And bullied employees may continue the cycle by bullying peers, or even their spouses and children.

Smart Business spoke with Burton about bullying in the workplace and how to stop the spiral of incivility.

What is workplace bullying, and how does it differ from being assertive or aggressive in the workplace?

The big difference is that it is a sustained process. For example, you may have a bad day and act out against subordinates or peers. But that’s not bullying — you’re just in a bad mood on a particular day and may become too aggressive.

Bullying is a prolonged and sustained display of hostile behaviors, such as demeaning employees, belittling people and undermining others on an ongoing basis. It’s not a one-time event but something that goes on for a while.

Research has shown that when someone is bullied at work, that person is more likely to bully others. Therefore, the behavior of bully bosses can lead to a spiral of incivility that spreads throughout the organization. This spiral of incivility can even make its way to the employee’s home.

What are the drivers of bullying?

While the research has demonstrated that perceptions of unfairness or stress can lead to bullying, the biggest drivers are the culture, values and systems that are in place at work. It may be fine for some companies to have an aggressive culture; for example, Microsoft is known for its aggressive culture, and that’s not necessarily a bad thing. However, there must be limits. Unchecked, an aggressive culture can spiral out of control.

For example, if your boss is not punished for bullying you, you may perceive it to be fine to bully others with the belief that the behavior won’t be punished or may even be expected. So bullying starts to spread throughout the organization and becomes part of the culture and expected behavior for the employees.

While some may argue that you can stop bullying by hiring the ‘right person,’ there are no personality traits that point toward bullying because anyone can become a bully. Even if you’re the nicest person, you might tend to adopt bullying characteristics if that type of culture is in place at your company.

How can an employer develop a culture that discourages bullying?

The key is to punish those who are causing problems. You need to make sure that management will reprimand bullying when it occurs so others know that it is not acceptable.

This sets the values that the company stands for. Employees are unlikely to begin bullying when they see their peers being punished for that behavior.

You should also look at the people you promote. Many times, the aggressive folks are the ones who can get the work done and they are the ones who are promoted. Other employees see that and believe that you need to bully in order to be promoted.

You also may want to develop formal policies against bullying in the workplace. There is a growing trend among many organizations, for example, Barclays Capital, Berkshire Hathaway, to adopt a ‘no jerks’ policy where employees are expected to treat others with dignity and respect. This then becomes part of the values and culture of the organization.

In a sense, you see a spiral of civility rather than incivility.

What should an employee do if he or she has been a victim of workplace bullying?

The worst thing to do is retaliate, especially if the bullying is being done by an immediate supervisor. The employee doesn’t have the same power and might face severe punishment. Instead, an employee should talk with a human resources professional to find out the company’s policies against workplace abuse and bullying, the definitions of bullying and if his or her experience matches that definition.

If it gets to be an extreme problem, an employee can seek legal counsel, but there are currently no laws against workplace bullying. However, if that bullying crosses over into harassment, there may be legal resources.

What are the benefits of preventing workplace bullying?

You create a climate and culture of trust and respect and have employees who are not psychologically damaged in terms of depression and low self-esteem. Employees will be more productive and focused on the job if you’re treating them with dignity and respect, and not bullying them.

Preventing bullying can also preserve the reputation of your company. There are many blogs on the Internet for employees to discuss bullying bosses and organizations, and the last thing you want as an employer is to get a reputation as a bullying organization, because then you won’t be able to attract the best and brightest employees.

James Burton is an assistant professor of management at Northern Illinois University. Reach him at (815) 753-6315 or