Pittsburgh (2550)

Most weeks I get on a plane and attempt to have an out-of-body experience to deal with all the hassles of flying as I travel from point A to point B. When flying, I have a few simple rules. One, I almost never eat the food. Two, I attempt to talk to no one other than obligatory hellos. Three, I never argue with or say a cross word to flight attendants.

One other very important practice I follow on land, sea and especially in the air is that I constantly scan my surroundings for potential troubles and new ideas.

On a recent flight, upon boarding, I quietly and obediently proceeded to my assigned seat.

As I began to sit down, a gentleman asked if I would mind trading seats with him so that he could sit next to his wife. Like most seasoned travelers I try to accommodate reasonable requests. In this case it seemed a no-brainer to agree to move.


Notice the details

As I started to settle in and fasten my seat belt I noted that my new seatmate was very hot. No, it’s not what you’re thinking. I mean she seemed to be flushed and radiating heat, ostensibly from a high fever. I’m thinking, this is not good, plus it proves the age-old adage that no good deed goes unpunished.

In the next minute I had an epiphany, which happens frequently as I believe that many problems come disguised as opportunities.

I rang the call button and, when approached, asked the cabin attendant to please bring me two cloth napkins. I stated that the purpose was to construct a makeshift face mask by tying the two pieces together to prevent possibly contracting some dreaded disease.

I feared that my intentions could be misinterpreted if I were to don a mask without an explanation; this could cause a well-meaning passenger to drag me to the floor thinking I had nefarious motives.

The stewardess smiled, nodding approvingly of my plan. She then summoned all her co-attendants to my seat and proceeded to whisper what I was attempting. Otherwise, she explained, they, too, could misunderstand my appearance and cause me bodily harm.

As founder and CEO of Max-Wellness, a health and wellness retail and marketing chain, I’m always looking for that next special something to share with my team. Therefore, while burying my now masked face in a newspaper so as not to frighten or offend the sick seatmate, I began dictating a memo to my merchandise product group proudly asserting that I just had another “aha!” moment, for which I am well-known, among my colleagues. For full disclosure, however, I am sometimes known for being a bit “out there” on occasion — but no one bats a thousand.


Turn an idea into a product

This particular predicament gave me the idea to develop a product kit that we could sell to weary travelers in our stores and in airports. I suggested a handful of complementary products, including a mask, a disinfectant spray and, if all else fails, relief remedies. I also noted that it probably would be prudent to include a cigarette pack-type “Black Box” warning stating that the mask is not what some suspicious flyers might think, but instead it’s for prevention of disease only. I even proposed we market these kits directly to the airlines to dispense as an emergency prophylactic for passengers exposed to airborne (pun intended) pathogens.


Fleeting thoughts have value

A key role for business leaders is teaching a management team to use fleeting thoughts as a springboard, to pair common problems with sometimes-simple solutions.

Just because it is a simple fix, though, doesn’t mean the idea couldn’t be a lucrative breakthrough.

When something sparks an idea it needs to be taken to the next level before being pooh-poohed. Most likely the vast majority of these inspirations won’t see the light of day, but that’s OK. Just think — what if one transient idea translates into the next Post-it Notes, Kleenex or bottled water?

The next time you sit by a masked man on a plane, it most likely won’t be the Lone Ranger. Instead, you might be witnessing the incubation of the next best thing since sliced bread. ●


Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at mfeuer@max-wellness.com.

The U.S. government enacted Medicare 48 years ago to help senior citizens who were finding it difficult to obtain private health insurance coverage.

It originally consisted of Medicare Part A for hospital insurance and Part B for supplemental medical insurance. A payroll tax paid by employees, employers and the self-employed funded Part A, available to those 65 or older; it had a $40 annual deductible. Part B was open to aged citizens and legal aliens who lived in the U.S. for at least five years for a $3 monthly premium.

Medicare costs have climbed at rates substantially above growth in general inflation or GDP. Today the Part A deductible is $1,184 and the Part B premium is $104.90 with a $147 annual deductible.

“Nearly 50 million Americans — 15 percent of the nation’s population — depend on Medicare for their health insurance coverage. With increasing life expectancies and more baby boomers turning 65 every day, that number is expected to double between 2000 and 2030,” says Crystal Manning, a Medicare specialist at JRG Advisors, the management arm of ChamberChoice.

Smart Business spoke with Manning about how Medicare coverage operates.

Why is Medicare important?

Medical costs have become expensive, especially for those older than 65 and already retired. They are more prone to diseases and injuries, and need a plan that covers drugs, hospital stays and doctor’s visits to ensure necessary medical care. The Medicare benefit structure has remained stable, but medical technology has rapidly increased the tools available to diagnose and treat patients.

Medicare applies to individuals who can’t afford private health insurance, which prevents severe financial hardships from chronic or long-term diseases like kidney failure. Medicare also is available to people of all ages with qualifying disabilities that keep them from earning a living.

How is Medicare funded?

Medicare funding comes partially from payroll taxes. Federal Insurance Contributions Act (FICA) taxes are comprised of a Social Security tax that contributes to Social Security retirement benefits and a 2.9 percent Medicare tax. With Medicare taxes, employers withhold 1.45 percent from employees and then match it. High-income Social Security beneficiaries also pay income tax on Social Security income. Some of that goes into a trust fund used to pay doctors, hospitals and private insurance companies when Medicare patients use their services.

How were Medicare Parts C and D created?

Prescription drug costs are increasing as more seniors rely on new drug therapies to treat chronic conditions. Many cannot afford to maintain their health. This trend will continue as out-of-pocket spending for prescription drugs rises.

In 1997, Medicare benefits became available through private health plans. Now known as Medicare Advantage plans (Part C), they replace and cover all Part A and Part B benefits, with the option to add prescription drug coverage. The Medicare Prescription Drug, Improvement, and Modernization Act created a specific drug only benefit (Part D) through private insurance companies.

In the 2000s, 25 percent of Medicare beneficiaries had no drug coverage. Today, beneficiaries can join a Prescription Drug Plan for drug coverage, or join a Medicare Advantage plan, which covers medical services and prescription drugs. However, seniors need to join a drug plan when first eligible to avoid paying a monthly late enrollment penalty of 1 percent.

What’s critical to know about Medicare?

The drug benefit has a major coverage gap called the ‘doughnut hole,’ which begins when total retail drug costs — not what you personally spend at the pharmacy — reach $2,970. In 2013, anyone reaching the doughnut hole receives a 52.5 percent discount on brand-name formulary drugs and a 21 percent discount on generic formulary medications. Part D beneficiaries remain in the doughnut hole until their true out-of-pocket costs exceed $4,750.

Seniors need to choose the right Medicare coverage. However, know that Medicare isn’t part of the Affordable Care Act’s health insurance exchanges. Your benefits won’t change and you don’t need to do anything.

Crystal Manning is a Medicare specialist at JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7254 or crystal.manning@jrgadvisors.net.

Insights Employee Benefits is brought to you by ChamberChoice

Business succession often fails because business owners failed to plan, not because of a failure of the plan itself. But once a succession plan is established, it requires periodic review because tax laws change, goals change, dreams change and outcomes change.

“Often I find a business, particularly when it’s closely held, is one of the biggest assets of a family. So you’ve got to treat it that way,” says Rick Applegate, President of First Commonwealth Financial Advisors. “People get so close to their business that they forget, or fail to, look at it objectively.”

Smart Business spoke with Applegate about what to consider with business succession.

Why do business transfers to another generation often fail?

Assuring continuity is vital, but it doesn’t always mean that a second generation can assure success. A business succession strategy needs to take into account the business owner, the buyer, key employees and, most importantly, the clients.

Many times, owners of a closely held family business want to be ‘fair’ to all their children. So, a sibling who hasn’t been involved gets an interest equal to that of the sibling who has worked in the company for many years. Fairness has nothing to do with a successful business succession. Work out some other way, such as taking out a life insurance policy on yourself to benefit the uninvolved son or daughter.

How does a defensible business valuation help?

Understand what you’re trying to do — are you selling to family members, on the open market or to internal employees? One of the first things a buyer wants to know is the cost, so you need a supportable valuation to put a price on the business.

Even if you’re not selling, a business valuation is helpful. If the company hasn’t been properly valued at your death, the IRS will value it as highly as possible to collect more tax when your estate executioners sell or transfer the business.

It’s important to bring in appropriate professionals like attorneys, tax accountants, financial planners, etc. People who are closely vested in their business almost always think it’s worth more than it is. Professionals can help guide you to a reasonable valuation, including picking the best methodology.

What else should you take into account?

You need to think about who would be interested in buying your business. It might be difficult to sell in the open market. Family members could be disinterested. So, employees may be an option. Employee stock ownership plans have tremendous tax benefits to the prospective seller. Today’s low interest rates also easily allow a stock transfer with a bank loan. Again, qualified professionals can help with sale contract language and other matters.

In addition, you might not have the option of active, thoughtful selling. Plans must weigh what happens if there’s financial hardship, injury, disability or even death. Business succession planning should go hand-in-hand with your estate planning.

When family members are under duress, you don’t want them scrambling with business operations or estate matters. Leaving the business to your uninvolved spouse may be a terrible position to put him or her in. And it can hurt the value if they end up having a liquidation sale.

Use the plan to put your successors in the best position. Ask who is key to the continued success of the business. Do you need to give key employees part ownership or incentives to stay?

How can the right financing help with the plan’s execution?

There are different ways to sell a business. Prospective owners often utilize life insurance purchased under an agreement of sale because it makes the outcome a known entity. This is particularly useful when the buyer is paying through installments. If the business owner dies in the transition period, the life insurance awards funds to pay for the remainder of the company.

There are a lot of details to wrap up with business succession. Even after a sale, the right parties must be notified so previous owners or survivors aren’t liable for the unemployment tax filings, tax returns, business credit cards, etc. With help from experienced professionals, your plan can anticipate and respond to ensure the business continues after you’re gone.

Rick Applegate, CFP®, AIFA®, ChFC®, CLU®, is the president of First Commonwealth Financial Advisors. Reach him at (724) 933-4529 or rapplegate@fcbanking.com.

Insights Wealth Management is brought to you by First Commonwealth Bank

Preventable hospital readmissions cost the U.S. health care system an estimated $25 billion every year, according to a study by PricewaterhouseCooper’s Health Research Institute. A logical first step toward containing health care costs would be in controlling the expenses related to these readmissions.

“The patient-centered medical home is becoming a very effective tool for reducing preventable hospital readmissions,” says Dr. Stephen Perkins, vice president for Medical Affairs at UPMC Health Plan. “The care and attention that patients are provided in the medical home model is compatible with improved quality of care, well-coordinated care and readmission prevention. Coordinating care for patients with complex conditions is essential.”

Smart Business spoke with Perkins about how the patient-centered medical home (PCMH) can be effective in reducing preventable hospital readmissions.

Why is the PCMH concept effective in reducing preventable hospital readmissions?

The PCMH stresses that a personal physician and a personal physician’s staff should proactively and holistically coordinate their patients’ care. Because the model encourages patients to become more engaged in their own care, patients are more prepared before, during and after their hospitalization to understand their condition. This leads to less confusion about their care plan and a better understanding of their self-care once they are sent home from the hospital.

What elements of PCMH make it especially suited to reduce preventable hospital readmissions?

One potential component of a PCMH is the use of practice-based care managers. These care managers — who are often nurses or social workers — can coordinate health services with other providers, manage a patient’s health conditions, connect the patient with community resources, assist patients with managing prescriptions, and help members focus on lifestyle changes including lowering or maintaining weight, decreasing stress, smoking cessation, and identifying safety and fall risks in the home.

Practice-based care managers help serve as the bridge between members and their physicians — before, during and after office visits — as they function as part of the physician’s team, coordinating and assisting in the development of a care plan for members. They support their physician practices and meet with members face-to-face to address knowledge gaps and provide self-management tools.

These care managers also assist physicians in the delivery of continuous, accessible and high-quality patient-oriented population management by identifying stresses placed on patients and caregivers upon discharge from the hospital. They coordinate health services with other providers, and work with patients before and after hospital stays to make sure each patient understands his or her condition and care regimen. Practice-based care managers make direct contact with patients, identify barriers to care and educate patients.

Essentially, the use of practice-based care managers is a way of changing the workflow in the medical community. Historically, the medical community has approached health care in a reactive way; that is, they react to a patient presenting for care, rather than anticipating care needs. Likewise, patients react by seeking episodic care. In order to control costs and improve quality, this paradigm must change to allow the practice team to understand management of their patient population, and yet focus on the specific to identify the needs of individual patients.

What are the benefits to patients in a medical home situation?

Patients receive more coordinated services in a medical home system, which results in less confusion about their care plan. This usually leads to better compliance with the recommended treatment. In addition, they share in the decision-making with the physician and care team. The physician and patient are on a much more parallel track, understanding the patient’s goals, which causes greater patient satisfaction.

Dr. Stephen Perkins is a vice president, Medical Affairs, at UPMC Health Plan. Reach him at (412) 454-7682 or perkinss@upmc.edu.

Save the date: Tuesday, Oct. 22, webinar “The Physician’s Role in a Changing Health Care System,” from 11 a.m. to noon. To register, visit the “Webinars” page, or email Lauren Formato at formatol@upmc.edu.

Insights Health Care is brought to you by UPMC Health Plan

Monday, 02 September 2013 15:37

How corporate retirement plans must be managed

Written by

The world of retirement plans has transformed during the past five years, but the majority of companies sponsoring employee retirement plans have yet to catch up with the changing times.

"It is no longer acceptable to take a wait-and-see approach with your plan unless you are willing to accept the risk and the consequences of that decision, which in many regards could be very costly on a corporate and personal level," says Drew Gracan, Vice President of the Retirement Plan Advisory Group at First Commonwealth Financial Advisors.

Smart Business spoke with Gracan about what employers need to be aware of to modernize their retirement plans with the current environment.

What has changed with retirement plans in the past five years?

For the past 40 years, the Department of Labor (DOL) and the Employee Benefits Security Administration (EBSA) has largely focused on the rules governing the proper management of a retirement plan when plan fiduciaries were either fraudulent or grossly negligent in their decision-making processes. That's changed in the past five years.

The government has stepped up its efforts to ensure decisions are being made prudently and for the sole benefit of plan participants and their beneficiaries. This can be attributed to the demise of the defined benefit plan, the increased burden of savings, fees and investment decisions being borne by the individual employee, and the reality that 401(k) plans are now a significant part of an individual’s retirement savings. At the same time, there are widespread participant-based lawsuits against employers for imprudent decisions, bad publicity from the press and the government about the viability of the 401(k), and increased employee/plaintiff council scrutiny of fees.

What might plan sponsors not fully understand about their retirement plans?

The five questions employers/fiduciaries need to answer are:

  • Do you fully understand your fiduciary responsibilities to plan participants and the requirements under the Employee Retirement Income Security Act?
  • Do you fully understand the roles of your service providers, whether or not they are assuming any fiduciary liability for their actions, and if there are any conflicts of interest that may affect their recommendations?
  • Do you know all of the direct and indirect costs of your plan, and how your service providers are compensated in relation to the value of services received?
  • Do you have a formal process in place to make sure you are documenting your decisions?
  • Are you consistently measuring participant behavior and the likelihood of success for them in their pursuit for a successful retirement?

How can retirement plan risk be mitigated?

The first step in mitigating risk is really understanding your service providers' roles and how they are compensated for their services. The main question fiduciaries need to ask their service providers is whether or not they are assuming any fiduciary liability for their rendered services. This would include record keepers, administrators, financial consultants/advisers, trustees and custodians, and third-party administrators. Once you know if service providers are assuming any liability for their services, you can then determine which aspects of risk in the decision-making process you want to mitigate through the hiring of a co-fiduciary.

In addition to hiring a co-fiduciary, it is extremely important to have a formal decision-making process for the plan and thoroughly document all retirement plan decisions to ensure you have the necessary proof to defend those decisions.

What coming regulations deserve attention?

In the immediate future, there are two areas that seem to be the focus of regulators. The first is the requirement that retirement income projections be provided to participants on account statements. The second is a broadening of the definition of a fiduciary to ensure service providers that are performing fiduciary functions — advising participants, investment menu recommendations, etc. — take liability for their advice and don't exonerate themselves in the fine print of their contracts.

Drew Gracan, ChFC®, AIFA®, is a vice president, Retirement Plan Advisory Group, at First Commonwealth Financial Advisors. Reach him at (412) 690-4592 or agracan@fcbanking.com.

Insights Wealth Management  is brought to you by First Commonwealth Bank

Since its enactment in 2010, the Affordable Care Act (ACA) has garnered a great deal of attention, political and otherwise, for the far-reaching changes that it brings health care and health insurance. However, as stakeholders across the country prepare for its implementation, some of the law’s provisions have escaped widespread notice. Among these are rules that allow employers to reward their workers for actively pursuing a healthier lifestyle.

“Wellness initiatives are a big, but often overlooked, part of health care reform,” says Sheryl Kashuba, chief legal officer and vice president of Health Policy and Government Relations at UPMC Health Plan. “There is a growing interest in wellness programs on the part of employers, and the ACA provides new flexibility to create incentives for employees who participate in programs.”

Smart Business spoke with Kashuba about the ACA’s impact on wellness programs.

Will the ACA impact the growth of wellness programs?

The ACA has the potential to promote the continued growth of wellness programs. Employers have increasingly shown interest in a variety of wellness initiatives as a way to reduce employee absenteeism, boost productivity and slow employee turnover. Many have also found that successful programs can decrease their health care costs over time with reduced incidences of illness and chronic disease.

As of 2014, the ACA will increase the ability of employers to reward employees for wellness program participation and achievement of health goals. Under current law, the maximum ‘wellness reward’ offered cannot exceed 20 percent of the total cost of health plan coverage. This limit will increase to 30 percent for most programs and 50 percent for programs focusing on tobacco cessation. The ACA also authorizes federal regulators to make additional increases later. These new limits increase employers’ ability to offer financial incentives or consequences, both of which can increase participation.

How widespread are wellness programs?

According to the Kaiser Family Foundation, 67 percent of employers with three or more employees offered at least one wellness program with their employer-sponsored health benefits. More than half of those also offered wellness programs to employees’ spouses or dependents. And the larger the company, the more likely it is to have a program. Ninety-two percent of employers with 200 or more employees offer a wellness program, while virtually all companies with 1,000 or more employees offer one.

What do wellness programs consist of?

Most programs offer health risk assessments and screenings for chronic disease markers such as high blood pressure and cholesterol; behavior modification programs such as tobacco cessation, weight management and exercise; health education; and subsidized fitness club memberships. When integrated within a comprehensive program that promotes overall employee health, these initiatives have reduced employee medical costs and absenteeism, while also offering a better quality of life for employees.

Are there different, distinct types of wellness programs under the law?

Wellness programs generally fall into two categories. In ‘participatory wellness programs,’ rewards are available without regard to an individual’s health status. These might include reimbursement for fitness club memberships or financial rewards for completing a comprehensive health risk assessment. ‘Health contingent wellness programs’ require participants to achieve a specific health status or goal, such as rewarding employees who quit smoking or achieve a specific cholesterol goal. The ACA’s expanded flexibility applies to both.

Are some incentives unfair to employees?

Important safeguards ensure that wellness programs are fair for all employees. For example, an employer offering a health contingent wellness reward is required to offer a ‘reasonable alternative,’ a means of earning the reward if the required activity would be unreasonably difficult to complete because of a medical condition. The law gives employers the option to offer a widely applicable alternative standard or tailor the alternative to an employee’s situation. An employer can even waive a program requirement if no reasonable alternative can be put in place.

Sheryl Kashuba is a chief legal officer and vice president of Health Policy and Government Relations at UPMC Health Plan. Reach her at (412) 454-7706 or kashubasa@upmc.edu.

Find more information about the Affordable Care Act and wellness programs.

Insights Health Care is brought to you by UPMC Health Plan

Interior design is a very structured process involving both coordination and creativity. It includes a vast scope of services that must ultimately balance the client’s wants and needs.

“Not all designs are driven by aesthetics; functionality of the space usually takes precedence because employees have to work in the office every day,” says Michelle Yurkovac, interior designer at SMC Consulting, LLC.

Smart Business spoke with Yurkovac about the design process and what is required to create an office that is aesthetically pleasing, yet practical and functional.

Why are employee needs central to design?

Most office designs seek to reflect the latest and greatest trends, which is perfectly fine. One of the designer’s goals should be to achieve the right look for his or her client. A good designer should consider how a person feels coming into the space every day.

However, it’s not always about the ‘wow’ factor. Just because something looks great or goes with the design scheme doesn’t mean it will be comfortable, functional or promote productivity. For example, sitting in an uncomfortable chair for eight hours reflects a bad design choice. Without considering functionality in the design process, the office space will only look good.

What is the key factor in the design process?

Programming, which is simply working to understand the challenges employees and companies are facing with their current space that led them to initiate a change, is essential for a great design. This allows the designer to connect with the employees and identify their needs.

Designing for employees’ needs in a typical office setting tends to be the driving factor in most modern designs. Following the latest trends can lead to breathtaking work environments, but can also create inefficiencies and hinder performance. It’s central to a designer’s job to determine what your current space lacks that could be improved to create a functional, comfortable and productive work environment.

Programming also helps a designer understand what employees do every day, because not everyone has the same tasks or requirements. For example, while many might like the idea of an open-plan environment, it could be beneficial for some and a disadvantage to others. Open-plan offices encourage teamwork, collaboration and creativity, and allow employees to share information faster and easier. Conversely, it may create a stressful environment or distract employees given the increase in noise and lack of privacy.

This is why it’s crucial to analyze employees’ existing space and surroundings to fully understand how they work on a daily basis. Expect the designer to do a lot of research to develop documents, drawings and diagrams that will outline the information that was collected from employees. This will serve as a great guide to customize the design according to each employee. At the end of the day, you want your success to be their satisfaction.

How does the design process work?

The design process should follow a very detailed approach to acquire both creative and technical solutions for a client. Some of those tasks include:

  • Researching and analyzing the client’s requirements/goals.
  • Developing conceptual drawings.
  • Selecting colors, finishes, furniture, equipment, etc.
  • Preparing project budgets and schedules.
  • Preparing construction documents.
  • Coordinating with other design professionals.
  • Providing contract documents and bids.
  • Observing and reporting the progression of the project.
  • Providing post-evaluation reports.

What should be gained from a new design?

There are plenty of measurable results that you should immediately notice after you have implemented a new design. The designer, through the programming process, should have identified any inefficiencies in your previous space and addressed those in the new design. You should see an increase in productivity as a result. Improved morale seems to be one of the first and most noticeable results that you should expect to see, and for many, is also the most rewarding.

Michelle Yurkovac is an interior designer at SMC Consulting, LLC. Reach her at (724) 728-8625 or michelle@smcconsulting.net.

Insights Facilities is brought to you by SMC Consulting, LLC

The Affordable Care Act’s (ACA) employer mandate is delayed until Jan. 1, 2015. The employer-shared responsibilities of the ACA, also referred to as “pay or play” rules, impose penalties on large employers that do not offer affordable, minimum value coverage to their full-time employees and their dependents. For purposes of these rules, a large employer is one that employs on average at least 50 full-time employees (including full-time equivalents) on business days during the preceding calendar year.

Smart Business spoke with Amy Broadbent, vice president at JRG Advisors, the management arm of ChamberChoice, about what employers can expect with this delay.

What does this delay allow employers to do now?

The pay or play rules were originally set to take effect Jan. 1, 2014. The delay will provide business owners additional time to understand the rules and make decisions about providing health care coverage, including:

  • A final determination as to the number of full-time equivalent employees.
  • The look-back period that will be the basis for the calculation and coverage requirements.
  • The decision to ‘play’ — sponsor employee health insurance, or ‘pay’ — pay the penalty for not sponsoring employee health insurance.
  • An opportunity to compare the plans and pricing available on the insurance marketplace (public exchange) versus what is available in the private marketplace.

Why did the federal government decide to hold off on implementing certain provisions?

According to the U.S. Department of Treasury, the delay of the employer mandate penalties was required because of issues related to the reporting requirements and rules that apply to insurers, self-insuring employers and other parties that provide health coverage. The administration’s decision was based on concerns about the complexity of the requirements and the need for more time to implement them effectively.

The additional implementation period will be used to consider ways to simplify the new reporting requirements with the ACA. With these rules delayed, it would be nearly impossible to determine which employers owed penalties under the shared responsibility provisions. Therefore, these payments will not apply for 2014.  

What about the rest of the health care reform law?

The delay does not affect any other provisions of the ACA, including an individual’s access to premium tax credits or coverage through an exchange. Open enrollment within the public insurance marketplace is scheduled to begin Oct. 1, 2013, so that individuals not insured otherwise can have coverage in place by Jan. 1, 2014.
It is uncertain how the new deadline will impact guidance that has already been issued.

Although the employer mandate is delayed, many employers have non-calendar year benefit plans — meaning their contract renewal date could come prior to Jan. 1, 2015 — and will want to be in compliance with the ACA prior to Jan. 1, 2015.

What are employers’ next steps?

Employers should consider ‘staying the course’ and continue to plan and implement a strategy beginning Jan. 1, 2014. If nothing else, these employers will have gained a year of experience in addressing cost-sharing, coverage requirements, employee perception and reaction to the employer-sponsored plan versus the public marketplace, administrative issues, etc. They will be in a better position beginning Jan. 1, 2015.

On the other hand, if the delay would be deemed unconstitutional at some point later this year or next, and the penalties would take effect Jan. 1, 2014, these employers will find themselves protected.

The pay or play regulations issued earlier this year left many unanswered questions for employers. The employer mandate delay gives the IRS and Treasury the opportunity to provide more comprehensive guidance on implementing these requirements. Your adviser should continue to monitor developments and keep you informed of the latest updates.

Amy Broadbent is a vice president at JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7250 or amy.broadbent@jrgadvisors.net.

Visit www.chamberchoice.com and learn more about the ACA provisions.

Insights Employee Benefits is brought to you by ChamberChoice

When D. Kevin Horner took the reins of Mastech as president and CEO in 2011, he had the confidence of the company’s leadership and board of directors, but the people in the business were saying, “Why him? He’s never been in the staffing business. What does he know?”

“Frankly, it was a very reasonable question,” Horner says.

Horner is an experienced IT professional, having been in the arena for the previous 30 years at Alcoa, where he served as CIO of business units in Europe and North America. Horner ended his time at Alcoa as the CIO of the entire company. Alcoa and Mastech, however, are two very different animals.

“There were some things I was very well prepared for because of my CIO experience, but there were also some gaps,” Horner says about entering his first CEO role.

In addition to his prior experience, Horner had one other ace in the hole — he had been on the board of Mastech since 2008, giving him a good grasp of the 1,000-employee, $103 million IT staffing firm’s daily business.

“Part of it was right place, right time,” Horner says. “Part of it was I was well-known by the board and part of it was I didn’t run a restaurant for the last 30 years. I had been inside of the IT services business for a very long time and I understood the IT staffing industry reasonably well.

“In fact, I understood it from the other side of the table and I knew a network of CIOs out there who are always looking for resources.”

IT industry employment in the United States is at an all-time high. The marketplace is rich in its desire for talent and there is not enough talent to go around. Before Horner could get Mastech immersed in all that opportunity, however, he had to fix a few problems the company was experiencing before its previous CEO left.

Here’s how Horner meshed his CIO background with his excitement to lead and grow a company as a first-time CEO.

Grip the situation

Coming from a $25 billion organization to a $100 million company offers plenty of differences. The same could be said when it came to the differences in Horner’s experience as a CIO and the duties he was now undertaking as a CEO.

While Horner’s experience had him prepared for a lot of what he would have to do on a daily basis, there were a few voids that he had to fill as he began to lead Mastech.

“At Alcoa we had customer and employee satisfaction measures, service performance measures. We benchmarked externally, managed our cost structure and we dealt with global culture,” he says. “That mechanism for running the organization really did prepare me to run a company.

“The second big thing that we did that really prepared me was a systemic companywide link between IT projects, innovation and business value delivered. That connection of results or outcomes back to accountability and commitment for achieving those results really helped now that I am where I am.”

Horner also drove a standardization program at Alcoa and across the world, which taught him that process matters when you try to create scale. While process matters, people matter more.

“Mastech is a people business and our product is talented people who get linked to our customer’s job needs in the marketplace.”

Some of the gaps that the CIO job didn’t prepare Horner for included those regarding strategy.

“Strategy for the business is a CEO role, which is now mine,” he says. “That’s a blessing and a curse. That doesn’t mean I didn’t do strategy, because I did, but it was either in response to business strategy or an influencer to business strategy.

“As the CEO, you are business strategy. That’s a key piece of what your job is.”

Uncover the issues

As Horner got settled into his new position, he didn’t have much time to sit back and enjoy the view from the corner office. He was quickly analyzing Mastech and moving forward.

“I met with my board with a preliminary set of thoughts and a preliminary action plan 10 days after I took the job,” Horner says. “Within 10 days I knew that I had a segmented business that, to put it mildly, as a board member I didn’t see the detailed segments and sub-segments of, I saw things on a rolled-up basis. On a rolled-up basis it looked like there was improvement happening and so on.”

Within the first five working days, Horner found out that Mastech had a segment of business whose cost far exceeded its revenue. That segment was a reasonably significant part of the company that clearly wasn’t working.

“As we peeled back the onion on each segment of the business, I didn’t sleep a whole lot in those first couple of weeks, but it was really easy to see that we had a couple of problems,” he says. “In that particular business, it was clear we needed to close several locations and change the executive leader who was running the business.

“We closed two locations, restructured the organization around two P&L heads, eliminated an executive leadership role, and challenged the remaining two P&L heads to grow what was left of the ‘old organization.’”

Mastech had another large-scale area where Horner realized that the cost structure to run the business far exceeded the scale of the business.

“It wasn’t that the people were bad,” he says. “The business was just not growing at a rate that would support the cost structure. So we adjusted that cost structure.”

Horner made these business analyses and decisions within his first two weeks at Mastech.

“By my 10th day at Mastech we had a short-term action plan to fix some basic issues,” Horner says. “We had board support for the actions, and we had an implementation plan for the actions. We executed one in the first month and the second one in the second month.”

To discover these kinds of problems within a business you haven’t run before, you have to have an idea of where to start digging. In Horner’s case, that meant understanding financials.

“On the first working day of every month at Alcoa, I knew the IT cost for the entire company around the world,” Horner says. “At Mastech, financial understanding and business analysis wasn’t a core competency for the line management, other than our CFO. Fortunately, it was something that came fairly naturally for me given my Alcoa experience. What seemed like a very natural place to look for me hadn’t really been examined.”

Find growth opportunities

Once Horner had discovered the issues holding Mastech back and made the necessary changes, he was able to switch his focus to what would make the company grow.

“It’s often easy to figure out which things you need to stop,” Horner says. “It’s much harder to figure out what you need to start.”

What became clear to Horner in the first 10 days was not only did Mastech have places in the company where the cost side of the business far outweighed the revenue side, which he quickly took care of, it also had pieces of the business that were growing significantly, but were cash starved because of unprofitable activity.

“When we stopped doing those unprofitable things we were able to divert the money into the side of our business that was growing,” he says.

“Our issue was fundamental — we had job requisitions for that talent that in the past we weren’t even working, let alone filling. Our initial conclusion was we had a capacity problem. We needed to add more capable people to our talent search and recruiting function.”

Within Horner’s first 13 months, the company more than doubled the size of its recruiting organization.

“We doubled the capacity for finding talent and linking it to new job opportunities and that’s how we grew. We also committed to investing in training and development for that new recruiting talent.”

Compared to its public peers Mastech has grown relatively quickly. There is only one public peer that has grown faster than Mastech in either 2012 or to date in 2013 and it’s a company that did a large-scale acquisition.

“We’re growing at one and a half or two times our public peers,” Horner says. 

Now that Mastech is firing on all cylinders, Horner has to make sure the growth is sustainable, which starts with ensuring demand for IT talent continues with the company’s clients.

“You have to continually build relationships with your customers and you have to continually ensure that the demand side of that equation is there and will be there,” he says. “For us, it becomes consultant-centric really quickly. It becomes building relationships with the consultants and helping a consultant believe in the fact that Mastech is going to be a good option for their next job and their next five jobs after that so I can help them grow their career and grow their skill base.”


How to reach: Mastech, (412) 787-2100 or www.mastech.com



As a new CEO, understand what you know
and don’t know.

Analyze your business to uncover any problems.

Focus on business areas that are growing or have growth potential.


The Horner File

D. Kevin Horner

President and CEO


Born: Pittsburgh, Pa.

Education: Attended Saint Francis University in Loretto, Pa. Majored in math and computer science with a business minor.

What was one of the first jobs you had and what did you take away from that experience?

I worked at a paint store. I learned that the customer is always right.

What is the best business advice you’ve received?

If you take care of the customer, the customer will take care of you.

What do you miss about being a CIO and what do you enjoy about being a CEO?

I am loving the opportunity to run a business and I’m loving the type of business that we are in, because we put people to work every day. I do miss some of the scale in my previous role. Moving from a $25 billion entity that’s got name recognition everywhere in the world to a $100 million company has its differences that I miss.

If you could speak with anyone from the past or present, with whom would you speak with?

I would love to sit down with Winston Churchill and Franklin Roosevelt. To see the world through their eyes in the time that they lived in it would be really cool. Also, I’m a Pittsburgh kid, so I would love to sit down and talk to former Pirates right fielder, Roberto Clemente.