How horrible to watch your American Dream go up in smoke. Even worse, to find out your insurance coverage won’t replace it. Winds can carry hot embers as far as 5 miles, meaning wildfires should be a concern to all of us.
Wildfire season started earlier than normal this year and already thousands of acres and scores of homes and structures have burned. The fire chiefs say this could be the worst fire season ever. Wildfires don’t just burn homes that are on the outskirts of town.
One obvious lesson we should have learned from past wildfires was the disparity in insurance policy performance after these wildfires. According to the Census Bureau, after the 2003 wildfire, only 46 percent of the homes had been rebuilt by late 2007.
Why do some homeowners restore their homes and quickly return to their lifestyle while others are left to haggle over major additional out-of-pocket expenses?
“Because all homeowner policies are not created equal,” says Mary Hammett, personal lines broker with Westland Insurance Brokers.
Smart Business spoke with Hammett to see what consumers should know about their homeowner insurance policies and how to select proper coverage.
If a fire destroys your custom-built home with lush landscaping, will your homeowner’s insurance policy cover the loss?
Probably not. Most people are covered by a mass-market homeowner insurance carrier and have been insured by the same agent for many years not realizing they have outgrown their policy. These policies are not designed for high-value homes with custom work or expensive landscaping like 50-foot-high palm trees. After the fire, homeowners often end up battling their insurance carriers to provide coverage that they didn’t realize they hadn’t purchased in the first place, delaying hope of rebuilding their lives fully and quickly.
What can consumers do to ensure they have the right policy for their custom home?
By working with an experienced independent broker, a policy can be tailored to their individual needs. Brokers have access to insurance companies who specialize in insuring high-value homes. These policies are designed to anticipate the needs and demands of these affluent homes and the lifestyles of their owners. These policies automatically provide broader coverage and can be customized to eliminate coverage inadequacies.
What is meant by ‘coverage inadequacies’?
According to the California Department of Insurance, as many as 40 percent of homeowners statewide lack the insurance needed to cover home replacement costs. It is challenging to determine replacement costs, especially for custom homes with many unique features and exceptional building quality and architectural design. Building costs are rapidly changing with international demand and the cost of gasoline. Because of such changes, high-value home insurance carriers provide an additional service to their policyholders with an on-site replacement cost evaluation. The inspection is very technical and is completed by a highly trained professional in construction and interior design. This in-depth assessment removes the guesswork and assists the homeowner in purchasing adequate insurance coverage.
Why is it important to have adequate coverage for your dwelling and other structures?
You need adequate dwelling coverage because policies do not guarantee replacement. Additionally, if your home is damaged or destroyed during a catastrophe, costs to rebuild can double overnight due to the huge demand on materials and labor to rebuild numerous homes at the same time. High-value home policies typically provide 200 percent extended replacement cost, providing you a sufficient buffer from catastrophic-loss increases. Most mass-market policies provide up to only 125 percent of the coverage limit. So if you are underinsured to begin with, exponentially the problem worsens if your loss is during a catastrophic event. This coverage difference alone equates to hundreds of thousands of dollars less coverage with which to rebuild your home.
What are other areas where policies may lack in coverage?
Loss of use. Most mass-market policies provide 20 percent of the dwelling amount with 24 months max, whereas high-value home policies provide ‘actual loss sustained’ without a dollar or time restriction.
Landscape coverage. Most mass-market policies provide anywhere from $2,000 to $10,000 total coverage for landscaping with a maximum of $500 for any one plant, tree or shrub. These policies also can’t add coverage should the need exist, whereas high-value home policies can insure those palm trees.
Building code. Most mass-market policies provide only 10 percent or 20 percent of the dwelling limit. The older the home the more important this coverage is since more building codes will have changed. High-value home policies include all building code costs with no capped payout, even when the costs exceed the coverage limit.
Contents. Make sure your policy provides replacement cost and will not depreciate the value of your contents. All policies have internal limits for certain items restricting coverage, so schedule fine art and jewelry or collectibles so these items can be replaced.
MARY HAMMETT is a personal lines broker specializing in the affluent market with Westland Insurance Brokers. Reach her at (800) 541-0711 x3217 or firstname.lastname@example.org.
Sometimes Larry K. Ainsworth has to deal with the skeptics it’s just part of the job. They come out of the woodwork every now and then to chide him for his hospital’s pie-in-the-sky goal of providing “perfect care.” The president and CEO of St. Joseph Hospital of Orange hasn’t yet let the detractors stop him from setting his sights high, and he doesn’t plan on letting it happen anytime soon.
“Some people take an issue with that and say, ‘Look, you’re dealing with human beings that’s unrealistic to demand perfect care,’” he says. “Our view is, how would you feel about getting on an airplane when the motto of the airline is ‘We hope to get you there 90 percent of the time?’”
But perfect care is just one of the goals set forth for the organization. His staff also strives to create healthy communities and provide “sacred encounters,” which Ainsworth defines as a deep, meaningful interaction that reassures the patient that the hospital is completely committed to treating his or her body, mind and spirit.
“The perfect care goal is more about what we do,” Ainsworth says. “Sacred encounters is more how we do it.”
The three goals perfect care, sacred encounters and providing healthy communities were set forth by the hospital’s parent organization, St. Joseph Health System, to improve service across the 14-hospital system.
The enormous task that lay in front of Ainsworth was figuring out how to best address those goals in his particular hospital without deviating too far from the overall vision of the health system. Once he cleared that hurdle, he would have to get his 3,500 employees on board with his plans and find a way to measure progress toward the hospital’s goals.
Here’s how he did it.
Get everyone involved
The first thing Ainsworth did to drive the new goals through his organization was to set up meetings to discuss them with 30 groups of stakeholders, including physicians, nurses, clinical staff, support staff, trustees and management from both the health system and the hospital.
Communicating those goals to his employees was only the top-level reason for the meetings. The deeper reason he met with so many small groups of employees was to get them all involved in the strategic plan.
Ainsworth says there are several approaches an organization can use to improve customer satisfaction. One way is to hire a consultant, who would generally arrive with a pre-planned program of guest relations or set interactions. But Ainsworth didn’t like the top-down, consultant and management-driven approach, so he chose to look inside his organization instead of outside it and used the meetings to jump-start that approach.
During his meetings, he asked for input on how the hospital can achieve those goals. He wanted to not only raise awareness of the big-picture goals but build employee interest on the local level.
His plan worked. At every meeting, his management team was getting inundated with ways to get closer to perfect care and ways to make sure every patient has a sacred encounter.
“We basically put it in their hands,” he says. “And I think when you put a major objective in the hands of the employees, you get a couple things. No. 1, you get a lot of creativity. No. 2, you get a lot of buy-in, because the end result is really theirs. They created it from the beginning. They conceptualized it all the way through implementation.”
The key to getting that input was as simple as the Socratic Method. Ainsworth’s managers sat down with the employees in small groups no larger than seven or eight people and asked them to think through and answer several questions.
Many of the questions were focused on their experiences dealing with patients. Ainsworth wanted to know what needed to happen for a patient to have a positive experience at the hospital he wanted to know the key to making every patient interaction a sacred encounter.
So he asked questions like, “What is the typical patient thinking and feeling when they come in to receive services in our department?” and “What are the behaviors that would actually yield a sacred encounter for that patient?” This method creates true knowledge in the employee, not just rote memorization of what to do in a certain situation.
“Instead of like the Ritz-Carlton where they have scripted answers to requests or questions, the employees are agreeing amongst themselves to standardized behaviors not set by management but set by themselves based on their own knowledge of what patient need is,” Ainsworth says.
“It’s a wonderful approach because it tells the employee that management trusts them and trusts their knowledge of what the patient really needs and trusts them to design the more consistent responses that are going to yield sacred encounters.”
Ainsworth took all the ideas and tactics gathered from his employees to the board of trustees. The board narrowed the list down to the tactics it supported, and then included those tactics in the hospital’s five-year strategic plan.
But Ainsworth says the process isn’t over when the board votes on an idea. You need to close the circle of communication. After board approval, Ainsworth scheduled follow-up meetings with each group he had asked for input. At these meetings, he detailed which plans were chosen by the board as well as the reasons why they were picked.
Reach for a higher level
Once the organization’s direction is set, it’s important to let your employees know how their day-to-day responsibilities tie into the big picture. At St. Joseph, this is primarily done through manager-to-employee performance reviews.
At the annual evaluation, the employee and manager sit down and set goals for the next year. Then, the manager indicates how the employee’s work can contribute to the hospital’s overarching goals.
“In some instances, an individual employee can’t affect our ‘healthiest communities’ goals,” Ainsworth says. “But most of the time, they can do something, at least tangentially, to contribute to perfect care or sacred encounters.”
Once that discussion occurs and the goals are set, metrics are set at the same time. Managers will check in periodically throughout the year to determine how their employees are doing, then at the end of the year, they’re evaluated on their performance. Ainsworth rewards the employees who hit their targets their incentive compensation is determined based on progress toward their individual goals.
Performance evaluation isn’t difficult when you track as many different variables as St. Joseph does. The hospital meticulously collects data on everything that goes on within its doors. If Ainsworth wants to know how many bloodstream infections were acquired at the hospital last year, that information is readily available.
The depth of information at his fingertips helps the leaders of each department set benchmarks for progress toward the goal of perfect care. Each department has several areas on which it focuses, and each employee’s performance is measured against these benchmarks.
There are three levels of achievement for each area: threshold, target and exceptional. Ainsworth says the levels are determined by the likelihood that an employee will be able to meet them. For example, employees have an 80 percent likelihood of achieving the threshold level, 50 percent likelihood of achieving the target level and only a 20 percent chance of reaching the exceptional performance level.
“As you’re progressing up the chain of difficulty, there is a decreasing likelihood that we’ll actually be able to achieve that goal,” he says. “Obviously, exceptional is going to be much tougher to achieve than threshold. That’s the way the metrics are set.”
Ainsworth also ties financial incentives in each employee’s compensation plan to his or her overall performance level. This system gives employees a compelling reason to strive for the higher levels of performance, while making sure the hospital is held accountable for meeting national standards.
For instance, Ainsworth’s executive management team has several performance goals devoted to improving five Medicare-chosen focus areas. The hospital is held accountable for improvements in those areas, which include the hospital’s emergency department response to heart attacks and the staff’s treatment of patients with congestive heart failure, among other things.
Because of the data, Ainsworth knows where his hospital stands. His management team sets its performance-level goals based on how St. Joseph ranks in national databases.
It’s easy to collect easily quantified and measured facts, like the number of patients with a particular disease or the average number of days of their hospital stay. However, it’s a bit more difficult to develop metrics that measure how close an interaction was to being a sacred encounter.
Ainsworth measures the hospital’s particular brand of service by making sure his staff asks each patient several questions about their experience. The staff has a list of seven or eight questions like “Were you looked after in a compassionate fashion?” and “Did people seek to understand your needs before they cared for you?”
By asking questions like those, Ainsworth is able to determine if employees have been exhibiting the types of behavior that will keep the patients comfortable.
Put it all together
While getting existing employees involved in the process and holding them accountable helped drive the changes necessary to make St. Joseph a better organization, you also need to focus efforts on making sure any new employees fit into your new system.
“Hospitals can be very cold,” he says. “When patients are feeling very vulnerable and at risk emotionally, physically, mentally some hospitals do a real good job of bringing warmth and compassion to that circumstance, others don’t.”
To find employees who can deliver the type of compassion and caring necessary to achieve the organization’s goals, Ainsworth takes extra care in the hiring process. When recruiting, his team tries to find the motivation a person had for entering the health care field in the first place by asking a series of questions that attempt to determine if the candidate is simply looking for employment or something more.
By showing his staff the power of asking questions from the very beginning, Ainsworth is working to ensure that a patient will never feel cold and alone at St. Joseph.
“We clearly understand that just being nice at the bedside isn’t good enough,” he says. “People are here to be healed, and they’re only healed through a combination of people who are treating them with compassion but also people who bring great clinical competency to the bedside, as well.”
Ainsworth knows perfect care is a goal that will transcend many five-year plans. Providing sacred encounters is another goal that will never go away. As part of its goal of creating healthy communities, St. Joseph spent $48 million in fiscal 2007 on wellness outreach initiatives in the surrounding area but with obesity and other problems still running rampant, that goal won’t be crossed off Ainsworth’s checklist anytime soon, either. Even after achieving significant improvement in patient satisfaction surveys and being showered with awards and accolades, Ainsworth’s work isn’t finished.
“It’s going to be a long time coming,” he says. “But what it does do is it provides motivation for a quest. On a daily basis we’re saying, ‘We’ve got a lot of room to go to be perfect, but we’ve got to keep trying.’”
HOW TO REACH: St. Joseph Hospital of Orange, (714) 633-9111 or www.sjo.org
In 1971, Mike Goadby’s western Australian rowing squad was chosen to represent his country at the Munich Olympics.
What does that achievement 37 years ago have to do with his athletic prowess today? Absolutely nothing.
As president of the North American division of Fisher & Paykel Appliances Ltd., Goadby uses that example to demonstrate how meaningless words are without action. You can claim to have done anything, he says, but unless you actually go out and perform today, you may as well keep your mouth shut.
It’s been decades since Goadby has rowed competitively as it turned out, only one member from his old squad actually moved on to the Summer Games, and it wasn’t him but that hasn’t stopped the leader from establishing himself as a successful team player. Since stepping into his role at Fisher & Paykel just over 10 years ago, he’s helped transform the appliance manufacturer’s humble, 10-person office into a thriving, 10-office network with more than 680 employees and fiscal 2007 revenue of $152 million.
Smart Business spoke with Goadby about how to foster teamwork with a good old-fashioned bake-off.
Don’t hesitate to take risks. Risk is all about being prepared to take it as you sit. If you’re not prepared to have a go on the sport field, don’t go out there. It’s the same in the business world.
If you make 10 decisions, and every one of them was wrong, you’ve made one good decision, which was to make some decisions. If you make no decisions, then that’s totally wrong because you didn’t have the balls to go out and make those 10 mistakes.
Create an open environment where people are not frightened to come to you with ideas. Be very clear that you’re not some godlike human being that can walk on water. Just because I’m the president doesn’t make me right; it just makes me the boss.
Communicate in the kitchen.When I’m in a room, there is no rank. It’s not, ‘What does the president want to hear? I’ll get into trouble if I say something else.’
I’m all about saying, ‘Look, I’m here as an employee as you are, and I need to know what is really happening, not what you think I need to know.’ Try to foster that culture on an ongoing basis.
We do that by having social events. We do cooking sessions here in our kitchens where we encourage our staff to do a monthly bake-off.
You get teams of people who are formed together as groups from the office. They go out into our kitchen and create some superb afternoon tea piece, which could be ice cream or could be a meat dish. The rest of the staff come in and sample it at 3 o’clock. Then we have a judging panel at the end of it to decide whose was the best delight.
(It makes them) feel as though they’re a part of the company. They participate in something during work hours that’s social, that I’m there, and that they laugh and joke about. They lighten up the environment so that the people become more familiar with me and are able to communicate with me very, very freely about their feelings.
That’s a great way of breaking down barriers, where people sort of enjoy the camaraderie of the moment and also the fact that you’re there and in an apron getting dirty.
Get out on the front lines. The internal people are just as important as the external people. If you don’t know them and work with them, alongside them, how can you ever know whether you’re failing them or not delivering what you promise?
Get out and work with the people. It’s not about telling them that this is what I could do. It’s about showing others that this is what I do, do. That’s a fundamental difference.
I’ve heard a lot people tell me how wonderful they were on the sport field. I used to be a rower. I was chosen for the Olympic games but back in 1971. Who gives a rat these days? It’s all about demonstrating to the people that you’re as good as what you say.
In corporate life, we’ve all got bottom lines to look at, but basically what I’m about is saying, ‘Look. I’m never going to ask you to do something that I wouldn’t or I haven’t already done, including cleaning out restrooms, including driving forklifts and unloading trucks.’ Sure, there are long hours to put in, but you’ve got to recognize them and be there with them. You can’t ask the people to do things if you don’t lead from the front.
Deliver on your promises. Over-promising and underdelivering seems to be a part of one’s culture these days. Staff [members] lose respect and desire to want to perform because you don’t deliver what you say you would.
Day one, I came out here and said, ‘Listen, this is a great company from Down Under, but look at this tin shed over here. This is what we’re working out of. When we get better, we’ll get a nicer office. When we’re able to afford better health conditions, I will give them to you.’ Fortunately, everything I’ve ever said to them, I’ve been able to deliver.
Constantly reviewing your own work practices is really what you’ve got to do. If you’ve made a statement to the staff of what you’re going to do, you’ve got to measure your own performance. It’s not about just measuring their performance.
HOW TO REACH: Fisher & Paykel Appliances Ltd., (888) 936-7872 or www.fisherpaykel.com
Acquisitions can be good for business. They provide buyers with immediate revenue growth, new markets and intellectual capital while sellers have the opportunity to be financially rewarded for their efforts. But the deal’s attractiveness can quickly wane when the transaction results in a double layer of taxes for the seller or a lack of step-up in basis for the buyer. Advance planning along with knowledge of the tax implications and possible alternatives are the best ways to make acquisitions advantageous for both parties.
“In some cases, there will be no immediate taxes generated by a tax-free stock exchange or only a capital gains rate may apply, and in other cases, you could be looking at double taxation under an asset sale,” says Gary Curtis, corporate tax partner for Haskell & White LLP. “Since the transaction often puts buyers and sellers at odds, it’s important to have enough time to look at all the alternatives and structure the deal in a way that’s best for everyone.”
Smart Business spoke with Curtis about how to avoid excessive taxation from acquisition transactions.
What determines the tax liabilities in an acquisition?
Usually buyers and sellers benefit from different acquisition transaction structures. In a taxable acquisition transaction, two of the influencing factors include:
- Whether the buyer is purchasing assets versus stock
- The entity structure of the seller
Sellers usually want a stock sale because the gain will be taxed only once at the relatively low capital gains tax rate. Buyers usually prefer an asset sale because they can purchase known assets and liabilities, as opposed to a stock transaction where they take on liabilities for all previous actions of the company, and the ‘step-up’ in basis to fair market value can be depreciated or amortized, which improves cash flow. Generally, the seller offers more warranties and guarantees to offset the unknown liabilities resulting from a stock sale, but they may get a lower sale price, as well.
How does the seller’s legal entity impact taxation?
If the selling company is set up as a C corporation, the principals may be hit by two rounds of taxation during an asset sale: income tax at the corporate level and again at the shareholder level when the proceeds of the sale are distributed. You can avoid double taxation resulting from an asset sale if the selling firm is structured as an S corporation. An S corporation or a business set up as a pass-through entity, such as a limited liability company (LLC), will generally only pay one level of tax, which will be at the capital gains rate. There may be some taxes at ordinary income rates, but these amounts are often insignificant in relation to the overall taxes.
What are the tax alternatives?
S corporations and LLC legal structures produce the least amount of tax liability during acquisition events. So if your company is currently structured as a C corporation, and you plan to keep the company for 10 years or longer before selling it, consider converting to an S corporation status.
A tax-free merger is another alternative. It occurs when one company acquires a controlling interest in the other company in exchange for its stock. The sellers don’t report taxable gain until the new stock is sold. This method is advantageous if the shareholders of the acquired company don’t want to cash out in the near future, but even if the seller wants to receive some cash from the transaction, the merger will still work as long as the seller doesn’t require more than 50 percent of the sale price in cash.
Is a 338 election a viable tax alternative?
Section 338 allows the purchasing corporation to buy the stock of another company and treat the purchase as an asset acquisition under a set of specific conditions. On the surface this sounds favorable, but there are still a few things to consider. While the transaction may not result in double taxation, the seller may still be liable for some additional taxes. While an entity change may be a solution when time allows, there are other potential alternatives to the tax implications resulting from acquisitions. Each situation requires its own unique solution that will work best for both parties.
GARY CURTIS is a corporate tax partner with Haskell & White LLP. Reach him at (949) 450-6311 or email@example.com.
The word philanthropy means “love of humankind.” Nowhere is that more evident than in not-for-profit hospitals that typically began when a group of concerned citizens raised funds to ensure their community could access the best care available.
Hospitals particular those in California face insurmountable odds. In an environment of ever-increasing regulations, unfunded mandates, demand for services and rising costs that outpace smaller increases in reimbursement, philanthropy is becoming more and more critical.
Smart Business spoke to Barry Arbuckle, Ph.D., president and CEO of MemorialCare Medical Centers and chair of the California Hospital Association, to learn about hospital philanthropy.
How important is philanthropy to hospitals?
Many hospitals report a negative or just break-even bottom line. Even those achieving slim profits know it’s not enough to cover infrastructure, equipment, education, staffing and research. Hospitals are postponing capital spending, technology acquisitions and renovations due to inadequate operating margins. And state seismic regulations force hospitals to make multimillion-dollar facility investments or risk closing.
The burden of meeting the health needs of California’s 13.2 million uninsured and under-insured also weighs heavily on nonprofit hospitals, as revenues from government and other payers decline.
How does philanthropy support hospitals?
In 2006, U.S. health care institutions raised $7.9 billion. Philanthropic gifts support facility improvements, essential equipment upgrades, wellness, education, screenings and much more. They allow us to provide groundbreaking clinical research, enrich medical and health education, enhance patient programs and fund capital expansion.
Philanthropy makes a difference. Every week premature babies are saved, elderly patients comforted, bones mended, illnesses diagnosed and lives saved thanks to the generous philanthropy of individuals, corporations and private foundations in our caring communities.
Philanthropy elevates a life of success to a life of significance. We see people making that choice every day: children raising $11 for cancer research through a lemonade stand, adults funding charitable trusts and annuities, others making outright major gifts, board members providing expert leadership, hundreds of volunteers and organizations sponsoring fund-raising events all appreciate the value of having high-quality patient care close to home and want others to receive the same, today and in the future.
Can you share examples of philanthropy?
Well over $200 million in gifts, grants and bequests given to MemorialCare Foundations help distinguish our hospitals among the top medical institutions in the country.
When Long Beach Memorial opened in 1907, physicians and community members each donated $200 to begin what is today the second largest community hospital campus in the West. Philanthropists were responsible for the state’s largest children’s hospital when the late Earl and Loraine Miller’s generosity helped to build the Miller Children’s Hospital in 1970. Their own foundation continues with a lead gift of $5 million for Miller Children’s Hospital’s $151 million expansion.
Saddleback Memorial began when Leisure World citizens, envisioning a world-class hospital in South Orange County, raised $500,000, and developer Ross Cortese donated nine acres. It opened in 1974 the first community health facility serving the growing Saddleback Valley. Philanthropy helped build Meiklejohn Critical Care Pavilion with the gift from philanthropists Louise and the late Bill Meiklejohn, the largest in Saddleback Foundation history. A $190 million plan will further expand the medical center, services and technological capabilities. Gifts to Saddleback Memorial-San Clemente helped fund heart programs and technology. Funding for Orange Coast Patient Care Pavilion offers advanced diagnostic and treatment facilities for cancer, surgery, obesity and other services at Orange Coast Memorial.
In fiscal 2007, our medical centers provided $146 million in charity care and community benefits. We support charities like Susan G. Komen for the Cure and Habitat for Humanity, where over 200 MemorialCare leaders refurbished a home in Santa Ana.
How can employers help?
Corporate philanthropy is effective for companies trying to meet consumer expectations for the role businesses should play in society, says a recent McKinsey global survey. Employers and their work force help provide ‘that extra measure of care’ through many philanthropic channels individual gifts, corporate grants, payroll deductions, in-kind gifts, major gifts, estate and planned gifts, endowments, tributes, corporate giving, fund-raising events, sponsorships and more. One example, ‘Partnerships in Excellence,’ a group of business owners and executives, supports capital equipment needs at Long Beach Memorial/Miller Children’s. No matter the size of a gift, we are indebted to those who choose a life of significance through their philanthropic commitments.
BARRY ARBUCKLE, Ph.D., is president and CEO of MemorialCare Medical Centers (www.memorialcare.org) and chair of the California Hospital Association. Reach him at firstname.lastname@example.org or (562) 933-9708. MemorialCare Medical Centers include Saddleback Memorial Medical Center in Laguna Hills and San Clemente, Orange Coast Memorial Medical Center in Fountain Valley, Anaheim Memorial Medical Center, Long Beach Memorial Medical Center and Miller Children’s Hospital in Long Beach.
Education: Bachelor’s degree, electrical engineering, University of Southern California
What has been the greatest challenge you have faced in business?
I’ve been through everything. Layoffs are one of the biggest challenges. It’s so hard to get rid of people you work with every day, especially if they have family counting on them. We’re here to build growth. We’re here to build new challenges. We’re here to build the impossible. So, downsizing is definitely one of the biggest challenges we ever faced.
How do you avoid the need to downsize?
Be a lot more careful. Be more patient and a little bit more conservative. But not too much this business is not about conservative. It’s like a war, you can’t be conservative.
How do you develop a brand?
The best branding is a great product with great value. Not necessarily the rocket-science-like technology, but it has to be a great product at an affordable price.
We believe every single customer we have should come back to buy a second or third set from us because they like our quality and value so much. That’s the kind of brand equity we like to create is through quality of goods.
How do you keep those customers coming back?
In case there is a quality problem, we’re really focused on our customer service and technical support. We’re one of the few TV companies out there who have our own internal technical support and customer service. In fact, a majority of our people here in Irvine are on the phone supporting our customers. We really emphasize customer satisfaction in case there is anything wrong with the set.
Wang was born and raised in Taiwan and came to California with his parents when he was 14, with no knowledge of the English language.
Wang survived a fiery plane crash in 2000, when a Singapore Airlines 747 took off on the wrong runway in Taiwan, struck a construction site and broke in two. Nearly half the passengers and crew died in the crash.
Quality has never been more important for health care providers. Employers ask for it. Payers demand it. Pay-for-performance is taking shape. Physicians increasingly choose hospitals known for high-quality care. External rating agencies measure outcomes, sharing results for all to see. Consumers use multiple media to research and identify best medical practices. And there’s an explosion in information accessibility and public reports and an increase in legislation and regulation.
Smart Business learned more from Barry Arbuckle, Ph.D., president and CEO of MemorialCare Medical Centers and chair of the California Hospital Association Board of Trustees, about what health care organizations are doing to improve quality measures.
What role does quality play among health care providers?
Quality and safety must be central to the mission of every provider from hospitals, home health services and long-term care facilities to physicians’ offices, ambulatory facilities and other settings. That’s because we know even one preventable death or complication is one too many.
How can health care providers implement quality initiatives?
We have an example close to home. More than a decade ago, MemorialCare Medical Centers began aggressively documenting our quality through extensive clinical outcome studies. Through teams of doctors, nurses and clinicians from our six hospitals, we created best practice, evidence-based medicine and clinical guidelines that identify the best diagnostic, treatment and preventive techniques. Physician-led teams focus on specific populations of patients or diseases and develop and refine guidelines that support delivery of care at the bedside. These more than 300 guidelines have become standards of practice at all our facilities. We also are identifying bold goals to reduce mortality, attaining superior compliance to key measures of care, improving early response to prevent patient emergencies, reducing hospital acquired infections and complications and improving the experiences of patients and families.
What is the result of best practice standards?
Spending many months identifying and implementing optimal clinical standards allows organizations to achieve outcomes that can surpass national and regional benchmarks for most diseases. It can result in extraordinary quality, proven treatments and comprehensive care that continually raise standards. An empowered and powerful network of clinicians and support staff work in the best interest of every patient. With shared goals and purpose, every staff member is devoted to aligning safety and quality aims and learning from one another.
How do electronic medical records fit in?
Electronic medical records (EMRs) are critical to patient quality and safety. In this Smart Business February 2008 column, we shared how EMRs place a patient’s full medical history onto computers and information systems, allowing clinicians to better coordinate care through immediate access to secure patient data. This facilitates clinical workflows and handoffs. It minimizes waste and inefficiency of manual and paper-based processes, maximizes quality through real-time decision support at points of decision-making and eliminates most paper used in patient documentation and education. Efficient care delivery prevents unnecessary orders and diagnostic tests, reduces medical errors and improves safety.
How will quality impact financing?
It already has. In late 2006, a major credit ratings firm announced that credit ratings will be incorporating quality measures and specific metrics into the assessments of credit quality for health care organizations a critical breakthrough in understanding and evaluating how hospitals operate. With outcome indicators and benchmark data growing abundant, analysts are integrating quality measurements into rating activities and ensuring a culture of quality and safety.
Before too long, all health care organizations will be submitting quality measures to rating agencies, just as we submit financials. Favorable clinical outcomes and low complication rates as well as zero events of avoidable patient harm and 100 percent performance on critical quality policies will be carefully studied by rating agencies and payors.
What actions can employers take to ensure their work force receives quality care?
Query local physicians and hospitals about their quality initiatives. Do they have teams that design and implement best practice tools, offer education and monitor outcomes and opportunities for improvement? Are clinical outcomes documented and easily accessible? Are they implementing EMRs? How focused are they on supporting a strong culture of patient safety? Do they document their goals to significantly improve quality? What procedures have they implemented to reduce infections and the risk of complications? And what type of awards have they received from external organizations for performance in quality and safety?
BARRY ARBUCKLE, Ph.D., is president and CEO of MemorialCare Medical Centers (www.memorialcare.org) and chair of the California Hospital Association. Reach him at email@example.com or (562) 933-9708. MemorialCare Medical Centers include Saddleback Memorial Medical Center in Laguna Hills and San Clemente, Orange Coast Memorial Medical Center in Fountain Valley, Anaheim Memorial Medical Center, Long Beach Memorial Medical Center and Miller Children’s Hospital in Long Beach.
Born: Pasadena, Calif.
Education: Associate of arts, Pasadena City College; attended Cal State Northridge First job: I was a busboy at Marie Callender’s. When I was going to college, it was a good way to pay for dates.
What is the greatest business lesson you’ve learned?
Take nothing for granted. The smallest detail matters. Anything that’s permanent will change.
How does gathering data benefit your decision-making?
It allows you to make a more researched decision. Very rarely do I not have a report at my fingertips already or that one of the folks in IT can’t produce for me within 30 minutes.
It’s very rare that I can’t get something I need. Even things that I think up that are very elaborate and complex, they find a way to get me the information very quickly.
How do you integrate that data?
You have to show it to people. It’s great to have a report that you look at, but if those around you don’t know the guts of the report and the information inside of it, it doesn’t do you any good. As far as being collaborative, when they have that information, they have different perspectives, so they may see something in the information that you don’t see.
No company is perfect, and, eventually, a big mistake may cost you a big customer. But when you begin losing customers over small issues, it may be a sign that it’s time to revisit your commitment to being a customer-focused company.
When a trend of losing customers develops, many leaders make a beeline for their customer service department. After all, isn’t it responsible for keeping clients satisfied? Not if your goal is to become customer-focused. The best customer-focused initiatives run from the top all the way down, and the speed at which customers run to your competitor is, in fact, directly related to the depth of their relationship with your front-line employees.
“When you have emotional connections with your customers, it really binds you together,” says Kathy Riley Cuff, senior consulting partner, The Ken Blanchard Companies. “And to get that connection, your front-line employees have to be passionate if you don’t have great employees dealing with your clients, you’re going to continue turning over customers.”
Smart Business recently spoke with Cuff about why every company really is in the business of customer service and, while your products or services may bring customers to your door, how it’s the relationships that keep them coming back.
Is there a growth stage in organizations when customer service typically suffers?
Yes. It happens when a company tries to grow too big, too fast bigger than its ability to manage the process. You’ve got to do your homework and have a plan.
A lot of successful companies are successful in spite of themselves. You might open up 10 new offices, but if your systems do not support that growth, your internal folks, your employees, are the ones that suffer, hearing the frustrations from external customers doing business with you. They’d like to serve the customer, but the current systems you have don’t support them. You need to set them up for success so they can better serve the external customer.
Can you describe an emotional customer connection?
Here’s a grassroots example of building emotional connections. There’s a little restaurant where I live, with good food and moderate prices. When my kids were young, if the restaurant wasn’t busy, the owner would come over and take my kids and say ‘come on kids, let’s go look at the rabbits out the back door.’ There were probably never any rabbits there, but the owner wanted to give us 10 minutes of peace and quiet at the table alone together.
What happened was, the times we went in and the service wasn’t great or they were really busy and short-staffed, I was willing to make exceptions for that. I even got up and poured my own water. The moral of the story is if you don’t have an emotional connection with your customers, it’s much easier for them to find fault with you.
What is the most difficult aspect of creating a customer-focused company?
It’s getting people to buy in from the top down and then getting them to live it. Top management must walk the talk and really be good role models to the service initiatives. They can’t just say it and go along with it to appease others they’ve got to be living it day in and day out and promoting the beliefs. Beliefs drive behaviors. For example, if you have a customer service department, everybody in the company may believe that department is the only one that deals with customer service. Instead, you have to get everybody in the organization to believe that it is everyone’s responsibility to deliver service. The other difficult aspect is keeping it front of mind. This shouldn’t be the training program of the month; you should be promoting that: We are going to be a customer-focused company, and we are going to consistently and persistently keep it in front of you.
How can you turn front-line employees into customer-focused employees?
There’s been a lot of research by my colleagues around the leadership profit chain. They found three aspects that make an organization vital, including financial success, employee passion and customer devotion. The results have shown a direct correlation between employee passion and customer devotion and, if you have those two, financial success happens.
Your people need to be asked for their input on things and need to feel like they’re listened to and that their ideas matter. And I’m a true believer that there is very little information that should be withheld from your employees, because you want to create ownership in these folks you want them to feel like this is their business. An employee who feels valued and supported by the systems is going to be happier dealing with your external customers.
KATHY RILEY CUFF is a senior consulting partner with The Ken Blanchard Companies in San Diego. Reach her through The Ken Blanchard Companies Web site at www.kenblanchard.com/cuff.
It was described as the nation’s boldest attempt to reform a health care system in serious disrepair. For more than a year, stakeholders representing hospitals, health organizations, the governor’s office, state assembly, employers and other key groups made considerable progress to move forward a comprehensive bipartisan proposal for health reform. With more than 6.8 million in the state uninsured for all or part of a year and an additional 6.5 million on Medi-Cal (California’s Medicaid health insurance program that ranks dead last nationwide in funding), the quest for a solution was urgent. But, despite Herculean efforts, the California Senate Health Committee could not muster the votes to move forward the proposal.
The next chance for this level of comprehensive reform is not scheduled until 2010, which is the time frame targeted by Gov. Schwarzenegger. And while presidential candidates from both sides of the political aisle continue to hammer away at reforming the U.S. health system, comprehensive health reform at the national level is highly unlikely.
Smart Business spoke to Barry Arbuckle, Ph.D., president and CEO of MemorialCare Medical Centers of Southern California and chair of the California Hospital Association Board of Trustees, on issues surrounding health reform and steps employers can take to keep California health care off the critical list.
Why was the health reform initiative voted down despite support of a wide range of constituent groups?
Those voting ‘no’ used this argument: How could we pass a health reform bill with an anticipated cost of several billion dollars when the state’s budget faced a $14.5 billion shortfall? The answer is twofold. First, it is not a choice of either/or. Both the budget and health care challenges are strategic priorities so closely integrated that one cannot be displaced by the other. Second, the vast majority of monies necessary to fund the governor’s comprehensive health reform package would have come from sources other than the state budget.
Hospitals were prepared to contribute more than $2 billion, which would have enabled the state to receive more than $4 billion from the federal government. Considering that California ranks dead last among the 50 states in Medicaid (Medi-Cal in California) funding, these monies could have been put to good use. Additional funding from individual contributions toward their health care brought the total to an estimated $2.1 billion. And a proposed tax on tobacco products would have brought in another $1.5 billion.
How did the initiative impact employers?
Employers in the state that do not now provide any health care coverage for their employees would have had the opportunity to either do so or, utilizing a sliding scale, contribute a defined percentage of their payroll to a state pool. That contribution would have represented only a fraction of what it would otherwise cost the employer to provide health care coverage through one of the commercial health plans.
The key to the Schwarzenegger health reform package was its comprehensiveness, or ‘shared responsibility/shared benefit,’ as the governor says. No group or constituency was singled out to bear the entire burden of reform. I liken the combination of elements of this comprehensive reform package with multiple constituent groups to economist John Nash’s equilibrium theory wherein each party, while not 100 percent satisfied with its role, is sufficiently content such that it does not wish to alter its position and risk the entire agreement failing.
Employers shouldn’t forget about the hidden tax discussed in this January 2008 Smart Business column. As a result of a growing uninsured population compounded by increasing under-reimbursement from the government (providers are reimbursed more than 20 percent below their costs), in the current system the only remaining source for economic viability of providers is commercial health plans. Because the governor’s health reform package would have covered a substantial percentage of the uninsured and increased Medi-Cal reimbursement to the maximum allowed by federal law, providers would have been largely relieved of the pressure to cost shift therefore slowing this insidious cycle of the hidden tax.
What can employers do now?
During the next months, employers can ensure our health care system in California stays afloat by supporting comprehensive health reform. Do not allow individual components to be dissected out of the package as it will effectively eliminate the equilibrium of shared responsibility. Work with your local congressional representatives at the national level to resurrect Association Health Plans which permit small employers to come together to purchase health coverage for their employees at lower rates.
We need your help. While the fate of California’s health care reform continues to be debated, lack of progress could have a devastating impact not only on the 13.3 million uninsured and underinsured but all the state’s 36.5 million residents from overall health and wellness to sustainability of the economy and our communities.
BARRY ARBUCKLE, Ph.D., is president and CEO of MemorialCare Medical Centers (www.memorialcare.org) and chair of the California Hospital Association. Reach him at firstname.lastname@example.org or (562) 933-9708. MemorialCare Medical Centers include Saddleback Memorial in Laguna Hills and San Clemente, Orange Coast Memorial in Fountain Valley, Anaheim Memorial, Long Beach Memorial and Miller Children’s Hospital in Long Beach.