The on-site clinic model — a quick care center that focuses on primary care, workplace wellness screenings, disease management and any acute colds, pains, etc. — is still somewhat of an unknown for small and midsize employers.
Typically, on-site clinics are utilized by large employers, so employers with less than 1,000 employees may think it is too expensive or too much of a startup expense. But that doesn’t have to be the case.
Dr. Ken Rybicki, an internal medicine specialist who runs several on-site clinics, says employers can put together an on-site clinic for less than they might think, while designing a plan that gets people to participate and become healthier. This in turn decreases claims and saves money.
“A business doesn’t need a full-time clinic. I have a company with about 30 employees that I go to once a month and one with 75 I go to twice a month,” Rybicki says. He also works with a company that has 600 employees and has a three-room medical center staffed 25 hours per week by himself or a medical assistant.
“It does not need to be a full clinic,” he says. “I transport the things I need, like my blood pressure cuff. Companies don’t need to spend a lot of money — as long as I have a room to use and computer access, I am good to go. You don’t need to have 5,000 employees and a full-time medical clinic. There are ways to do it on a smaller scale and still provide what employees need.”
Smart Business spoke with Rybicki about setting up on-site clinics and the advantages they can bring.
How do on-site clinics benefit both employers and employees?
The big advantage is the clinic is right there for people. Minor ailments can be cared for on-site, preventing employees from needing to leave work to go to the doctor. If someone needs a follow-up, he or she can come in on a break, and these visits are at no cost to the employee. On-site clinics also are able to take care of people quickly, which improves work performance and stops absenteeism and presenteeism — being present at work but not feeling well.
On-site clinics are convenient and keep people at work so they can continue to be productive. It also gives employees the sense that the management cares about them from a recruiting and retention perspective.
What are some specific ways on-site clinics help cut health care costs?
On-site clinics allow you to get very aggressive about identifying conditions like high blood pressure, asthma, heart disease or diabetes, for health plan members. You can then take an aggressive stand on treating these conditions on-site to keep them healthy and manage their cholesterol, blood sugar, blood pressure and overall health targets with testing and management.
On-site clinics can be highly successful in terms of employees and spouses reaching their desired health parameters. And in doing so, that saves employers funds because it reduces health care claims. There are not as many emergency room visits, heart attacks, etc.
Beyond checkups and treatment, how do you recommend business owners take the next step with wellness and prevention?
Employers should work with their insurance broker. If they have access to a particularly good broker, the representative will know about those resources and can help tailor their plan. You want a flexible plan that is made to work for any individual company.
What’s the best way to tie different health care management programs, like pharmacy, to an on-site clinic?
It can be done automatically. In my group, we have a pharmacist who looks at the pharmacy benefits and counsels us on everything from formulary to medication compliance reports. So, ideally, you want to choose a group that automatically does that as part of its on-site commitment. You can set it up so the clinic uses one pharmacist and medications are delivered on-site.
Do you have any other advice for employers?
You have to go a step beyond just doing a health fair and checking people’s blood pressure, blood sugar or cholesterol. You need to aggressively follow up and treat these conditions on-site. The only way to make a difference on cost and benefits is to get those under control, and you can’t do that unless you have somebody right there working with employees. ●
Insights Health Care is brought to you by HealthLink
FOLLOW UP: For more information about on-site clinics and HealthLink’s health and wellness product offerings for employers, call (800) 235-0306.
How many of you remember your mother telling you, “Sticks and stones may break your bones but words will never hurt you"? I remember making this statement to my two daughters, for which I have since apologized. However well-intentioned this statement may have been, it is utterly false.
Words do matter, and they can hurt. Words can be hurled out in haste either in speaking or in writing that quick email, message or tweet. Our minds work extraordinarily fast, our defense mechanisms kick in, and we are in response mode.
In fact, if we think about all the muscles we have in our bodies and how we are to properly exercise them, there is none more powerful than the tongue, yet we do not often think about how to control that single muscle which can cause so much damage in such a short amount of time.
Setting the tone
As leaders of your organization, you have the responsibility of setting the tone within the organization. The words spoken and how they are spoken create an atmosphere that can be either helpful or toxic.
Who can forget the speech given by Gen. George Patton at the beginning of the film, “Patton” or how we reacted to hearing a coach’s pep talk right before the big game?
All of us can remember hearing words of encouragement and congratulations, and I would imagine, you can relate to the cringe I feel when I think back to the “sting” I have inflicted when my words were poorly chosen. Words do matter.
It’s all in how you THINK
I once heard a presentation about the power of words and what to consider before speaking. The message did not contain anything I had not heard before, but it did give me an acronym that I use every day: THINK. “T” stands for thoughtful, “H” for helpful, “I” is for inspirational, “N” for necessary and “K” for kind.
That has been a lifesaver for me on more than one occasion. While I am far from being perfect, taking a split second to THINK before speaking has made a significant difference in my relationships.
THINK reminds me that it is always best to use words I would want to hear in a tone that would elicit a positive response.
Inspire, rather than prod
There will come a day when we will no longer be around, yet our reputation and legacy will remain. We get to influence what that reputation may be by the words we speak and write.
Certainly, corrections are needed at times; however, a correction can be given in a manner that is inspiring rather than harsh. We can choose words and the tone of our voice, which demonstrate our desire to lead rather than prod. Because we are leaders, we must be consistent in demonstrating to others that we understand the power of words.
We can all remember times when unknowingly, someone has made a statement that impacted us in a significant way. Taking just that split second to THINK has the potential to make the difference between sending a message of encouragement or disaster.
Vistage International in the St. Louis area
Vistage provides professionally facilitated peer advisory experiences that help CEOs, business owners and key executives grow their business.
“Successful leadership is not about being tough or soft, assertive or sensitive. It’s about having a particular set of attributes ... and chief among these attributes is character.” — Warren Bennis
A colleague of mine recalls a time during high school when he admired a certain teacher and even saw him as a potential role model. That potential was quickly lost, however, when the teacher consistently demonstrated that what he said and what he did were two different things.
We’ve all experienced times when we see leaders who don’t walk the talk. That is disastrous for leaders. There is no quicker way to undermine leadership than to say one thing and do another … or even say one thing and have people perceive that you’re doing another.
Of course, leadership development is a journey. The teacher mentioned above was young and may have learned later in life that to be a successful leader of students one must be the right kind of person in addition to having the skills or knowledge to teach an academic subject.
Bill George, former CEO of Medtronic, Harvard Business School professor and co-author of the book, “Finding Your True North: A Personal Guide,” outlines some warning signs that can help identify five potential character “hazards” that can lead to ineffective leadership.
Imposter — Being driven by the fear of “making mistakes and having one’s lack of skill or knowledge exposed.” Avoiding feedback and being selective about one’s sources of input are a few of the signs that this hazard may be imminent.
Rationalizing —When we won’t admit our mistakes for fear of being considered a failure. We see this play out when we don’t hold ourselves accountable for results, play the blame game or talk only about the positive in order to hide our failures.
Glory seekers — Pursue only outward signs of success, don’t give others credit and overstate their own contributions to the organization’s success. Navigating around this hazard includes recognizing that acknowledging others’ contributions in no way diminishes one’s own accomplishments.
Loners — Cut themselves off from feedback, lose perspective and make decisions that are out of touch with stakeholder needs. Listening to and building natural networks with those we serve will keep us from losing touch with their perspectives and needs.
Shooting stars — Move away from what the authors call an “integrated life” by neglecting family, friends, community and their own health and wellness and end up running too fast and not doing their best.
Bennis also adds, “Leadership is … character in action.” If that’s true, it is critical for us — with the help of those we trust — to assess whether or not we see any of the warning signs that these hazards are on the horizon and take the necessary steps to avoid them at all costs. ●
Dialect Inc., a company that helps organizations improve alignment and translation of organizational identity.
Andy is also the co-author of “Uncommon Sense: One CEO’s Tale of Getting in Sync.” (314) 863-4400
We know there are “Seven Habits of Highly Effective People” and “50 Ways to Leave Your Lover.” Thank you, Steven Covey and Paul Simon for helping us to clarify these things. Business leaders are often pushed and pulled in many directions and are trying to motivate and manage many people and projects at the same time.
Keeping seven things in mind might be tough. I apologize to you, Mr. Covey, but we may have to cut the list down. How about four? We can probably keep four things in mind at any time.
Showing empathy for those you lead will gain you respect and loyalty. Having empathy for others will give you a broad and deep understanding of affairs and conditions that are important to your mission.
Putting yourself in your customers’ shoes will help you develop products and services that bring real value and create good margins. Understanding the position of your investors and stakeholders will help you alleviate their concerns and garner more support from them.
How will your actions and your company’s behavior shape the near-term future and the long-term future? Are today’s activities helping you build for more opportunity and better service? Thinking ahead will help clarify strategy and tactics, helping to rally support among your team members.
Every action has ripple effects that move well into the future. If you can anticipate those ripples and influence them, you can create solid and sustainable strategies.
When it is time to act, act. Take plenty of time for empathy and thinking ahead and planning and strategizing. But when it is time to act, act swiftly and deliberately. Act boldly. You may not have many opportunities to move an organization in a significant way, so make that opportunity count when it is presented to you. Leaders are called leaders because they take people and projects to places that the meek and unprepared would not dare venture. Go there with purpose and go there boldly.
Good leaders make mistakes. Admit when you make a mistake and move on from it. If you were using your empathy, thinking ahead and acting boldly, you did all you could to be prepared. In that case, you made a good mistake. Own it. Learn from it. Forget it and move on to the next set of decisions. Make sure the people who are affected by the mistake know you made it, understand how you made the mistake and see how you plan to move on. Involve them in the next plan and prepare for action.
Successful leaders know there are only a few things that set them apart from those who pretend to lead or those who are managers but not leaders. If you aspire to be a successful leader, you can do it by exercising your empathy, thinking ahead and acting boldly.
When you err, admit your mistake and move on. You will have many who will follow you, because they know your mistakes will be worth experiencing for the successes that follow. ●
StorageMart, one of the world’s largest privately held self-storage companies with locations across the U.S. and Canada.
Tron has helped lead the company to double-digit revenue growth for the last four years by embracing digital marketing and call center support. With 40-plus years of experience in sales, marketing and training, he continues to be sought after as a public speaker, sales trainer and consultant.
They say that the best way to overcome your fears or phobias is to confront them. Not comfortable flying in an airplane? How about giving a public speech or walking across a high bridge?
Well, you’re not alone. Some surveys say about 20 percent of people 18 and over have anxiety problems that when you get right down to it, are irrational.
While some fear can be expected as a response to imminent danger, phobias are exaggerations of those reactions. They can be difficult to overcome, people avoid them like the plague — it’s the friend who always takes a train or bus to travel when an airplane would be much quicker.
Overcome through confrontation
What about if you could take a dry run on a small scale? It might help you as you weigh the risks of the entire process.
Sarah Clarke, manager of the Gateway Arch Bi-State Development Agency, which operates the tram to the top of the Arch, has some observations that can help shed light on the subject. After all, the Arch is a 630-foot monument, the top of which can only be reached via a five-seat tram that stops at an observation area crammed with visitors.
She says there is a car from the tram in the Arch’s lobby on the ground floor so visitors can and see what it is like and find out if they might feel claustrophobic.
“That allows people to get inside and try it out,” Clarke says. “Usually that helps, but some people at the last minute jump out before the doors are about to close. Most people who give it a try don’t feel that it’s too bad.”
So the smart visitor has a chance to test the personal space inside the tram — and decide if it’s time to confront his or her fear.
No dress rehearsal
While you don’t get a dress rehearsal with every business risk, there are some ways to prepare your company so it has a better chance for success.
One of the first steps to take is an analysis to see if the risk is a good fit for your company. For example, you wouldn’t want to expand your customer base without improving your production line first.
If you don’t get an outside opinion of your risk, you might be dooming your success. An unbiased look can analyze if the opportunity is a good one for business growth.
Mark Bamforth, CEO and president of Gallus BioPharmaceuticals LLC, can add his two cents here.
“You need to evaluate things and assess risks and potential, but you can’t wait until there’s no risk because if you do, the opportunity will have gone away.”
That is the definition of a calculated risk. With your opportunity, weigh the pros and cons of going forward — and of keeping the status quo. Don’t allow the fear of failure to quash your ambitions. ●
Smart Business St. Louis
Dennis is interested in the people and business making a difference in St. Louis.
Mark Bamforth’s M&A handbook contains a great piece of advice he used to grow Gallus BioPharmaceuticalsWritten by Dennis Seeds
Mark Bamforth remembers arriving in the United States in 2000 from his native Scotland — and receiving some powerful advice from his new CEO.
“I was working for the biotech company Genzyme — and the day I arrived he told me that Genzyme was going to buy another company and the investment was one-fifth of Genzyme’s value at that time, so it was a pretty big deal.
“When I asked him why it was right to do this he said, ‘Well, we think we know enough to know that we should do this. But if we wait until we’re certain, then somebody else will have done it.’”
That advice gave Bamforth some insight he would never forget.
“It made me realize that you need to evaluate things and assess risks and potential, but you can’t wait until there’s no risk, because if you do, the opportunity will have gone one way or another.”
That major acquisition at Genzyme would be followed by a dozen more — a few in Asia, but most in the United States and Europe, covering different types of biologic manufacturing and medical devices.
When Bamforth and Genzyme tried to acquire a site in St. Louis from Centocor Biologics LLC, a Johnson & Johnson company, it didn’t work — twice. The incidents led him to take an introspective examination into where he was on the ladder of success.
“I was at a point in my career when I was looking for what was next — I wanted to run a company and have that experience,” he says.
The opportunity for Bamforth to set up his own business had arrived. He asked Johnson & Johnson to sell the Centocor site to him. Johnson & Johnson agreed, and Bamforth raised the money. Taking the Scottish word for brilliant and impressive, Bamforth founded Gallus BioPharmaceuticals LLC, becoming president and CEO.
“The rest, somewhat, is history,” he says, “Since that start, we’ve more than doubled the workforce to 350.”
Gallus is a pure-play contract manufacturer, meaning it only offers contract manufacturing and doesn’t have any of its own products; it doesn’t compete with its customers.
Here’s a look at how Bamforth evaluates business potential to drive growth and revenue of $50 million to $100 million a year.
It’s the fit and execution
Many new businesses are founded with having only one customer. If that customer does enough business to keep you afloat, you’re fortunate. But one day, you will probably realize that it’s not wise to depend on only one customer — and you must grow and diversify your organization.
“On day one, Johnson & Johnson accounted for all our business,” Bamforth says. “So part of our requirement really has been to grow the business in order to diversify our client base.”
Once you clearly identify your objective, you build your strategy. His vision was to make Gallus the most trusted provider of world-class contract manufacturing and development services for the pharmaceutical and biotechnology industry.
Bamforth decided it all boiled down to two steps that, if successful, would accomplish that vision.
“First of all, a good acquisition has to ‘fit’ with the company’s needs,” Bamforth says. “That’s having the right technology available, the right skill of manufacturing and the capacity available.
“So the right fit with those clients — all that is backed up by having in place the right quality systems. That’s a prerequisite.”
The next key is execution, and proving that with the acquisition in place you are able to deliver the goods as promised.
“Some of our clients are smaller biotechs, and the molecule we create really is their baby — it’s incredibly important for it to be able to help patients,” Bamforth says. “So it is a tremendous position of trust. Having the right fit, then executing on the programs, delivering materials on time with the right quality are essential for their program and fulfilling their mission to help patients.”
Do your due diligence
Besides partnerships and organic growth, the mother lode of growth opportunities is in acquisitions. It doesn’t hurt to be somewhat opportunistic. Should a company come on the market that would be worth your review, follow Bamforth’s advice: You can’t wait until there’s no risk, because if you do, the opportunity may be lost.
“I think it starts with that initial diligence phase of really trying to understand the business that’s in place. So, what is the revenue? What’s that based on? Who are the clients? How diversified is that client base? And how good a fit is it with what you’re trying to do?”
What makes a merger or acquisition a good fit is that it fills a gap in the company, creating an expansion in its products, workforce or abilities. Another measure is if it helps the company enter a new market, and thus creates a new revenue stream.
“We have a lot of capability for organic growth at Gallus, but we’ve also been actively looking at M&A opportunities over the last couple of years,” Bamforth says.
So when Gallus was reviewing possible acquisitions recently, it came across Laureate Biopharmaceutical Services Inc., which was in the same space as Gallus.
“They were a pure-play contract manufacturer and they had very strong development and clinical manufacturing, but they had very limited commercial manufacturing,” Bamforth says.
“Their real requirement was to find a way to be able to put in place commercial manufacturing so that the clients they’ve been working with, as their molecules mature, continue to be clients.”
The acquisition was a good one, since long-term sustainability would come from its long-term commercial relationships, not the clinical relationships that may only last a few years, Bamforth says.
“This is a very good match because combining Laureate with Gallus more than doubled our pipeline of client molecules that we’re working on,” he says, including process development and clinical drug substance manufacturing capacity. “So it increases the number of molecules that are likely to mature to be commercial and create that long-term sustainability.”
Bamforth says the Gallus team members realized early that they would want to keep the facility in place.
“This wasn’t a question of how to somehow strip them out of business; this was a question of keeping the current facility and organization in place to continue to drive business growth,” he says. “And sometimes an element overlooked is trying to understand the culture and the cultural fit of the organization.”
No two companies have the same cultures, and some can be very different.
“It can be hard to meld those cultures together,” Bamforth says. “Sometimes acquisitions are done and the company being acquired is treated as though it’s broken and the new company comes in and imposes a lot of things that can cause upset to those who have been in place and who felt that things were working well. Understanding the culture and how to meld the two organizations, I think, is really a critical area to effect.”
Staying on track
Now that your merger or acquisition is complete, it likely won’t be your last. You will have, hopefully, broadened your offerings to clients and will have a better chance of meeting client requirements.
Gallus continues to look for companies similar to Laureate, but also for opportunities to add additional platform technologies.
“We continue to look for the right kind of opportunities to add a new technology platform,” Bamforth says. “I think that to rely solely on organic growth is potentially risky.”
Gallus has looked at a number of opportunities over the last few years, either businesses that were being sold or facilities that have been sold by larger companies on a piecemeal basis. Bamforth says it’s valuable to examine the client base of your acquisition or merger target; you might find out something about your own industry.
“One of the things that we were somewhat surprised about was that with the Laureate client base, there wasn’t a high overlap between their clients and the ones that Gallus had, and I think that says something about the breadth of the biotech business,” he says.
“So we weren’t sacrificing something by making this combination. We were purely adding to Gallus. Really understanding those elements of the business is the fundamental starting point.
“And, of course, what’s critical is to understand the teams in place — their skills, their strengths, their culture and the technologies they use and the capacities that are in place,” Bamforth says. “Look at the operational side of the business and how complementary that is to what’s already in place.”
Another key thing is to reach out to clients, existing and prospective, to make sure they understand the acquisition, and that there’s going to be a continued focus and priority on supporting their work.
“So, in turn, the current clients won’t or don’t have concerns or worries, and if they do, address them,” Bamforth says. ●
How to reach: Gallus BioPharmaceuticals LLC,
(314) 426-5000 or www.gallusbiopharma.com
With a merger or acquisition, look for a good fit.
Investigate the target’s performance; look into all aspects.
Keep your foot on the pedal for future M&As.
The Bamforth File
Name: Mark Bamforth
Title: President and CEO
Company: Gallus BioPharmaceuticals LLC
Born: Glasgow, Scotland. I lived in Scotland until I was 23.
Education: The University of Strathclyde, in Glasgow. I received a chemical engineering degree and a master’s in business administration from Henley Business School near London.
What was your first job and what did you learn from it? The first job that I had was as a food porter, which was in a large department store cafeteria where the job was to keep all the food shelves stocked with hot foods. I used to go home smelling of fries because that was one of the duties — to make the fries. I learned from that that I should definitely get a degree and try to do something different from food handling for the rest of my life. It’s great to have that opportunity to see different types of jobs, and it definitely has an influence on your understanding of the rules where different people end up playing in their careers.
One of the most influential jobs that I had was in my final summer as a student. I worked for a whiskey company. I was able to borrow a computer from the university. I was able to set up all these intricate calculations for design of equipment. I worked with a very experienced engineer who had about 25 years’ experience, and he had never used a computer, but he was a fantastic engineer. I discovered that at the age of 20 that I knew something that he didn’t know.
What is the best business advice you ever received? Besides what I mentioned earlier, the other piece of advice was, as I was setting up Gallus, that whatever you do, you should try to build off a base of experience that you have. The greatest opportunities are likely to be where you have the greatest depths of experience. Trying to do a career switch to an area that you have no knowledge of or kind of a constant knowledge of is almost an impossible thing to do well. So your greatest opportunities are where your greatest knowledge is.
If you could speak with anyone from the present or past, with whom would you want to speak with? I think it would be to have a meeting with Tony Blair, who was the prime minister in the U.K. for 10 years. He really drove change in an organization that was pretty stuck in the past and had an image that was quite negative, and he really focused on cultural change transformation of that organization, the political party. Then when he was in power for many years, I think he drove economic change that was very positive.
I used to not understand the U.S. system of only giving two terms to a president, but I actually think it’s a very smart system because I think in the U.K. as you look at the two most influential leaders over the last 30 years, the tail end of their leadership has actually been quite stressful and deteriorated. So there’s something to be said for limiting terms for those in power.
A 2013 survey of 2,000 U.S. health care consumers found that 83 percent are entirely unfamiliar with private exchanges, according to Accenture, a global management consulting company.
A Kaiser Health poll conducted at the same time found that almost half of respondents didn’t understand that public exchanges are a provision of the Affordable Care Act (ACA).
A year later, those numbers might have moved somewhat, but the confusion and caution about the health care exchange concept is still causing slow initial enrollment for both.
“I haven’t seen a massive uptake on the private exchanges yet,” says Mark Haegele, director of sales and account management at HealthLink. “But I have started to see, for the first time, a few employers say, ‘I’m no longer offering insurance, and you can just go on the public exchange.’”
However, the wait-and-see approach may change soon. By 2017, private exchanges are expected to catch up to public exchanges, with one in five Americans purchasing benefits from a health insurance exchange, Accenture projects.
Smart Business spoke with Haegele about how the two exchange types differ.
How are private exchanges different from the public ones?
The public exchanges, which are mandated by the ACA, allow certain unemployed individuals, individuals with employer-sponsored plans and some small companies to purchase health insurance. The exchanges are sponsored by the government, either state or federal, and cover medical and prescription drugs with four levels of coverage. The individual consumers and small employer groups pay for the coverage, with some eligible to receive government subsidies.
Private exchanges are available to employees of companies who decide to participate. Right now, only a few organizations are offering private exchanges, such as Aon Hewitt, Towers Watson and Gallagher Benefit Services, Inc. The employer sponsors the coverage, but a private exchange has a broad range of coverage from medical and prescription drugs to dental, vision and voluntary benefits. Like a traditional health plan, usually the employer and employee each pay for part of the coverage.
What’s the attraction to private exchanges? Do they help employers control health costs?
Private exchanges are a way for employers to easily establish a defined contribution-type health plan. They can say, ‘I spent $1 million last year on health care for my employees. I’m willing to spend $1 million plus 3 percent next year, but that’s it.’ Then, every person gets an allocation and can choose within the available plans.
Private exchanges create predictability. You’re buying a more budget-friendly solution, that helps employers be one more step removed from insurance, versus managing your own health plan. In fact, it may end up being a stepping-stone to the public exchanges. Once employees get used to exchange-type health plans, some employers may decide to stop health coverage altogether, having them go on the public exchange.
An exchange doesn’t inherently do anything to control health care costs. It’s not a silver bullet. The claims are still the claims. The health status is still the health status. And the insurance companies still have to price each plan with their underwriters. You can build in prevention measures to keep costs down, but that’s like any health plan.
What else should employers know about private exchanges?
So far, private exchanges are structured as a single carrier solution. For example, if Aon Hewitt’s private exchange has Anthem, UnitedHealthcare and Cigna, a 500-life employer can go to the exchange and pick one of those three carriers. Then, health plan members have a menu of plan offerings under that single carrier.
Typically, the majority of employer-sponsored health plans have two or three options. Under the exchange model, you might have upward of 10 choices, as well as ancillary coverages. There are still plenty of choices, but it’s not like each health plan member can decide between UnitedHealthcare, Anthem and Cigna. It basically puts different carriers’ defined contribution plans in a room together, making it easier for employers to choose one. ●
Insights Health Care is brought to you by HealthLink
The Institute of Medicine estimated 30 percent of health care spending in 2009 was wasted. Patients get duplicate services, unneeded services or services that haven’t proven to have medical value, which is where medical management can help.
Utilization management enables health plan members and network providers to contact a benefits manager to determine whether services are medically necessary before they are rendered, says Dr. Robert Sorrenti, medical director at HealthLink.
Years ago, physicians, hospitals and providers strongly opposed utilization management, feeling it intruded upon their ability to make decisions. Today, there is acceptance, along with strong interest from those paying for health plans.
“It’s evolved,” Sorrenti says. “I can’t say providers embrace it and love it, but we’re at a time where people accept this as a tool to help manage some of the utilization that takes place.”
Smart Business spoke with Sorrenti about the value of utilization management services to manage unnecessary clinical procedures.
What’s the benefit of utilization management services?
Utilization management moves people to getting the right quality of care at the right time through evidence-based medicine. If you don’t medically need a service, you really shouldn’t get it. CAT Scans involve a lot of radiation, one MRI can lead to another, and certain procedures with unproven outcomes can be deleterious in the long run.
The bottom-line is: Managing expensive and sometimes unnecessary services will result in health care that is less expensive for employers and health plan members. As plan sponsors, employers have taken a renewed interest in medical management, particularly those struggling to keep pace with health insurance cost increases. They are looking for ways to control that without shifting all cost back to their members.
How does utilization management determine what is, or isn’t, medically necessary?
Health benefits managers, who are accredited through organizations like URAC, employ an extensive process to determine if a service is medically necessary. They utilize medical policy and clinical guidelines to determine the appropriate rationale for carrying out a procedure or service, or using a particular drug. Then, they match up each member’s situation with these policies and guidelines to see if the service makes sense.
Is time a factor with this kind of review?
No. Emergent procedures aren’t reviewed, and with elective procedures there is time for due diligence. Accredited utilization managers have reasonable turnaround times — usually no more than three days — to get back to providers and members.
What services are typically reviewed?
In-patient days are reviewed to ensure patients are moved through the continuum of care. You don’t want them staying in the hospital for $5,000 per day, waiting for a bed to open up in a skilled nursing facility where the cost is $1,000 per day.
Other services being reviewed are:
- Radiology services, particularly MRIs and CAT Scans.
- Physical therapy. At some point, patients can continue the exercises at home.
- Sleep studies. Can a study be done at home, rather than at a costly lab or hospital?
- Durable medical equipment, such as wheelchairs, mattresses, hospital beds or braces. Are patients being persuaded to over-purchase or over-use?
- Nasal and eye procedures, to distinguish between cosmetic versus medical.
- Back surgery. This ensures a standard approach of time, medication, physical therapy and watchful waiting is followed before surgery. Back surgery has variable outcomes. You don’t want to jump into it.
How else can employers deter over-use?
Many providers say patients are the ones demanding more services. Employers can empower plan members to have realistic expectations and be careful about demanding unnecessary services. Encourage them to take pride in the decision-making — be wise consumers and ask questions. •
Insights Health Care is brought to you by HealthLink
The Internal Revenue Service defines the depreciable life of a building as 27.5 to 39 years. But that doesn’t mean that all assets grouped with the building have to be on the same depreciation schedule.
A cost segregation study can identify personal property assets that can be reclassified to allow for a shorter depreciable life.
“By accelerating depreciation deductions, you’re deferring taxes, which creates a cash flow benefit.” says Robert W. Haggerty, CPA, Partner, Tax Services at Brown Smith Wallace.
Smart Business spoke with Haggerty about what assets might qualify and the potential benefit to businesses.
How does a cost segregation study work?
Typically, blueprints or architectural drawings are used to identify what went into the building. Engineers analyze the drawings and perform site visits to identify qualifying property. Information from the general contractor or estimating manuals is used to determine the cost. A tax analysis is performed, which involves reviewing court cases and rulings that address which particular assets qualify for a shorter life.
Cost segregation studies can be performed anytime you build, acquire or expand. If the cost is $1 million or more, it is worth looking at.
The IRS also allows you to do a ‘catch-up adjustment.’ For example, if you bought or built a building five years ago and didn’t do a cost segregation study, you could still do one today and take the benefit on your current tax return.
With certain income tax rates rising, it’s a nice time to consider a catch-up adjustment.
What types of assets typically qualify for shorter depreciation?
Generally, property that is unique to a particular trade or business qualifies for a shorter life. An example I often use is the lights used to showcase merchandise in a retail store. Those lights are considered five-year property even though, by definition, lighting is part of the building. Not only do the light fixtures qualify, but so does the wiring and the portion of the electrical system supporting the fixtures.
Manufacturing facilities benefit the most from cost segregation studies because they typically have a lot of specialty systems or design inherent in the building that function as part of the manufacturing process. A large portion of the plumbing, electrical and HVAC systems qualify for a shorter life. Even the concrete floors can qualify. Hospitals and medical facilities are another industry with big benefits from cost segregation. Think about all of the specialty systems in a medical setting.
What are the tax benefits?
The benefit is the deferral of income taxes by accelerating depreciation expense. Moving costs from a 39 year building life to a five or seven year life can significantly increase depreciation expense for the building. Cost segregation studies can provide a permanent, time-value-of-money benefit of 10 to 50 times the cost of the study, which typically runs $5,000 to $10,000. Studies for larger projects can be much more costly, but the benefit usually increases with the cost of the project.
Any new developments of interest to businesses?
Yes, businesses can also take advantage of new final ‘Repair Regulations’ and proposed ‘Partial Disposition Regulations,’ which were issued in September 2013.
Under the old rules, you could not retire a portion of a building, so taxpayers who had a roof replaced, for example, could have two layers of roofs depreciating on their books. The new rules allow you to write-off the old roof.
In situations where it may be difficult to quantify the portion of the building that relates to the old roof — there might be only one asset on the books called ‘building’ — we are helping clients quantify the amount of the partial disposition.
Windows, interior build-outs and elevator replacements are other examples of items that may be eligible for partial disposition.
The Repair Regulations offer some safe harbors for small businesses and include de minimis rules that can apply to all taxpayers. So, there are even opportunities for businesses to take some tax deductions with very little effort. ●
Insights Accounting is brought to you by Brown Smith Wallace
This may be the most unglamorous and simplistic business in the world, but like every other business, it has developed a complicated and multifaceted advertising and marketing ecosystem. I am making plans and preparations to present some of StorageMart’s marketing practices at PubCon, which Forbes magazine has called a must-attend event for online and social marketing. Conferences like these are a great way to show what you are doing to peers, and study what other peers are doing. My sessions are normally about local and niche marketing.
It has been said that all politics is local. The thinking is that people vote for candidates based on how the candidates feel about or act on issues of local importance. I am not so sure this is correct.
What does this have to do with advertising and marketing? Many businesses are similar to self-storage in that they draw their customers from a defined geography. The shoe repair shop does not have many customers mailing shoes from the next state over to be repaired and mailed back. The shoe repair customers come from a rather small area, perhaps 10 minutes’ drive-time, perhaps 10 minutes walk-time. There may be reasons you would choose one shoe repair shop over another, and you might go an extra 10 minutes to get far better service or because that shop’s staff are particularly pleasant to deal with. But would you go an extra 15 minutes farther? Twenty minutes farther?
Value of the locality
Grocery stores are similar. How many grocery stores would you drive past or walk past to get to the one you like best. Grocers draw from a very tight geography as well. This is one reason you hear about the existence of “food deserts” where neighborhoods lack access to full service grocers.
I suppose the world view qualifier that I believe affects politics also affects shopping. If you only eat gluten free organically grown locally produced foods because that is what you believe in, you may pass many other grocers before getting to the one that meets your qualifications. If the local shoe repair shop uses leather repair patches made of Kangaroo, and you are opposed to making leather from kangaroo, you might travel some distance to find a shoe repair shop that only uses cow leather.
My point is that advertising and marketing is local, because your most likely prospect is the person who lives closest to your place of business. If your business practices or business niche caters to people of a certain world view, then your geography suddenly widens tremendously. If your business does not have a physical location, then your place of business is the mobile device, tablet or PC of anyone in the market for your product or service anywhere you able to complete a delivery. If your business does have a physical location, you are competing online with companies strung across the globe for the potential customers in your local area.
Advertising and marketing is local and it is not local at the same time. For storage companies in general, the focus has become heavily dependent on reaching local consumers. There just aren’t too many ways to differentiate between storage places so that one can create a niche market that will draw from a very wide area. There are not too many world views that would work for or against a storage operator to help make local advertising and marketing less of a factor.
We do look for differentiators that will help convert more shoppers into customers. A clean storage facility that smells fine is what consumers want, but they don’t always know that until they get to the storage place and take a look around and experience the smells there. It would be odd and probably counter-productive if StorageMart advertised itself as the best smelling storage place in Brooklyn. It might work, but the chances seem pretty slim.
It is difficult to appeal to other niches. How do you promote self storage as an environmentally friendly, low carbon footprint business? In some ways it is exactly those things. We encourage people to save, reuse and repurpose, because we all about keeping things rather than throwing things away. Storage places use a fraction of the electric power buildings of similar square footage use, because we only run lights when people are in the aisles and in their units. We use a lot less heating and cooling because people’s belongings are fine being a lot warmer in the summer and a lot cooler in the winter than you would keep your home, office or hotel room. Wouldn’t it seem a little weird to promote self storage as an earth friendly action that will save the snow leopard and the tiger? Maybe this would be the perfect way to promote storage and I just don’t believe it yet.
StorageMart has several properties in the greater Toronto area that are being outfitted with solar electric power generation panels on all of the roof space. Each of these properties is large enough that hundreds or even perhaps thousands of homes can be powered while reducing greenhouse gas emissions. But how many people are shopping for an environmentally friendly storage facility? Even if people were shopping or such a thing, we wouldn’t know it, because Google no longer reports on keyword data.
If StorageMart is competing with all sorts of companies from outside of its many, many little geographic trade areas, and if it is difficult to fit storage in to a particular world view, how do we go about local advertising and marketing?
Distribution is the first item of importance. Look at the world’s most successful companies and you will see that they master distribution. By this I mean they are easy to find everywhere. In how many places can you find Coca Cola, Pepsi or Budweiser? We take this same approach in a local way. Any outlet that is local in nature in one of our trade areas is important to us.
Google Maps, Yellow Pages, city directories and local business listing sites get a lot of attention. These activities are the foundation for building other local tactics. Any local business should be spending a lot of time managing and tweaking these tools.
Other steps to consider
Local relevance is the next item of importance. I don’t mean relevance in the way internet marketers used to use the term relevance before Panda, Penguin and Hummingbird. I mean relevance in real life with real people in real situations. Is your customer service top notch? Do you support local events, local organizations and local charities? This local relevance generates positive online reviews and positive real-world word-of-mouth, which all influence how powerful a local brand you have. The more powerful your local brand, the easier it will be for people to recognize you when they search and to the easier it will be for search engines to identify you and show you to people who are searching.
Online social engagement is the next item to consider. There are many social sharing sites that are powerful influencers and allow those people who find you relevant to speak well of you and to be a part of your wider network of support. There are those who scoff at social engagement and say that it does not produce definitive returns on investment. I would answer that when people are checking in at your place of business on their favorite social site, that when people like, share and comment on your postings, you are getting valuable referrals, recommendations and affirmations that others in the geography you work in will notice. This is powerful stuff.
Video is another very important part of the mix. People love to watch video and they love to watch interesting, funny, entertaining or informative video. It is tough to make storage be all of those things, but you have to try and have a little fun with it.
Mobile is the fifth piece of the puzzle. We have tried to make the mobile version of Storage-mart.com user-friendly and easy on the eyes. We use many advertising partners to serve ads to mobile users when those users are in our geographic areas. When you see how quickly people are changing their use habits and now spending most of their online time on their mobile devices it makes your head spin. We plan to spend a lot more time working on ways to make it easier to find StorageMart and easier to find a storage unit in the mobile environment.
We don’t pretend to have all the answers to the advertising and marketing questions. In fact, I am not sure we even know all the questions. I expect that if we continue to focus on local distribution, local relevance, social engagement, video and mobile, we will find a way for enough people to find us easily.
If all advertising and marketing is in fact local, then we are on the right track. In the meantime, we might discover the one world-view twist that makes storage a must-have item for cool people everywhere.
Tron Jordheim is CMO of StorageMart, one of the world’s largest privately held self-storage companies with locations across the U.S. and Canada. He has helped lead the company to double-digit revenue growth for the last four years by embracing digital marketing and call center support. With 40-plus years of experience in sales, marketing and training, he continues to be sought after as a public speaker, sales trainer and consultant. For more information, visit http://www.tronjordheim.com.