Pittsburgh (2550)

Monday, 22 July 2002 09:34

Sales from the crypt

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What do the banking and cemetery industries have in common? If you said both have vaults, you're right. And both have a safekeeping role.

Beyond those attributes, it might take a while to figure out a connection.

But PWCampbell saw a link between the industries that made perfect sense to the 90-year-old construction company. It has entered the cemetery sector in a partnership with a Canadian company that introduced a new method for constructing the concrete crypts used in mausoleums.

PWCampbell has built its business substantially on design and construction work for financial institutions, including commercial banks, savings and loans and credit unions and, more recently, for health care clients. Its specialization has allowed it to carve a niche that has provided significant repeat and referral business in a 13-state area for the RIDC Park-based company.

So it was natural, say its owners, to seek out a specialty field in which to expand its business.

"It's a niche market, and one of the things that's been good for us is not to go after something that's glamorous, but something that's good repeat business," says Jim Campbell, the construction company's CEO. "Both of these niches are relationship oriented, and that's what we've been good at."

PWCampbell has teamed with Royal Building Systems, a Woodbridge, Ontario, manufacturer, to develop an extruded PVC plastic product, Plastiform, that is assembled for use as a concrete form and remains in place as an integral part of the construction. The assembly of the plastic parts, which Campbell describes as similar to putting together Legos, produces a crypt that is superior in fit and function to the conventional poured or precast concrete products commonly used in mausoleums.

PWCampbell has completed two projects for the St. Joseph Cemetery in Monroe, Mich.

Securing a strong reputation in the mausoleum industry would provide opportunities for repeat business for obvious reasons, but as PWCampbell officials quickly learned, the barriers to entry are formidable. In the relationship-oriented industry, operators tend to do business with the same circle of vendors and service providers over a long period of time and are slow to switch to alternatives.

"Cemetery people as a rule are fairly conservative and are not anxious to try something new out of the gate," says Campbell.

It's no wonder. Mausoleums are substantial commitments for cemeteries and big-ticket projects, often running in the millions of dollars. Once built, construction features are virtually impossible to alter.

"We provide a product that that has to be maintained for generations," says David Shipper, president of the 6,000-member International Cemetery and Funeral Association.

With that in mind, cemetery managers usually opt for the safe choice when it comes to crypt construction, as a wrong decision could bankrupt a small cemetery or cost the executive of a large operation his or her job.

Playing on their strengths

Campbell and his brother, John Campbell, the company's president, believe they can overcome the barriers and make the cemetery business a mainstay by playing on their strengths.

They have demonstrated their commitment to the business by staying in touch with the industry through trade shows and personal contact. Competitors and others in the close-knit industry were skeptical when PWCampbell showed its wares at trade shows and industry events, but now, the Campbells say, the skeptics are starting to show curiosity about their business.

"In order to gain access to the market, you've got to get yourself known," Shipper says.

The most successful companies in the industry, he points out, are typically those that have mounted strong marketing campaigns.

To get the business launched, PWCampbell hired two people to run the mausoleum business, both of whom have considerable experience in the industry. While the Campbells are experienced in the construction business, they knew they needed expertise in the cemetery industry.

"It was almost like a law firm that does corporate work and wants to do litigation," explains John Campbell. "We went out and bought individuals, by putting them on the payroll, who understand the division."

Gaining a cost advantage

There may be one other factor working in PWCampbell's favor. The cost of building the traditional pour-in-place crypt and the scarcity of labor could tip the advantage to systems like Plastiform, which requires less skilled labor to build.

The cost of construction for the Plastiform system is about the same as for poured crypts, but the Campbells believe that, with time and experience, they will be able to cut their costs.

"We believe that, in the future, as we learn more and get more efficient at it, it will be less expensive than pour-in-place," says Jim Campbell.

That will be a critical factor, says Shipper. Cost plays a central role for cemetery operators. If a company can demonstrate a significant cost advantage with a comparable product, he says, it will be competitive.

And finally, since little succeeds like success in any business, getting a project under its belt was essential to PWCampbell's marketing efforts. With a completed project and a satisfied customer, it has a demonstration site it can use to sell to prospective clients. Selling to once-skeptical prospects will be much easier, say the Campbells, with a real-world example to show.

Says Jim Campbell: "If we can secure three or four more projects next year ... it does appear as if it will snowball. Once one or two people buy into it, it does appear as if it will be what's accepted as the best way to do it." How to reach: PW Campbell, www.pwcampbell.com; International Cemetery and Funeral Association, www.icfa.org

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN Pittsburgh.

Monday, 22 July 2002 09:34

Money where your mouth is

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Do you dread making financial presentations to board members or senior executives? Here are a few tips to make them less of an ordeal.

Kimberly Griffith, a CPA with Alpern, Rosenthal & Co., says there are ways to make these events less traumatic for you and more meaningful for your audience:

Prepare thoroughly. You'll find that adequate preparation will have the added benefit of giving you more confidence.

Hold yourself to a time limit and keep track of the time. Avoid racing to finish.

Avoid early mornings, after lunch or the end of the day for your presentation.

Demonstrate energy and enthusiasm. Spice up your presentation with graphs and charts.

Don't overwhelm the audience with detail. Less is usually more, says Griffith.

She also suggests you explain financial terms your audience may not be familiar with. Also, make educational tools, such as videotapes, study guides, books and pamphlets, available to senior staffers.

Ray Marano

Monday, 22 July 2002 09:34


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All right, call me crazy. It's not that I love grocery shopping, it's just that I don't dread it as much as most people do.

That might seem doubly incredible to people who know that I spent nearly a quarter of a century working in supermarkets. Maybe it's because I can enjoy a kind of academic interest in the business now that I don't have to worry about whether there's enough bread on the shelf or milk in the cooler.

Besides, I like to squeeze the tomatoes and sift through the apples.

Until August, Turner Dairy in Penn Hills was a third-generation family-owned business well known locally as one of the few dairies that still offered home delivery service -- something that's become a bit of an anachronism in recent years. Turner Dairy finally gave up home delivery, saying it just doesn't pay for itself, even at almost a buck a gallon premium over the going retail price. Still, 1,200 of its customers were willing to pay extra for the convenience of having milk delivered to their doorstep.

Oddly enough, Turner is getting out of home delivery just as venture capitalists and dot-com entrepreneurs are pouring millions of dollars into home delivery services. Those investors are betting big money that consumers in big enough numbers are going to be eager enough to avoid supermarket checkouts to turn to the likes of Peapod and ShopLink.

Home delivery of groceries, I'm convinced, will catch on. It won't take away all of the business from bricks-and-mortar locations, but it will become a substantial part of the food business. The convenience of it will simply make it an irresistible choice for consumers.

And the companies that will be most successful at it will not be the whiz-bang dot-coms, at least not the ones with lots of Internet knowledge but scant understanding of grocery shoppers. Who will be the ones to figure out how to make this work? The supermarket operators, that's who.

There's evidence that the conventional retailers have an inkling that it's going to take hold. Dutch grocery giant Royal Ahold has poured $73 million into Peapod, of Lake Zurich, Ill., to take a 51 percent stake in the dot-com delivery company.

Analysts take a dim view of the prospects of the home delivery business, citing the high cost of operation, particularly labor, as a barrier to making it profitable. What they don't see, however, is that in both the so-called old and new economies, barriers are often opportunities in disguise.

Automated picking systems could ease the labor cost problem. The transportation logistics field is revolutionizing the conveyance of freight, utilizing sophisticated computer software to route commodities between points at increasingly efficient levels. No doubt the same technology can be applied to the grocery shopping process.

Advances in packaging technology will overcome spoilage issues. And developments in agriculture will bring the day when every head of lettuce or cut of meat is virtually identical, making the quality of those perishables more predictable.

Then there's the convenience factor. With all of the other activities that busy people are trying to pack into their days, a few bucks in exchange for avoiding the hassle of the supermarket might be a welcome trade-off. Under the right circumstances, even I might be tempted to enter a few keystrokes instead of driving to the store.

But I'll probably miss squeezing the tomatoes.

During the day, Ray Marano (rmarano@sbnnet.com) is associate editor of SBN Pittsburgh. On his off hours, though, you may find him in the produce department -- squeezing tomatoes -- at a supermarket near you. We're not sure why.

Monday, 22 July 2002 09:34

(Tax) Free parking

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If you're scratching your head looking for ways to attract and hold onto employees, you might want to try the tax-exempt transportation program.

Although it won't have the allure of stock options or health club memberships, it has one definite attraction: It will cost you almost nothing to offer it.

An IRS regulation implemented this past January allows employees to reduce their gross income and federal income tax, according to Mike Schneider, a tax partner at Sisterson & Co. Specifically, the regulations allow employees who pay for parking to reduce their taxable income by up to $175 a month. And those who take the bus to work can have their gross taxable income reduced by as much as $65 a month.

Employers who choose to take advantage of the reduction can collect and credit employees' parking receipts weekly, twice a month, monthly or quarterly, whatever the company's preference.

Now if they can just come up with a way to offer a free lunch.

Ray Marano

Monday, 22 July 2002 09:33

What's your value-added?

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Is the focus from your customers mainly on price? Have you recently lost a major account?

If so, that may be a strong indication that your customers may not see the value you add.

Perhaps one of the most critical challenges confronting distributors and suppliers alike is the ability to show, in dollars, the value they add to their customers. True value is what you do that allows your customer to be more profitable, period. Since most customers don't know how to quantify the value you add in this business, you must do it for them.

Showing the value you add

Why must the value be shown in dollars? If you can't do this, how will your customers know the worth of what you provide or be able to differentiate between you and another vendor offering a different value-added package?

When customers can't see the difference, they buy on price. Typically, we fall back on the age-old answer that what we offer our clients is service. Hogwash! Everyone will tell you they offer the best service. So how do we quantify it?

Companies that can show the value they add in real dollars achieve a significant competitive advantage because customers always are looking for ways to improve their profits. The more value you bring, whether it's in an incentive program or an embroidered cap order, the more profitable it should become for your customer.

The nice part about added value is that customers often are willing pay a premium for it.

Measuring the value you add

Consider three steps in measuring the value you add: Identify the value you have provided or can provide to a specific customer; determine how these opportunities will make an impact on your customer; and measure the impact.

Developing a profit improvement proposal

To get customers to see and buy on the value you add, you must develop a unique selling proposition. This should be based on your ability to improve your customers' bottom lines and is the difference between selling them products and selling a program.

To take this one step further, make them a profit improvement proposal. Wouldn't that be appealing to you if you were the prospect?

While everyone else is selling products, you are selling profitability. How many distributors actually show their clients how to make money?

Consider these areas in making a profit improvement proposal: Price, added value, performance and compatibility to their needs. The first three can be measured in dollars and therefore can be related directly to profit improvement opportunities. This is what many key accounts are looking for, which can provide you with a competitive advantage if you can show them the impact.

One distributor I know once built a modular presentation around 32 added-value solutions that his company could potentially provide for its customers. Each solution was related to a specific need with which the company could help its customers, given any challenge. The solution always outlined the potential dollar impact expected for a customer, as well as the resources available from the distribution company to achieve the objective.

The distributor then chose which solutions to include in the proposal and filled out a short worksheet on each. The result: a customized profit improvement proposal with minimal effort.

To create a profit improvement proposal, you must be able to measure the total cost impact you have -- or expect to have -- on your customers. Today, this ability will prove a competitive advantage. But tomorrow, it may become a requirement for survival in this crazy business climate.

In ending, I would like to try something different. It's my turn to ask you for something. Would you take a few minutes to jot down the answers to the three questions below? Then fax them to me at (412) 373-8773. I will compile the results and report back in a future column.

1. How do you define added value in your industry/profession?

2. What kinds of value-added services provide -- or could provide -- additional revenue/margins?

3. What additional value-added services will you be providing in three to five years?

Because of such a diverse readership, this may be difficult to compute, but perhaps we will see some trends in the Pittsburgh market. Jeff Tobe, primary colorer at Monroeville-based Coloring Outside the Lines, teaches diverse businesses how to be creative in their sales and marketing strategies. Subscribe to his free creativity newsletter by visiting www.jefftobe.com or contact him at (412) 376-6592.

Monday, 22 July 2002 09:33

Telework facts

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The International Telework Association & Council completed a study this year that covers the growth and characteristics of telework in the United States. Here are some of its key findings:

  • There are 16.6 million regularly employed teleworkers in the United States who work at least one day a month and are at least 18 years old.

  • About 9 million U.S. workers telework at least one day a week. In 1995, according to FIND/SVP, there were 8.5 million teleworkers. While 9 percent of U.S. workers telework, 41 percent believe their jobs could be performed in their homes.

  • While a few years ago most teleworkers worked for small- to medium-sized organizations, half now work for organizations with at least 1,500 employees.

  • Of all teleworkers, 54 percent are employees, 13 percent are contract workers, 9 percent are operators of home-based businesses and 27 percent are self-employed teleworkers.

  • The highest proportions of teleworkers are in the New England, Mountain and Pacific states.

  • Males make up 65 percent of the home-based work force. The average teleworker is in his or her early 40s, slightly older than the average nonteleworker surveyed.

  • Four out of five teleworkers commute to work on days they are not telecommuting. Their average commute distance is 19.7 miles, vs. 13.3 miles for nonteleworkers.

  • One out of every five telecommuters reports that his or her direct supervisor is in the same state.

How to reach: International Telework Association & Council, www.telecommute.com

Ray Marano

Monday, 22 July 2002 09:33

Law briefs

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Money votes

Though the Electoral College officially decides the 2000 presidential race Dec. 18, we already know who won the money race in Pittsburgh and Western Pennsylvania congressional districts.

According to Federal Election Commission data analyzed by the nonpartisan Center for Responsive Politics, in Washington, D.C., the fund-raising champs in local races in each case also won their Nov. 7 elections.

  • District 14 (Pittsburgh): William J. Coyne (D), incumbent; unopposed, $126,572

  • District 18 (Pittsburgh): Mike Doyle (D), incumbent, $315,697; Craig C. Stephens (R), $6,009

  • District 4 (northwest of Pittsburgh): Melissa Hart (R), $1,371,461; Terry Van Horne (D), $549,322

  • District 20 (south of Pittsburgh): Frank R. Mascara (D), incumbent, $458,886; Ronald J. Davis (R), $0

  • District 12 (east of Pittsburgh): John P. Murtha (D), incumbent, $766,451; Bill Choby (R), $6,990

  • District 21 (north of Pittsburgh): Phil English (R), incumbent, $992,284; Marc Flitter (D), $236,018

A hand, not a hand-out

When a Pennsylvania construction company modified a dump truck for a one-armed driver, the company not only gained a more self-sufficient employee, it freed for other duties a second employee who previously had to ride along, and got a state reimbursement for the cost of the modification.

Site, building and transportation modifications, adaptive machinery and equipment, and specialized employer training for the disabled are eligible for up to $50,000 in grant funding from the three-year-old Independence Capital Access Network.

First, apply beforehand at the Pennsylvania Office of Vocational Rehabilitation, which administers the program. After completing the project, submit expense receipts to the OVR. The agency reimburses in four to five weeks.

The disabled worker for whom accommodation was made must remain on the job for at least one year. An OVR specialist will check after about six months to confirm. How to reach: Stephanie Parker, Office of Vocational Rehabilitation, (717) 787-5123

Appeal for calm

If you own commercial property in Allegheny County, you should have received Sabre Systems and Service's preliminary property tax valuation by now.

Sabre Systems was paid $23.9 million by Allegheny County to reappraise property values after a judge invalidated the existing tax system, then lifted an assessment freeze imposed by county commissioners.

The new assessments are supposed to be revenue-neutral -- for every extra $1 paid by one property owner, another owner should pay $1 less. Of course, that's cold comfort for the taxpayer with the higher bill. Local tax districts could raise their rates, though state law limits their reassessment windfall to less than 5 percent.

Keep these things in mind as you stew over your notice:

  • Sabre's appraisal estimates your property's value, not your property tax assessment. The latter is set by county commissioners, your municipality and/or school boards.

  • Go to www.reevaluation.net and enter the "e-code" on your Preliminary Notice of Market Valuation. Verify that Sabre's photo really shows your building, and that other data about your property is correct. Note any discrepancies.

  • If you want to challenge your valuation -- and everybody wants to -- contact Sabre. The information is on your notice. You'll be called to its Point Breeze office at 400 N. Lexington St. Business income and expenses, and sale prices of similar businesses, are key to estimating commercial property values. Find evidence to prove Sabre made a mistake in your case.

  • Your official valuation will be mailed around Jan. 1. Still not satisfied? Submit an appeal application to the Allegheny County Board of Property Assessment. The appeals and review process is scheduled to end by Feb. 28, 2001. Get an appeal application from www.county.allegheny.pa.us, from the county, your municipality or a local library. Again, bring evidence.

  • Still unhappy? File an appeal with the Prothonotary's Office at the City-County Building within 30 days of the date on the letter deciding your county appeal. But unless you've got a very strong case -- or a really outrageous assessment -- you might bring along a signed check.

Midnight for regulators

A recent George Mason University study claims that -- like Cinderella racing home from the ball -- federal agencies rush to finalize pet regulatory projects in the final months of outgoing presidential administrations.

Jay Cochran, a research fellow at GMU's Mercatus Center, reviewed page counts of the daily Federal Register from 1948 to the present. He reports that average Register volumes swelled 17 percent in post-election November-to-January quarters, compared with the same months in nonelection years.

Opponents first noted those "midnight regulations" during the transition from Jimmy Carter's administration to Ronald Reagan's in 1980-81. Cochran says the phenomenon crossed party lines all the way back to the Truman presidency. Critics say counting Register pages is an inaccurate measure of meaningful regulatory work. Agencies say their processes -- often set to congressional and court-ordered schedules -- are largely independent of executive branch intervention. They dismiss Cochran's study as a public relations stunt by anti-regulation activists.

Good news for cell phone users?

The Federal Communications Commission may allow licensees of government radio frequencies to sublease them for commercial use in wireless and other services.

The FCC proposal seeks to encourage a "secondary market" in radio spectrum frequencies, to relieve demand pressures on the burgeoning wireless communications markets. "This demand threatens to outstrip supply and to impede the future growth of wireless services," the FCC announced Nov. 9.

If adopted, the proposal would be good news for wireless service providers and for consumers who use cell phones and other wireless telecommunications technologies.

Veterans need apply

The U.S. Small Business Administration is accepting public comment until Dec. 11 on a plan to set a 3-percent government-contracting goal for service-disabled veteran-owned small businesses.

The plan would implement parts of the Veteran Entrepreneurship and Small Business Development Act signed by President Clinton in August 1999.

The SBA wants additional government contract procurement assistance for veterans, including a requirement that federal agency chiefs move toward the 3 percent goal in their departments' prime contract and subcontract awards.

As part of the act, the SBA earlier this year established an Office of Veterans Business Development. The office seeks outreach to veterans, establishment of an information network and expanded access to technical assistance programs for service-disabled veteran-owned small companies.

OSHA's final ergonomics rule

The Occupational Safety and Health Administration released its controversial final "ergonomics program standard" in November.

No business will be spared, though companies with 10 or fewer employees won't have to keep records. More than 100 million workers at 6.1 million workplaces will be covered, with the exception of those in maritime, agriculture, construction and railways.

The rule becomes effective Jan. 16, 2001.

OSHA estimates the cost to business at $4.5 billion a year. Business groups argue it's likely to cost several multiples of that. Small business gets a few concessions in the final standard, OSHA says. In addition to the small business reporting exemption, the agency offers a "Basic Screening Tool" which companies can use to determine whether ergonomic issues require compliance action.

Employers with just one ergonomic-related injury in a job, or just two such injuries companywide in the previous 18 months, can apply "Quick Fix" solutions within 90 days. OSHA believes this will appeal particularly to smaller firms.

The final rule gives companies four years to install permanent ergonomic controls (See related article in this month's Of Counsel Quarterly.) William Hoffman is a Washington, D.C.-based freelance writer.

Monday, 22 July 2002 09:33

Disabling disabilities

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When Jeff Hadburg's eyesight deteriorated to the point where it became difficult to do his job, he easily could have found himself out of work.

Instead, Hadburg's employer, Highmark Inc., found out what could be done to accommodate his disability and keep him on the job in his position as a customer service representative, a job he had held for 14 years at the health insurance company.

But Highmark isn't simply being a benevolent employer; it is looking out for its own interests by enabling Hadburg and other employees with disabilities to continue to work. The tightest job market in three decades is encouraging companies to find innovative ways to attract employees and keep them.

"Quite frankly, it just made good business sense," says Elaine Gedman, director of corporate work force initiatives for Highmark, of the concerted effort it has made to keep employees like Hadburg on the job. "The unemployment rate is so low that finding good employees is a challenge for any organization."

In Hadburg's case, macular edema, a condition that makes it difficult to see small print and contrast on computer screens, threatened to prevent him from doing his job. In his position, Hadburg spends about 75 percent of his time at a computer screen. Through a process that involved consultation with his physician and an agency that helps individuals with vision impairments, Highmark fitted Hadburg's computer with ZoomText, a computer software package that magnifies text on-screen.

Had Highmark not been able to accommodate him, says Hadburg, "I probably would have gone on to some kind of permanent disability program." In that scenario, Highmark would have lost a valued, experienced employee and Hadburg would have lost a job that he enjoys.

Gedman says that achieving an accommodation is not always that simple. It sometimes takes patience and a coordination of efforts by the employer, the employee and other consultants. The effort is usually worth it, she says, because it often engenders a strong loyalty to the company.

For Highmark, compliance with the Americans With Disabilities Act, passed 10 years ago and implemented in 1992, means access to a wider pool of employees to fill positions. The company long ago eliminated physical barriers for disabled workers; its focus in more recent years has been to help employees overcome less obvious obstacles that may prevent them from performing at their peak.

As Gedman points out, compliance is much less expensive when compared to the costs of recruitment and retention, lost productivity and the loss of business that could result if Highmark can't maintain its staffing levels.

Companywide, says Gedman, Highmark has about 70 employees for whom some kind of accommodation has been implemented. That doesn't include those with disabilities that don't impede their ability to do their jobs, such as a wheelchair-bound person, for whom accessibility to buildings and facilities exists. Fifth Avenue Place and the adjoining Penn Avenue Place, where Highmark has its offices, are both accessible.

Controlling costs

In some cases, says Gedman, agencies that advocate for individuals with certain kinds of disabilities will provide special equipment for them to do their jobs.

In others, they will work with employers to achieve a solution that works for both employer and employee. Most of the agencies, she says, are skilled at finding creative solutions that take into consideration the cost to the employer.

In one instance, an employee needed to have her legs elevated off the floor while she worked. The simple solution: a cardboard carton used to package computer paper put to use as a footrest. The cost: nothing.

Finally, Gedman emphasizes, providing accommodations isn't simply about complying with the law or about lowered expectations for employees who need some modification to their work environment to perform their jobs.

"It's not about lowering the bar," says Gedman. "It's about business, and it's about the bottom line." How to reach: Highmark Inc., www.highmark.com

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN magazine.

Monday, 22 July 2002 09:33

Changing pressures

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Hospitals, already turned upside down by the merger and restructuring craze that has hit health care during the last several years, are facing more difficult decisions.

According to a study by Deloitte & Touche, financial pressures are forcing hospital CEOs to cancel managed care contracts at a "surprising rate." Overall, nearly one-third of hospitals have cancelled an HMO contract; that number leaps to nearly 60 percent for hospitals with more than 500 beds. The most commonly cited reason for cancelling an HMO contract was poor financial results.

"Despite near-term financial pressures, hospitals are more optimistic about their long-term survival," says Ray Cisneros, the survey's architect and a national health care partner with the firm.

Even though the market environment is challenging and many hospitals are closing, optimism remains high. The survey found that 75 percent of hospital CEOs expect their organizations to still be operating in five years -- up from 57 percent a decade ago. This increased optimism has allowed executives to direct their attention to meeting the needs of consumers.

One of the growing demands of these consumers is alternative medicine.

"Hospitals have discovered that alternative medicine and health care therapies can provide new revenue," says Tom Hochhausler, national health care partner with Deloitte & Touche. "That's resulted in steady growth in the number of organizations offering complementary care, especially among larger urban facilities."

In fact, 25 percent of inner-city and 32 percent of larger hospitals offer alternative therapies more frequently than do their counterparts. The study also found that 24 percent of hospital CEOs use alternative therapies, such as natural and herbal medicines.

What is slow to change is the downsizing of overall acute care capacity, with nearly 40 percent of those surveyed reporting an excess supply of these services in their respective markets. A portion of this excess is being converted to outpatient use, with a growing percentage of CEOs reporting that outpatient care represents more than half of their revenue.

Despite these facts, 40 percent of suburban and other urban hospitals report plans to increase acute care offerings over the next two years.

"While nationally there appears to be an imbalance in supply and demand, some acute care facilities are simply not located where they are needed," says Cisneros. "As a result, we are seeing many hospitals shutting acute care wings while others are adding beds."

Cisneros cautions that hospitals need to keep an eye on the capacity problem and not compete on size without regard for demand. Todd Shryock (tshryock@sbnnet.com) is SBN's special reports editor.