The due diligence of M&A

Business purchasers historically have a poor track record of success in evaluating target companies.

According to, there were 10,296 domestic mergers and acquisition in 2004, representing in excess of $820 billion in value. Academic studies predict an M&A failure rate of approximately 75 percent, which suggests that more than $600 billion invested will result in a significant loss.

Why does this happen? While mergers and acquisitions that proceed to close look good on paper, it appears that business purchasers often focus too narrowly on financial analysis to the exclusion of rigorous due diligence concerning cultural fit and human resource issues.

However, these issues are highly predictive of whether a transaction will succeed or fail.

Cultural fit

When evaluating a target, the following cultural factors should be considered.

* Organizational philosophies. Determine whether similar business environments exist at both the buyer and the target. Are there similar decision-making processes, reporting structures, management responsibilities and autonomy levels, as well as similar employee incentive structure, motivation and drive?

* Strength of management team. Is the management team committed to the merger or acquisition? Without a true commitment or confidence in the transaction, it is likely that management will fail in navigating new territory and meeting new challenges.

* Location. Is the target located near an existing buyer location? Remote locations often present serious management obstacles.

* Employee morale. In a general sense, employees should be positive and inspired. Have the employees previously been through a merger or acquisition and been successfully assimilated?

Human resources issues

If the cultural fit of buyer and target appears to be good, a buyer needs to engage in a thorough HR analysis that consists of reviewing not only existing employee litigation and claims but also the target company’s employment practices and policies, with particular focus on equal employment opportunity, wage/hour, workers compensation and benefit issues.

Although actual charges of wrongdoing may not exist at the time of a transaction, a buyer that uncovers questionable employment practices is better able to assess future problems and more effectively evaluate the acquisition price of the target.

* Equal employment opportunity issues. Review the target’s affirmative action plans, audits, results, conciliation agreements, charges and proceedings. Insufficient or nonexistent documentation policies should raise a red flag.

* Wage/hour issues. Investigate compensation practices, a hot target for plaintiff class action lawyers. Improper classification of employees as “exempt” can cost millions of dollars depending on the pervasiveness and duration of the misclassification.

* Health and safety issues. What is the target’s record regarding accidents? Review OSHA claims and investigations and workers’ compensation history carefully. If the company is poor in this area, the potential exists for significant damage awards.

* Cost of existing benefits. Be certain to assess what it will cost to maintain the current work force.

In reviewing executive compensation packages, beware of golden parachute provisions, as well as options and extensions. Assess restrictive covenants to uncover costs that could be associated with competitive threats.

A focus on these types of people issues by a business buyer go a long way in uncovering potential problems in any acquisition. In the classic Stanley Kubrick cold war comedy, “Dr. Strangelove,” the president of the United States is unable to understand how a mentally unstable Air Force general could launch a nuclear attack on the Soviet Union despite the numerous technological and other safeguards that had been put in place to prevent such an attack.

By way of explanation, his military adviser, Gen. Buck Turgidson (played by George C. Scott), ultimately is forced to admit to the president that, “It appears the human element has failed us here.”

When conducting due diligence, business buyers would do well to remember Gen. Turgidson’s words and do all they can to assure that the human element will not fail them in an acquisition.

Robert E. Dewitt is a partner at Gambrell & Stolz LLP. His areas of practice are business, health care, mergers and acquisitions, and joint ventures/strategic alliances. Reach him at (404) 577-6000 or [email protected].

Burden reduction

In the course of running and growing your business, there are inevitable responsibilities that always manage to drain an organization, or a staff member, of valuable time. Somewhere close to the top of this list of responsibilities lies payroll processing.

The payroll process can be a thankless, time-consuming administrative headache that is often thought of as a necessary evil. Regardless of the size of your business, payroll processing can sideline efforts to focus on more productive areas. Outsourcing can provide much-needed relief from this unprofitable administrative burden.

Due to the ever-changing payroll tax laws, filing requirements, human resource demands and the need to improve normal business practices, the payroll process has evolved and expanded in the past 10 years. Many payroll organizations train their staff in all areas of payroll, and many practitioners have their CPP or FPC payroll certification through the American Payroll Association.

Handing off your payroll processing to a seasoned service bureau is a great way to move your business forward, because payroll services can save you time, and ultimately money, through methods that include:

* Handling all aspects of calculating and printing paychecks or direct deposit notices and payroll reports

* Working directly with your CPA to provide payroll information as needed

* Submitting your payroll tax payments and tax filings in a timely fashion, thus avoiding tax penalties

* Providing a valuable professional resource when dealing with payroll-related issues such as a payroll tax notice or other governmental inquiries

* Providing a software interface to GL systems, time clocks, 401(k) administrators and other third-party providers

One out of every three employers will incur a penalty due to a payroll mistake each year. One IRS tax penalty could have a very negative effect on your bottom line. If you have ever had to respond to an IRS or other tax agency notice in regard to a payroll-related issue, you know exactly how time-consuming and frustrating this can be.

Payroll service bureaus can help insulate a business from these headaches. Most service bureaus will accept responsibility for payroll tax penalties, and any interest that is a result of an error made by the service bureau. What is even more important, however, is the expertise that a service bureau can provide.

It is not uncommon for government agencies to send erroneous payroll tax notices. With a payroll service bureau, you are not encumbered by these notices, as the service bureau will go to bat for you and figure out exactly what needs to be done.

Starting up with a payroll service bureau is generally easy and the ongoing process is smooth.

Payroll service bureaus have several methods of collecting your payroll information. There are the traditional call-in or fax-in methods. There is also PC-based service bureau software that gives the end user the ability to enter pay information and transmit it to the service bureau for processing. This method works well for clients who desire the greatest reporting ability and control over the data.

One of the most flexible methods is to enter your payroll and view the information via the Internet. An Internet-based system is a good choice for those who have a need to look up or enter payroll information from multiple physical locations such as the office or home. More important, an Internet browser is all that is needed to get started.

Payroll service bureaus can ease a lot of other business processes as well — assisting with HR, timekeeping, 401(k), custom payroll requests and GL interface solutions. No matter who you choose to handle your payroll processing, it is important to establish a good working relationship with the processor.

By removing much of the administrative burden associated with payroll, you can spend more time working on revenue-generating tasks.

Robert Gialamas, FPC, is president of Paytime Payroll Processing, a leading independent provider of payroll and human resource solutions. Reach him at [email protected], (800) 579-9529 or

The controversy around health care prices

As employers push harder for their employees to take more control of their health care decisions, hospital prices have attracted greater scrutiny.

Over time, and due to many factors, hospital pricing has become complicated and difficult for many to understand. Basically, any service has specific charges, somewhat like the sticker price on a car. Over many years, some payers, including the government, employers and insurers, have contracted to obtain a discount on these charges.

The media has recently focused on charges and the potential inability of uninsured patients to pay the full amount billed. In reality, this rarely happens. Most hospitals have fair and compassionate payment plans that allow substantial discounts for uninsured or underinsured patients, based upon the individual’s financial circumstances.

Transparency is another issue related to pricing. In July 2004, California adopted legislation mandating that hospitals publish their charges for all services. These lists, commonly called chargemasters, are typically hundreds of pages long and list thousands of services. Following this lead, legislation was introduced in the U.S. Congress in March that would require all hospitals to report the prices of their 25 most common procedures and their 50 most prescribed medications.

At this point, 15 states require public price disclosure and four have voluntary reporting in place. Ohio and the remaining 30 states have no voluntary or required reporting.

Wisconsin and California both have price information available; Wisconsin’s is centrally located on one Web site —; California’s prices are available at individual hospitals. A review of both methodologies shows that the data are complicated and difficult for consumers to understand.

The rationale behind the price reporting movement is twofold.

* Arming consumers with price information encourages competition between hospitals, which should lower costs while improving quality.

* Increases in the number of uninsured or underinsured Americans have strengthened the need for greater price disclosure.

While this movement continues to grow, the extent that consumers will actually use such data is unknown. A recent RAND Corp. survey showed that only 14 percent of people who had searched for health care information in the past year reviewed pricing information. Another consumer survey by Blue Cross and Blue Shield Association showed that while consumers are eager for health care information that allows them to shop among providers, they are mainly interested in quality data, not pricing.

Sutter Medical Center in Sacramento reported that when a reporter asked for the list, no consumer had requested it in the previous six months.

Prices become more useful when reviewed in conjunction with quality indicators, which are further along the transparency curve. On April 1, the American Hospital Association and leaders of the Hospital Quality Alliance launched a Web site featuring hospital ratings on individual quality indicators. The Web site,, is a voluntary effort, with nearly all (4,200) of the nation’s hospitals participating.

Seventeen quality outcome measures that have been proven to yield pertinent information for most patients are included on the site. Three clinical areas are featured: heart attack, heart failure and pneumonia. The site is designed so that consumers can review data and compare hospitals on the same criteria.

What does this mean to employers? Transparency relative to health care prices and quality add up to value for health care dollars spent. Educated consumers are far more likely to make better choices.

Consumers who use price data along with quality information are far more likely to have a better health care experience than those who don’t. Employers should encourage health care providers to offer as much data as possible.

Alan Bleyer is CEO of Akron General Health System, which includes Massillon Community Hospital, Visiting Nurse Service & Affiliates and RoseLane, a long-term care facility. The system has more than 6,000 employees and 1,000 physicians. Reach him at (330) 344-6000 or

Internet advertising

Internet advertising is big business — on the order of $8 billion annually. Competition among businesses is at an all-time high, so it should be no surprise that your competitor may be using your name to gain a competitive business advantage.

If it is happening to you, what can you do about it? Or, if you are using your competitor’s name, is it legal?

There are currently two closely watched Internet advertising cases, both involving the Internet search engine Google and its AdWord advertising program. Both are pseudo trademark infringement cases and have similar fact patterns.

Google Inc. is the Internet’s leading search engine. Users input keywords into Google’s search engine to seek information about virtually any topic. Using a computer program, the site displays the results by listing Web sites that correspond to the user’s query. The user then chooses the Web site that best meets the criteria.

In the first litigation, Government Employees Insurance Co. (GEICO) v. Google Inc., GEICO filed suit in Virginia against Google, challenging Google’s AdWords advertising program. Google sells advertisements that are triggered by searches using trademarks and company names. The problem with that, according to GEICO, is that whenever GEICO’s trademark is typed into Google’s search engine, GEICO’s competition appears in the “Sponsored Links” area on the resulting Web page.

GEICO argues that Google’s AdWords advertising program violates federal laws.

The Virginia district court agreed and disagreed. In a bench ruling, a federal judge ruled that Google’s advertising policy does not violate any federal trademark laws. However, the judge did find that when the Sponsored Link search results page displays the GEICO name, that could be a violation of federal law. The case is proceeding on that cause of action.

For the time being, at least this Virginia court felt that buying competitors’ names from Google is not a violation of federal law, provided that the resultant search link does not have the competitor’s mark listed therein.

In the second closely watched Internet advertising case, Google filed suit against American Blind in Google Inc. v. American Blind & Wallpaper Factory Inc. American Blind is the owner of several trademarks that it uses in connection with its business. It complains about the same Sponsored Link advertising. American Blind’s argument is that when its competitors show up in the search results page via American Blind’s trademarks, users who were seeking American Blind were then diverted to the Sponsored Link section and, ultimately, to its competitor’s Web site.

Thus, argues American Blind, Google is allowing competitors to trade off of the goodwill established by American Blind.

Google moved to dismiss the trademark infringement and unfair competition claims early in the proceedings. The court denied Google’s motion since the case was in its infancy, and the case is going forward with the trademark infringement and unfair competition counts.

The outcomes of these two cases will be carefully scrutinized by those who use Internet advertising and those whose names are being used against them in competition. If your company has not purchased its AdWords from Google, one defensive strategy is to purchase them before your competitor does.

If your company is aggressive in its advertising, you may want to consider purchasing your competitors’ names and compete — until and unless these two cases tell us otherwise.

John M. Skeriotis is a partner at Brouse McDowell. Reach him at (330) 535-5711 or [email protected].

Securing your network

As networks and inter-networking become more complex, the need for more advanced and capable security practices is paramount in keeping information and resources secure from malicious activities.

There are many best practices available, including a three-tiered approach that utilizes a firewall, intrusion detection system and virus scanning to prevent, detect and quarantine/remove malicious activities and threats from internal networks.


A firewall is the first line of defense in a comprehensive security solution. Firewalls inspect traffic and match it against a set of preconfigured rules. They can filter by source address, source port, destination address, destination port or any combination therein. Based upon these rule sets, the firewall either passes the traffic through to the internal network or blocks it entirely.

Firewalls come in a variety of flavors and from several manufacturers. Some are hardware or appliance-based; others are software-based and reside on high-end servers or workstations. Regardless of the platform an organization chooses to implement, the basic functionality is the same. Keeping current with technology, as well as maintaining and updating rules as new threats are exposed, will help increase your level of protection.

Intrusion Detection Systems

The Intrusion Detection System (IDS) is responsible for detecting paradoxical behavior based upon predetermined guidelines. There are two forms of IDS — host-based and network-based. The host-based IDS is software-based and is used to detect malicious activity on a single endpoint, whereas a network-based IDS is used to inspect and detect malicious activity within its network segment.

A host-based IDS may be a personal firewall or a software agent running on a local machine. A network-based IDS operates in promiscuous mode and has sensors that monitors packets moving across the network segment. The packets are compared against various signatures and when suspicious activity is detected, alerts are sent to appropriate resources.

A combination of both systems should be implemented to detect the presence of malicious activity. There is one key point to remember when implementing host-based IDS — protect every host.

Antivirus software

The final and most important part of this layered approach is the antivirus software. Antivirus software is written specifically to combat harmful viruses and remove them from your computer.

Antivirus software utilizes updates to keep a current listing of known virus definition files. Maintaining a current virus definition file can be accomplished by manual or scheduled updates. The definition files are updated by supporting software vendors as new viruses, worms and other malicious files are discovered, and are typically posted on the vendor’s Web site.

Antivirus software is reactive in nature and is only a small part of a comprehensive security solution.

There are emerging technologies such as Network Admission Control (NAC) that proactively protect networks from clients whose integrity is not yet established. The theory behind NAC is that when a network-capable device attempts to access the LAN, it is segregated from known good resources until it adheres to established security guidelines.

NAC-compliant software scans the host to determine if it is properly patched and updated. If a machine requires updates, it can be automatically redirected to the proper resources. Once the updates are installed, the new host will be given predetermined access. In the event that the machine cannot be properly updated, the host may be denied access, given restricted access or placed in a quarantined area. This is another method of taking a proactive approach to defending your network.

Due to the popularity of mobile computing, it is nearly impossible to ensure a network is 100 percent secure. Computers are often used in multiple locations and on multiple networks. This causes an inherent risk within SMB and corporate networks, but with a properly designed and implemented security solution, the effects can be minimized.

Protecting internal resources from external attacks by utilizing a firewall, monitoring network segments and hosts utilizing IDS for known malicious and suspicious activity, and implementing and enforcing antivirus protection policies, as well as keeping current with emerging technologies, are only a few steps you can take to secure your network.

James Gretta is a network integration engineer at TriLogic Corp., a solutions integration company focusing on IT infrastructure solutions. Gretta is a Cisco Certified Network Associate (CCNA). Reach him at (724) 745-0200 or [email protected]

A healthy choice

Less than three weeks before he left office, President Clinton issued a memorandum to the heads of all federal departments and agencies. He called on all department executives to “review their policies” and “leave flexibilities to allow Federal employees to take advantage of screening programs and other effective preventive health measures.”

In recent years, many employers have followed suit by offering workplace screenings for their employees, albeit without the prompting of a presidential directive. Workplace screenings make too much sense for employers to ignore the concept. As Clinton pointed out, “The workplace is a logical place to provide employees with health information and services to help them learn about preventive health.”

In recent years, employers have found that work place screenings come with a number of benefits.

* Early detection of potential health problems

* The encouragement of healthier lifestyles

* Reduction of absenteeism

* Increased productivity

* Improved morale

Workplace screenings — which are conducted in such away as to keep personally identifiable information secure from both the employer and the health plan — can be designed to measure height and weight, blood pressure, waist/hip ratio, cardiovascular endurance, body composition and cholesterol and glucose levels. The results provide essential information to employees about low-level chronic disease or other conditions that may require immediate attention. It can also alert employees to behaviors that could potentially create costly health problems in the future.

The screening can motivate employees to make improvements in their behavior for their health and to institute lifestyle changes. Studies have shown that many employees understand that workplace screenings benefit them and their families first and foremost, and not the employer or the insurance company that may sponsor it. And screenings get results. A national survey by the Principal Financial Group showed that 47 percent of employees who participated in health screenings eat healthier, 45 percent exercise more and 42 percent think about healthier options more often.

“It’s not just the right thing to do from an altruistic standpoint,” says Jerry Ripperger, director of consumer health for the Principal Financial Group. “It’s a good business decision. The result is improved employee attendance, productivity and morale.”

The workplace is an ideal place for such screenings for several reasons.

1. You can reach a high number of people at low cost, including those who would not otherwise seek professional help.

2. It provides easy access for a majority of employees.

3. The involvement and support of colleagues maximizes participation.

4. It allows for a better chance of long-term follow-up measures.

One Pittsburgh-area business instituted a workplace screening program in fall 2004. A recent survey regarding the screening program got encouraging results.

* 85.2 percent to 92.3 percent of respondents strongly agreed or somewhat agreed that the screenings were helpful in understanding their personal health status

* 99.3 percent plan to discuss screening results with their physicians

* 50.9 percent plan to participate in other health promotion events and activities

* 19.6 percent uncovered a new medical condition at their screening

Workplace screenings can be expensive for companies to arrange, but there is a bottom-line benefit. According to a study by the University of Michigan, overweight employees had $186 more in health claims each year than normal-weight employees. Obese employees cost $488 more per year, according to the same study.

Employees with chronic diseases had annual claims of $760 more than those without such diseases. Learning about health risks early and addressing them before they develop into full-blown chronic diseases could save countless dollars.

To encourage participation, some companies provide prize giveaways or run contests. But contests are designed to produce only a few winners. With work place screenings, everyone wins.

Debra Horn is acting vice president of clinical services and network performance for UPMC Health Plan. The Health Plan, with 440,000 members, is part of the University of Pittsburgh Medical Center’s integrated medical delivery system and is the only provider-led health plan in western Pennsylvania. Reach her at (412) 454-5210.

Making sense of the benefits puzzle

The health insurance benefits puzzle boggles many employers and employees. With so many pieces, parts and mix-and-match components to today’s health care plans, both employers and employees must take on the responsibility of choosing and using their benefits wisely.

Your employee benefits consultant can unlock this information and help solve confusing issues by providing suitable plans and educational tools to help you facilitate an effective, valuable health insurance program. Benefits consultants should provide you with more than basic health, dental and vision plans. A good consultant will work with you to:

* Create a complete employee benefits package that fits the particular needs of your business

* Communicate the program options to your employees, so the best plans are selected

* Continue the value of the program with ongoing human resource support

Many employees choose one work place over another because of benefits, and employers know that offering more than basic insurance keeps their staff satisfied, motivated and loyal. But all too often, employers are not provided the appropriate communication tools to help employees understand insurance needs.

It is important to choose an employee benefits expert that invests time in researching relevant health care information for your particular business.

When employers are not equipped with resources to support their benefits packages, many times employees don’t understand which plans meet their needs or do not dedicate time to learn about available health insurance options. Rather than asking questions, workers become frustrated working through the health care jigsaw and will leave pieces on the table for an employer to manage.

Partnering with the right employee benefits consultant will help you personalize the puzzle, so to speak. Your consultant can provide a variety of creative health care solutions and tools needed to educate your staff on their benefits. Particularly with the consumer-driven health care offerings such as Health Savings Accounts and Health Reimbursement Arrangements, it is imperative that your employees have full comprehension of their options.

A true benefits specialist will offer tools ranging from a detailed Web site to simple charts, grids, pamphlets and brochures as a way to educate your staff and encourage them to try these inventive options.

Communication is a critical factor in whether employees will play active roles in making benefits decisions. Work with your employee benefits expert on ways to implement a documented communications strategy. Even a simple plan pays off significantly in employee retention and satisfaction.

Your employee benefits consultant can offer you the right materials to help facilitate information flow, because you must inform workers of program changes and ways they can better utilize their plans.

Written communications or e-mail updates serve as useful documents. Further, periodic company meetings to review health insurance benefits and ways to maximize programs will help employees better understand and appreciate their benefits package. An expert in employee benefits will be able to support you by suggesting solutions, ranging from online human resource support to wellness fliers, brochures and payroll stuffers.

Employee benefits packages aren’t valued when employees are not aware of or cannot make sense of their options. Don’t lock your workers out of the significance of their benefits by working with a consultant that does not support you with the communication tools you need.

Jessica Galardini is COO of the Chambers of Commerce Service Corporation and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Security isn’t a four-letter word

Security is an interesting word. A person can have security in his or her job. Someone can have security in a marriage. Most would say they feel safe or secure in their home.

Security can be in the form of an insured bank account, one that is backed by the FDIC. Security can also be protection against thieves, muggers or even terrorists.

The word security is used extensively all over the world, especially in the wake of Sept. 11, 2001. We even have a daily security barometer for worldwide terrorist activities. Security is used so often and in so many ways that many of us take it for granted.

In business, personnel and finances are the most valuable aspects, and thus, in need of the most security.

Most corporate executives are high-profile individuals who can become easy targets for all types of security-oriented problems. This risk is part of their job and, in many cases, these executives require special security-oriented services. Here are several worth considering.

* Key management employees must be protected while on the job, especially when traveling. Putting two or three high-level managers in automobiles or airplanes together can be disastrous for both the individuals and the organization they work for, especially in the event of a tragic accident.

Whole divisions or top management can be wiped out in an instant. Top management officers should travel in separate cars or planes. A trained security specialist should accompany each CEO, especially when traveling out of state.

* Top executives should not be easily accessible by the public. Their offices should be in the most secure part of the building. They must be well-informed as to the safest way in and out of the office, especially in the event of a disgruntled former employee.

There must be a well-documented plan for protection, one that has been extensively rehearsed by all top management and security personnel. Panic system devices should be used in all top-level management offices and location devices should be standard equipment in all their vehicles.

* All threats should be taken seriously. Having key personnel within an organization with the proper security background and training is critical. Every company needs employees who know how to react to threats and can ensure that proper precautions are taken.

* All office buildings should be outfitted with the latest security systems. These should provide surveillance cameras and controlled gates at all exits and entrances. All employees should be assigned some type of entrance code. No one should be permitted to enter any office building without picture identification, and all visitors should log in and log out of all office facilities.

Security comes in many forms. One form is in the obvious actions you take to create a web of security around your home and your family. The other form is state-of-mind, knowing that you and your belongings are safe. The same goes for all businesses. A good company shows its security strength in overall appearance, but it also offer security in the minds of its customers.

Dru Rezzetano is president of Citizens Transport LLC. Reach him at (866) 257-5858.

Web approach

While many business owners recognize the need for having a Web site, most don’t have a clear strategy. Instead, they see their site as a simple electronic brochure where prospective buyers can learn about their business, but a Web site should be much more — it should be designed as part of your business’ online strategy.

E-commerce has too often been viewed as a separate marketplace. It was that view that resulted in the wild run-up of stock prices for Internet-based companies before the dot-com crash. Since the implosion, many business owners have been confused about the importance of the Internet.

The best business strategy to emerge has been forged by large companies that have recognized the value of a multifunctional Web site. These companies have built sites that complement their bricks-and-mortar businesses, viewing the Web as simply another market. And for good reason. The growth in e-commerce has more than doubled the regular economy. In the second quarter of 2004, e-commerce sales reached $15.7 billion, a growth rate of 23.1 percent, while total retail sales for the same period grew by only 7.8 percent.

Today’s business leader needs an online business strategy to produce a site where potential customers can get information and transact business. Several things are needed to accomplish this goal.

First, Web sites, by themselves, do not attract new customers. If your Web site does not show up on the first few pages in a keyword search, your chances of being seen are slim to none. Web sites need to be registered with search engines and designed so that key search words can find your site.

The most effective way for a business to get a first page ranking is to pay for placement. Several organizations offer bundled packages of services that include search engine registration, paid-for placement submissions, optimization and inclusion in Internet yellow pages.

Second, Web sites should be designed so that visitors can either place an order or transact business. That transforms your site into a fully-functional e-commerce store on the Web, with payment gateways for credit card transactions.

Third, Web sites need to have customer service functions integrated into the design, with database look-ups to access information and forms to request information while capturing e-mails.

Fourth, your site should be designed to play an active role in your business, with things such as a marketing program that creates a campaign to stay in contact with customers with things such as e-mailed newsletters and special discount offers. The cost of generating additional business from an existing customer is significantly cheaper than finding a new one.

Business owners who have a big picture view of their Web site will see that developing an online business strategy can both increase revenues and lower costs while expanding the marketplace of the business without a major outlay of capital.

Tom Ryan is director of sales development for International Profit Associates. IPA’s 1,700 employees offer consulting services to businesses throughout the United States, including Alaska and Hawaii, as well as Canada. Reach Ryan at at or (800) 531-7100.

Savvy health consumers

Researching available products and shopping around for the best price is part of being an informed consumer. It’s the American way.

So why should health care benefits be any different? Health care is the single most expensive purchase a company makes each year, yet it is often left unchallenged.

CEOs need to become savvy consumers of employee benefits. If you are part of the 87 percent of businesses still waiting for renewals, now may be the time to shop around for a new broker. A knowledgeable, aggressive and innovative broker knows how to find the best deals and can make the difference between saving 25 percent or losing 25 percent on employee benefits.

Even if you’ve already renewed your benefits package, shopping around is worth the effort. There is no rule that says you have to wait until renewal to switch brokers.

When you’re searching for a new broker, make sure to find one that is knowledgeable about consumer-driven health plans (CDHPs).

The freedom to choose

With CDHPs, your employees will spend your money as if it were their own, making better-informed, budget-conscious health care decisions. They have the freedom to make their own choices regarding their health care, choosing a la carte health services from both in-network and out-of-network practitioners.

CDHPs pair high-deductible insurance products ($1,000 to $1,500 annual deductibles) with individual spending accounts, potentially offering a significant reduction in overall health care costs. Interest in CDHPs has grown with the IRS’s guidance on health reimbursement arrangements (HRAs) and health savings accounts (HSAs), which typically offer employees a year-to-year rollover for funds not spent.

A well-designed CDHP — one that is nimbly and intelligently negotiated by a skilled health care consultant — can deliver the best a health plan has to offer. That means health care coverage that allows for preventive health measures, as well as crisis interventions, and is comparable in cost to the existing employee health care program.

CDHP basics

To understand how such a plan can save money for you and your employees, you must understand two central concepts.

1. Employees will become better consumers.

When employees pay for health services out of their own accounts, they become more selective buyers. They’ll be more apt to research the best mix of quality service and affordable price. But this means employees must have access to information on quality and price as it pertains to medical services, doctors and hospitals.

2. Plans and costs vary by carrier.

Insurance rates have always varied from company to company for similar health plans. CHDPs are no different. Different insurance companies and underwriters have their own outlook, risk-assessment indicators and program pricing structures.

In today’s market, some carriers provide absolutely no savings through a CDHP, while others offer substantial savings. Each company believes or “bets” something different about future claims or market share objectives.

Work closely with your health insurance broker to actively investigate and negotiate the best alternatives for your business.

Are CDHPs right for you?

Will implementing a consumer health care plan today save you money? It depends on local insurance carriers and your previous claims experience — both of which need to be analyzed.

Taking the time to work with your health benefits broker to investigate your options and shop for the best price can’t hurt. You’ll either realize that your current plan is the best fit for your company or you’ll find a better plan. Either way, you win.

Eric Raymond, CLU, is founder and CEO of Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia region. He is a frequent guest speaker at insurance and HR conferences and serves on the board of directors of Albert Einstein Medical Center. For more information on what benefits service brokers offer, including development of CDHPs, go to or call Corporate Synergies at (877) 4-CORPSYN (877-426-7779).