Business Journal NORTHEAST
$1.50
by Dave Gardner
PENNSYLVANIA
THE REGION’S AWARD-WINNING SOURCE OF BUSINESS NEWS AND INFORMATION
December 2018 VOL. 33 NO. 12
A look back at 2018
Investment, education, employment and stability marked the trends that Northeast Pennsylvania’s business community faced during calendar year 2018. According to Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry, it was a positive year for the overall state economy as part of the ongoing national boom. Tax reform courtesy of WashBARR ington certainly helped to stimulate the business sector, as well as the curtailing of government regulations which businesses consistently said were strangling their operations. “There hasn’t been much talk about regulation reduction stimulating the economy, but it’s very real here in Pennsylvania,” said Barr. He noted that, despite the rosy times, concerns surfaced during 2018 about a mounting trade war with China and its inherent trade tariffs, and voiced hope that the conflict would be resolved during 2019. China is Washington’s biggest creditor, and Barr noted that this debt could become a pawn if the trade war intensifies and America’s federal debt mounts from the federal tax cuts while interest rates rise. Steel is one product Barr specifically mentions that is being adversely affected by trade tariffs. Prices for industrial construction around the country are based to some degree on steel costs, and tariffs on this product, plus others, could place a drag upon the state’s current economic boom. However, when looking back at 2018, workforce concerns are the number one issue voiced by Barr
and virtually every employer in a survey recently conducted by the Pennsylvania Chamber. As the economy has rebounded from the 2008 financial crash, needs for trained personnel are outstripping the supply, creating a frustrating personnel shortage with no quick fix available. “The losses suffered by the Republicans during the election also have not created any tremors within the business community,” said Barr. “Despite the changes in Congress, we are hopeful there will be agreement reached next year on renovations to the nation’s infrastructure, which are badly needed.” Health care stability Within the bustling health care arena, process changes from legislation were manageable during, but during 2019 could become more challenging, according to insurers. Pricing gains for Accountable Care Act Internet-based policies finally settled down as insurers gained actuarial insight from several years of operation, and Congressional battles, although heated, never resulted in the abolishment of the internet-based policy market. Tom Novinger, MD, senior medical director with Highmark Blue Cross/Blue Shield, voiced the observation that the rash of mergers and acquisitions with NEPA’s health systems is largely complete. However, national system changes are still NOVINGER ongoing. He said that during 2018, Highmark continued to evolve both culturally and with its business processes, and that these changes have been particularly noticeable with provider relationships as conversion occurs from a system of payment for
service to payment for patient outcome. Highmark also has partnered with Geisinger to create a new facility in Montoursville, participated in improvements by the Allegheny Health System based in Pittsburgh and forged a financial affiliation with the Hershey Medical System. The need for dollars to purchase new technologies continued to be a major insurer challenge during 2018, as all insurance company actuaries strived to forecast equipment costs and then provide for the financial needs. Promising, but costly treatments also continued to appear, such as manipulation of the immune system to battle cancer, thereby delivering new hope for patients while also increasing policy premiums. Some drug costs also can be expected drop in time. “The accelerating use of bio-similar drugs that provide the same effectiveness as the costly brand-name counterparts can bring down overall pharma costs,” said Dr. Novinger. “However, the drug companies may fight this trend.” In what may be regarded as a surprise, technology actually lowered some health care costs during 2018. Dr. Novinger explained that new procedures and systems, such as the move of many patients from in-patient to out-patient care processes, are decreasing costs, and some surgical procedures such as an appendix removal or knee replacement can involve extremely short hospital stays. “As I look back at 2018, what has kept me up at night involves the drive to provide the right care at the right place at the right time,” said Dr. Novinger. “This sounds simple, but is becoming increasingly complex.” Industrial investment Calendar year 2018 witnessed continued investment in the overall NEPA industrial system,
True Performers make every minute of every visit count.*
*Based on reduction in hospital costs for patients with True Performance doctors compared to those without from January 2017 to December 2017. Highmark Blue Shield is an independent licensee of the Blue Cross and Blue Shield Association.
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