Deborah Garofalo

Monday, 31 March 2003 08:38

The pill and the bill

As Congress grapples with revising Medicare’s prescription plans, the lesser known issue of contraceptive coverage waits to be decided.

In 1998, a district court in Washington ruled that Bartell Drug Co. could not exclude prescription contraceptives from its generally comprehensive prescription plan. The ruling stated when the company omitted contraceptive coverage that constituted discrimination on the basis of sex.

Lynette Falkowski, a Cleveland lawyer with McDonald, Hopkins, Burke & Haber, represents companies with facilities in multiple states and says that the ruling can affect Ohio businesses.

“What we tell employers is, if you have multi-state operations, …cover it (contraceptives) across the board,” says Falkowski.

As with any law, the key lies in the language. In this case, the term comprehensive is the issue. Health care plans that offer coverage for other preventative medications are considered comprehensive.

The Bartell ruling, set the precedence in how the some courts look at pregnancy. According to the ruling, pregnancy is not a state desired by all women or at all times in a women’s life. Therefore, the ruling follows that prescription contraceptives are similar to other preventative drugs and should be covered.

“What really prompted this whole issue to come up is when Viagra came out,” Falkowski says. “If your plan covers Viagra, I would recommend you probably cover prescription contraceptives as well.”

Since the decision 13 states have added legislation regarding contraception coverage and although Ohio is not one of them a bill (House Bill 432, Contraceptive Drug Insurance Act) is pending.

It has been in committee since January of this year but Falkowski says, “In the wake of Sept. 11th, these issues have pretty much been tabled.”

In fact federal changes are also being considered; the Equity in Prescription Insurance and Contraceptive Coverage Act has also been in committee since Sept. 10, 2001.

Falkowski says in light of rising health care expenses, some employers are waiting for the law to pass in Ohio before offering contraceptive coverage. She warns, however, businesses could be at risk to become the next plaintiff. “You could be the next Bartell Drug Co,” she adds.

How to reach: McDonald, Hopkins, Burke & Haber Co., (216) 348-5400 or ww.mhbh.com

Friday, 27 September 2002 12:21

Mr. Clean

STERIS Corp. is one of those local success stories Northeast Ohio is so proud of: A small company takes advantage of a niche market, flourishes and even stays in the area.

But despite its success, it has not always been a smooth road for STERIS.

Founder and CEO Bill Sanford left just before STERIS' stock took a dive. All the while, the company and its new CEO, Les Vinney, were trying to figure out how to mesh new acquisitions with the larger corporate culture.

Fast forward a few years, and Vinney and other STERIS executives are in Washington, D.C., standing before the Food and Drug Administration discussing homeland security and anthrax. Those meetings culminated in an agreement to conduct a collaborative research and development project to evaluate and modify STERIS' anti-biological and chemical warfare technology.

Most recently, STERIS, a Mentor-based medical sterilization equipment company, was recognized by Fortune magazine as one of the top 40 mall/mid cap stocks to invest in over the next 12 months.

SBN Magazine sat down with Vinney, CEO to discuss some of the changes the company has undergone since he took over and what Sept. 11 meant for STERIS.

STERIS dealt with some significant changes not only in its core customer base but in the economy. Shortly after it adjusted the strategic plan, the bottom fell out of STERIS' stock, Sanford was out and you were in. How did you manage the changes?

At the same time as these changes in the hospital environment were occurring, we had just completed a large number of acquisitions and were facing a different economic model for all those pieces. The entire profile of the corporation changed. We were going through dramatic changes both as an organization and as individuals. People were uncomfortable not knowing what those changes might lead to.

The result was we had to re-examine some of the ways we approached the market. We had to make sure we were operating more efficiently ... taking advantage of the economies of our operation, and that we didn't build our organization around the old process but rather addressed the issue of providing value and solutions to our customers rather than a piece of equipment.

Bringing together a number of companies can be difficult. What was the most important thing you changed?

You have to do a group of things. You cannot build a team without providing the resources. You cannot provide the resources without building the team. You can't leave cultures in place that are conflicting or using different thought processes to get at issues. You can't do only one thing, and you can't affect only one part of the organization.

You're trying to accomplish a single mindset -- an organizational structure in which everybody realizes they have a role and tries to perform that role to the maximum within the concept of that mindset. That's what you're trying to accomplish.

It's an impossibility, but you know that. But that's what you're striving for.

The first thing you do is try to be involved and be present at as many locations as you can. Any time you have that kind of change, you want to make sure people know who you are and recognize your personality, desires and the direction you hope to take.

We used newsletters, events, sales meetings, leadership meetings with senior management -- all those events defined our activities. On my 100th day as CEO, we took the leadership group off-site and developed a blueprint for growth.

We looked at how we could double the size of the company in the next five years, what avenues for growth we could take and what we needed to do to work more closely together. We started to establish a base for people to have a common vernacular and common approach to issues.

Then we looked at a variety of areas management felt they had to address to expand their blueprint, stretch it out, strive for excellence and get everyone aligned with the objectives and the overall strategy. It's communication, it's interaction and it's difficult from this office to communicate around the world to 4,500 people.

It doesn't have to happen every day -- it just has to be reiterated and reflected and mirrored through the organization a sufficient number of times.

Are we perfect? No, we still have a long way to go. To compound the issue, we were confronted with transition from not just one culture, but many old cultures -- 11 acquisitions. We're still struggling with that. But the way it will happen is by communication, interaction and sharing in successes.

STERIS is highly dependent upon its research and development for growth. How do you decide how much and where to invest?

We narrowed the scope and focused on the projects we though would be most meaningful to the marketplace most quickly. We are very focused on the projects we are involved in, more so than in the past. We are building off the core technologies that we feel we have and positioned as the strongest offering.

For other technologies, we will continue to look at opportunities that are developed outside the company and look to acquiring them or licensing them. It's simply a matter of having enough of a comfort level that the portfolio of projects and technologies we acquire is broad enough to have an adequate return for our shareholders.

Having said that, you can also have too broad a portfolio, which is where we were when we were looking at too many activities, suboptimizing everything. We narrowed that down and decided on a dozen areas we felt were the most important to invest in, and we'll put meaningful dollars into those.

What was it like to go to Washington and deal with the anthrax issue, and what is the level of your involvement now?

When we were in Washington, D.C., late September and early October last year, it was as if we were the only ones visiting the city. People had really gone back to their base and sort of pulled the curtains. That has dramatically changed from the beginning of this year. But we have raised the level of awareness as to our vulnerability.

Sterilization and decontamination chemistries and equipment are used every day in hospitals and pharmaceutical production facilities. Transfer that to an office or mail processing facility, and one can draw the analogy.

You can't stop the event, but you can serve as a preventative to the spread of the event. That's really the key. What we've discussed with the government are areas we felt our technology could be utilized in a modified way or in a new environment to assist in that effort. Discussions continue.

We received exemptions from the EPA for testing in unique applications in authorized environments. The products are not for general consumption. We hope to convince the EPA that they're safe and manageable and can be used generally for anybody in their particular environment.

STERIS could be sitting on a big project in terms of its work with the government. Is Northeast Ohio capable of supporting something big?

I don't care who you are, I don't care how great your intellectual property fence is. At some point in time, somebody can come up with a better idea and drive that idea to fruition. For Cleveland as a city and a community, the challenge is somewhat greater.

We have a very knowledgeable base of individuals, and we have the underlying acumen to pull the businesses tighter. The real question in my mind is do we have the support in terms of the core of individuals that will have to do the day-to-day tasks -- the technicians, the scientists, the chemists, the biologists.

Who will be able to support a growing business as it goes from development of an idea to fruition to commercialization? That, I think, is our biggest challenge as a community -- to have that base of people readily available to not just one organization but to a variety of organizations.

What would you suggest to Cleveland's leaders to strengthen our competitive advantage?

I think our biggest challenge is education or work force. Have a group of people who want to stay in the area, first of all, that's a challenge.

We have to retain the young adults who go to school elsewhere because they don't see the opportunity here. We have to make sure they are aware of the opportunities, and we have to make sure we have a stronger education base in the sciences and math.

Biotech will require that science and math background. Talking to other executives, I think we would say we see that talent piece as the biggest issue, not only in driving biotech business but also in our own businesses today.

If you look at the region, even downtown Cleveland, there has been such a dramatic change in the underpinning of the organizations that are here. They tend to be more technologically oriented. They have transitioned from what were the steel and auto part and tire industry days to polymers and electronic components, subassemblies and medical devices.

There is a core base here. We're not recognizing that the transition has occurred.

Friday, 30 August 2002 05:40

Just in time

The room was full of Lincoln Electric sales trainees listening attentively to a veteran sales representative. His advice was to work smarter, not harder. John Stropki, then relatively new to Lincoln Electric, didn't necessarily agree.

"The more I thought about it, I realized there's always going to be somebody who's smarter than you," says Stropki. "And if your philosophy is you're just going to work harder, there's always somebody who'll work harder than you. But what if you couple the two together ... that's a pretty tough combination for people to beat."

Over the next 29 years, Stropki worked both harder and smarter, rising through the ranks to national sales manager. He became president of Lincoln Electric's North America division in 1995.

Since his time as a sales trainee, Stropki has driven change, taking the 100-year-old arc-welding company into a new century by focusing on finding a new way to manufacture its product.

"We've focused on industry best-of-class, not welding industry best-of-class," he says.

Improvements are difficult to implement at a traditional organization, but for Lincoln, a large-batch manufacturer, it was a monumental task. Traditionally, Lincoln concentrated on big batch manufacturing runs, large inventories and a piecework pay policy that encouraged mass production.

But manufacturing was changing, and for Lincoln, as inventory grew, so did the order backlog. More flexible and efficient companies were outperforming larger, traditional manufacturers, and something needed to change.

With the help of his staff, Stropki reworked Lincoln's manufacturing philosophy top to bottom. But even with significant changes, Lincoln kept many of the strategies that were part of its history, like employee profit-sharing and promoting from within.

One major change was the revamping of Lincoln's plant. The company replaced outdated machinery with state-of-the-art equipment and re-engineered the manufacturing floor to eliminate production redundancies. It cleared out warehouses overfilled with raw materials and changed suppliers to accommodate just-in-time delivery capabilities rather than bulk discounts.

Many operational improvements were driven by the need to incorporate e-commerce.

"We recognized that we had to be operationally excellent in order to be able to take advantage of what e-commerce would require," says Stropki.

New technology coupled with other changes had a profound effect. On the administrative side, Web-based platforms allow customer inquiries to be received via the Internet rather than through the front office.

"If your goal is to get an order in an expedient, cost-effective way, you have to be able then to fill that order in an expedient cost-effective way," says Stropki.

Approximately $75 million and many logistical improvements later, Lincoln had decreased machine downtime and increased the number of cross-trained of employees.

The risk has paid off. Under Stropki's guidance, Lincoln has remained a competitive player, with approximately $1 billion in sales last year.

In the world of big manufacturing, change is a necessity for survival, and Stropki and Lincoln's management recognized that.

"The business used to be a slow, steady go -- just drive costs out of the manufacturing side," says Stropki. "My view is that Lincoln relied too heavily on the workers to outperform their peers without providing the necessary investment in tools to get additional leverage."

The only thing constant in life is change. And by embracing change, Lincoln has been able to stay profitable while many other traditional manufacturers went out of business.

"Change is embedded in the organization in both product and methodology," says Stropki. "I think we hire very intelligent people, and now we're giving them the tools to use that intelligence and work ethic and have the best in class manufacturing."

 

 

 

Wednesday, 31 July 2002 11:11

Easing the pain

In 1998, Research Organic Inc.'s insurance premiums increased a whopping 58 percent. That's when Annie Harlan, HR director at the chemical manufacturer in Cuyahoga Heights, decided to look at streamlining the company's benefit's package.

In addition to the rising costs, the company was experiencing a growth spurt. Its work force grew 38 percent and Harlan didn't want to make recruiting more difficult by cutting benefits across the board.

Research Organic's is experiencing what many other local companies are going through. According to the SBN and ERC Workplace Practices Survey, insurance premiums paid by employees in Northeast Ohio rose from 21.7 percent in 2001 to 22.5 percent in 2002.

In part, Harlan did what most employers are being forced to do -- pass a portion of the rate increase on to employees.

"The cold, hard fact is, it's a shared benefit," says Harlan. "But you have to remain competitive. When I try to attract staff, I use our benefits package as a recruitment resource."

Harlan went back to her insurance broker and implemented a cafeteria-style benefits packages. With the new packages, employees can pick and choose the benefits they want toreceive and pay a percentage of the cost based on their choices.

By analyzing costs, Harlan found out what the biggest expenses were and what changes would have the least negative impact on her staff of approximately 100 people. Harlan says knowing your work force demographics gives you insight into what benefits are frequently used and which are not.

Research Organics added a deductible for hospital admissions that drove down premiums 5 percent and affected less than 10 percent of employees. The logic is that co-pays and deductibles aren't felt until they're used, and not every employee uses them. Harlan even found that some benefits were never used and could be eliminated.

Communicating frequently and openly helped with the acceptance of the benefit. In addition, Harlan posted news articles on employee bulletin boards and included data on insurance trends in the company newsletter and the Web site.

"When you're honest and open with employees, you'll get a lot more buy-in," she says.

How to reach: Research Organics Inc., (216) 883-802 or www.resorg.com; Employers Resource Council (ERC), (216) 696-3636 or www.ercnet.org

Friday, 19 July 2002 06:59

Time to change the packaging

Winemaker Nicholas Ferrante is taking baby steps toward modernizing the image on his wine labels, maintaining consistency and changing just one product line at a time.

"In labeling, you want to update your look while keeping some continuity so you don't lose people," says Ferrante, general manager of Ferrante Winery & Ristorante.

Established in 1937 by Ferrante's father and uncle, the family-owned winery is located on 35 acres of vineyard in Ashtabula County. It produces 15 varieties of table wine, totalling 80,000 gallons annually, and sells it in 11 Ohio counties.

But changing a brand -- whether it's simply the packaging, a logo or an entire product line -- can't be taken lightly. It requires a lengthy period of evaluation to determine not only how to go about the change, but also to promote the change in a way that keeps customers buying the product or service.

Ferrante says part of the reason for the change in the labels was that he wanted to take advantage of the flexibility of pressure sensitive technology. That new technology for making labels is less labor intensive than the glue-applied technology he formerly used, and allows for easier changes. Three pressure sensitive labels make up the front bottle design.

The new graphics were launched late in 2000 with Ferrante's basic table wines, which are sold in many Northeast Ohio grocery stores. The remaining lines will follow over time because, Ferrante says, it's prudent to move slowly.

Susan Jaeger, the graphic designer who worked on the project, says consumers buy a product based on looks. By keeping some of the flavor of the original label, Ferrante is building customer confidence that the product's taste has not changed.

Jaeger describes the new look as clean, innovative and very new for an Ohio-based wine. The image she wanted to portray was a "California ... upscale feel."

The "FERRANTE" logo was kept, while at the same time, a new logo identifying the wine with the initials "FW" was introduced. How to reach: Ferrante Winery, (440) 466-8466

Deborah Garofalo (dgarofalo@sbnnet.com) is an associate editor of SBN Magazine.

Thursday, 18 July 2002 13:13

Tapping resources

There's no question anymore that technology must provide a return on investment.

The payback comes in the form of smart tech, a distant cousin to working smarter and a core competency of companies that are here today, here tomorrow.

Does that mean every chair is occupied in the IT department or that a partnership is built with an outsourcing firm? Not necessarily. Business leaders need to look within their company's own four walls for technology management.

One Ohio school manages its information systems like a business, a practice that saved it a quarter million dollars by putting "inside power" into practice.

Robert Agnew is director of Information Technology at Baldwin-Wallace University. He is responsible for more than 2,000 ports, 40 servers and all telecommunications on campus. Agnew says the number of IT jobs being created exceeds the number of people entering the market. The answer to the technology gap may lie with employees knowledgeable about the company and looking to add to their portfolio of skills.

Whether it is a secretary who steps forward or an engineer with very logical thought processes, many employees may be more successful with programs and systems than anyone can predict.

"Those are the people you want to encourage to get further training," Agnew says. "That's an untapped resource."

The Perry School District in Lake County looked in house for the installation of a new technology infrastructure. The Perry High School student-run company Perritech joins the big "T" with the 3 Rs, and students receive a nontraditional education that combines real-world technology with business experience and classroom training.

The student-run company was created in 1998 with a $100,000 grant from the state of Ohio. The original goals included providing practical experience with in-class instruction. The result has been not only surprising but lucrative -- a cost savings of $250,000 to the school district in three scant years.

Perritech employees assisted with the upgrade of the district's technology and act as the help desk for the 1,300 computers used by teachers, students and the administrative staff on campus. One-third of the student population is involved in some aspect of the technology program, and 15 students who have qualified in specific computer certification courses make up Perritech.

The thinking-outside-the-box mentality has Perritech reaching out to local businesses after school and on weekends. Students manage software installations and hardware repair and trouble-shoot systems problems, all at competitive rates, with revenue fed back into the company. How to reach: William Sarvis, (440) 259-9379 or www.sarvisb@perry-lake.k12.oh.us; Robert Agnew, (440) 826-2700 or ragnew@bw.edu

Deborah Garofalo (dgarofalo@sbnnet.com) is associate editor at SBN Magazine.

Friday, 28 June 2002 05:59

Financial independence

As the the consolidation wave washed over the financial services industry, Brown Gibbons Lang & Co. held fast to its status as an independent investment banking firm and continues to grow.

In 1989, then-35-year-old co-founder Michael Gibbons left behind a successful career as president and CEO of a Houston-based investment firm to return home to Cleveland and launch an investment house. With a close business associate, Kevin Brown, he formed Brown, Gibbons & Co.

The two were just setting up shop when Brown suddenly passed away. But Gibbons carried on, focused on what he knew best -- middle market investment banking.

Early success helped Gibbons expand both the firm and its client roster. He attributes that success in part to keeping the firm focused on investment banking.

"We're doing only one thing for our clients," Gibbons says. "We're representing them in a financial advisory position without regard to any other products or issues."

Scott Lang arrived in 1996 from a large Chicago capital investment firm, where he was executive vice president and managing director of investment banking. Today, he oversees BGL's Chicago office.

Gibbons and Lang both believe that investment banking firms and corporate financial institutions do not mix. That's why BGL remains independent, resisting numerous buyout offers from larger organizations.

The pair also credits the firm's success to the loyalty of its 40-plus investment bankers.

"It's a difficult process to keep people," says Gibbons. How to reach: Brown, Gibbons, Lang & Co., (216) 241-2800

Wednesday, 24 April 2002 06:23

Sammy's takes a turn

As simple and straight-forward as the restaurant business may seem, the fact is the failure rate of restaurants is one of the highest there is and everything from a bad review to an untimely street repairs can kill a place.

Denise Marie Fugo and her husband, Ralph DiOrio know this all to well. They owned and ran Sammy's in the Flats, a restaurant that was considered one of downtown's best in the '80s.

Fugo estimates that in the beginning, 60 percent of Sammy’s customers were local business people and of that local clientele, 88 percent were male business executives, including many of the city's movers and shakers.

"Dick Jacobs closed his deal on the Cleveland Indians there (at Sammy's)…it was a place you took your customers to do business," says Fugo.

But tax law changes in 1986 had a profound affect on the way business meals were looked at. According to Fugo, the fact that business-meal deductions decreased to allow only 50 percent sent Sammy's revenue plummeting.

Changes in business meal deductions were then followed by a recession that closed many Cleveland businesses. It became increasingly clear that for Sammy's to ride out the economic downturn Fugo was going to have to dive into some unfamiliar waters.

So in 1983, in response to the business environment and at the request of their customers, Fugo and DiOrio diversified the business and started doing event catering. Fugo says, "The best market research comes directly from your customers," says Fugo. "If you listen to your customers, they will tell you where the opportunities are."

The risk paid off so well that last year, Sammy's fine dining restaurant officially closed. Fugo admits it was like cutting off an arm. "I had vendors I had used for many years that dropped me cold. They didn't think we were going to survive the change."

Now two floors are dedicated banquet facilities, the number of staff fluctuates between 35 and 300 on a weekly-basis and Sammy's catering business is evenly split between the social market –- weddings, anniversaries -– and the corporate market –- company events, customer entertaining.

Fugo says, "Our corporate mission was to bring life back to the city through world class food service, ambiance and management. We wrote the mission statement in 1980 and we still use it today."

How to reach: Sammy's, (800) 837-5899

Sammy's Web site

Thursday, 28 March 2002 11:05

The debatable drug

The neighboring houses are still dark when Harold Dennison rises each morning.His 5:30 a.m. ritual includes a few cups of coffee, which he refers to as "the fog lifter" because it's a little stronger than the several million cups Americans reach for each day. Dennison, a process engineer, proudly boasts that he drinks 10 to 12 cups a day and admits he's addicted to caffeine.At any given company, on any given morning, it's standing-room-only by the coffeepot. And as the java brews, people slowly come to life. A whopping 110 million Americans reach for the legal, addictive stimulant -- more than three times the number that drink soft drinks and more than four times the number that quaff beer.But like anything that seems too good to be true, the pick-me-up carries a price. Physicians argue over whether consumption leads to addiction and, as alcohol does, carries health risks.The drug in coffee is caffeine, a crystalline alkaloid that affects the brain and artificially lessens fatigue. For the average drinker (two to four cups a day), the drink is relatively harmless. However, overconsumption causes insomnia and jitters, injection into human muscles causes paralysis, and a sudden accumulation in your body, say 10 grams or more, results in death. (The average cup of coffee contains between 66 and 280 milligrams of caffeine.)According to Kurt Donsbach, Ph.D., an expert in holistic health care and author of more than 50 books and booklets, one or more cups of coffee causes your stomach temperature to rise 10 to 15 degrees. Your heart beats faster as blood vessels around the heart widen and those around the brain narrow. Your metabolic rate increases as your kidneys manufacture and discharge up to 100 percent more urine.Many people write off coffee drinking as a harmless habit. But coffee meets two criteria for addiction -- it is tolerated by the body in increasingly higher doses and its absence creates withdrawal symptoms. That second characteristic, accompanied by a loss of control, can be judged by your temperament before that first morning cup.Simply ask yourself one question: Are you edgy before you get your java?

Kurt Donsbach, Ph.D., Web site

Thursday, 28 March 2002 08:37

The long road ahead

There is no escape from aging, yet many people don't plan for how they will live out their senior years. In fact, most people don't even want to think about it. However someone is thinking about it. Recent tax law changes now provide business owners the opportunity to offer employees long-term care insurance. As of 1997, limited liability corporations (LLCs) and the self-employed can itemize 70 percent of the premiums for long-term care insurance. In addition, the law is relatively flexible. "An owner can do this for himself and his spouse, and they do not have to include any other employees," says Jack Harding president of Harding, Harding and Associates Inc., dba Long-Term Care Solutions Agency. Harding calls long-term care "the missing link in employee benefits today." The fact that long-term care insurance can not be paid for with pre-tax dollars like many other benefits means most employees are not opting for coverage. Harding says most long-term care plans today are referred to as "10 pays" -- a business owner pays 10 annual installments and is covered for life. "They can walk away, retire, sell the business, whatever, and have a paid-up, long-term care policy for themselves and their spouse," Harding says. As significant as the tax changes are for LLCs, other recent changes include being able to itemize 100 percent of long-term care premiums for C corps with no cap to the amount. Health care for the elderly is also receiving attention, with legislation pending that will offer tax benefits similar to those of an IRA contribution. The average annual cost of a semi-private room in a Cuyahoga County nursing home is $58,000 to $62,000. Home-care costs are up to $300 a day. According to Harding, 15 percent of senior citizens are in nursing homes and approximately 35 percent are in assisted-living facilities. And the elderly are not the only ones who may need to utilize long-term insurance. Convalescence from surgeries and accidents often requires extended care. "Up to 40 percent of long-term health care today is used by working age adults," says Harding. "When we see that come through, I think we're really going to see significant growth in the long-term care insurance market," says Harding. "I think it's around the corner."

How to reach: Harding and Harding, (330) 666-0991

Harding, Harding & Associates