VOL. 38, NO. 13
MARCH 27 - APRIL 2, 2017
Source Lunch
Dynamic battle FirstEnergy is cutting rates to best NOPEC’s numbers. Page 3
Michelle Venorsky, founding partner of Hello LLC Page 35
Another try
CLEVELAND BUSINESS
REAL ESTATE
MANUFACTURING
Builders enjoying bulked-up market
Charting a path on the Great Lakes
Sales-tax expansion still in Kasich’s plans. Page 6
By STAN BULLARD sbullard@crain.com @CrainRltywriter
Shaun Brady and business partner, Bob Campana, recently began putting in the streets for the first 26 home sites at the 100-parcel Preserve at Quarry Lakes residential development in Amherst. The two hope that their buyer, national builder Ryan Homes, has sales brisk enough that they’ll be able to develop 11 more lots by yearend. Their goal is to sell out the subdivision by 2020. “Everyone is optimistic going into this year,” Brady said. “But everyone does not want to be in the same situation they were in before the downturn.” That is, sitting on unsold lots or homes waiting for buyers. But this year looks to be busier and bigger than the past few, as the shortage of existing homes in desirable locations pushes more buyers to consider new homes. Ted Otero, president of the HBA Greater Cleveland and a Chagrin Falls-based builder of luxury homes, said, “This year has started off very strong and looks to continue so even as interest rates slowly increase.” Otero said members of his trade group are “extremely busy. The increase in interest rates has seemed to move the consumer to act in the short term. Personally, we’ve had one of the most active January-March sales periods we’ve had” since he started Otero Signature Homes in 2004. The rising pace is borne out by U.S. Census Bureau statistics for single-family building permit sales. In January, the most recent period the federal agency provides data for at the metropolitan statistical area (MSA) level, the Cleveland-Elyria SEE HOUSING, PAGE 31
The Dorothy Ann-Pathfinder, an articulated tug-barge vessel, is loaded with 13,000 tons of iron ore pellets at the Cleveland Bulk Terminal on Whiskey Island for delivery to ArcelorMittal’s steel plant, a 6-mile journey down the Cuyahoga River. (Photographs by Peggy Turbett for Crain’s)
Interlake Steamship’s round-the-clock crew delivers ‘the building blocks of America’ By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty
With a touch of a lever, captain Jeremy Mock guides the Dorothy Ann-Pathfinder through the hooks and bends of the Cuyahoga River.
Entire contents © 2017 by Crain Communications Inc.
In the Great Lakes region, there’s a critical partner to the steel and construction industries that the public may overlook: the lake and river shipping industry. “We haul the building blocks of America,” said Jeremy Mock, captain of Interlake Steamship Co.’s Dorothy Ann-Pathfinder. Interlake, a family-owned U.S.-flag fleet that operates on the Great Lakes, has been in existence since 1913. The Middleburg Heights-based company employs about 400 people and has nine active ships in its fleet, eight of which it owns and one of which it operates through its sister company. While Interlake doesn’t share its annual revenue, president Mark Bark-
er said 2016 wasn’t a great year, but it was OK. The company delivers products for the steel making, power generation and construction industries. “As the economy goes, we go,” Barker said. The automotive industry has kept the steel industry alive, he said, but the strong dollar and foreign competition certainly presented challenges. Barker said he is seeing some optimism for 2017, especially in the construction and infrastructure industries, and he has seen a small uptick in volume. It’s early in the year for Interlake. For the most part, Interlake’s season begins when the Soo Locks in Sault Ste. Marie, Mich., open on March 25, said Paul Christensen, director of vessel operations and security. But the Dorothy Ann-Pathfinder got an early start on its Cuyahoga River ore shuttles, which started March 1. SEE INTERLAKE, PAGE 30
Food industry report Flats East Bank restaurant scene still thrives despite early turnover. Page 11 Indy grocers find a niche. Page 13 Q&A with JACK Cleveland Casino executive chef Shane Brassel. Page 16
CONTENT
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TECH MATTERS THE POWER OF BIG DATA FOR BUSINESS
M
odern society is awash in big data. Because of big data, machines can drive cars. Doctors can care for remote patients who are using wearable technology to monitor their health and stream the information into hospital electronic medical records. Mobile devices alert their owners to severe weather, the communication of which was generated without any kind of human interpretation. “We’ve only just begun. We’ve created more data in the last two years than in all of human history combined,” said Lev Gonick, CEO at DigitalC, a Cleveland-based civic tech collaboration. “If you think about where we are with big data, we’re in the bottom of the first inning.” The tech industry is buzzing about the ground swell of big data. But what does that mean to businesses and other organizations, and how can they harness big data to make better decisions and strategic moves? Organizations that want to corral the power of big data should not focus so much on the sheer volume of data they possess, but what they want that data to convey, local tech industry experts say. “When I think about big data, it’s more about context and creating intelligence,” Gonick said. “Whether we’re running a business, the government or a nonprofit, we may have this great lake of data, but how do we create pools of intelligence? If you can’t measure it, it’s hard to manage it.” First, map out key work or product flow questions during the data discovery process and consider your available data sources, he said. Then determine what issues you want to solve — whether it is improving productivity or determining how to make good land acquisitions that drive economic development. “Start with the questions. The data will follow,” Gonick said. To that extent, DigitalC conducts boot camps for government and health care
MONETIZING BIG DATA Gartner Inc., a global information technology research and advisory company, estimates that approximately 6.4 billion devices were connected in 2016. That number is projected to surge 225% by 2020, to some 20.8 billion devices. Indeed, many organizations are preoccupied with how to best monetize the data pulsing through the consumer and business world. The key is selling the story.
organizations to learn about how to interpret data analytics. At one local hospital, for example, analysts and administrators discover how to improve the patient experience while reducing post-operative patient stays. “That’s a data question,” Gonick said. DigitalC also is using big data to improve Northeast Ohio’s infrastructure and quality of life. In one example, DigitalC has partnered with the Cleveland Water Alliance to create a robust data set that will give the Health care data aggregators may sell their data to hospital systems or insurance companies that want to determine how to save money and generate increased revenue. Strain “In order to monetize data, you have to be able to take complex data sets and standardize them,” said Tom Strain, director of business intelligence at OEC. “You want to be able to funnel big data so that you’re making it consumable. You have to be able to deliver a compelling
TO READ PREVIOUS TECH MATTERS STORIES, GO TO crainscleveland.com/techmatters.
group insight into the quality and quantity of Lake Erie’s water. Meanwhile, by looking at a wide aperture of patient data longitudinally, IBM Watson Health is helping its health care system clients determine how to best manage patients with chronic diseases, said engineer Douglas Meil. “We’re integrating data from electronic medical records sources and claims data, and constructing a variety of registries for our customers so they can figure out how to improve patient care and quality of life,” said Meil, who co-founded Explorys, a Clevelandbased health care analytics software company that IBM acquired in 2015. Organizations that are considering integrating a big data solution into their operations should make sure they first improve their data security, said Robert Eckman, chief information security officer at MCPc, a Cleveland-based technology consultancy and integrator. First, perform a data classification effort to determine where your special data reside and how they may need to be protected based on risk to the organization. Of specific regulatory interest are sensitive data such as payment card information; protected health information; or personally identifiable information, he said. “These may require that a higher level of protection be applied to mitigate the risk of this data being breached,” Eckman said. Next, create an information security policy that spells out to employees how to treat sensitive or confidential data. “Organizations should consider an enterprise-wide data loss protection solution be implemented that mirrors your data security policies and monitors your data by flagging any potential breach, like unwarranted access to a company’s intellectual property,” he said. Evaluate regulations that impact your industry. Incorporate these requirements into the big data design. Finally, implement information security training to raise organizational awareness about data protection. “These are a few best practices that can help secure big data,” Eckman said.
story of what the data is telling us through visuals like infographics, charts or graphs.” Strain says data aggregators and consumers should be aware of misinterpretation. “As we forge ahead and slice and dice big data, we’ll want to make sure that the critical stewards of this data — the data providers — are disseminating the data in an ethical way,” Strain said. “You may have two companies with the same data, but they’ll tell two different stories. It comes down to making sure you are gaining insights from reputable sources, and that a factual story is being told.”
APRIL 24-28
Presented by OEC, this series is full of tech events and programs that support and promote Northeast Ohio’s vibrant tech community. The week’s highlights include an Innovation Event in partnership with the Health Tech Corridor; an Enterprise Tech event, with forums discussing big data, cybersecurity and the Internet of Things; several presentations by software developer bootcamp organizations; Women in IT; and the signature event, the Best of Tech Awards, which celebrates regional accomplishments in tech. The weekend before and after Tech Week will include GiveBackHack Cleveland, which brings together forward-thinking citizens with social entrepreneurs, venture capitalists, and nonprofit and business leaders who will work together on inventing products or services that can positively impact Cleveland. The weekend after Tech Week will include the NASA Space Apps Challenge at Glenn Research Center. During this week, the Medical Capital Innovation Competition will award winning health care big data innovators with cash prizes, funding, mentoring and potential access to Cleveland’s three largest health systems (applications are due March 31). Events also include a Linking IT Talent to Opportunity career and professional development event; IT Speaker Series, and Employer and Student Speed Networking; TechPint; and a Passport to IT Careers Day at the Global Health Innovation Center. Info: Techweekneo.com.
CALENDAR OF
EVENTS MARCH 30 Startup stories: 5:30 to 8:30 p.m., BottleHouse Brewing Co., 2050 Lee Road, Cleveland Heights. Sip on one of this taproom’s small-batch brews while drinking in insight from seasoned Northeast Ohio entrepreneurs who will talk about how to think locally in terms of accessing resources, while keeping your eye on global growth. Info: jumpstartinc.org/events/startup-storiesliving-local-thinking-global
APRIL 6 Ohio Venture Association Summit: 8:30 a.m. to 1:30 p.m., MOCA, 11400 Euclid Ave., Cleveland. This year’s event will help startups think both locally and globally. The summit includes founders, investors and startup community members from throughout Northeast Ohio and outside the region. Info: nvite.com/ OVAVenture2017/e16d
APRIL 23-24 BioOhio annual conference: Great Lakes Science Center, 601 Erieside Ave., Cleveland. This conference recognizes growth in the bioscience sector, from medical devices, lab equipment and regenerative medicine, to alternative fuels and digital health. Info: Bioohio.com
A PRODUCT OF
CRAIN CONTENT STUDIO C l eve l a n d
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FirstEnergy to offer discount it says will undercut NOPEC’s rates By DAN SHINGLER dshingler@crain.com @DanShingler
A little more than four months after their highly publicized split, Akron-based FirstEnergy Solutions and the Solon-based Northeast Ohio Public Energy Council are in full competition mode. With a new discount for customers, FirstEnergy may have just fired the initial shot of their first major battle — one being fought over about halfa-million Northeast Ohio customers. It’s bragging that its rates in April will be the cheaper among the two power providers, though the question remains as to which will be cheaper for customers in the long run. Prior to last November, the two were partners. FirstEnergy gave NOPEC a discount on its power, and NOPEC marketed FirstEnergy’s electricity to consumers through its relationship with local governments in the region. But the relationship ended when the two could not agree on the fee that NOPEC should receive in the deal. Now FirstEnergy, the region’s biggest electric utility, has announced aggressive pricing that it says will make its rates cheaper than those provided by NOPEC, the nation’s largest governmental retail energy aggregator, beginning in April. “We want to continue our relationship with customers” said Diane Francis, FirstEnergy’s manager of customer communications. Francis said the company is applying a 6% discount, which it used to reserve for NOPEC’s roughly half-amillion Northeast Ohio customers, to all its in-house residential accounts. That will make its power cheaper, at
least temporarily, than NOPEC’s, an aggregator that buys its power on the competitive market. In November, NOPEC entered a three-year agreement to buy electricity from Florida-based NextEra Energy Resources. Customers in FirstEnergy’s Ohio Edison territory, which includes much of Northeast Ohio and parts of central Ohio, will see an April rate of $4.71 per kilowatt hour, compared with a NOPEC rate of $4.91 per KwH. In Cleveland and other parts of FirstEnergy’s Illuminating Co. territory, customers will see a rate of $4.77 per KwH, compared with $4.98 for NOPEC customers in that same territory, Francis said. Customers on so-called “general service,” which includes most businesses outside of heavy industry, will get a 4% discount and see cheaper prices from FirstEnergy starting in April, she said. General services customers will get a rate of $5.06 per KwH in the Ohio Edison territory, versus a rate of $5.26 from NOPEC, while in the Illuminating Co. territory the rates will be $5.03 and $5.25, respectively. The differences are significant and mark a reversal from March, when NOPEC still has a price advantage of between 9 cents and 14 cents per KwH. The real question for consumers, however, might be whether FirstEnergy can continue to keep its rates below what NOPEC can offer, or whether the situation is fleeting. Both NOPEC and FirstEnergy concede that customers don’t like to change their suppliers. Most don’t even compare prices on a month-tomonth basis, if they do it at all. For its part, FirstEnergy downplayed the move to win over NOPEC customers. Although Francis said, “We wonder why they would walk away from lower rates,” she added
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that efforts to publicize FirstEnergy’s price advantage was more about informing customers than it was a direct appeal for them to switch. Chuck Keiper, NOPEC’s executive director, said it’s notable that FirstEnergy’s rates have dropped below what he’s offering, but he’s not worried. “This is probably the first time they can claim that,” Keiper said. Keiper said he thinks the FirstEnergy discount is not sustainable and that NOPEC's rates again will be lower. Customers must opt out of NOPEC’s program in order to switch to FirstEnergy or another electricity provider, and Keiper said he thinks his customers are satisfied with the value they’ve received from NOPEC to date. “It’s news that their rates are lower than mine? That’s flattering … but it’s not sustainable,” Keiper said. When FirstEnergy ended its relationship with NOPEC, Keiper said he had more than 30 energy companies vying for his business within just a few days. He predicts a competitive market will continue to make low prices available to NOPEC. For now, both FirstEnergy and NOPEC are vowing to work hard to have the lowest rates not in the spring, but in the summer months, when rates are the highest and when customers also tend to use the most power for air conditioning. And NOPEC has some other benefits to market, aside from the published price of electricity, Keiper said. For one thing, he said NOPEC customers can opt to remain with NOPEC, but to choose a rate that mirrors what FirstEnergy offers. But what’s more important, Keiper said, is that NOPEC customers can rely on his organization to monitor their power costs and to keep them informed of the best deals.
The 350-unit Stonegate complex in Broomfield, Colo., is now owned by Akron-based Summit Management Services. (Contributed photo)
Akron firm pays $90M for Colorado complex By STAN BULLARD sbullard@crain.com @CrainRltywriter
Summit Management Services Inc. of Akron has just completed a $90 million acquisition of a multifamily complex near Denver. Stonegate, a 350-unit complex in Broomfield, Colo., was purchased March 14, according to a news release from Holliday Fenoglio Fowler, L.P. (HFF), which represented the seller. Starwood Capital Group of Greenwich, Conn., was the prior owner. Ed Newman, CEO of Summit, in a March 22 interview called the property “some of the chaff” that Starwood shed from a major purchase of multiple properties from Chicago-based Equity Residential, led by famous realty investor Sam Zell. “This is in a great location, and Colorado has been great for us,” Newman said. “It’s in Broomfield,
which is between Denver and Boulder. It attracts people who don’t want to deal with cities and doesn’t have Boulder’s prices.” Moreover, Newman said his investor group was able to assume a longterm, $72 million mortgage on the property with a 3.6% interest rate. Raising equity privately from investors for the purchase also was easy for the established multifamily owner-operator. “We had it with four phone calls,” Newman said. The Denver market is such, he said, that Summit can update suites in the 18-building complex and hike rents. Summit already operates an office in Denver, where it now owns 1,450 suites that have a 98% occupancy rate. The company also has 1,200 suites and an office in North Carolina. Summit’s total portfolio consists of 5,500 suites, and it continues to own apartment buildings in the Akron area.
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New Hahn Loeser CEO will lean on coaching backdrop By JEREMY NOBILE jnobile@crain.com @JeremyNobile
Marc Kessler is a highly regarded business litigator, but it’s his experience as a youth sports coach, not his lawyering skills, that could be his greatest asset in growing one of Northeast Ohio’s longstanding law firms. Effective March 15, Kessler, 50, replaced Lawrence Oscar as Cleveland-based Hahn Loeser & Parks LLP’s CEO and managing partner. To further the firm’s ongoing pursuit of growth, Kessler is focusing on teamwork and collaboration, and he’s bringing a coach’s perspective to that. “I think every person is different, and what motivates each person is different,” said Kessler, a sports fan who played football in college and coached teams for his kids in hockey, football and lacrosse. “I once had a coach who was a yeller, who’d go around stamping on the ground. Some people that turns off, and you don’t get them motivated.” He added, “I have a passion for leading. And as the leader of this firm, I have to be adaptable to the personalities and identify what motivates them so we can make them better lawyers.” Oscar, 60, has held the dual CEO and managing partner roles since January 2009, when he took over for Stephen Knerly Jr. The firm likes keeping the dual titles for its top leader because it reinforces the role isn’t merely an administrative job to its partners and associates, but a true leadership one. He’s staying with the firm, continuing his work that focuses largely on corporate and business bankruptcy. The firm had been considering the leadership transition since the third quarter of 2016. Oscar said that firms of Hahn Loeser's size, in the 50-200 lawyer range, tend to have managing partners for about seven years, so the timing was on par with others for a change. This year would’ve been Oscar’s ninth in the managing partner role. His predecessor held the position for about 14. While many firms talk about how client demands are really reshaping legal services, and industry reports, like one from Thomson Reuters, illustrate the last 10 years in the business as a decade of fundamental change, Hahn Loeser doesn’t outwardly convey many pressures from the industry’s evolution. The market may be generally stagnant — demand for legal services has never quite recovered to pre-recession levels, according to Thomson Reuters — but cross-selling opportunities should keep lawyers busy. Alternative billing is available, but Kessler posits that the bulk of the firm's clients opt for traditional billing and fees.
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Marc Kessler, left, replaced Lawrence Oscar as managing partner of Hahn Loeser & Parks LLP. (Contributed photo)
“In some ways, Hahn Loeser disagrees that there are major changes in the industry,” Oscar said. “There are. But the important one is how you serve clients. And that isn’t changing for us.” That’s the “North Star” driving the firm’s decision-making, he said. And it’s similarly behind the desire for internal collaboration. Firm officials declined to discuss revenues but said a two-pronged result of collaboration should be the funneling of more work to attorneys while benefiting client service. “If we know ourselves better as a firm, each individual, then we are much better able to serve clients,” Oscar said. “Marc appreciates that with a background as a litigator, which I’m not, and having a coaching style of personality. He’s really dedicated to getting to know everyone.” Kessler will remain based in Columbus, where he is in charge of that office’s litigation practice. Sounding like a coach highlighting their players’ skills, Kessler mentions lawyers in their offices from Florida to California by name, identifying each by unique talents and expertise before citing examples where a cybersecurity lawyer in Chicago could — or should — be invited to look at work involving banking clients in Ohio. It’s not a novel approach, but one the firm seems to be zeroing in on as a way to shape the firm moving forward. Fostering connectivity should further promote a tight and even fun culture that supports lawyer retention — something clearly important to Kessler as he discussed the challenges of finding and keeping the best young attorneys facing all law firms. Kessler said he wants to get attorneys together more often, which is something that sounds great in principle but in reality can simply fall by the wayside for busy attorneys. He referenced firm retreats and celebrating “life successes.” He mentioned how the annual Christmas Volume 38, Number 13 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 441131230. Copyright © 2017 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373.
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parties aren’t divvied into practice groups, but involve the firm as a whole. Kessler intends to facilitate more camaraderie and ensuring lawyers truly understand each other well enough to work together in novel ways. Oscar lauded that goal, conceding that a greater focus there is an innovative objective from other firm leaders. “I think he’ll be challenging our partner-meeting concept and how we will be getting to know each other even better,” he said. At a 97-year-old firm with some 110 attorneys and no shortage of capable partners, it was that coaching background that helped separate Kessler from a pack of potential leaders, Oscar said, as it should help him further connectivity and collaboration among their lawyer base that now covers six offices in Ohio, Florida, Chicago and California. Kessler sees Chicago, Florida and Columbus as strong areas for adding attorneys and growing the firm's business, again reinforcing the need for collaboration and the offices working together on client matters. Oscar said the firm saw benefits in bringing “fresh ideas” to facilitate its ongoing pursuit of growth. “The time is right, now, in the cycle of things,” he said. In terms of other development, the firm is looking to build out its newest offices in California and Chicago. “We are going to build up locations in our geographic footprint we have currently,” Kessler said. “But our eyes are always open and we are always looking for other opportunities.” New markets or practices seemingly aren't on the firm’s radar at this time. Litigation and work for highnet-worth individuals (big business in Florida) remain Hahn Loeser’s bread and butter, though practices developed in recent years under Oscar include work in cybersecurity and intellectual property. A new office to support a client is always a possibility, though. “But it’s got to be client-driven,” Kessler said, driving home the firm’s guiding focus. “If we don’t add value for clients, then it’s all for naught.”
Correction J A March 20 story about Achieve Incentives and Meetings incorrectly stated the company’s location. It is based in Westlake.
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Kasich’s sales-tax tries are ‘like Groundhog Day’ By JAY MILLER jmiller@crain.com @millerjh
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Gov. John Kasich’s third attempt to expand Ohio’s sales tax to more services reminds one observer of a classic Bill Murray comedy. “Going after some of the targeted sales tax exemptions, I don’t think that will get a lot of traction,” said David Robinson, principal of Columbus lobbying firm The Montrose Group and a former Republican state representative. “It’s a little like ‘Groundhog Day.’ ” Kasich, he said, “is trying to make a point.” Said another observer, who asked not to be identified because he’s involved in other aspects of state legislation, of Kasich’s career, “If he was governor for 20 years, he would be trying the same thing every few years. He hopes that he gets some of his way, but he wants to get things all his way.” The $66.9 billion state biennial budget proposed by Kasich now working its way through the General Assembly seeks to expand the sales tax to a clutch of now-exempt services. In both 2013 and 2015, similar attempts to expand the services covered by the sales tax were unsuccessful. The governor would expand the sales tax to include lobbying, public-relations, management-consulting, debt-collection, cable TV subscriptions, parking and travel services. Kasich’s plan also increases taxes on cigarettes and other tobacco products, as well as on beer and wine. The budget recommendation also includes a rise in the basic statewide sales tax rate by one-half percentage point, to 6.25%. “He’s trying to make a point about decreasing the reliance on income taxes,” Robinson said. An email to the governor’s office seeking an explanation for the focus on expanding the sales tax brought an email response from Gary Gudmunson, communications director with the Department of Taxation. “The governor has consistently tried to align the state tax system with an economy that is increasingly driven by service-delivery businesses,” Gudmunson wrote. “The interest in expanding the sales tax base also works to allow Ohio to reduce its reliance on the individual income tax Elizabeth McIntyre Scott Suttell Tim Magaw David Kordalski Damon Sims Sue Walton Kevin Kleps Stan Bullard Real estate/ construction Reporters Jay Miller, Government Dan Shingler Energy/steel/auto Rachel McCafferty Manufacturing/ energy Jeremy Nobile, Finance Lydia Coutré, Health care Data editor Chuck Soder Cartoonist Rich Williams *** Events manager Ashley Ramsey Events coordinator Megan Lemke Integrated marketing manager Michelle Sustar
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which, along with the municipal and, often, school district income taxes, the governor — and many economists — believes is too high and acts to discourage the growth and recruitment of new businesses and jobs.” Most observers, including Robinson, believe the current attempt to include new services also will fail, though opinion is divided on whether the increase in the basic rate will survive. “It’s always better to shift taxes away from income creation and towards consumption,” Robinson said. “I think that really encourages private sector risk taking. As for the attempt to tax new services? “My sense is the Legislature will keep the revenue goals and re-
“I do think the governor is adopting the view that a tax system more heavily based on consumption is a better tax system” than one that relies more heavily on income taxes. — Columbus tax lawyer Thomas Zaino
write the tax provisions,” he said. As introduced, the Kasich budget cuts income taxes by 17%, at a cost to the state of about $3.1 billion over two years. But since the budget doesn’t reduce spending by a commensurate amount, the proposal offsets a large portion of those income tax cuts by increasing the sales tax rate and by adding a variety of services to the sales tax list. While Kasich’s sales tax expansion plan may not make it through the Legislature intact, if history is any guide, lawmakers will find a way to keep the income tax cuts alive. In 2015, the governor proposed a $72.3 billion, 2016-2017 budget that included a $5.7 billion income tax decrease, partly offset by a $2.5 billion increase in both the overall sales tax rate — from 5.75% to 6.25% — and a $1-per-pack increase in the cigarette tax; a first-ever tax on electron-
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ic cigarettes; an increase in taxes paid by oil and gas drillers; and reduced tax breaks on used car trade-ins. The Legislature ended up approving a $71.2 billion budget that included a 35-cent tax hike on cigarettes, to $1.60 a pack. In 2013, Kasich offered a $63.3 billion budget for 2014-2015 that included a $2.1 billion income tax cut. That budget proposed a reduction in the state portion of the sales tax, from 5.5% to 5%, but expanded the sales tax to cover some 80 services ranging from pet grooming, to household goods storage, to dozens of professional services. The plan didn’t survive the legislative process. The Legislature cut all the service expansions. Instead, it raised the overall rate from 5.5% to 5.75%, which allowed Kasich to maintain his income tax cut. “This mix of services is a bit more targeted and certainly less broad than his last go-round,” said Thomas Zaino, a Columbus tax lawyer who led the Ohio Department of Taxation from 1999 to 2003 under former Gov. Bob Taft. “I do think the governor is adopting the view that a tax system more heavily based on consumption is a better tax system” than one that relies more heavily on income taxes, Zaino said. But Zaino said it’s hard to put together a group of services on which to apply the sales tax. A large portion of the untaxed service sector is in health care and educational services, which are hard to tax. He said that Ohio already taxes many services. “Ohio has been adding services to the sales tax base since the early 1980s,” he said. “Actually, if you compare us to most other states, we already include a tremendous amount of services compared to those other states.” A listing on the tax department’s website includes 23 categories of services that trigger the sales tax, including employment services, hotel rooms and laundry services. Gudmunson wrote that the list is smaller than the services the governor sought to include in 2015 “because the General Assembly made clear its lack of interest in extending sales tax to those particular excluded services.” He added that the services included were largely discretionary and similar to services already included under the sales tax umbrella.
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The ACE Report AHOLA. CRAIN’S. EMPLOYMENT Crain’s Cleveland Business has partnered with The Ahola Corp., a payroll and human capital management firm in Brecksville, and local economist Jack Kleinhenz to provide monthly data — and clarity — about a key factor in business decision-making: the size of Northeast Ohio’s workforce. Seasonally adjusted employment numbers, Northeast Ohio OCTOBER: 1,173,393 NOVEMBER: 1,174,298 DECEMBER: 1,172,037 JANUARY: 1,179,472 FEBRUARY: 1,180,415 1,160,000
1,165,000
1,170,000
1,175,000
1,180,000
Economy is ‘inching forward’ this year By JAY MILLER jmiller@crain.com @millerjh
The seven counties of Northeast Ohio added 943 jobs in February, a modest number, but the second straight month of job increases, according to the Ahola Crain’s Employment (ACE) Report. Year-over-year, payrolls were up by 5,422 jobs on a seasonally adjusted basis, a 0.46% increase. February payrolls for the Cleveland Akron Metropolitan Area equaled 1,180,415 on a seasonally adjusted basis. Between February 2016 and February 2017, most of the increase in jobs came from the service section, 5,137 jobs, while the goods-producing sector showed a gain of 285 jobs. “Recent economic data releases are very encouraging about the nearterm outlook for the U.S. economy, and (we) should in turn have a similar expectation for economic activity in Northeast Ohio,” said Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “The data in many cases continues on a roller coaster pattern, which makes the strength of the momentum hard to detect,” Kleinhenz said. “Nonetheless, (the data) include the NFIB’s small business optimism index that remains elevated; housing starts increased in February; the job opening and labor turnover survey was unchanged but positive; February’s retail sales were tepid; business inventories increased; and industrial
production was unchanged after dipping in January.” That forecast agrees with a recently released estimate from economists at Pittsburgh-based PNC Financial Service Group, which described the Northeast Ohio economy as “inching forward” during the first quarter of 2017. “The region’s economic growth is hamstrung, however, by a manufacturing industry that is struggling on multiple fronts,” the report stated. “Steel production and employment in 2016 had been hit hard by cheap imports and the collapse in energy prices that reduced investment in oil and gas wells.” The PNC economists did see hopeful signs — the oil and gas rig count began to edge up in the last half of 2016, high steel tariffs are expected to help domestic producers, and the auto industry is coming off a record year — at least in the short term. “Longer term, continued population loss will cause Northeast Ohio to be a below-average performer in terms of job growth,” the report stated before ending on a more optimistic note. “Though still only in their early development stages, manufacturing hubs for the machinery of new energy technologies and transportation equipment hold great promise for those regions that can attract and cultivate them," according to the report. “The (Northeast Ohio) region’s lower costs and availability of underutilized assets will be an important tool in attracting new industries and opportunities into the region in the years ahead.”
Crain’s looks to feature emerging legal minds Know an up-and-comer in the legal industry? Crain’s is looking for individuals to profile as part of its ongoing efforts to include more voices in its weekly special sections. We are looking for people who might fly under the radar now but could disrupt the legal field — for the better — in the future. Do you know someone who is carving out a niche that is setting him or her apart from others in the legal field? Is he or she climbing the ranks inside the firm or organization particularly quickly? Perhaps he or she has solved a particularly complex legal problem for a client.
And aside from solid résumés, do their personalities also set them apart? If you know someone worth profiling in the April 24 Legal Industry Outlook section, let Sections Editor Timothy Magaw know by Friday, March 31. Just drop him an email at tmagaw@crain.com with “People to Watch” in the subject line. This feature is part of a recurring feature in Crain’s weekly special sections. The next “People to Watch” feature will publish in next week’s Sports Business section. Previous ones have focused on health care, entrepreneurship, finance, meetings and events.
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CRAIN’S CLEVELAND BUSINESS
Opinion From the Editor
Time for the region to shake off the rust
Editorial
The uniter In one respect, at least, President Donald Trump is proving adept at bringing together people in Northeast Ohio. The president’s 2018 budget outline, released this month, envisions wiping out the $300 million in annual funding for the Great Lakes Restoration Initiative, a popular program launched in 2010 that protects and restores the largest system of fresh surface water in the world. It’s part of the White House’s proposal to cut funding for the U.S. Environmental Protection Agency by 31%, or $2.6 billion. The Great Lakes initiative has unusually high bipartisan support, and Trump’s plan to gut it has been met, encouragingly, with pledges from Democrats, Republicans, business interests and others to fight to protect the program. Sen. Rob Portman, R-Cincinnati, and Sen. Sherrod Brown, D-Cleveland, were quick to condemn the targeting of the Great Lakes initiative, as did most members of Ohio’s delegation to the House of Representatives. (Portman co-chairs, with Sen. Debbie Stabenow, D-Michigan, the Senate’s Great Lakes Task Force, a bipartisan group that advocates for policies that protect the Great Lakes.) The Greater Cleveland Partnership, the Port of Cleveland and the Cleveland Water Alliance issued a joint statement in support of the program, noting that Lake Erie, which they called “the most vulnerable of the five Great Lakes,” accounts for an estimated $10.7 billion in economic impact annually and roughly 30% of all tourism dollars coming into Ohio. The Great Lakes initiative has been a target before, though not to this extent. As Portman noted in an op-ed piece in The Toledo Blade, former President Barack Obama “repeatedly proposed slashing this program by $50 million,” an effort that was beaten back by Democrats and Republicans. Obama ultimately signed into law full funding for the initiative. The test this time will be stiffer, not only because the magnitude to the proposed Great Lakes initiative cut is greater, but because Trump has entered office with an explicit promise to
cut discretionary spending that’s not related to the military. As Reuters pointed out, the biggest portion of the $3.9 trillion federal budget, about $2.4 trillion, is for “mandatory entitlement” programs that provide Social Security retirement benefits and Medicare and Medicaid health care for the elderly, poor and disabled. Combined with a planned 10% increase in military spending, the budget can get awfully lean, awfully fast for programs that aren’t a high priority in the White House. Ed Brookover, a Republican strategist who worked for Trump’s presidential campaign last year, told The Wall Street Journal, “I think the Trump supporters expected President Trump to slash the federal government very significantly. They’re not the kinds of folks who look to Washington for solutions to all their problems.” Fair enough. But the Great Lakes initiative’s goals — keeping lakes clean, protecting them from algal blooms and invasive species like Asian carp, and ensuring that citizens have safe drinking water — are the types of efforts that don’t have easy market-based solutions and need government involvement. If the feds don’t protect the Great Lakes, who does? Of course, it’s entirely possible that in this hard-power budget outline, Trump is just trying to send a signal to supporters that he’s willing to get tough on spending, knowing that cuts to programs like the Great Lakes initiative will be rejected in Congress. It’s also tempting to assume that because the Great Lakes program enjoys widespread support in Ohio and other Midwestern states, it will be safe in the budget process. But if the past 18 months in the political world has shown us anything, it’s that our traditional assumptions more often than not are wrong. As Portman noted in his Blade op-ed, a recent study of the Great Lakes initiative’s work shows the $300 million annual investment generates benefits many times that amount in health, tourism, and the fishing and recreation industries. Cutting the initiative, he concluded, is “penny-wise and pound foolish.” We couldn’t agree more.
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Dinnertime is a challenge for any working parent. Not only what to have for dinner, but when to have it. I’ve found, though, that dinnertime is also an opportunity. Something my husband and I have always insisted is that we sit down at the table as a family and eat dinner together. Sometimes that means we eat at 7; other times at 9:30 p.m. No cell phones allowed. It’s a sacred half-hour or so when we decompress and share how our days went. Of course, some days the hectic schedule doesn’t allow it. But we really try, and usually succeed, to follow our dinner rule. It also gives us a chance to discuss news of the day or other topical subjects. Recently we got on the subject of the term “Rust Belt.” I turned to my 16-yearElizabeth old and asked if she knew what the Rust McIntyre Belt was. “Nope,” she said between bites of Asian noodles. (10 minutes prep, 20 minutes cooking time, I can share the recipe if you want.) When both your parents are journalists, you know there will be follow-up questions: “What do you think it means?”… “Would you ever want to move to a place called Rust Belt?” … “What does the Rust Belt look like?” Her answers were not surprising, but it didn’t lessen their impact: “Rust means it’s a place that’s decaying.” … “Why would I want to move there? It’s rotting.” … “It’s empty and left behind.” I’ve bristled at the term “Rust Belt” since it entered the lexicon back in the 1980s and stuck like a barnacle to the region that includes Cleveland, of course, but also Buffalo, Pittsburgh, Detroit, Milwaukee and Chicago. We haven’t shaken it over the past three decades. Just witness President Donald Trump as he embraced it on the campaign trail when he declared that Ohio and surrounding states were places where “everything is rusting and rotting.” Sure, there have been efforts to embrace the term rather than run from it, a la “Rust Belt chic.” That’s a heartfelt effort to take ownership of the term and to turn it from a pejorative to a proud nod to our history. But make no mistake: “Rust Belt” is still full of bad connotations. If we want to bring people back, or keep them here, “Rust Belt” isn’t helping. As my daughter said after we explained the term to her, “I’d rather move to the Sun Belt. That sounds nice.” We’re not a rusting heap. Yes, we have a proud steelmaking and manufacturing history, but why focus on the negative of rust? We’ve shaken the rust with advanced manufacturing, plastics and biomedical. We’re a hub for innovation in medicine and education. We can control this narrative. We can send “Rust Belt” to the scrap heap where it belongs, throw off the rusty shackles and declare a new moniker for our region and so many others that are embracing innovation: Detroit, Flint, Gary, Youngstown, Allentown, and yes, even Pittsburgh. I’ve talked to a few folks recently who suggested the term “Legacy Cities.” I like that phrase, because it speaks to our industrial roots. Other ideas: “Industrial Belt” or “Innovation Belt.” Gov. John Kasich in February suggested we use the term the “Knowledge Belt.” Or maybe we should go beltless. Do we need a label? I’d love to hear what you think. If not the “Rust Belt,” what should it be? Share your comments on crainscleveland.com, or send me an email at emcintyre@crain.com.
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes. Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.
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Transforming Environmental Liabilities into Thriving Assets
After Before KeyBank provided $9.6 million for Emerald Alliance IX, which will aid the homeless. (Contributed rendering)
Key continues to boost affordable housing biz By JEREMY NOBILE jnobile@crain.com @JeremyNobile
It will be two years ago this May that KeyBank directed one of its own to elevate the bank’s affordable housing business to one of the company’s top revenue drivers. Robert Likes, national manager of Key's community development lending and investment platform, was given three years to achieve that goal. He didn’t need that long. Key had its best year yet in the affordable housing business in 2016 — the first full year for that line under direction by Likes, who led the business’ nationwide expansion. The bank lent $1.4 billion in debt and equity financing to designated affordable-housing projects last year. That’s a 47% increase over loan levels in 2015, and 250% over the $400 million lent out in 2014. Key aims to replicate similar performance this year, but that could be a challenge as demand for affordable housing projects is expected to simmer down slightly. That doesn’t seem to bother Likes, though. “We won’t stop here,” he said. “Hopefully, we’re just getting started.” Key’s lending activity in 2016 puts the Cleveland-based bank, which now represents about $140 billion in total assets with its recent acquisition of New York’s First Niagara Financial Group, in the company of the largest banks in the U.S. in terms of affordable housing. According to a recent ranking by Affordable Housing Finance, KeyBank Real Estate Capital is the fifth most-active affordable-housing lender in the country. Companies ahead of them, though, in order, are JPMorgan Chase Bank, Bank of America Merrill Lynch, Wells Fargo and Citi Community Capital — large national banks that each control well more than $1 trillion in assets a piece. Of course, banks are required by regulators to invest loans in local communities, and affordable housing can be part of that. The larger banks would be required to do more, and they have deeper bases to lend from, so their numbers should be high. There also was pent-up demand for affordable housing in the extended wake of the last recession that’s been met the last few years, with demand bolstered by prolonged low interest rates. According to Affordable
Housing Finance, $27 billion was lent to affordable housing properties last year, which marked a significant increase from the $22.9 billion lent out in 2015. Likes But for Key to be lending as much as the U.S.’ largest companies clearly shows a concerted effort to grow the business. So how did they do it? As Likes, a 14-year KeyBank veteran who previously led the bank's Northwest income property group, transitioned into his current role, resources were pushed into hiring new bankers and cross-training, and they’re still beefing up lending teams. Likes declined to say how much has been invested in those efforts. “We’ve had the support from management since day one,” Likes said, referencing the bank’s corporate goal of maintaining a longstanding “outstanding” ranking per the Community Reinvestment Act (CRA). “We’ve been adding employees and products and have all the support we need from the top.” Those efforts supported the goal of taking the community lending platform across the country. Today, Key has a physical presence in 15 states — the First Niagara deal, which was consummated since Likes’ appointment, added three more — but does business in all 50. Community development lending, which supports affordable housing projects, was being pursued only in those footprint states before Likes came into the picture. Key, which typically is a 99% equity partner in the deals it lends to, sees the business as low risk with very high demand. At the corporate level, that’s where the bank reasoned the affordable housing business was loaded with growth potential. CRA lending dollars stay in the footprint states. But balance sheet lending providing construction loans, rehab loans, bridge loans and lines of credit, for example, was pushed across the United States. Fannie Mae, Freddie Mac and HUD loans saw a similar expansion. There’s not one state driving demand, Likes said, which is ultimately spread out. People tend to think of need on the coasts, like in New York and Seattle. But Likes said the demand varies by states, which tend to have their own individual plans for
affordable housing. “I think the demand is much larger than what’s publicized,” he said. “Not every state is even doing a full-blown assessment of need.” The First Niagara deal also gave a jolt to the business, adding loans across New England in addition to western New York, where Key has since committed $16.5 billion in community lending projects over five years. Housing is a component of that. That doesn’t mean Key has lost sight of Cleveland, though. The bank provided $100 million in lending and investment to affordable housing projects in Cleveland in 2016, and it ended the year with another $100 million in the pipeline. Some of the projects that Key completed in Cleveland and hopes to replicate in its newer markets, including upstate New York, could look like Hough Heritage, a 60-unit assisted-living complex for seniors. Key provided $17.7 million to that project, which included an $8 million construction loan and a $9.7 million Low-Income Housing Tax Credit (LIHTC) investment from Key’s Community Development Corp. Another project Likes pointed to is Emerald Alliance IX in Cleveland, a 66-unit building for chronically homeless individuals, which Key provided $9.6 million in LIHTC equity. Interest rates are finally starting to rise, prices for LIHTC are falling and construction costs are rising. Those elements indicate developers may take out fewer loans, which has some experts leery of the demand for affordable housing projects moving forward. Likes, though, doesn’t see things quite that simply. “The demand for affordable housing hasn’t subsided at all. It’s actually grown,” Likes argues. “There may be less demand to purchase tax credits. But there’s no less demand from tenants to occupy those buildings.” The way Likes sees it, the fact that some headwinds might push other lenders away from affordable housing actually creates opportunity. “What you’re going to see this year is demand grow even faster because of headwinds out there that will constrain the new supply coming online,” he said. There are other factors creating uncertainty in the market, including what could happen as the Trump administration seeks lower corporate tax rates, that also could hinder demand by lenders for tax credits. Despite all those factors, “we’re not wavering,” Likes said.
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Focus FOOD INDUSTRY
Farm orders - Page 12 | Grocery trends - Page 13 | Q&A - Page 16
Flats East Bank continues to transform The Flats East Bank is vastly different from its days of honky-tonk dive bars that filled out the business district prior to its $750 million redevelopment by The Wolstein Group and Fairmount Properties. The lofty project has transformed the area into a true mixed-use development on the banks of the Cuyahoga River featuring an array of restaurants, bars and entertainment alongside apartments, a massive office tower and a new hotel. And while the project has seen its share of challenges and business turnover early on, causing some to question whether the Flats East Bank could be doomed to fail, the outlook at this time is not nearly that bleak. Below is what the development looks like today with current and pending businesses.
FWD Aug. 2015
Parking
c Bocce Bar Pending
Beerhead Oct. 2015
Thirsty Dog Opening TBD
Parking
Bold Food & Drink Dec. 2015 Previously Ken Stewarts
Aloft Spring 2013
MAIN AVEN
Rascal Flatts Opening TBD
Existing building
0TH
Water Taxi
Existing building
UE
W E ST 1
Coastal Taco May 2016
Ernst & Young tower Spring 2013
H
a Crop Sticks b Crop On Air c Crop Rocks All closed Aug. 2016
TH
b
Lago Spring 2013
W E ST 1 1
Flats at East Bank Apartments Summer 2015
EB Fitness Spring 2013
Existing building W E ST 9 T
Punch Bowl Social Club Sept. 2015
Dante’s Inferno Opening TBD
a
Cu ya ho ga Ri ve r
FRONT STREET
Big Bang Aug. 2015
WEST 10TH
Alley Cat Aug. 2015
Wileyville Closed Oct. 2016
Flip Side Sept. 2015 Magnolia Aug. 2016
Program/event space
Parking
Parking
Margaritaville Opening TBD
Key Executed lease Available space Executed lease/ coming soon Crain’s graphic by David Kordalski
Has the East Bank deflated? Not quite. Despite some turnover, developers and restaurateurs are optimistic about the resurgent Flats By JEREMY NOBILE
Early turnover
jnobile@crain.com @JeremyNobile
As Big Bang opened and 2015 rolled on, other businesses came online. An enticing variety of operations opened that summer and fall, including a complex anchored by Steve Schimoler’s Crop Rocks, Crop Sticks and Crop On Air, in addition to Alley Cat, FlipSide, Punch Bowl Social and Beerhead Bar & Eatery. The timing was imperfect as warm weather was about to give way to the slower patron traffic of the cooler months. But entrepreneurs like Leatherwood were staying lean and hunkering down, looking eagerly toward a fresh busy season kicking off in spring 2016. That winter was challenging, though. The new Flats East Bank was young and didn’t have a real customer base yet despite the potential patrons living and working nearby in the recently built EY Tower and Aloft Hotel. Last year brought a mixed bag of performance for young bars and restaurants there.
When word spread in summer 2015 that Toby Keith's I Love This Bar and Grill had backed out of opening a new location in the redeveloped Flats East Bank, Sam Leatherwood got a little nervous. Leatherwood — a Dallas native — is owner of the Big Bang Dueling Piano Bar chain, which opened its Cleveland bar and restaurant in the Flats in August 2015. Development of the Toby Keith bar stalled that July. The plan was officially abandoned shortly afterward. It would’ve been located in a sprawling, 18,400-squarefoot building nearly four times the size of the piano bar it’s across from — a conspicuously large and vacant space for fellow businesses to stare at in a food and entertainment district that was just starting to come alive with new venues. It wasn’t a promising sign to new businesses who bought into the idea of “build it and they will come.” And it gave
Busy summer days would see 1,300 customers at Alley Cat alone. (Orville McEachron photography)
early reason for some onlookers to abruptly believe the redeveloped East Bank of the Flats was already struggling and possibly doomed for failure. But the business district isn’t really hurting quite as bad as it may seem.
“We’re already getting ready for a strong season, especially with the new operators creating even more interest down there,” Leatherwood said. “We’re at a pretty high level down there that we are happy with.”
That doesn’t mean Leatherwood and others in the Flats East Bank haven’t had their concerns, but the story of the Flats is more complicated than just some quick turnover of a few bars and restaurants.
SEE FLATS, PAGE 14
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FOOD INDUSTRY
CSA memberships continue to take root By PARIS WOLFE clbfreelancer@crain.com
Some Northeast Ohioans are bypassing the grocery store to secure their favorite seasonal produce and instead subscribing — for several hundred dollars a season — to local farms for shares of their harvests. So-called community-supported agriculture memberships, or CSAs, have been growing in popularity over the last 30 years or so, but the surging appetite for fresh and local produce has increased that demand. In late winter — National CSA Sign Up Day was Feb. 24 — the bulk of the farms secure their new members who get a share of their crops for a specified number of weeks. The typical summer subscription in the Midwest is 20 to 25 weeks, according to Simon Huntley, founder of Pittsburgh-based Small Farm Central & Member Assembler, whose technology is used by farmers to manage their CSA programs. The average summer fee is about $25 per week for a medium share, he said. Some farms offer short, perhaps six-week, subscriptions in the off season. That share follows the season. It might start with lettuce, strawberries or asparagus and progress to tomatoes, blueberries, broccoli and then finish with an abundance of fall crops like potatoes, squash and apples. Consider it a prepaid farmers market, where members pick up their shares at a set time and location — usually at work-
Here is an example of what would come in a large, mid-summer share from Geauga Family Farms. (Contributed photo)
places, churches, community centers, actual farmers markets or retailers. The arrangement has advantages to both farmer and consumer. Farmers, for one, use the subscription fees early in the season when they need money to plant — literal seed money, if you will. And, they’re guaranteed that income no matter the outcome. “It is a relief to have pre-sold produce and this way we can plan how much to plant,” said Noah Yutze, who grows a variety of organic produce for Geauga Family Farms, an 8-yearold cooperative with five farms. “It’s a lot more personal and easier to make a living this way.” In the unlikely event of a natural disaster that wipes out every crop from
every farmer in the collective, the consumer comes up empty handed. Picking up a box of produce each week has many appeals to consumers. “If I plan well, I could go to the grocery store once a month. I would just pick up rice, oatmeal and staples,” said Jennifer Marks, a personal stylist from Akron. Meanwhile, Meghan McCarthy, a food/wellness blogger in Lakewood, said her CSA cuts her winter grocery shopping trips because she cans and freezes some of her summer share. But less time at traditional grocery retail isn’t what drives consumers to CSAs. “I like the variety of interesting vegetables and fruits. They force me to be more creative in my cooking.
And, I like the idea of supporting small farmers,” Marks said. “Grocery stores can be faceless, nameless. Being part of a CSA is being part of a community.” CSA made its first appearance in 1986, Huntley said. And, like farmers markets, CSAs take business away from grocery stores. In 1994, the U.S. Department of Agriculture reported 1,755 farmers markets, while today it reports 8,669. Meanwhile, the CSA count is at 7,398, according to the USDA. This matters for the grocery industry, particularly in Northeast Ohio. “Food consumption in Northeast Ohio is a zero-sum game,” said Jeff Heinen, co-CEO of Heinen’s Grocery Stores. “Our population isn’t growing, so anyone who sells product that we sell impacts us to some extent.” He added, “The upside is (CSAs) educate people about locally grown produce. (Heinen’s) is the leading retailer in locally grown produce. Seventy percent of what we sell in the summer is locally grown. We compete with quality, price and selection when it comes to other people who sell local product.” Many CSA farmers also supply Heinen’s and other grocery stores in Northeast Ohio. And, some grocery stores work with CSAs. “We have teamed with stores like Whole Foods in Woodmere and Mustard Seed in Solon for CSA pick-up locations who see our presence as complementary,” said Laura Dalheim, farm representative with
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Geauga Family Farms. GFF’s CSA subscriptions go for 20 weeks. People can subscribe to medium ($465) or medium customizable ($700) and large ($775). A typical medium share is about a half bushel of produce. Dalheim added, “Despite the overlap in some products, they see the value in supporting local farms, while knowing that customers are likely to purchase other items in the store when picking up their shares. It’s really been a win-win situation.” There isn’t any hard data about the impact CSAs have had on grocery store traffic. Neither the Food Marketing Institute, an Arlington, Va.based advocacy group that represents retailers, nor the USDA track such figures. “Anecdotally speaking, I can tell you there are traditional grocery stores who have embraced CSAs as a means of addressing the consumer’s desire for locally produced food items and showing support for the local community,” said David Fikes, vice president of communications and consumer affairs for the Food Marketing Institute. Fikes compared CSAs and retailers to baseball farm teams and major league teams. “They compete in the sense they may divert dollars away from actual stadium revenue, but they complement in the sense they drive deeper interest in the sport and in many cases are the source of the talent that major league teams make use of,” he said.
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Constantino’s Market downtown has top brands, as well as “grab-and-go” prepared foods. (David Kordalski)
Independent grocers fighting for relevance By DOUGLAS J. GUTH clbfreelancer@crain.com
Neighborhood grocers not only feed their customers, they also serve as a strong foundation of the local community. At least, that’s the vision of Northeast Ohio’s independent supermarket operators seeking to stand out from national chains. By their very name, independent grocers enjoy a flexibility and freedom — relative to national stores, anyway — that allows them to connect with consumers on a one-to-one basis. Personalized service, signature fresh foods and an emphasis on healthy eating are other ways Cleveland retailers are setting themselves apart in an industry in which many shoppers are content with simply defaulting to the best price. Constantino’s Market mostly serves active young professionals and students living near its two locations — downtown in the Warehouse District and a newer store in University Circle’s Uptown neighborhood. At 12,500 square feet each, Constantino’s stores don’t have the same in-bulk offerings as the typical supermarket giant, noted CEO Andrew Revy, who operates the business with his wife, Anna Mavromichalis, following the retirement of founder Constantine “Costas” Mavromichalis. Instead, the family-owned establishment is stocked with top brands, along with salads, homemade international dishes and “grab-and-go” hot foods aimed at busy consumers who shop more than once a week. “We want everyone to be part of our customer base, but the majority of shoppers come from smaller households, and our product mix reflects that,” Revy said. Like many of its fellow independents, Constantino’s lives by a laser-focused version of customer service. If a single customer recommends a particular brand of salsa, Revy will taste-test the product himself. Should the item pass muster, it is often in stock within days of request. “There’s no forms to fill out in triplicate that take six months to go through a corporate office,” Revy said. “We have the ability to be flexible and bring in a product quickly.”
This nimbleness also allows independent owners to put their full support behind locally made fare. Mustard Seed Market, an Akron-based business founded by Margaret and Phillip Nabors in 1981, carries organic produce obtained from Ohio growers. “Lots of stores have local produce, but carrying local organic produce is a big differentiating factor,” said Gabe Nabors, Mustard Seed’s marketing director and son of Margaret and Phillip. “This is based on 25-yearlong relationships started by my dad. I’m now working with the sons and daughters of these same farmers.” Independents should make a point to “tell the story” of their local fresh products, whether it’s produce, craft beer or locally churned ice cream, said John Karolefski, a Cleveland-area supermarket analyst and purveyor of the website GroceryStories.com. Grocers can make a visual connection with in-store signage that advertises a selection of Ohio wines, or make sure verbiage on store websites calls attention to locally sourced messaging. A store’s ability to support its surrounding community cannot be underestimated, said Laurie Rains, vice president of retail consumer and shopper analytics with Nielsen in New York. A survey released in February by the National Grocers Association revealed independent patrons value locally grown fresh foods and source traceability more than shoppers of national and regional chains. “Independent grocery retailers who are passionate about supporting local are typically not shy about it,” Rains said in an email. “One retailer claims its farmers pick corn in the morning and have it in the store later that day for their shoppers’ dinner table. Why does that resonate with customers? Because it plays right into the consumer’s interest in fresh and local community support.” Recognizing a neighborhood’s ethnic diversity is a potentially powerful means of making a connection with a new customer base, said Karolefski. A small market could run a promotion around Dyngus Day — a celebration held on Easter Monday in Poland and Ukraine — by loading up on country-specific food and alcohol.
“Once you get a foothold in a community, word is going to spread,” Karolefski said. Indeed, the man on the street is an independent grocer’s best friend, said Frank Cangemi, owner of Miles Farmers Market in Solon. “You can read an ad in the paper or online, but if you have a friend or relative whose judgment you trust, that’s going to mean a lot more,” Cangemi said. “Neighbors telling neighbors that they’re satisfied is the kind of testimonial we hang our hat on.” Leveraging and empowering employees familiar with a store’s products represents another customer service touch not found at larger retailers, independent store owners believe. For example, Mustard Seed trains workers to answers questions about its wide array of supplements and health products. “This puts us on the front line of customer service,” Nabors said. “It’s about educating the consumer so they know they can trust us.” Mustard Seed extends that learning environment to shopper-friendly nutrition and cooking classes, as well as events that reflect the company’s self-described “golden standard” of health and wellness. “Twenty-five years ago, we were hosting macrobiotic cooking events, but we’ve expanded those in the last five or 10 years,” Nabors said. “For us, knowledge is power.” As smaller grocers battle chain stores on pricing, they must continue to offer perks that consumers won’t find among the big names, said analyst Karolefski. “If I was an independent, I’d have a three-piece band playing on Saturdays,” he said. “Cordon off part of the store and have hors d’oeuvres and wine and give customers coupons. Independent stores around the country are doing this.” Linking specially tailored services and events to a sturdy framework of locally acquired and diverse products is always going to be the calling card of a successful indie grocer, Karolefski said. “It’s a tough road going forward, but smart independents will find ways to add value to the shopping experience,” he said.
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FOOD INDUSTRY
FLATS
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Some venues seemed regularly busy. Others were dead through the week and stayed slow even on Fridays and Saturdays. July’s Republican National Convention in the nearby downtown was expected to be a boon for Cleveland’s hospitality sector, but most restaurants outside of East Fourth Street — the Flats in particular — reported generally lackluster business that fell short of inflated expectations. That summer, Schimoler abruptly closed several of his operations, including his trifecta of Flats restaurants that didn’t see even a full year of business. That was particularly sour news for a young business district trying to find its identity in the market. “That kind of freaked us out a little bit,� said Leatherwood, who was no stranger to the greater Flats, having run the Howl at the Moon Saloon on the West Bank through the 1990s. “I knew Steve was a talented operator. But for some reason or other, it just didn’t work out.� East Bank businesses generally would brush off troubles in the Flats as isolated incidents in the already risky and crowded sector of food and entertainment. Yet, there was still a lingering sense of worry for some — and understandably so. Clevelanders, often quick to feel down on themselves, zeroed in on the struggles. Chatter spread: was the new, modern, mixed-use $750 million Flats already a flop?
Falling apart One reason longtime Clevelanders may be skeptic of today’s outlook for the Flats East Bank despite the momentum there could come down to its
recent history. The bar-heavy East Bank of the Flats was bustling for most of the 1970s through the 1990s. There was a certain crowd attracted to it, largely younger, underage boozers. As that clientele matured, they’d graduate to bars on the adjacent West Bank. “The East Bank was really cranking back then,� said Roger Loecy, who opened Shooters on the Water on the West Bank 30 years ago. “It was like New Orleans, but it was all falling down.� As the 1990s drew on, though, the area grew increasingly run down and garnered a seedy reputation. The properties were in poor shape. Many operators wouldn’t invest in their buildings because they were all renting from a mishmash of landowners. Cheap bars opened in droves because “all you had to do was paint the ceiling and open up,� Loecy said. But it still had a fun vibe, he said, emphasizing “it was neat and I liked it over there.� Loecy, among others, claim security there was terrible. Police were seldom seen. There were some high-profile accidents, including a couple drownings in the Cuyahoga River and some stabbings. Couple those incidents with poor aesthetics and the area’s reputation, “and everyone said the Flats was falling apart,� Loecy said. “The city said enough is enough. We want to clear that whole honkytonk area out,� Loecy said, referencing an administration led by then-Cleveland mayor Michael White. “The minute they did that, the East Bank fell apart.�
'Could've walked away' Scott Wolstein of The Wolstein Group — which has partnered with Fairmount Properties on the East Bank redevelopment — started buying properties there back in the 1980s as parcels became available. Some locations, he said, did quite well, but security exacerbated existing issues,
The East Bank has seen an almost phoenix-like rise over the last few years. (Orville McEachron photography)
which only grew worse through the 1990s. “They literally pulled out police and in one year, I saw my parking lot revenue go from $600,000 to zero,� Wolstein said, citing one metric for tanking traffic. “It was very difficult. And there was a time when we could’ve licked our wounds and walked away.� Taking advantage of the distress, the Wolsteins continued piecing together properties along the East Bank, buying up parcels at low prices, leveraging the powers of eminent domain in cooperation with the port authority.
The Flats was flattened as the Wolsteins prepared to start over. It was around 2005, a year after Scott’s father’s death, that the developer unveiled what would be Phase I of the redevelopment featuring the new hotel and office buildings that would become the 18-story EY Tower and the Aloft Hotel. Then came more trouble: the financial crisis. In 2008, four banks who agreed to finance the project pulled out, “and we were back to square one,� Wolstein said. But with some wildly creative financing, which involved funding from 35 dif-
ferent sources — creating “probably the most complicated real estate financing that has ever been done,� Wolstein said — brought the project back to life.
Great expectations Phase 1, featuring the hotel and tower, was finished in spring 2013. Phase II, which created the new business spaces, was completed in fall 2015. The vision is for a true mixed-use food and entertainment district that leverages the Flats’ riverfront amenities that are unique to
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Cleveland — and possibly the United States. Issues with turnover come down to individual business owners, Wolstein maintains, and there’s some substance to that. The Toby Keith restaurants had their own issues across the chain. When the Crop locations shuttered, they were part of a slew of operations Schimoler closed in Cleveland. Wileyville, which closed in October 2016, was a little isolated at the end of West 10th Street, but the owners “gave it their all,” Wolstein said, adding he’s not deterred from his ex-
pectations for the Flats regardless of some past issues. And while there have been some high-profile turnovers and some slow nights, businesses there are far from struggling. In fact, many say they are thriving. Leatherwood operates three of his dueling piano bars with ones in Cleveland, Columbus and Nashville. Although declining to discuss revenues, Leatherwood said the Cleveland location is his number one store currently. “It’s really exceeded our expectations,” he said. “I can’t say much
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about the places that have closed. But I think it just has to do with the concept.” Leatherwood, who has done business in the Flats before, acknowledges the challenge of seasonal business and a lack of general traffic. The Flats is more of a destination, he said. But those things alone won’t sink a business. And while some venues failing to open or closing down might be jarring at first, it’s not an indicator of how the area at-large will perform, which businesspeople like Leatherwood adamantly maintain. Cleveland restaurateur Zack Bruell, who has publicly discussed whether Cleveland may be nearing a restaurant saturation point, shares the same perspective. Bruell owns Alley Cat and is partnering with former Great Lakes Brewing Co. brewer Luke Purcell on Collision Bend Brewing Co. in the Flats — Bruell is helping design the menu there with one of his executive chefs. The key to success, he said, is managing the seasonality of the restaurant business, which can create additional challenges for new operators in a young district, which this incarnation of the Flats East Bank certainly is. “There is a seasonality to it and to go in there thinking otherwise would be naïve,” he said. “(Alley Cat) is a monster in the summer time when the weather is good. It can be crickets in the cold months, although when the weather was good it was busy again. It was crazy.” The river is truly a big draw, said Bruell, who has operated restaurants across the country in major markets from Los Angeles to New York City. “There’s a primal instinct in people in that they’re drawn to two things: fire and water,” he said. “And the water is there. I was asked multiple times to open down there, and I
wouldn’t have even considered it if it wasn’t on the water.” Bruell also declined to discuss revenues, but said Alley Cat is doing well. Busy summer days would see 1,300 customers at Alley Cat alone, he said. Staffing skyrockets with the summer business, while operations are much leaner through the winter. Bruell is optimistic time will sort out any troubles bars and restaurants the public sees the Flats East Bank having. Turnover is part of the natural evolution of a new business district, he said, and observers thinking this one is doomed are casualties of a “woe is us” Cleveland mentality that still seems to linger over the city, much to the frustration of local businesspeople. “This is no different than Tremont, East Fourth, Playhouse Square,” Bruell said. “Look at University Circle. How long did it take to become what it is? Did anyone expect that? It all takes time. The market isn’t finished yet, and this stuff doesn’t happen overnight. The Flats is no different.”
Haters gonna hate Of all the locations that have lost operators in the last year or two, each one has another tenant already lined up, with the exception of the Wileyville location north of FlipSide and Lago. Businesses planned for the former Crop spaces comprise a restaurant and taproom from Akron’s Thirsty Dog Brewing Co., a pizzeria by Dante’s Inferno and a yet-to-be announced “Bocce Bar” that Flats officials declined to provide other details on beyond Wolstein saying it's lined up. There’s also a tenant lined up for an empty space adjacent to Magnolia, said Flats East Bank director of marketing Heidi Yanok, declining to provide other details. A Jimmy Buffet-inspired Margari-
taville bar and restaurant, meanwhile, is expected to open this summer in the large space the Toby Keith chain ditched. The recent turnover isn’t scaring any newcomers away. David Crabtree, president and CEO for International Meal Co. U.S., Margaritaville’s parent company, for example, sees the restaurant’s concept as an ideal fit for the riverfront Flats with its outside patio and rooftop bar. He wouldn’t discuss revenues, but he said he expects the location to employ 200 in peak summer months. “We are always cautious in selecting expansion sites, but Jimmy Buffet has a great following in Cleveland proper,” he said, adding the redevelopment upgrading the area into a true entertainment district “increases our chances of success while reducing our risk.” “We think Cleveland will be a strong market where Margaritaville will be well-received,” he said. Even Loecy at Shooters on the West Bank, who’s witnessed the East Bank’s phoenix-like rise from the ashes in his three decades at Shooters, has every expectation of the redeveloped project succeeding. “We’re hoping for a good season here, but (the East Bank) is good for both sides because it’s bringing more people down here,” he said, adding he didn’t like when the development was nothing more than a pile of sand waiting to be developed. “Would you rather be looking at what looks like bombed-out Beirut or Alley Cat?” Loecy asked with a laugh. “Once everyone gets used to the system over there,” he added, “they’ll be fine.” So what does Wolstein think about chatter that the Flats is dead? “Well, haters are going to hate,” he said. “But there’s nothing to hate about this project.”
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FOOD INDUSTRY
Q&A: Shane Brassel
Executive chef and directory of culinary, JACK Cleveland Casino “The great thing about a buffet is that you can try a wide variety of foods in one sitting. The challenge is keeping the variety interesting.” Shane Brassel’s first month on the job as the JACK Cleveland Casino’s executive chef was a trial by fire. It was July 2016 — the same month Cleveland hosted the Republican National Convention, and the bustle of the activity was just steps away from the casino’s doors off Public Square. That flurry of activity was good training, though, as the casino’s Market District Buffet routinely serves 1,600 guests on both Saturdays an Sundays, and 1,250 customers each of the other five days of the week. There’s plenty of eating going around at the casino, and Brassel oversees all of it. The buffet alone goes through about 2,500 pounds of ribeye and 1,500 pounds of shrimp each week. Crain’s recently chatted with Brassel — who has worked in executive roles at Caterbury Golf Club in Beachwood and Kalahari Resorts in Sandusky and Mount Pocono, Pa. — about what it takes to feed thousands of hungry gamblers each week. — Susan Condon Love What is your biggest challenge in providing a unique and appetizing buffet for JACK customers? Our goal is to provide an exceptional dining experience to every guest, every time. At Market District Buffet, we serve fresh, local cuisine and our priority is to ensure a spectacular experience for our guests. We don’t cook in bulk, we prepare our food in small amounts to ensure it is always fresh. Although this means more work for us, it is worth it for our 25,000 diners each month.
How did your experience at Canterbury and Kalahari assist you in approaching your duties at JACK? At Canterbury I was a personal chef for 480 members and their families. At Kalahari I managed several different food and beverage outlets. As a chef for JACK Cleveland Casino, I blend those experiences into what I do every day which is to prepare outstanding food and to see that our guests are happy. I enjoy working at a fast pace and setting the bar high.
How did you decide to have the themed days at Market District Buffet? (Themes include Meatloaf Monday, Taco Tuesday, Backyard Wednesday, Slow Cooker Thursday, Fish and Chip Friday, Slider Saturday (dinner only) and Southern Sunday (dinner only).) The great thing about a buffet is that you can try a wide variety of foods in one sitting. The challenge is keeping the variety interesting. Themed nights was an idea we had to keep our guests excited about our menu and provide them with a unique experience. Themed nights provide a diverse selection that our guests absolutely love. Buffets can be challenging as far as calculating tastes and volume, versus throwing away uneaten food at the end of the day. How do you determine pricing and portion control with something as unpredictable as buffet-style eating? Does “pre-plating” help? We have been doing this for almost a year now, so we have it down to a science. Even though we are a
buffet, we cook our food in small amounts, which keeps the food fresh for our guests and gives us very low food waste. We are proud to offer our guests 65 different items in one restaurant for under $15. Las Vegas buffets have basically morphed from an after-thought to big business. How can JACK cater to Cleveland and Midwest tastes and avoid having customers feel as if the food is from an assembly line? It goes back to our goal of providing fresh, local food and unique experiences for our guests. As I mentioned, we also have themed nights to keep the guests excited and allow them to be able to try new foods. Our Backyard Wednesdays, which feature BBQ ribs, chicken wings and other comfort foods, is a hit with our guests. We want to serve a variety of delicious foods that keep our guests coming back for more. Do you feel, as a chef, that you can experiment with dishes, or do you have to be more conservative with a buffet? I’m always trying new things to see what people think. Our goal is to provide local dishes and to experiment, which gives me opportunity to be creative. It’s rewarding as a chef to be able to have my own take on classic dishes. We have a made to order pasta bar at the Shuffle station that changes each week. At one point, I removed the mac n’ cheese and our guests let us know very quickly that they often come here just for the mac n’ cheese.
I’ve always wondered — is there a psychology or a strategy to food placement on a buffet line? How does that help the bottom line? There are many ways to place food items for optimal guest convenience, but we found that for our guests it works best if we arrange the food with breads to start, followed by appetizers, salads, soups, starches and other side dishes, then main courses. We like to have servers for our carved meats because guests really enjoy the interaction with our cooking staff. We like to have our meats near the front of the line because it’s a great experience for our guests to be greeted by a friendly face. They also can ask questions and engage with our team members. We group all the vegetable choices together so that it’s easiest for our guests to make their selection. Additionally, we group the hot dishes next to other hot dishes and cold dishes next to other cold dishes because that makes for a cohesive experience on the plate. Our only exception is if we serve a build-yourown sandwich making station, then the breads and condiments go with the meat platters. Again, for optimal guest experience and convenience. What makes JACK Cleveland Casino’s Market District Buffet unique? We are the only buffet restaurant in downtown Cleveland. We prepare our dishes in front of our guests and will make anything for a guest, if we have it available. Just ask! The chefs are here to ensure each guest has an enjoyable, delicious and fun dining experience.
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TABLE OF
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FINANCE
3 LEGAL AFFAIRS 4-8
WELLNESS
9-11 HEALTH 12-13 REAL ESTATE
Paying for long-term care assistance
Irrevocable vs. revocable trusts
Hospice quality standards Intellectual stimulation for seniors Home modifications for aging in place Express your legacy creatively Senior living amenities Medicare plan choices Palliative care assistance Support for caregivers Communication devices at home Home health care trends
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The cost of long-term care assistance Options available to pay for home-based help
Y
ou may not even realize your loved one’s independence is forever starting to wane when you begin pitching in to tidy up the house or prepare some casseroles for the week. But eventually, those light chores and errands turn into full-fledged caregiving responsibilities. An estimated 44 million Americans ages 18 and older provide unpaid assistance and support to older people and adults with disabilities, according to the Family Caregiver Alliance, a nonprofit advocacy organization for caregivers. Many aging adults expect to rely on Medicare and Social Security benefits to pay for their long-term care needs when they age, but these programs do not cover most of those services or costs. The aging U.S. population means more seniors will require some form of long-term care assistance — such as cooking, bathing or remembering to take medicine — that can be provided at home or in an institutional setting. Americans ages 65 and older represented only 14% of the U.S. population in 2013. The senior population will nearly double — to 22% of the U.S. population — by 2040, according to the Associated Press–NORC Center for Public Affairs Research, which studies attitudes and trends about long-term care in the U.S. “This is an important issue as people age. You have to be proactive,” said Scott Michaels, owner of Solon-based Home Care Assistance, a home care provider. “We have to figure out how we’re going to care for the aging population and who’s going to provide that care.” Generally, home health care refers to skilled care, such as therapies and medicine administration. These services are covered by Medicare, Medicaid, Medigap (a Medicare supplement insurance policy) and veterans insurance for a specified period of time. “You also may qualify for MyCare Ohio, which is a combination of Medicare and Medicaid, if you qualify under the governmental care guidelines,” Michaels said. That integrated care program offers managed care plans that coordinate
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50s age range and younger. There are specified limitations, depending on the policy, including daily rate maximums. “You should purchase this earlier in life so that it’s not as cost-prohibitive,” Michaels said. U.S. DEPARTMENT OF VETERANS AFFAIRS BENEFITS (IF APPLICABLE). “The veterans administration also has an Aid & Attendance program that pays up to $1,000 a month for a single person, and $2,000 for a married couple so that they can access home care benefits,” Michaels said. LIFE INSURANCE POLICIES. Some life insurance policies may include provisions that enable the policyholder to access funds to help pay for home care. “I always recommend to my clients to review their policies carefully and see if they offer this provision,” Michaels said. A REVERSE MORTGAGE. Older homeowners may be able to tap into some of their home equity for additional cash flow if they meet certain requirements. “Talk to a reputable financial institution if you’re interested in pursuing this option,” Michaels said. FAMILY SUPPORT. Indeed, it may be difficult to corral caregiving support and resources from siblings or other close family members. However, in many cases, family members may be able to share the responsibilities of home care for their loved one. Or, mom and dad may move in with their children, Michaels said.
2 physical, behavioral and long-term care services for eligible individuals over age 18. Ohio’s Passport Medicaid Waiver Program also helps Medicaid-eligible individuals ages 60 and older obtain long-term services so they can remain in their homes. Meanwhile, non-medical home care services are defined as activities of daily living, such as meal preparation, light housework, personal care assistance, medication reminders and transportation. Medicare generally does not cover these services. Veterans insurance may cover home care services. Medicaid users also may qualify for home care coverage. “Medicare is very restrictive,” Michaels said. “There are some narrow provisions that may pay for nonskilled visits in between skilled visits, depending on the medical condition. If an individual is in a situation in which they’re expected to pass away within six months or so, they can move into hospice or palliative care and be covered by Medicare.” There are a number of options that can help pay for home care costs beyond private pay, Michaels said. Among them:
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LONG-TERM CARE INSURANCE. About 75% of Americans do not have long-term care insurance from a private company to pay for the expenses of ongoing living assistance, according to the AP-NORC Center for Public Affairs Research. AARP says rates are generally lower with individuals in the early- to mid-
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Proposed policies to help subsidize the costs caregivers face in providing long-term care — including employersponsored family paid leave, tax breaks for caregivers, Social Security earnings credit for caregivers and tax breaks for long-term care insurance purchases — all have wide public support, according to the AP-NORC Center for Public Affairs Research. “I think you’re going to see more companies providing some kind of family leave benefit,” Michaels said. “They are faced with more and more employees having to unexpectedly take off time, and they don’t want to have the lost productivity.”
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Irrevocable vs. revocable trusts: Which option is right for you?
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rusts are the legal delegate for one’s tax and wealth transfer goals. Some people set up trusts because they want to make sure their assets pass along directly to designated beneficiaries, with certain fixed distribution parameters. Other grantors want to offload their assets to their family, and thereby reduce their taxable estate while they’re still alive. Others set up trusts to protect their money from creditors. Depending on the grantors’ wishes, irrevocable and revocable trusts can help satisfy tax and estate planning goals. A key differentiation between revocable and irrevocable trusts is that revocable trusts can be changed, and irrevocable trusts cannot be altered. Knowing the difference is critical because of each trust’s legal and tax consequences. John Seich, principal at McCarthy, Lebit, Crystal & Liffman Co., a Cleveland-based law firm, says each vehicle has its benefits:
REVOCABLE TRUSTS
1
ASSETS REMAIN IN THE GRANTOR’S ESTATE
Revocable trusts avoid probate. At the time of the person’s death, assets pass directly to the trust’s heirs and outside of the probate process.
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Flexibility. A grantor can make changes to the trust at any time.
Distribution control. When revocable living trusts are incorporated into an estate plan, the trust agreement generally governs the terms of the decedent’s property, rather than a will. A revocable trust can tailor distributions to each beneficiary’s situation, whereas a will distributes assets to the beneficiaries. “I have a client who had three children. Two children got immediate distributions from the trust, but the third’s trust was set up so that he got payments over a lifetime because he had substance abuse issues,” Seich said.
IRREVOCABLE TRUSTS
ASSETS MOVE OUT OF THE GRANTOR’S TAXABLE ESTATE
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Tax benefits. A grantor may reduce his or her taxable estate when assets are gifted into an irrevocable trust. “We often set up irrevocable educational trusts for children,” Seich said. Some clients gift into the trust the annual exclusion limit of $14,000 per beneficiary. Many individuals also set up irrevocable life
REVOCABL
E
ABL C O V E R IR
insurance trusts to manage their life insurance policies while they are alive. The insured can also make annual exclusion contributions toward the irrevocable life insurance trust to pay the insurance premiums. The life insurance in this trust is not considered part of the insured’s gross estate, and therefore is not subject to federal estate taxation.
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Asset protection. The trust provides financial support to beneficiaries while protecting assets from creditors, as long as the
trust meets certain asset protection guidelines. In Ohio, once 18 months passes from the time the trust is formed, future unknown creditors cannot access funds in the asset protection trust, according to the Ohio State Bar Association. These are ideal vehicles for individuals who work in a highrisk industry. “I once had a client who worked in a paint factory who set one up to protect his assets because he was worried he would get sued because of a superfund issue,” Seich said.
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Transfer company out of your name. In one sophisticated estate planning technique, a business owner can sell his or her company to an intentionally defective irrevocable trust in exchange for a promissory note. The note payments are generated from the entity’s earnings for a certain length of time. The grantor still pays income taxes on the assets, but avoids capital gains taxes
since the entity was sold to the trust rather than gifted. This type of trust enables an individual to reduce the size of his or her taxable estate, and freezes the wealth of the company. The entity’s value appreciates in the trust, which ultimately will be passed along to its beneficiaries. “Don’t utilize this approach without an estate attorney who knows what they’re doing,” Seich said.
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We employ sophisticated estate planning techniques to meet individual and family goals in the disposition of an estate, while minimizing transfer and estate taxes. Contact: Kimon P. Karas, John S. Seich, Steven P. Larson or Wade T. Weber, 216.696.1422
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You’ve relied on him since you wore your own tutu. Now it’s his turn.
APRIL 16 IS NATIONAL HEALTHCARE DECISIONS DAY. It’s time to ask your dad if he’s
completed a living will and healthcare power of attorney. Talk to him about his healthcare choices. Discuss how much medical intervention he wants if the worst happens. Ask about the hard stuff. Talk about compassionate options. Tell him how much knowing his answers matters to you, his granddaughter and your whole family. Then fill out the simple documents together. Visit hospicewr.org/decisions for helpful information, videos and free downloads.
NORTHERN OHIO’S HOSPICE OF CHOICE
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March 27, 2017 S5
Maintaining rigorous quality standards is imperative for hospice providers By WILLIAM E. FINN
N
ational health care policy is focused on protecting patients, eliminating fraud and ensuring high quality care. Today’s evolving regulatory environment provides all health care providers — including hospice — with an opportunity to shine despite the many operational and financial challenges posed by the rapidly evolving climate. As organizational leaders, we all know it is crucial to maintain best practices and the highest ethical standards. This is important not only to preserve an organization’s reputation,
but to uphold the mission and to deliver on a promise of quality and customer satisfaction. Maintaining the highest standards of quality and establishing benchmarks for performance are particularly important in end-of-life care. Families place their trust in hospice at a vulnerable time. There are no second chances to get it right, so it is essential that hospice organizations hold themselves to the highest professional and ethical standards. What are appropriate benchmarks for evaluating a hospice’s performance and expertise? If a hospice encourages its employees to be certified in hospice and palliative care, one can assume the hos-
pice is focused on quality. Professional certification is considered the gold standard for assessing expertise. Although certification is voluntarily sought and earned, it is widely recognized by government entities, health care systems, insurers and patients themselves as an objective, Finn evidence-based benchmark for attaining the highest level of competence. Currently, there are 17,000 hospice and palliative care certified nurses and administrators practicing in the U.S., so Hospice of the Western Reserve was
honored recently when three of our staff members received national awards recognizing their expertise among peers. This year, the National Board for Certification of Hospice and Palliative Nurses named one of our nurses, Denise DiMare, Certified Hospice and Palliative Care Nurse of the Year, and Bob Phillips-Plona, director of residential services for our three hospice units, Certified Hospice and Palliative Care Administrator of the Year. Our vice president of quality, Mary Kay Tyler, was named as one of 68 fellows in Palliative Nursing in the U.S. The designation is reserved for those who
are deemed to “provide evidence of progressive leadership in the field of palliative nursing.” All of our physicians are board certified in hospice and palliative medicine and a large percentage of our nurses, social workers and other allied health care professionals also are certified in their specialties. We offer continuing education to the medical community, and professionals from our region’s academic and health care institutions sit on our board and advisory councils. By demonstrating an ongoing commitment to advancing expert care in serious illness, hospice organizations can and must stay true to the mission of relieving suffering, promoting comfort and improving the quality of life for the thousands of patients and families in our region. Finn is president and CEO of Hospice of the Western Reserve.
Learning, interaction keys to intellectual stimulation
T
he benefits of exercise in life’s golden years are often touted — a healthier heart, stronger bones, better balance, to name a few. What’s becoming increasingly clear is the importance of staying mentally active as well. “Seniors today, more than ever, realize that in order to have a good experience as they age, they need to continue to engage socially, mentally and physically,” said Cheryl Kanetsky, vice president of programs and services for the Alzheimer’s Association. A number of studies indicate that individuals who maintain strong social connections and keep mentally active may lower their risk of cognitive decline and Alzheimer’s. Experts are not certain about the reason for this association. One theory suggests it may be due to direct mechanisms through which social and mental stimulation strengthens connections between nerve cells in the brain. In many cases, there is an emotional payoff as well, according to Lee Ann O’Brien, director of community relations, special projects and planned giving at The McGregor Home. “Lifelong learning programs provide a means of stimulation and social engagement that can improve mood, prevent or reduce depression and motivate self-improvement,” she said. Not surprisingly, therefore, finding ways to intellectually stimulate seniors has become an area of intense interest among senior living facilities, Kanetsky said. This can range from informal activities, such as card games like bridge or games like Scrabble to structured lifetime learning opportunities.
BRAIN GAIN Krystal Culler, director of the Center 4 Brain Health at Menorah Park, said memory- and brain-related programs
are among the newest offerings at retirement communities. “People are so engaged in wanting to know the things that they can do to be proactive about their brain health and wellness,” said Culler, adding that they not only want the educational resources but often they are “actively taking the next step and making modifications to their daily routines, adjusting their lifestyle, getting engaged with new activities or revisiting old hobbies they used to do.” Some of the most popular programs at Menorah Park, for example, involve memory enhancement topics, which include general tips for improving focus and more specific techniques such as how color can be used as a memory
boosting tool. Other in-demand classes include detailed brain health seminars and light-hearted brain teasers. Foreign languages are another fastgrowing area of brain enhancement, Culler said. New research indicates studying a new language can boost brain activity and may ward off the symptoms of dementia and Alzheimer’s disease. Meanwhile, several McGregor residents exercised their creativity by submitting floral designs from an art course to the Shaker Lakes Garden Club’s Perennial Centennial Flower Show last year. “Quite a few of them were recognized,” she said. “They got a lot of enjoyment out of engaging with other
people with similar interests in the area while also achieving a reward.”
STIMULATION THROUGH INTERACTION Many older adults participate in lifelong learning programs for the social aspects as much as for the learning experience, according to Ohio Living Breckenridge Village executive director David Schell. “There was a time when older adults wanted to have activities brought to them,” Schell said. “Now, however, they want to be engaged in activities that are more social.” Activities like ranger-led outdoor hikes, educational field trips and travel
provide opportunities to make new friends while engaging in stimulating discussions. Closer to home, Schell said, many retirees opt for activities that are also “socially accountable” – not only of interest to their needs, but opportunities to give back. Among its most popular programs is one in which residents are paired with nearby third-grade pen pals. In another example, residents are active through the Leadership Lake County program, where they help develop programming for young participants. Through a “living lab” partnership with Case Western Reserve University engineering students, residents are helping test some of tomorrow’s independent living technologies.
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Home modifications help seniors age in place safely
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or some seniors, aging comfortably means staying put. Many homes, however, are not well-suited to accommodate the physical challenges that come with age, and renovating living spaces to be safer and easier to navigate can be a daunting and sometimes expensive proposition. The good news is, “it doesn’t all have to happen at once,” said Nancy Smoot, program director at senior products company Integrant. “The majority of these things can happen in bite-size pieces over time.” Still, experts say whether you are retrofitting a home for yourself or for a loved one, the best time to start is now. Falls, after all, are the leading cause of fatal injuries for older Americans, according to the National Council on Aging. Even a non-fatal fall can threaten
a senior’s safety and independence and may generate enormous economic and personal costs. Individuals and couples worried about the cost of installing safety features might have options. Many long-term care insurance policies cover modifications necessary to help a person remain in the home, according to Kathy Hirko of KAZ Co., an insurance brokerage. In addition, seniors who have not recently reviewed their Medicare supplement plan and shopped around the coverage and cost could be surprised at what they find. Hirko said some people may have the potential to save hundreds of dollars in premiums each month by doing some careful shopping. “A $300-per-month savings adds up to $3,600 in a year,” she said. “Now, I have the money to put those bars up in
the shower or install a ramp up to my front door.”
START SIMPLE Seniors and their caretakers can ease into modifying the home with small — yet meaningful — changes, said certified aging-in-place specialist Cindy Griebeler, owner of Stay At Home Modifications in North Ridgeville. Loose throw rugs and area carpets with curled edges, for example, are a major tripping hazard for seniors. Griebeler said to remove throw rugs altogether and secure the edges of area rugs to the floor with double-sided tape. Consider replacing door knobs with door levers. Levers are easier for seniors to open than a traditional round door knob. Also, clear walking paths. Often, Griebeler said, she and her team
To ensure that grab bars are installed properly, it’s important to use a qualified installer.
need to remove excess furniture like coffee tables or end tables to create 36inch walkways, which is ideal. Finally, Smoot said, ensure living spaces, especially walkways, are well lit, and if a senior is not able to get up and move around safely on his or her own, locate frequently used items within reach.
TARGET THE BATHROOM Bathrooms can be one of the most dangerous areas of the home for two reasons. First, surfaces tend to be wet and slippery. Second, people are often alone in the bathroom; a fall victim might not be discovered quickly. Grab bars are a must for anyone having difficulty with mobility or balance, according to Mike Foti, president of Cleveland-based Innovate Building Solutions and another certified aging-in-place specialist. Grab bars can be installed in showers and baths to aid in entering and exiting and next to toilets to assist in getting up and down. While handy homeowners may be able to properly install grab bars themselves, Foti suggested most people use a qualified installer because placement and stability are critical. Plus, water seeping behind improperly installed grab
bars can rot out a bathtub or shower. A zero-threshold shower base — no ledge to step over — is another important bathroom feature for seniors, Foti said. Swapping out a one-piece shower/tub or a conventional stand-alone shower with a ledge for a “curbless” version is a larger financial commitment, but greatly increases accessibility, he said, and makes daily showering a much safer activity, particularly for seniors who have mobility issues or live alone.
EXTEND ACCESSIBILITY If mobility issues reach the point where the homeowner needs a wheelchair or a walker, more complicated modifications will likely be needed. It’s not a simple project, but widening doorways could be the thing that makes a home accessible for wheelchairs, Foti said. Other projects can include installing stair lifts and wheelchair ramps or adding pull-out shelves in cabinets and closets. “It’s important to remember that these upgrades are an investment in safety, giving you peace of mind when caring for a loved one or when making plans for living comfortably in the future,” he said.
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EXPRESS YOUR LEGACY CREATIVELY Outdoor tributes, handmade items convey lasting impression
ECO-FRIENDLY END-OF-LIFE
I
ndividuals who make philanthropic gifts leave a personal stamp on their most valued causes. A donor’s interest perpetuates through cash donations, endowment funds and estate gifts. Donors who bequeath stock, appreciated assets, real estate or certain personal investments to their favorite organizations ensure the vitality of a particular mission. For those seeking a more experiential way to be remembered, there are several charitable and creative opportunities to make sure their legacy lives on. “Many nonprofits have naming opportunities that come along with making a philanthropic gift,” said Laura Frye, planned giving officer at the Hospice of the Western Reserve. “They could have a dedicated building, room, atrium or even garden.” The Hershey Play Garden at Ames Family Hospice House in Westlake, for example, was funded through both foundational and individual support. The 5,000-square-foot space includes a playground, koi pond and chalk garden, offering a reprieve for children and their families who are visiting loved ones in hospice. Other outdoor tributes such as engraved benches and tribute trees along the Vista Walk at David Simpson Hospice House offer personalized support to strollers seeking sanctuary among views of Lake Erie and the gardens.
The Hershey Play Garden at Ames Family Hospice House is an interactive garden that offers a safe, playful environment for children.
Art projects also convey a loved one’s wishes and serve as a comforting keepsake for family members and a cherished heirloom for future generations. “Some people create scrapbooks, recordings or videos that become a comforting keepsake for their families,” said Bonnie Robbins, foundation relations manager at Hospice of the Western Reserve. “At (Hospice) on East 185th, we have many examples of beautiful quilts that were made to commemorate important moments in a person’s life. Expressing feelings through art is healing. People can be sure any message they need to relate is told to their loved one, and
that fulfills them.” People also find comfort in writing out their hopes, dreams and life lessons through an ethical will (which is not a legal document). “An ethical will is essentially a legacy letter to your family,” Frye said.
For those who want to carry forward their ecologically minded principles in the after-life, green burials afford an end-of-life recognition to conservation and sustainability. A small but increasingly interested segment of the aging population is inquiring about green funeral planning, said J. Mark Busch, funeral director at Busch Funeral and Crematory Services, which operates seven funeral homes throughout Northeast Ohio. “We did green funerals for about four to six families last year,” he said. “People who do pre-planning are thinking about their disposition.” Busch said his operation was at the forefront of the movement in Ohio, having been certified by the Green Burial Council shortly after that advocacy organization was founded in 2005. Green burials, or natural burials, are free from formaldehyde, metal or concrete grave liners and burial vaults. Caskets, coffins or other containers are made with biodegradable materials. The body is not embalmed. “Only certain cemeteries in Ohio allow green burials because they require different rules and regulations,” he said. Five cemeteries in Ohio are Green Burial Council-approved providers. More than 300 have come online throughout the U.S. since 2006. Busch said his operation handles most of their green funerals at Foxfield Preserve (above), a nonprofit cemetery located in Stark County. “Green burials are a topic I’ve been asked a lot of questions about,” Busch said. “People are interested in a resting place that preserves nature and promotes conservation.”
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Senior living communities embrace resident-centered model, expand amenities and services
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hen it comes to deciding on a retirement living community, today’s seniors want options — and lots of them. In response, independent living and assisted living facilities have ramped up the range of amenities offered to residents, from services that help with daily tasks like housekeeping and medicine reminders to an increased array of recreational options like cultural events, fitness classes and educational opportunities. “Seniors are looking for lots of choices so that they can get support when they need it or want it but also have the autonomy to choose some things and not others,” said Allison Salopeck, president and CEO of the Jennings Center for Older Adults. “It used to be that choices at a senior living community were nice, but not essential. … I do not think we will ever go back to the more cookie cutter set of (senior living) offerings and people will be satisfied with that.” Salopeck said this is especially
true for baby boomers, the newest generation of seniors, who put a high value on the “a la carte” variety of services that can be accessed when wanted and as their needs change with age. Many who opt to settle in a continuing care retirement community, like the Jennings Center, do so to maintain their independence as long as possible. Meal services, housekeeping, help with bathing and dressing and transportation to doctors’ appointments and grocery stores are just a few of the features that keep older adults living independently. Others include ancillary services like physical therapy and podiatry. Beyond these personal care options, however, today’s seniors also want residences that offer socialization, variety in entertainment and food, and the ability to remain connected through technology. “Seniors are really looking for communities that offer areas where they can gather together and opportunities to engage with each other,” said Sheryl Sereda, vice president and chief
advancement officer at Eliza Jennings. “They want to see large spaces for socialization, community dinners and dancing. They are a more active senior group looking for more fun activities.” Entertainment ranges from visiting musicians and performers to day trips that might include local farmers markets or wineries, forays into nature or an outing to a casino or museum. Easily accessible — even onsite — walking trails and natural features like ponds or golf courses are another draw. In common areas, seniors meet for board games, poker or bridge, movies or special interest groups like scrapbooking or gardening clubs. And, boomers, especially, often are technologically savvy, according to Danbury Senior Living director Andy Harpster, and are looking for communities with high-speed internet and wireless networks that can help them maintain virtual connections to family and friends. They also understand the importance of staying active and opt for settings where they can maintain or improve their level of
Excellence in Caring
ABOVE: Residents stretch and improve muscle strength during chair-yoga at Jennings Center for Older Adults. RIGHT: Eliza Jennings’ Renaissance Retirement Campus includes an on-site golf course.
fitness — whether it’s joining a chairbased yoga or dance-fitness Zumba class or going it alone in onsite fitness centers and swimming pools. “Some of the popular wellness offerings include things like reiki and tai chi,” Salopeck said. Safety is another important consideration. Some communities have secure entrances, Sereda said, and many are monitored. Most offer alert systems so if residents have emergencies in their own apartments or rooms, they can summon help, she said. It all comes down to a desire on the part of seniors to live as safely and comfortably as they can, which means independent and assisted living facilities are expected to provide more than a place to reside. They must deliver a lifestyle that often surpasses
the homes and neighborhoods they are leaving behind, Harpster said. “We hear a lot of the time after people move in, ‘I wish I had done this two years ago,’” he said. “Once they are in the community and surrounded by the people and activities and conveniences, they know they made the right decision.”
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E K d ƉƌŽǀŝĚĞƐ ŝŶĚŝǀŝĚƵĂůƐ ǁŚŽ ŚĂǀĞ ĐŽŵŵƵŶŝĐĂƟŽŶ ĚŝĸĐƵůƟĞƐ ĂŶĚ ƚŚĞŝƌ ĐĂƌĞƚĂŬĞƌƐ ĂŶ ŽƉƉŽƌƚƵŶŝƚLJ ƚŽ ŝŵƉƌŽǀĞ ƋƵĂůŝƚLJ ŽĨ ůŝĨĞ ƚŚƌŽƵŐŚ ƉĂƌƟĐŝƉĂƟŽŶ ŝŶ ĂĐƟǀŝƟĞƐ ƚŚĂƚ ƉƌŽǀŝĚĞ ĞŶƌŝĐŚŵĞŶƚ ĨŽƌ ůŝƐƚĞŶŝŶŐ ƐƉĞĂŬŝŶŐ ƌĞĂĚŝŶŐ ǁƌŝƟŶŐ ĂŶĚ ƐŽĐŝĂůŝnjĂƟŽŶ E K d Ăƚ ůĞǀĞůĂŶĚ ,ĞĂƌŝŶŐ Θ ^ƉĞĞĐŚ ĞŶƚĞƌ ŽīĞƌƐ z Individual & Group Speech Therapy z Lee Silverman Voice Treatment (LSVT) z Speak Easy: ƉĞĞƌ ƐƵƉƉŽƌƚĞĚ ƐŽĐŝĂůŝnjĂƟŽŶ ĂŶĚ ĐŽŵŵƵŶŝĐĂƟŽŶ ŐƌŽƵƉ z Speak Easy Plus: ĂĐƟǀŝƟĞƐ ƚŽ ĞŶŚĂŶĐĞ ƐŬŝůů ĂƌĞĂƐ Ŭ ĐůƵď ŵƵƐŝĐ Θ ƐƉĞĞĐŚ Žƌ ĞdžĞƌĐŝƐĞ ƚŚĞƌĂƉLJ ƌĞĂĚŝŶŐ Θ ǁƌŝƟŶŐ Ăůů ƚŽĚĂLJ ƚŽ ĮŶĚ ŽƵƚ ŚŽǁ E K d ĐĂŶ ŝŵƉƌŽǀĞ ĐŽŵŵƵŶŝĐĂƟŽŶ ƐŬŝůůƐ ĂŶĚ ĞŶƌŝĐŚ ƚŚĞ ůŝĨĞ ŽĨ LJŽƵƌ ůŽǀĞĚ ŽŶĞ
216-325-7538
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March 27, 2017 S9
Choose a Medicare plan that meets interim and long-term needs
M
edicare coverage comes in an alphabet of offerings, and understanding what those plans will cover can spell out significant advantages in savings and health care coverage. “Each individual should think about how they consume health care today, and how they anticipate they will consume health care in the future, when they are deciding which Medicare plan is most appropriate,” said Mike Novelli, vice president of AultCare Corp., a Canton-based insurance company. “Medicare doesn’t pay for everything.” Medicare is the federal health insurance program for individuals age 65 and older. Medicare Part A (hospital insurance) covers inpatient hospital stays, skilled nursing care, hospice care and some home health care. Medicare Part B (medical insurance) pays for preventive and doctors’ visits, outpatient services and medical supplies. Medicare Part C (Medicare Advantage Plan) includes both Part A and B benefits and, depending on the plan, prescription drug coverage. Private companies contract with Medicare to provide Medicare Advantage Plans, which include Health Maintenance Organizations (HMO); Preferred Provider Organizations (PPO); private fee-for-service plans; special needs plans; and Medicare Medical Savings Account Plans, according to the U.S. Centers for Medicare & Medicaid Services. Lastly, Medicare Part D plans add prescription drug coverage to the original Medicare plans (Parts A and B). Novelli offers the following factors to consider when determining which plan is most suitable to fit your needs:
DETERMINE AFFORDABILITY “How much can you afford? This is No. 1 on your list,” Novelli said. Monthly premiums in 2017 under Medicare Part A range from $0 to $413 based on your or your spouse’s work history. The Part A premium is free if you have worked 40 quarters, or 10 years, in your lifetime. Part A deductibles in 2017 are $1,316. The standard monthly premium in 2017 for Part B insurance is $134. The annual deductible is $183, with a 20% coinsurance after the deductible is met. Part C and Part D monthly premiums vary according to the plan. A Medicare supplement insurance policy — also called Medigap — subsidizes some of the health care costs that original Medicare doesn’t cover. “Let’s say you have a $15,000 outpatient knee surgery. Without a supplement, you’re responsible for the first $183 deductible, plus 20% of the $14,817,” Novelli said.
VERIFY PROVIDER NETWORK Some plans insure a larger bandwidth of providers than others. Individuals who are insured by Medicare and a medical supplement can visit any provider that accepts Medicare. “This is important because if you live in Akron and your doctors are in Cleveland, but you buy a plan that doesn’t cover your Cleveland providers, you’re more restricted,” Novelli said. “This is also a key consideration, especially for snowbirds who may split their time between Ohio and Florida.” Indeed, gender, age, tobacco use, payment method and medical claims are among other factors that affect supplemental insurance premiums, according to the Ohio Department of Insurance’s “Guide to Medicare Supplement Insurance,” which lists different insurance companies and their plan costs. “An important question to ask when you’re buying a Medicare supplement is what the plan will cost when you turn 66, 67 or 70,” Novelli said. “A broker or agent should be able to tell you what kind of rate increases they’ve had over the years.”
AVOID THE DRUG INSURANCE HEADACHE
THE UNAPPETIZING DONUT HOLE The uncertainties surrounding the Affordable Care Act have created a cliffhanger for many Americans, who wonder whether the Trump administration will sufficiently replace what it repeals. Among them is Medicare’s Coverage Gap, or the so-called “donut hole.” It works like this: You pay the full cost of your brand-name prescriptions until you reach your plan’s deductible. Then you and Part D share the cost of the prescriptions until the total drug costs reach $3,700. At this point, you enter the coverage gap stage, and pay 40% of the cost for brand-name drugs and 51% for generic drugs costs until you reach your annual out-of-pocket
spending limit (which is $4,950 in 2017). By 2020, the coverage gap is to be “eliminated” by decreasing to 25% the patient’s financial responsibility under the Affordable Care Act. Prior to passage of the Affordable Care Act, seniors were responsible for 100% of their drug costs once they reached the coverage gap. “The big question is: Will the Trump administration eliminate the donut hole? Prescription drugs and the donut hole are a big deal for seniors because their drug costs are so expensive,” said Mike Novelli, vice president of AultCare, a Canton-based insurance company.
LIFETIME COST PROJECTIONS FOR MEDICARE PARTS B, D, SUPPLEMENTAL INSURANCE PREMIUMS AND OUT-OF-POCKET EXPENSES Premiums
Out-Of-Pocket
Total Costs (Present Value)
Total Costs (Future Value)
65-Year-Old Couple
$288,400
$89,012
$377,412
$567,903
55-Year-Old Couple
$368,474
$97,433
$465,907
$943,760
45-Year-Old Couple
$484,103
$108,172
$592,275
$1,614,712 SOURCE: HealthView Services
Medicare Part D tacks on drug coverage to Medicare. Insurance companies provide these plans and categorize drugs into five tiers: two tiers of generics, two tiers of brand names and one specialty. “It’s very important that seniors make sure they know what tier their medication is considered, and whether
Part D covers their drug, and what the co-pay is,” Novelli said. “Medicare.gov allows you to enter in your drugs and ZIP code, so you can determine what your plan and costs will be.” Pre-emptively adding prescription drug coverage upfront is a defensive move that could save individuals
money down the road, even if they don’t currently take medication. Otherwise, Medicare assigns a lateenrollment penalty for those who go more than 63 days without a Medicare drug plan or other credible drug coverage. The individual incurs a penalty for each
month he or she doesn’t have coverage. “I had a gentleman come in who was 70 and hadn’t taken prescription drugs his whole life,” Novelli said. “Then he needed a certain medication. He found out he had to pay a penalty on top of his $30 premium.”
KEY CONSIDERATIONS
Ask yourself these questions to help guide your decision in choosing the best health care plan: n Do you want an original Medicare or a Medicare Advantage Plan? n Do you want prescription drug coverage? n Do you want supplemental insurance coverage to help pay for deductibles, copays, coinsurances and other costs that Medicare does not cover? n How much can you afford to spend on your plan? SOURCE: Medicare and AultCare
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S10 March 27, 2017
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Palliative care improves quality of life for patients with advanced conditions
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ri-Ann Kotecki spent most of her days caring for her father while making frequent visits to see her mother in a nursing home, all while juggling three jobs and pursuing an undergraduate degree. She’s had to face both of her parents being on life support, and has been
shouldered with the responsibilities of making decisions on her father’s behalf as his power of attorney. “Hospice (of the Western Reserve) stepped in when my father went on life support for the second time,” Kotecki said. “Then he bounced back, and entered their palliative care program.”
Now, at age 23, Kotecki has pressed pause on her college studies — she’s a senior health sciences major at Cleveland State University — to provide full-time care for her father, who moved in with her. “I only have so much time with him. I can always finish college later,”
she said. “Having the support from Hospice’s palliative care program is such a relief because they offer 24/7 support if I need it. I’ve called them at midnight, and they send a nurse right away. They not only help my family, but they are a huge help to me.” Palliative care services alleviate
’S
PrimeTime Health Plan is an HMO-POS plan with a Medicare contract. Enrollment in PrimeTime Health Plan depends on contract renewal. For more information, please contact PrimeTime Health Plan at 1-800-577-5084, TTY users can call 1-800-617-7446, Monday-Friday 8:00 a.m. to 8:00 p.m. (October 1-February 14, we are available 7 days a week from 8:00 a.m. to 8:00 p.m.), or visit www.primetimehealthplan.com. A sales person will be present with information and applications. For accommodation of persons with special needs at sales meetings, call 1-800-577-5084. TTY users may call 1-800-617-7446. Medicare evaluates plans based on a 5-Star Rating system. Star Ratings are calculated each year and may change from one year to the next. Our plan does not discriminate based on race, color, national origin, sex, age, or disability in its health programs or activities. ATTENTION: If you speak English, language assistance services, free of charge, are available to you. Call 1-800-577-5084 (TTY 1-800-617-7446). ATENCIÓN: si habla español, tiene a su disposición servicios gratuitos de asistencia lingüística. Llame al 1-800-577-5084 (TTY 1-800-617-7446). 注意：如果您使用繁體中文，您可以免費獲得 語言援助服務。請致電 1-800-577-5084 (TTY 1-800-617-7446).
some of the caregiver’s commitments, and provide support for individuals who are dealing with a combination of chronic and advanced conditions, such as cancer, dementia, chronic obstructive pulmonary disease, advanced renal failure and congestive heart failure. The Hospice of Western Reserve’s palliative care program offers both social and medical services to help individuals manage their condition, whether from home or a senior living facility. “Most of our patients are a year to three years away from receiving hospice services, although we have a handful of individuals who’ve been receiving palliative care support Kotecki for four to five years,” said Joan Hanson, director of Western Reserve Navigator, the Hospice of Western Reserve’s nonhospice palliative care program. “Our focus is on improving the quality of life for patients and their families through emotional, physical and spiritual support.” The organization uses a team-based care approach, with trained volunteers, social workers and advanced practice nurses working together with patients and their families. Families either can consult the patient’s physician to determine whether he is a candidate for palliative care, or contact a palliative care provider directly. The Western Reserve Navigator coordinates the initial patient visit with an advanced nurse and social worker, who both assess the patient’s unique needs. “An advanced nurse may be able to help the patient manage their symptoms, guide them on how to take their medications or how to use a certain type of therapy,” she said. “The social worker becomes the main patient and family contact if the medical issues are under control. We want to make sure we are caring for the individual with a holistic approach.” Volunteers assist with respite care. They may help patients balance a checkbook, prepare meals or fill out paperwork. On-call nurses are available around the clock to answer questions or for in-home visits. “Our patients often are on the brink of the next acute episode,” Hanson said. “If they don’t call, they may end up in the emergency room with a prolonged stay. We can help manage the symptoms in home and prevent a hospital stay.” The Western Reserve Navigator works closely with the Western Reserve Area Agency on Aging, a Northeast Ohio nonprofit that connects older adults and individuals with disabilities to community-based resources. Palliative care programs also facilitate the power of attorney declaration process with patients and their loved ones. “It’s so important to decide who will be your powers of attorney early on because you want the POA to relay your wishes,” Hanson said. “You don’t want to place the burden on a loved one to make a decision for you.”
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SUPPORT FOR CAREGIVERS
in the home or in an assisted living or skilled nursing facility. Typically private pay, respite stays offer the benefit of 24/7 care, a nursing team, meals and medication management. Another perk is Medicare Part D can often be used to provide potential therapy for a loved one during a stay. “A lot of caregivers don’t take full advantage of respite care,” Connelly says, indicating HCR ManorCare’s Arden Courts memory care communities offer respite stays and 30-day trial stays. “A 30-day trial lets you see how the resident adapts to the community, and also lets us adapt to the resident. It’s a chance for the caregiver to adapt to someone being in a new environment.” Other forms of respite care are adult day programs and senior companion programs, in which volunteers spend a few hours a day doing mindstimulating activities with homebound senior citizens.
Where to turn for help when the task of caregiving becomes overwhelming
T
oday, about 40 million family caregivers provide to their loved ones more than $450 billion in unpaid care annually, according to the American Association of Retired Persons (AARP). And the burden is expected to rise as the number of elderly in the United States increases.
CAREGIVING CHALLENGES The challenges of caring for elderly family members can be mental, physical and emotional. Indeed, the National Alliance for Caregiving reports the following: n 11% of family caregivers say providing care has harmed their own physical health; n 24% say caregiving has harmed their work performance and shortened time spent at work; n 70% have made a job change due to caregiving responsibilities. So where do you turn for help when caregiving becomes overwhelming? Liz Pencak, director of marketing and clinical liaison for The Village at Marymount in Garfield Heights, says first and foremost, make sure the decision to provide care for a loved one is for the right reasons. “Make sure you are taking into consideration your loved one and their needs, and you’re not doing it because it makes you feel better,” Pencak says.
CARE FOR THE CAREGIVER Pencak says caregivers first have to care for themselves. “If you have a job, you have vacation and sick time. You have to be able to utilize that time to keep some balance in your life,” Pencak says. She adds that in her own research, about 35% said they had difficulty finding time for themselves, and another 29% said they found it difficult to manage the emotional and physical stress of caregiving and balancing work and family responsibilities. Ken Connelly, divisional director of marketing/sales development for Toledo-based HCR ManorCare, says there is a lot of guilt and fear that goes along with taking a break from caregiving. “What we’ve seen in the past is people are waiting too long until there’s a crisis — then it becomes even more of a crisis,” Connelly says. “The caregiver burden is very impactful. Caregivers wind up in the hospital and have no choice but for their loved one to go to a community or facility. Caregivers have to take care of themselves and utilize the resources available to them.” There are options available, but caregivers have to be proactive in finding them.
AGING NETWORK Did you know Ohio has the sixth largest elderly population in the nation?
Christine Foley, director of the Home Care Program at the Benjamin Rose Institute on Aging in Cleveland, said a lot of people aren’t aware of the Older Americans Act of 1965, which created a national aging network with a dynamic group of home- and community-based services, including Meals on Wheels, in-home services, transportation, legal services, elder abuse prevention and caregiver support. Foley said the Benjamin Rose Institute’s caregiver support program is geared toward individuals who fall through the cracks and don’t have insurance for personal care coverage, which provides everything from preparing meals and light housekeeping to personal care. “Personal care aides take over caretaking responsibilities while the caregiver takes a break,” says Foley. There are a variety of options available to caregivers. Support groups can be a wealth of information and provide a necessary outlet for caregivers. Pencak says sometimes just knowing you are not alone is enough. Memory Cafes are similar to support groups, but are held in a public place
THE FUTURE Foley says one of the biggest takeaways from this is to encourage younger individuals who are now caregivers to start thinking about their future needs. “While caring for older adults, start thinking about your needs when you get older,” Foley says. “There are a lot of little niche communities and services out there people don’t know about.”
Caregivers need to make sure they prioritize their physical health and emotional well-being, so that they can care for their loved ones.
and are more relaxing. Senior centers can provide healthy senior adults with options to participate in activities, field trips and educational
“Let us be the caregivers so you can be a son / daughter / husband / wife.”
programming. Many provide free transportation to their centers, as well as to medical appointments. Respite care services can be provided
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S12 March 27, 2017
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Communication device improvements help users retain independence in home setting
A
ugmentative and alternative communication devices have come a long way from the 20-pound onerous apparatus that was used some 40 years ago to help individuals relay their wishes. These impractical devices only offered about eight to 10 picture-card choices for non-speaking users that featured basic expressions, such as, “I am in pain,” or, “I need to use the bathroom.” “A hand would move slowly around the device to get to the right picture that the individual was pointing at. If your thought or need wasn’t represented on the device, you were out of luck,” said Michelle Foye, director of speech language and learning services at the Cleveland Hearing & Speech Center. Communication devices have since transitioned from the mechanical phase, to electric light boards and then to computerassisted technological equipment. Until about 10 years ago, speechgenerating devices served a singular purpose — to help users speak. “We’re moving from specialized devices to general technologies such as the iPad or other mobile devices,” said Melanie Fried-Oken, a member of the
PIVOTAL TECHNOLOGIES THAT WILL TRANSFORM U.S. HEALTH INDUSTRY Look for artificial intelligence to replace human intelligence and virtual technologies that will change the user’s experience in the physical world. Robots will augment or assist humans in their daily living activities, and remote patient monitoring will help individuals maintain independence and remain within their homes longer. Advances in technology will impact physicians’ roles in patient health care. According to PwC’s 2015 Health Research Institute’s workforce survey of clinicians, about 55% of participants believe that physicians in 10 years will spend less time conducting in-person care. About 85% of those clinicians surveyed believe physicians will focus more time on analyzing data and wearable technologies. SOURCE: PwC Health Research Institute’s “Top Health Industry Issues of 2017”
Augmentative and alternative communication devices have evolved from cumbersome equipment to user-friendly, portable technologies.
American Speech-Language-Hearing Association. “The challenge is screen technologies don’t work for everyone, especially those with cognitive or motor impairments. The great thing is, there’s a large population buy-in. Almost everyone has a mobile device.”
Today’s portable technologies enable users to communicate face to face and long distance, with more independence. “It’s so much easier for individuals who’ve had a stroke or another brain injury to be connected with people in front of them and the outside world because of access to these different technologies,” Foye said.
Tablet-sized eye-gaze devices use infrared eye tracking and eye-control technology that calibrate with the user’s eyeballs. When used with a speech-generating device, the equipment can easily interpret and relay the user’s thoughts with voice output. The technology is a far departure from staring at a communication board and using one’s eyes to spell out her feelings letter by letter.
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“It was obviously fatiguing, and required a lot of guesswork with their communication partner,” said Jessica Blakeman, a speech language pathologist at the Cleveland Hearing & Speech Center. “The devices have changed to adapt to individuals’ motor skills, which, especially with the elderly, change as they get older. Now, communication partners don’t need to predict what their loved one is thinking.” New technologies are helping individuals with declining or limited speech abilities to retain more autonomy, safely, at home. Alarms can be programmed into devices to remind an individual with dementia to put wet laundry into the dryer, or to take medication, Blakeman said. Even improvements in voice output volumes are a game-changer. “Now, you don’t need to be in the same room all the time with a loved one because their voice output can call out to you,” she said. “It gives the user and their loved one’s peace of mind.” Meanwhile, funding for communication devices has become more accessible. Medicare, Medicaid and private insurers generally cover these technologies — which typically fall in the $1,000 to $20,000 range. “There was a time when you’d have to go through trial periods and rental periods, which delayed the ability to get a device,” Blakeman said. “Now, people are getting devices a lot more quickly.”
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TRENDS IN HOME HEALTH CARE A growing industry is helping seniors age in place
F
or some, there’s no place like home. And home health care offers aging seniors the chance to live out their lives where they’ve been comfortable for decades. Home health companies provide a range of skilled nursing, health care and personal care services to patients in their homes. And, according to the National Association for Home Care & Hospice, a variety of forces will begin to push care away from nursing homes and drive it toward home and community-based care.
the family to provide support. His employees also go into facilities and nursing homes and provide bedside care. He says nursing homes often have one nurse for every 15 beds. “When a family member can’t be there, we provide companionship and help at the bedside,” Cefaratti says. “It’s often done in the evening hours and through the night. It’s a protection layer through the night.”
agency provide — registered nurse, physical therapist, speech therapist, occupational therapist, nutritionist, social worker, home health aide? n How much experience does someone have? How long has the agency been in business? n Does the agency conduct background checks on all staff? n Do the same staff members provide service, or do they rotate? n Is the agency certified to be paid by Medicare or Medicaid? n Are costs and payment expectations in writing? n Do staff members receive ongoing training?
n How often do staff communicate with family members and how?
TECHNOLOGY Home care combined with technology is helping more seniors age in place. Telehealth, activity
monitors, digital consults with doctors and nurses, and online social networks, combined with in-home health care professionals are helping seniors stay in their homes longer. A five-year study in 2016 from St. Jude Medical (now Abbott) found that patients with cardiac devices who used remote monitoring had significantly fewer hospitalizations and lower overall health care costs than patients who did not use the technology. “We’re trying to remain young so we can keep our clients young,” Cefaratti says. “We strive for updated websites, introducing technology to them and providing all the latest and greatest the world has to offer.”
AGING IN PLACE
THE ‘SILVER TSUNAMI’ In 2016, home health care spending totaled $78 billion as the first of the 78 million baby boomers turned 65 last year, according to a MarketResearch.com report. The “silver tsunami” is coming as the remaining boomers reach their golden years over the next two decades. At the same time, fewer younger family members are taking on caregiving responsibilities for older relatives because of the burden it places on their families. According to the U.S. Centers for Disease Control and Prevention, more than 10 million people need long-term care.
Angel Church, private duty coordinator with FamilyTree Home Care Services in Aurora, says the biggest trend she’s seen in home health care is an increase in the education agencies are providing to families specific to a loved one’s diagnosis. “They are not getting that kind of education in the doctor’s office, but there is a big focus on keeping individuals coming out of rehabilitation from going back into the hospital,” Church says. “A lot of our care is, ‘What do we need to do to keep you out of the hospital?’ Your home health care nurse also provides patient teaching and education.” The ultimate goal, Church says, is to keep an individual out of the hospital. “They will do better where they should be living,” Church says, whether that is the home, independent living or assisted living. “The objective is to prevent decline and going back to the hospital.”
AN AGING MARKET Carmen Cefaratti, CEO of Guardian Angels Family Care, says his private pay company has seen incredible growth over the five years it’s been in business. The company provides services ranging from laundry and errands to 24/7 care and end-of-life work. “The market is aging,” he says. “The need for and want for maintaining home residence is out there.” A lot of families, he says, are hesitant to put loved ones in nursing homes because of the stigma. Home health care companies can provide supplemental care, working with
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Call 440.942.4342 to schedule your visit today! WHAT TO ASK When interviewing home health care providers, seek out referrals from friends, neighbors, co-workers or medical professionals. And check references. There are a number of questions to ask: n Is the agency licensed by the state? n What services does it provide, and are they available 24/7? n What kind of staffing does the
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The Dorothy Ann-Pathfinder is an approximately 700-foot-long tug boatbarge combination that employs 14 people who live on the ship full-time. Christensen said the ship works in the stone trade and can travel as far as the Saginaw River in Michigan, but that its primary operation is iron ore shuttles. On Wednesday, March 22, the ship conducted one of those shuttles from the Cleveland Bulk Terminal to ArcelorMittal’s Cleveland plant. The iron ore it carries is a critical raw material for steelmaking. Eric Hauge, vice president and general manager of ArcelorMittal Cleveland, said in an emailed statement that Interlake is an “extremely reliable partner.” The plant depends on those deliveries of ore along the river, and it receives about one iron ore boat shipment a day. In all, the shuttle trip along the Cuyahoga River is about 6 miles long, full of tight turns and bridges, and takes about three hours. This is not a business that has been automated. Throughout the trip, second mate Dan Spoth kept watch through the windows of the pilot house, calling out distances for how far the ship was from walls and bridges. Mock stayed at the controls, watching the river in front of him, but also monitoring the many screens in the pilot house and using the radio to communicate with bridge operators and other ships. The trip takes the crew on a tour of Cleveland that most people wouldn’t see, past the restaurants and bars of the Flats, piles upon piles of rock and concrete and the sprawling ArcelorMittal plant. The trip back to the Cleveland Bulk Terminal takes place backward, Mock said, because there’s no way to turn the ship around in the river. In fact, there are few places on the Cuyahoga where large ships can even pass one another, Mock said. In the summer months, he said, Interlake isn’t the only company delivering to ArcelorMittal. And those large ships aren’t the only vessels on the water. Recreational traffic is another issue. Mock said if the deckhands and mates need to
The Dorothy Ann-Pathfinder squeezes past a St. Marys Cement boat with eight feet to spare. (Photographs by Peggy Turbett for Crain’s) Top left: Mate Kyle Joyce adjusts the line winch prior to departure. Top right: Chief steward Kay Meader prepares fresh potatoes for the evening’s pot roast dinner.
yell out to a boater who is in a bad spot, they’ll try to tell them why, so they can educate themselves. “They don’t know that they’re putting themselves in danger,” he said. “We may react in the pilot house very quickly, but the ship itself has a slow reaction time.” Other challenges include weather, the depth of the water (and whether it’s been dredged) and managing employees, especially when they have family issues to deal with at home, Mock said. For the months when the crew is working, home is the ship. Most people work two months on and one off. The CONTINUED ON NEXT PAGE
Bottom left: The Dorothy Ann-Pathfinder passes under the Veterans Memorial Bridge. Bottom right: After a 6-mile trip, iron ore pellets are offloaded at ArcelorMittal’s plant.
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Captain Paul Christensen, director of vessel operations and security at Interlake Steamship, looks over the conveyor system in the belly of the Dorothy Ann-Pathfinder.
barge is an old steamboat that was converted in the 1990s, Christensen said. Because Interlake operates its ships on fresh water, instead of the ocean, the ships don’t rust out, Barker said. But they do need regular upgrades to keep machinery running well, which Interlake takes care of every offseason. In the past decade, Interlake has been going beyond those regular updates, including repowering them to make them more environmentally friendly. Today, the Pathfinder barge is where the material being transported is stored, and many of the old living quarters have been transformed into storage. The ship needs to be able to be self-sufficient while on the water, so it needs to carry spare parts, safety supplies and food. The modern living quarters are in the tug boat, with the galley, and the crew has access to a fitness room, recreational space and
laundry. (And yes, they have Wi-Fi and TV.) On March 22, Kay Meader was serving as steward on the Dorothy Ann-Pathfinder. It’s not her regular ship for Interlake, where she’s worked on multiple vessels since 2011. She likes that, while she’s on the ship, her job is all she has to worry about. And the crew “becomes family,” she said. Mock expressed a similar sentiment, joking that there’s a lot of gossip and no secrets. A lot of the crew members have been working together for years, he said. It’s clearly not your traditional job. And that seems to be the appeal. Mock, who grew up on Kelleys Island, said he likes working with his hands and couldn’t imagine commuting to a city every day. “Look at my office,” he said, gesturing to the scene around him. “I’m always on the water. I couldn’t imagine not being on the water.”
area saw a 24% increase in permits, to 162 in 2016 from 131 in January 2015. In the Akron MSA, builders pulled 71% more starts this January — 48, compared with 28 a year ago. Stephanie Termine, vice president of new home sales for Keller Williams Greater Cleveland, said the regional homebuilding market has been boosted by the resurgence of existing home sales, where the constant refrain is about a shortage of inventory. “The ability of people to sell starter homes or move-up homes allows people to buy new homes. Their confidence is starting to come back,” Termine said. “Just two years ago, people were struggling to sell their homes. Now there are a lot of hot markets where buyers have the confidence to go under contract without having their home sold.” She said the homebuilders that Keller Williams works with are rushing to get more model homes available and are looking to expand their offerings from last year, when a lack of inventory slowed their sales activity. At a Pepper Pike subdivision Keller Williams is handling, there is a waiting list of more than 20 people eager to see the first models of a new duplex townhouse development in which units will cost about $500,000 apiece. Termine also is seeing homes sell at a pace faster than any time in the past 12 years she has been in residential realty brokerage. “At Battery Park (in Cleveland’s Detroit-Shoreway neighborhood), we’ve sold five townhouses,” she said. “We’re building as fast as we can, and they sell. This phase (of 17 townhous-
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es) may be done by the end of May.” Annual statistics also bear out the continued resurgence of single-family homebuilding. In the Cleveland-Elyria MSA, permits were taken out for 2,653 homes last year, up 6% from 2,505 in 2015, according to Census data. In the Akron MSA, 570 singles were started in 2016, compared with 438 in 2015, a hike of 30%. Even though it’s up, the market remains anemic compared to periods prior to the housing bust. For instance, permits for 6,601 homes were issued in 2003 in the Cleveland-Elyria area and 2,730 were issued the same year in the Akron MSA, federal data show. However, the table is being set for a quicker pace by land development projects such as that in Amherst and other outlying parts of the region. Girard, Ohio-based Universal Development, a specialist in building apartments and condominiums, won approval last December in Stow to start a 220-unit townhouse development on a 70-acre site off Gilbert Road. If anything shows builder confidence, that does; over-building of townhouses and condos before the housing bust took years to rein in. National builders, who typically have corporate sources for financing development of new subdivisions, are particularly busy. K. Hovnanian Homes, a Red Bank, N.J.-based builder with a big Northeast Ohio presence, has opened three communities across the region this past year, in Avon, Lorain and Streetsboro. “This is going to be an exciting year for K. Hovnanian in Northeast Ohio,” said Derek Lewallen, Ohio marketing manager for the builder. Brady noted he used to compete with Ryan as a homebuilder, but now sells the national firm land and
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builds homes on a custom basis, as well as pursuing commercial real estate deals in Lorain County and Cleveland’s western suburbs. Although financing has loosened up, Brady said it remains tough for local land developers to get it, which constrains the supply of lots for builders. “We’re using private financing or land owners are participating in financing land development,” Brady said. “In the past, knowing how to do it and a track record was enough, but not now.” David Sharkey, president of the Ohio City-based Progressive Urban Real Estate residential brokerage and a partner in Civic Builders, said the lack of inventory in Cleveland and inner-ring suburbs is challenging for people seeking homes. “People keep waiting for the magic house to come on the market,” Sharkey said. “But so are 20 other people. Finally people are realizing they can build something and get in the place they want to be. Finally, over the past month, I’ve been able to get people interested in new construction.” Competition for well-located and executive home rehabilitation projects has created situations where the per-square-foot price has on occasion surpassed $193 — about the same price as new construction in Westlake. If builders could finance construction of speculative homes on the near West Side, he said, he’s confident they would sell. The other sign that builders are getting more aggressive is that HBA Greater Cleveland plans to hold its first Homearama in a decade. Plans call for four homes costing about $1 million apiece to go into the dream home show site at Barrington Estates in Aurora.
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AKRON
Akron’s economy seeing a nice rebound By DAN SHINGLER dshingler@crain.com @DanShingler
Akron’s doing just fine. That’s not the opinion of just anyone. It’s the take of John Augustine, chief investment officer of Huntington Bank’s private client group. Augustine was in town Wednesday, March 22, to speak to wealthy clients of the city’s largest bank. Akron has become very important to Huntington, thanks to its 2016 acquisition of FirstMerit Corp. and its $25 billion in assets. Augustine told clients, and then told Crain’s, that Huntington is pleased to see that the Akron area is faring well and, in fact, is doing better than Northeast Ohio’s other large cities — with a lower unemployment rate and prospects for more growth ahead. “In Akron, our unemployment rate starts with a 4 (4.9%), which is where the national rate is. Cleveland, Youngstown and Canton all have rates that start with a 5, so arguably we’ve come back better,” Augustine said after his presentation. One reason for that, Augustine said, is the fact that the Greater Akron area has a strong and diverse mix of businesses for a city its size, including companies like Diebold Inc. and whole sectors, such as polymers and plastics, that require a lot of high-value employees in research and engineering to succeed. “Our having higher tech industries is definitely helping us,” Augustine said. Akron was doing well just before the Great Recession landed but was
hit harder by the economic downturn than most cities, Augustine said. That was evidenced by a stall in the city’s downtown development that has only recently seemed to regain traction. However, the city also has rebounded from the recession faster and with more vigor than most other places in terms of jobs and other important economic statistics, Augustine said. He points not just to the city’s relatively low unemployment rate, but the fact that it got that rate primarily by adding jobs, about 23,000 of them since 2010. During that same time, the median value of a house in Akron increased by about 20%. Though that value is still too low at about $120,000, it’s a significant improvement, Augustine said. Augustine isn’t the only economy-watcher who thinks Akron is doing well. Ned Hill, an economist with Ohio State University and former dean of Cleveland State’s Levin College of Urban Affairs, thinks the city is faring well, too. “People are discovering that Akron is a nice place now, huh?” Hill quipped, coincidentally as he was also driving to Akron to give a talk at ConxusNEO’s conference about manufacturing jobs. Like Augustine, Hill said Akron continues to benefit from having one of the top polymer and chemical engineering schools in the University of Akron — and from its proximity to a vibrant Cleveland market — but it’s also benefiting from some other trends. They include a move on the part of automakers to use more suppliers
“In Akron, our unemployment rate starts with a 4 (4.9%), which is where the national rate is. Cleveland, Youngstown and Canton all have rates that start with a 5, so arguably we’ve come back better.” — John Augustine, chief investment officer of Huntington Bank’s private client group
near their large assembly plants, many of which are in the Midwest and close enough to make Akron a desirable location for supply-chain participants, Hill said. At the same time, having cheap natural gas produced locally means those same companies already have lower energy costs than many of their competitors elsewhere, Hill said. Now the challenge will be for Akron to build upon its successes. On that front, Hill and Augustine see a few threats, but also opportunity. On the threats front, there is the loss or potential loss of corporate headquarters and the high-paying executive jobs that go with them. The city already lost FirstMerit to Huntington and Akron General Health System was taken over by the Cleveland Clinic, but the real risk for the future is the potential loss of FirstEnergy. Hill said he thinks the company is facing an “existential threat” from the energy markets and could be bought by another utility at some point. That would eliminate a host of headquarter jobs, from FirstEnergy
CEO Chuck Jones down to middle management. “Chuck Jones alone is probably worth 40 to 50 manufacturing workers in terms of city income taxes,” Hill said. But the city has other factors that could play into its favor as well, including a resurgence of the U.S. shale-drilling industry that many hope will play out in Ohio’s Utica play this year. That would mean increased economic activity from nearby drilling for Canton and Akron, and it would likely result in still lower energy costs for local manufacturers. “Generally, the guy with the lowest-cost energy wins” when it comes to competing in the manufacturing sector, Hill said. Perhaps more importantly, the shale industry has sparked renewed activity around building several ethylene cracker plants in and around Ohio to make polyethylene for the plastics industry — including Shell’s $6 billion cracker now in the works along the Ohio River in Pennsylvania. The development of those plants
could not only bolster the fortunes of Akron’s existing plastic operations, but expand them and attract new ones as well, Augustine said. And, finally, Akron might even get some benefit from Donald Trump becoming president — if, that is, Trump follows through on his promise to spur as much as $1 trillion in U.S. infrastructure investment. With a federally mandated $1.6 billion sewer project in the works, Akron most certainly could use some help on the infrastructure front, and Augustine said he’s hopeful the city will get it. “The last fiscal program really focused on roads and bridges. We don’t know, but we suggest that this administration will be more focused on utility-based infrastructure … So yes, that should be on the table, and we hope it is on the table,” he said. But Hill said he’s watching one thing very closely in terms of gauging the prospects of manufacturing towns like Akron: the value of the U.S. dollar. If the dollar goes up in value, that makes for tough sledding on the part of U.S. manufacturers. But if it falls against other currencies, it would give them a price advantage. Ironically, over the past six months or so, one foreign currency important to American manufacturers has been dropping precipitously in value: the Mexican peso. If that’s not fixed, it will make it tough for the U.S. to compete with cheap labor and a cheap peso at the same time, even with protectionist measures. “Picking a trade war with Mexico is somewhere between delusional and dumb,” Hill said.
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Drone maker Event 38 spreading its wings By RICHARD WEINER clbfreelancer@crain.com
While the skies become increasingly populated with drones and the industry continues to grow, Akron drone maker Event 38 has seen its sales increase and is expanding into new services. Jeff Taylor, founder and CEO of Event 38, said that the company has been “growing, expanding from just selling the hardware to providing software analysis services, data post-processes, driving data into a map, creating 3-D models, and providing other analytic services.” Military drones, commercial drones, delivery drones, hobby drones — they’re all filling the sky. Event 38 sells most of its drones to people who need data from large tracts of land — people such as farmers who want to track their crops’ spread and density to surveyors creating municipal planning maps. The company makes fixed-wing commercial drones, about 3 1/2 to 4 feet in length, that can hold sophisticated cameras, heat sensors and other technology. The machines can fly for 90 minutes, Taylor said. Event 38 drone bodies are made of a foam that resists breaking on impact and are sealed by heat, making them almost extremely repairable, he added. Event 38’s two basic drone models sell for between $2,500 and $4,000 or so, depending on equipment. The basic foam drone body is manufactured overseas, and then the drones are assembled in the company’s Akron facility by a staff of eight. Those
Jeff Taylor brought his drone company, which sells its products all over the globe, to Akron in 2013. (Contributed photo)
prices can undercut the competition from 50% to 90%. The company is able to keep the costs down by using commercial offthe-shelf parts, Taylor said. He said those parts are much less expensive and just as good, if not better, than the carbon fiber and other aerospace parts used by competitors. Event 38 recently expanded its product line by adding both a smaller and a larger drone model. But the expansion doesn’t end there. Now that the company has established its durable products — it has hundreds of customers around the
globe, Taylor said — it’s looking toward services and newer technology. “We are moving into technology development that we hadn’t touched before,” Taylor said. Event 38 is starting to look at automating the data transfer of its drones, something that has been a goal for a while, he said. “We’ve always had drones, and more recently we developed the post-processing software capability,” he said. “We were missing the middle link that tied the two together, so that operators can just take their drones back to the office and it will upload its data automatically to be pro-
cessed. … I think that’s a big breakthrough for us.” Event 38 already has hired a support person to deal with expected higher volumes as the farming season kicks off. Taylor sees the future of the drone business, or at least Event 38’s niche in it, as moving toward ease of use and operation by professionals who aren’t familiar with remote sensing, mapping or geographic information systems data handling.With a degree in aerospace engineering from Case Western Reserve University, Taylor always has been interested in drone technology, he said. He worked for a short time at SpaceX in California and then for a company in San Diego, where he worked on both the hardware and software for unmanned aircraft. He began testing his own drone designs in parks in Southern California, eventually coming up with a design that he began to sell online. In 2013, he returned to his native Northeast Ohio and began his business in earnest, sharing space with Tiny Circuits in Canal Place in downtown Akron. Event 38’s name comes from the title of a NASA project Taylor worked on at SpaceX. Since its inception, the company has maintained a steady growth tract, selling “hundreds” of drones a year and averaging 25% growth in gross revenue year over year, Taylor said. He declined to discuss the company’s financials in further detail. Most of his customers are farmers who need to survey their land and other land owners, such as quarries, that need to create various inventories. But there are a few fairly exotic
uses of Event 38’s drones around the world. Chet Walker of Archaeo-Geophysical Associates LLC in Austin, Texas, said he was one of Event 38’s “earliest” customers. He uses the drones for large-scale archaeological mapping. “We use drones for everything,” Walker said. “We have had them at 14,000 feet in the Andes (Mountains) and used them to map all of Wake Island (in the Pacific Ocean) looking for World War II artifacts.” Walker said he thinks he has also “crashed more drones than anyone. Just Gorilla Glue them, and off they go.” In the jungles of the Amazon, the nonprofit organization WeRobotics uses Event 38 drones to deliver medicine to tribes in need of rapid delivery, especially of antivenins. Patrick Meier, who heads WeRobotics, said that his use of Event 38’s drones in the jungle has paid positive dividends for the health of rainforest residents. The area experiences 45 snake bites a month and needed an efficient way to send antivenin into the forest, sometimes up to nearly 25 miles away. Enter the drones. “A regular boat (canoe) takes up to six hours to complete the journey,” Meier said. Our (Event 38) drone took around 35 minutes.” Other applications for Event 38’s drones are limitless, said Taylor, who added that the company’s next steps will be to “add long-range drones and satellite controls.” For now, he said, “I am happy about the way that this is going.”
For a single day, Akron will become Hacktown By JUDY STRINGER clbfreelancer@crain.com
An estimated 300 Northeast Ohio college students will pull an all-nighter in Akron on Saturday, April 22, but it has nothing to do with finals or parties. It’s a hackathon. For 24 hours straight, teams of collegians will attempt to create inventive technology-inspired solutions to a problem of their choosing at the inaugural HAkron event, held at the Bit Factory inside the downtown building of the Akron Global Business Accelerator. And it happens to be one of two Rubber City hackathons that day. About eight minutes north at the offices of WhiteSpace Creative, there will be a different sort of hacking taking place as area professionals collaborate to find solutions — tech and otherwise — to three of the city’s most pressing issues at the second Hack N Akron event. Oh, and there is one more big difference, noted Courtney Gras, executive director of Launch League, the organizer of Hack N Akron: Its hackers won’t be missing out on any Z’s. “We work from 8 a.m. to 8 p.m.,” Gras said. Hackathons are popping up across the county. Far from the nefarious activities often associated with the word “hack,” these events are about problem-solving, according to Elissa Peters, a sophomore at the University of Akron and the marketing chair for
the student organization HAkron, which is planning the April 22 event of the same name. Most of the student-run hackathons, including HAkron, are technical in nature. The term, however, also is used more broadly to include any gathering of people committed to finding new ways of solving old problems, she said. Having two such events in Akron on the same day is not entirely by chance. “We did sort of strategically plan to have them on the same day, knowing it would sort of create a little more buzz that way,” Gras said.
Student-driven HAkron is the University of Akron’s first hackathon built and organized entirely by students. Think of it as a “real-time science fair,” Peters said. “Students from all over come together with a problem in mind and how they are going to solve it utilizing their computer science and engineering skills that they learned in the classroom.” Popular projects involve the development of phone apps and websites. At a recent hackathon, she said, one team built an app that would turn a cellphone into a wireless computer mouse. HAkron is a sanctioned Major League Hackathon event. Each year, the organization provides hardware labs and know-how for 200 weekend invention competitions that include
more than 65,000 students around the world, according to its website. The same weekend of HAkron, MLH events will be held in seven other college towns. Other HAkron collaborators include the Bit Factory, UA’s Experiential Learning Center for Entrepreneurship and Civic Engagement, the nonprofit venture development organization JumpStart Inc. and Akron-based TinyCircuits. TinyCircuits owner Kenneth Burns said about half of his eight-person team are UA students or grads. HAkron sponsorship, he said, is a great way to give back and strengthen the company’s “close connection” to the local technology talent pool. Peters expects about 300 students from colleges all over Northeast Ohio to participate in the inaugural HAkron. The organization has worked closely with its counterparts at Kent State University, which hosts an annual hackathon that attracts about that number. HAkron currently has 50 team applications. Each team includes two to four students. Teams can register at hakron.io. After 24 hours of “pure hacking,” Peters said, the teams will get the opportunity to demo their projects in front of judges. Prizes will include a variety of tech merchandise as well as bragging rights. Bit Factory co-founder James Hilton is eager to see Akron’s first student-driven hackathon unfold but readily admits he is not prepared for the long haul.
“I don’t know if my body can handle 24 straight hours, but I will be there for a majority of it,” Hilton said.
Civic matters Just north of downtown on Furnace Street, meanwhile, four dozen civic-minded professionals will be cooperating — rather than competing — as part of Launch League’s second Hack N Akron, organized in partnership with the city of Akron. “Last year, we maxed out registration within 24 hours and had Mayor Daniel Horrigan open the event,” Gras said. “Needless to say, this will definitely be a high-profile venue for Akron.” The second installment of Hack N Akron will tackle two issues carried over from the first meeting in September: providing digital platforms to make city data easily accessible, or “open data,” and working to brand the Akron’s diverse neighborhoods. Plus, this go-round adds a new challenge involving bookings at the city’s community learning centers. Gras said the goal of the Hack N Akron events is to “chip away” at some of the city’s big problems, 12 hours at a time. With neighborhood branding, for example, Hack N Akron addressed Goodyear Heights and Highland Square in September and will move on to Middlebury and North Hill this month. “Likewise with open data, it is a really big issue to attack and not some-
thing you are going to finish in a 12hour period,” she said. “But it is something where we can begin to see really great tangible results when we kind of chip away at solving these issues for the city.” Hack N Akron participants include technical types, and creative and communication specialists. The technical groups focus on software development and building out websites, while the creative contingent develops branding concepts and the looks of the websites. With the inclusion of the newest challenge to the hackathon, Gras hopes to attract even more participants from the small business and arts community who may be keen on having better access to public spaces. Those interested can sign up at launchleague .org/hacknakron. “A couple of years ago, a lot of the Akron Public Schools were branded ‘Community Learning Centers,’ ” she said. “They are basically schools, but they are available to be rented and used by community members, so these are pretty affordable community spaces.” Up to this point, however, the booking process has not been online, nor have calendars for those spaces been readily available. Hack N Akron plans to change that or at least take a major step forward in developing a solution. It, like open data and neighborhood branding, may be continued to the next hackathon, tentatively planned for October.
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Zubizarreta House is big step for spinal cord treatments By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre
Miguel Zubizarreta, retired chief technology officer at Hyland, walks through the project house that he funded. (Dennis Crider for Crain’s)
Kevin Kilgore is still coming to grips with the fact that his dream of 10 to 15 years has become a reality in a matter of months, thanks to a chance encounter and a very generous donor. From his office on MetroHealth’s Old Brooklyn campus, Kilgore, a biomedical engineer and researcher at MetroHealth, has watched construction progress on the Zubizarreta House, a home for patients with spinal cord injuries to stay while receiving
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treatment from him and his colleagues. “For years, it was just such an outthere idea that didn’t seem like it would ever come to pass,” said Kilgore, who has for years been eyeing old homes that he hoped to renovate into an accessible solution for out-oftown patients. Kilgore is part of a research program at MetroHealth that has been studying the use of functional electrical stimulation (FES) to return some function to paralyzed patients and give them increased independence. The fully accessible facility is named after Miguel Zubizarreta, the retired chief technology officer at Westlake-based software company Hyland, who has almost entirely funded the project. The house, at 3111 Broadview Road, has a large common area and five suites, each of which can accommodate a patient and a caregiver who usually travels with them. The rooms are bright and large, with plenty of space to maneuver a power wheelchair, and motorized lifts and roll-in showers are incorporated into the design. Zubizarreta hopes the home will help Cleveland make a name for itself in the research-related spinal cord injury treatment available only at MetroHealth. Construction began in August, and officials expect to start hosting patients there in May. “The bricks and mortar, it gave me an opportunity to play architect and have some fun,” Zubizarreta said to a room of MetroHealth executives, foundation board members and other stakeholders gathered for a ribbon cutting at the new home on Thursday, March 23. “It’s really Dr. Kilgore and the entire team working with the FES solution. That’s the hard part. That’s the brilliance. That’s the real contribution.” Patients from around the country want to come to MetroHealth for the treatment, Kilgore said, but bringing a patient with limited mobility to Cleveland for the work is nearly impossible. There’s traveling to Ohio, transportation to the hospital, lodging and more. Even accessible hotels didn’t meet patients’ needs, Kilgore said. Grab bars in the bathroom aren’t helpful when a patient doesn’t have use of his or her hands. In MetroHealth’s first Think Tank competition in 2015, Kilgore pitched his idea to build an accessible, bedand-breakfast style home. He was one of three winners awarded $100,000 from MetroHealth. Fortunately for Kilgore and for MetroHealth, Zubizarreta was a judge. That same day, he wrote a $500,000 check for the project. “When I was sitting there, and I had met Dr. Kilgore, I immediately realized how a small piece of infrastructure was really what was preventing this from really taking off,” he said.
Another pretty quick realization: MetroHealth faced far more barriers in the path to building this project. “I could buy a piece of property because I wanted to,” said Zubizarreta, a graduate of Case Western Reserve University. “I could demolish the building because I wanted to. I could build something up because I wanted to. I could just accelerate (and) take years off of this project.” And so he did. By the time he’s done, he will have contributed more than $1.6 million to build the home, he said. Asked why he continued to fund the project, Zubizarreta answered matter-of-factly: It would have been “unfortunate” if he had made the first donation and the project was ultimately unsuccessful. He plans to hand over the keys, donate the structure to the MetroHealth Foundation and transfer the property to MetroHealth within the next couple of months. The new home means that patients from around the country will be able to come for the treatment and know they have a place to stay. The home is set up for their needs and free to the patients, thanks to grants, Kilgore said. The other piece, which he’s even more excited for, is that patients effectively can move to Cleveland for a few months during the treatment. There’s downtime when patients are practicing things at home, but also a lot of back and forth for training and testing. Maria Sutter is familiar with the back and forth. After sustaining a spinal cord injury in 2004, she moved home to Ohio from New York City and connected with the FES Center, a team of researchers, engineers and clinicians working to develop solutions for individuals with neurological or other muscular skeletal impairments. She received an upper-extremity hand implant in 2007, thanks to what she calls a series of fortunate encounters — her sister learned of the treatment through a local professor, and her therapist had worked with the upper-extremity treatment. And the latest fortunate encounter was that with MetroHealth, Kilgore and Zubizarreta. “It’s time for this technology to grow, and I lucked out,” said Sutter, whose half-hour trip to MetroHealth made her treatment and process relatively easy. “But for it to grow, there has to be wider interest in participation, and I think that’s what this house is going to be able to provide, so that people don’t have to have these fortunate encounters like mine.” Cleveland is at the forefront with this technology, Zubizarreta said, and there’s no reason to concede that somewhere else can do it better. This house, they all hope, is a great step forward in Cleveland’s chance to be a leader in another area of health care.
The Zubizarreta House at 3111 Broadview Road has five large suites that can each accommodate a patient and a caregiver.
CRAIN’S CLEVELAND BUSINESS
Source Lunch Michelle Venorsky
Founding partner, Hello LLC
Hello LLC’s humble beginnings are rooted in front-porch staff meetings and huddle sessions at local coffee shops. ¶ Four years later, the self-described “engagement agency” that specializes in public relations and social media remains intentionally cozy as its staff of eight now sits around a single conference table at its Chagrin Falls office. ¶ A veteran of the local PR scene, Michelle Venorsky wanted a more intimate environment following her departure from marketing giant Rosetta and, before that, a lengthy tenure with Marcus Thomas. ¶ Crain’s recently chatted with Venorsky about the pace of working in a boutique agency, how the industry has changed and why the entire Hello staff is required to go through mandatory Pearl Jam training — yes, as in the ’90s alt-rock giants who will be inducted into the Rock and Roll Hall of Fame in early April. — Timothy Magaw
Five things The ‘do not play while Michelle is in the office’ list Nickelback, Creed, Celine Dion and any boy bands. Those are the big ones.
Big appetite “I love food, going out to eat and cooking. All aspects of food. I come from a big Italian family, so food and wine. They just go together.”
The perfect home-cooked meal Bucatini all’Amatriciana — bucatini, fresh cherry tomatoes, pancetta, red pepper flakes, onion and olive oil
Table games Her oldest child will eat anything — from sushi to Indian. Her youngest? “It’s like negotiating world peace just to get her to eat something.”
Biggest influence “Ironically, the person who fired me from Rosetta. If he wouldn’t have done that, or if I would have followed their wish and made changes to my team I didn’t agree with, Hello wouldn’t be here. I’ve thanked him for that.”
Lunch spot Gamekeeper’s Taverne 87 West Street, Chagrin Falls
The meal Stockyard sirloin salad with romaine, tomato and white balsamic dressing; the other had the southwest chicken salad with local greens, cherry tomatoes, cotija cheese, salsa and cilantro lime dressing.
The vibe A mainstay in the charming Chagrin Falls community, the cozy eatery highlights seasonal ingredients and boasts roaring fireplaces and wood-paneled dining rooms.
The bill $39.98 with tip
Where did the name Hello come from? When I had this idea for the type of company I wanted to create, I was taken back by how many people were caught up in the various social media du jour and jumping on every bandwagon — or the opposite, hiding in the corner with their head covered. I felt the answer was somewhere in the middle. Regardless of what tools are at our disposal, at the end of the day we are talking about building relationships. And a relationship between a brand and its consumer is no different than any relationship we have in our personal lives. We all know the building blocks to making strong engagements and relationships. They all start by introducing yourself and saying hello. And it was my husband, Jamie, upon hearing me share that, who said, “A-ha, there’s your company name.” So, why you did you ultimately start your own shop? At Rosetta, people like me were brought in to sell the client, then they never saw me again. The junior team would come in and do the work, and somewhere along the way I realized that stopped being fun. I missed doing the work. So, I started this with nothing. I didn’t even have a laptop. I started this from my couch, and luckily Cleveland is a small town, and I never pissed anybody off along the way, so I reached out to former colleagues, clients and agencies and told them what I was doing and offered to help. I ended up getting a client, then another, then I brought in a partner, and today we have a team of eight with 30-some clients. How does it feel to be the leader of such a small, but mighty, team? Refreshing. I know this isn’t for everybody. We all work at one communal table. Some people like bigger and want their own space. But especially coming from the world of Rosetta, which was so impersonal and so big, it’s nice to be in an environment that matches my personality. We all work on every account together. It’s more personal that way, and the work is better. There really aren’t a lot of layers to go through. You mentioned you’re very selective about which clients you take on. Why is that? If we were going to create the company we wanted to, we knew we had to be intentionally small. And as
much as prospective clients are interviewing us, we’re interviewing them right back. If we sense any red flags at the beginning that this might not be a true partnership, we’ll walk. And we’ve said no to some big brands — even early on. People would ask us what we were doing, but we said if we didn’t do that now, then it’ll eat away at who we are and what we stand for. Culture seems really important to you. I can’t compete with the larger agencies on a lot of things, but I knew I could create one hell of a culture. If we’re doing well and the employees buy in, they’ll feel pride and ownership. When we do well, we share our profits with our employees. Every month we have a staff outing, we bring in lunches most days and on Fridays they can work from wherever they want. Everyone genuinely likes each other, and we celebrate our wins together and feel our losses together. There’s a real sense of camaraderie. Part of the culture, I understand, involves mandatory Pearl Jam training — something I can appreciate. Tell me more. I said something about Eddie Vedder once, and our first hire actually said, “Who is that? An old boyfriend?” She had no idea. I can only control so much, but they had to at least understand good music. Now anyone at Hello can tell you who Eddie Vedder is. Favorite Pearl Jam song? “Unthought Known,” hands down. There’s a great quote in it — “Dream the dreams of other men, then you’ll be no one’s rival.” That really speaks to how we got started and about how we’re all in this together. A rising tide lifts all boats, right? At first, when I reached out to other agencies and told them what we were doing, they gave me work they couldn’t do. Everybody was so collectively helpful. That’s one of the great things about being an entrepreneur in Cleveland. You mentioned you wanted to do this for 10 years and bolt. Why? Because I can. If I’m in a situation and we continue to do well and I can be out by the time I’m 50 or at the latest 55, why not? I’d love to leave the company to a partner, and the employees and see it continue under someone else’s leadership.
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sider intel
MARKETING, ADVERTISING & EVENTS INSIGHTS.
Today’s Tip: To make a lasting impact, consistently get in front of your audience.
A long-term marketing campaign ultimately will prove most effective and show the greatest results. Regardless of if a campaign focuses on one type of custom content or if it includes a mix of advertising and event sponsorship, the end goal should always be to regularly communicate with potential clients and partners.
Amy Ann Stoessel Managing editor, custom and special projects Crain’s Cleveland Business astoessel@crain.com
How Crain’s can work for you: The Crain’s Cleveland Business advertising team and Crain Content Studio – Cleveland can work with you to design a program that matches your needs and goals. CONTENT
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THE POWER OF BIG DATA FOR BUSINESS
M
odern society is awash in big data. Because of big data, machines can drive cars. Doctors can care for remote patients who are using wearable technology to monitor their health and stream the information into hospital electronic medical records. Mobile devices alert their owners to severe weather, the communicatio n of which was generated without any kind of human interpretation.
“We’ve only just begun. We’ve created more data in the last two years than in all of human history combined,” said Lev DigitalC, a Cleveland-base Gonick, CEO at d civic tech collaboration. “If you think about where we are with big data, we’re in the bottom of the first inning.” The tech industry is buzzing about the ground swell of big data. But what does that mean to businesses and other organizations, and how can they harness big data to make better decisions and strategic moves? Organizations that want to corral the power of big data should not focus so much on the sheer volume of data they possess, but what they want that data to convey, local tech industry experts say. “When I think about big data, it’s more about context and creating intelligence,” Gonick said. “Whether we’re running a business, the government or a nonprofit, we may have this great lake of data, we create pools of intelligence? but how do If you can’t measure it, it’s hard to manage First, map out key work it.” or product flow organizations questions during the to learn about how to data discovery process interpret data analytics. At one and consider your available local hospital, for data sources, he example, said. Then determine analysts and administrators what issues you want discover to how to improve solve — whether it is the patient experience improving productivity while reducing post-operative or determining how to make good land patient stays. acquisitions that drive “That’s a data question,” economic Gonick said. DigitalC “Start with the questions. development. The data will Northeast also is using big data to improve follow,” Gonick said. Ohio’s infrastructure and quality of life. In one example, To that extent, DigitalC conducts boot partnered DigitalC has camps for government with the Cleveland Water and health care Alliance to create a robust data set that will give the
MONETIZING BIG DATA
Gartner Inc., a global information technology research and advisory estimates that approximately company, 6.4 billion devices were connected in 2016. That number is projected to surge 225% by 2020, to some 20.8 billion devices. Indeed, many organizations are preoccupied with how to best monetize the data pulsing through the consumer and business world. The key is selling the story.
Health care data aggregators may sell their data to hospital systems or insurance companies that want to determine how to save money and generate increased revenue. “In order to monetize Strain data, you have to be able to take complex data sets and standardize them,” said Tom Strain, director of business intelligence at OEC. “You want to be able to data so that you’re making funnel big it consumable. You have to be able to deliver a compelling
TO READ PREVIOU S TECH MATTER GO TO crainscle S STORIES, veland.co m/techma tters.
group insight into the quality and quantity of Lake Erie’s water. Meanwhile, by looking at a wide aperture of patient data longitudinally, IBM Watson Health is helping its health care system clients APRIL 24-28 determine how to best manage patients with Presented by OEC, this chronic diseases, said series is full of tech engineer Douglas Meil. events and programs that support and promote “We’re integrating data from electronic Northeast Ohio’s vibrant medical records sources tech community. The week’s highlights include and claims data, and constructing a an Innovation Event variety of registries in partnership with the for Health Tech Corridor; our customers so they an Enterprise Tech event, can figure out how to with forums discussing improve patient care big data, cybersecurity and and quality of life,” said the Internet of Things; Meil, who co-founded several presentations by Explorys, a Clevelandsoftware developer bootcamp based health care analytics organizations; Women software company in IT; and the signature that IBM acquired in event, the Best of Tech 2015. Awards, which celebrates Organizations that are regional accomplishment considering integrating s in tech. a big data solution into The weekend before and their operations should after Tech Week will make sure they first improve include GiveBackHack their data security, Cleveland, which brings said Robert Eckman, chief together forward-thinking information security citizens officer at MCPc, a Cleveland-based trepreneurs, venture capitalists, with social entechnology and nonprofit and consultancy and integrator. business leaders who will work together on inventFirst, perform a data ing products or services classification effort to that can positively impact determine where your Cleveland. The weekend special data reside and after Tech Week will include the NASA Space how they may need to Apps Challenge at Glenn be protected based on Research Center. During risk to the organization. this week, the Medical Capital Innovation Competition Of specific regulatory interest are sensitive health care big data innovators will award winning data such as payment with cash prizes, card funding, mentoring and protected health information; information; potential access to Cleveor personally land’s three largest health identifiable information, systems (applications he said. are due March 31). Events “These may require also include a Linking that a higher level of IT Talent to Opportunity protection be applied career to mitigate the risk of velopment event; IT Speaker and professional dethis data being breached,” Series, and Employer Eckman said. and Student Speed Networking; Next, create an information TechPint; and a Passport to IT Careers that spells out to employees security policy Day at the Global Health Innovation Center. Info: how to treat sensitive or confidential Techweekneo.com. data. “Organizations should consider an enterprise-wide data loss protection solution be implemented that mirrors your data security policies and monitors CALEND your data by flagging AR OF any potential breach, like unwarranted access to a company’s intellectual property,” he said. Evaluate regulations that impact your MARCH 30 industry. Incorporate these requirements Startup stories: 5:30 into the big data design. to 8:30 p.m., BottleHouse Brewing Co., 2050 Finally, implement Lee Road, information Sip on one of this taproom’s Cleveland Heights. training to raise organizational security small-batch brews while drinking in insight awareness from seasoned Northabout data protection. east Ohio entrepreneurs who will talk about “These are a few best how to think locally in terms practices that can of accessing help secure big data,” resources, while keeping your Eckman said. eye on global growth.
EVENTS
story of what the data is telling us through visuals like infographics, charts Strain says data aggregators or graphs.” and consumers should be aware of misinterpretation. “As we forge ahead and slice and dice big data, we’ll want to make sure that the critical stewards of this data — providers — are disseminating the data the data in an ethical way,” Strain said. “You may have two companies with the but they’ll tell two different same data, stories. It comes down to making sure you are gaining insights from reputable sources, and that a factual story is being told.”
Info: jumpstartinc.or g/events/startup-storiesliving-local-thinking-global
APRIL 6
Ohio Venture Association Summit: 8:30 a.m. to 1:30 p.m., MOCA, 11400 Euclid Ave., Cleveland. This year’s event will help startups think both locally and globally. The summit includes founders, investors and startup community members from throughout Northeast Ohio and outside the region. Info: nvite.com/ OVAVenture2017/e16d
APRIL 23-24
BioOhio annual conference: Great Lakes Science Center, 601 Erieside Ave., Cleveland. This conference recognizes growth in the bioscience sector, from medical devices, lab equipment and regenerative medicine, to alternative fuels and digital health. Info: Bioohio.com
A PRODUCT OF
CRAIN CONT ENT STUDIO C l eve l a n d
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