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BUSINESS M A G A Z I N E Manufacturer & Business Association

Newly Renovated Eastside Medical Center Sets New Standards in Medical Care / Page 12

VOLUME XXVI, NUMBER 3

MARCH 2013


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March 2013

EDITORIAL >

FEATURES >

How health-care transparency is benefiting both consumers and employers alike.

The Manufacturer & Business Association explains what it is doing to answer the question: What does ObamaCare mean to your business?

9 / Health Matters

STEPHEN E. PERKINS, MD

11 / Legal Brief

3 / For What It’s Worth

What you need to do to protect commercial 5 / Risking It All real estate from the Takings Clause of the Frank Lundy III, chief executive officer of 5th Amendment. Lundy Construction Company, talks about JOHN PERSINGER the history and success of this 80-year-old family owned business headquartered in 15 / Financial Adviser Williamsport, Pennsylvania. Understanding the difference between 12 / Eastside Medical Center public and private exchanges. Health-care professionals explain JOHN M. BONGIOVANNI, CFP, CLU, CHFC how the newly renovated Eastside 17 / Business Management Medical Center — part of the multispecialty group practice Medical Associates Why you should think about transition of Erie, the Clinical Practices of LECOM — planning for your business. is setting new standards in the delivery JOE BIONE & STEVE FINDLAY of medical care.

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21 / On the Hill Guest columnist U.S. Senator Pat Toomey, R-Pennsylvania, answers some tough questions on the economic issues that the country is currently facing.

< SPECIAL REMINDER

Daylight Saving Time begins at 2 a.m. Sunday, March 10. Download your FREE Time-Change Poster from the Members Only section on www.mbausa.org!

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Read on the Go! For the most current Business Magazine updates, visit our website, www.mbabizmag.com, fan us on Facebook and follow us on Twitter! March 2013 > www.mbabizmag.com > 1


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For What It’s Worth

EDITORIAL > Contact: Karen Torres

VOL. X X VI, NO. 3 MARCH 2013

Blue Ocean Strategy Center

Manufacturer & Business Association Board of Governors

What Does ‘ObamaCare’ Mean to Your Business? The Manufacturer & Business Association is a not-for-profit employers' association with more than 4,500 member companies in Pennsylvania, New York and Ohio.

Editor in Chief Executive Editor

Right now there are thousands of consultants of all sizes, expertise and interest attempting to respond to the question: What does “ObamaCare,” formally known as The Patient Protection and Affordable Care Act, mean to your business? The fact is, they don’t know. The reason they don’t know is because the federal government has yet to publish the final rules and regulations that will be necessary to obtain and provide answers to critical questions that will help businesses comply with the new health-care law. Equally important, these answers are needed to help employers understand the economic implications of the new law. However, even the deadline for employers to notify employees of the availability of Health Benefit Exchanges has been delayed from March 1 to late summer or fall 2013. The Manufacturer & Business Association is not a consulting firm. We are a business association, and our job is to provide factual information and solutions that will help you, our members, understand and comply with the new law and assess its economic implications on your operations.

Managing Editor & Senior Writer Contributing Writers

Feature Photography

Advertising Sales

Design, Production & Printing

Yvonne Atkinson-Mishrell Joel Berdine John Cline Dale Deist Bill Hilbert Jr. Donald Hester Timothy Hunter J. Gordon Naughton John B. Pellegrino Sr., P.E. Dennis Prischak Sue Sutto Ralph Pontillo rpontillo@mbausa.org John Krahe jkrahe@mbausa.org Karen Torres ktorres@mbausa.org Joe Bione John M. Bongiovanni, CFP, CLU, CHFC Steve Findlay Stephen E. Perkins, MD John Persinger Ron Stephens La Mirage Studio 814/833-3200 ron@lamiragestudio.com Patty Welther 814/833-3200 or 800/815-2660 pwelther@mbausa.org Printing Concepts Inc. printcon@erie.net

As part of these efforts, your Association has assembled a group of tax, legal and health-care experts who will be charged with answering the following questions: • I am an employer with less than 50 full-time equivalent employees, what exactly are my options with regard to the new health-care law? • I am an employer with greater than 50 full-time equivalent employees, what exactly are my options with regard to the new health-care law? • Which options under the law are in the best economic interest to my business and our employees? Before you act, make sure you are fully armed with factual information. The Manufacturer & Business Association will conduct a series of briefings, conferences and webinars, free of charge, to all members with only one goal — to help you navigate this complex issue and ensure that you have all the facts. The Association will continue to keep you notified about these informational sessions. We also encourage you to visit our website, www.mbausa.org, to learn about the most current health-care law updates that are essential to your business.

FAST FACTS

The Patient Protection and Affordable Care Act, known as “ObamaCare,” was passed by Congress on March 21, 2010, and signed into federal law by President Barack Obama on March 23 of that same year. The healthcare law will impose massive penalties on young workers, small businesses and others who choose not to buy expensive health insurance, beginning in 2014. Over the coming decade, the nonpartisan Congressional Budget Office (CBO) estimates a tax increase of $1.93 trillion to pay for ObamaCare. The CBO also says the new law will, as of a decade from now, leave 30 million people uninsured.

ON THE COVER: Eastside Medical Center, 2625 Parade Street in Erie, recently completed a twoyear renovation and expansion project that has more than tripled the size of the original building and enhanced the delivery of care for patients on the city’s eastside. For full story, see page 12. Mission Statement The Manufacturer & Business Association is dedicated to providing information and services to its members that will assist them in the pursuit of their business and community interests. – Board of Governors Manufacturer & Business Association 2171 West 38th Street Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org © Copyright 2013 by the Manufacturer & Business Association. All rights reserved. Reproduction or use of editorial, pictorial or advertisements created for use in the Business Magazine, in any manner, without written permission from the publisher, is prohibited. Unsolicited manuscripts cannot be returned unless accompanied by a properly addressed envelope bearing sufficient postage. The magazine accepts no responsibility for unsolicited manuscripts or artwork. The Business Magazine and Manufacturer & Business Association do not specifically endorse any of the products or practices described in the magazine. The Business Magazine is published monthly by the Manufacturer & Business Association, 2171 West 38th Street, Erie, Pa. 16508. Phone: 814/833-3200 or 800/815-2660.

March 2013 > www.mbabizmag.com > 3


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EDITORIAL > by Karen Torres

The Lundy Legacy: 80 Years Later The Business Magazine’s “Risking It All” section highlights the entrepreneurs who made sacrifices to build their businesses in our region. This month, we met with Frank Lundy III, chief executive officer of Lundy Construction Company in Williamsport, Pennsylvania, to talk about the history and success of this 80-year-old family owned business. Soon after Maurice Lundy left his home in Slido, Ireland as a stowaway bound for the United States, he found himself in a flourishing career in the lumber industry in Williamsport, Pennsylvania. His son Frank B. Lundy and grandson Richard H. Lundy would eventually follow in his footsteps, starting their own business, Lundy Lumber Company. With the success of lumber company firmly intact, Richard and family member John Lundy decided to partner with E.M. “Dick” Jonas to focus on the commercial side of the business, forming Lundy Construction Company in 1933. It was a huge risk during one of the worst years of the Great Depression, but one that would become the Lundy legacy. According to CEO Frank Lundy III, these entrepreneurs not only had to overcome fear, but the conventional wisdom of the time — to steer away from investing in a new venture, coupled with the challenges of procuring building materials and securing credit for construction during a fragile and weak economic time. “But, not being scared of hard work, believing in one’s self to accomplish personal goals and the ability to move against conventional wisdom prevailed,” says Lundy, “and we are here 80 years later to prove that challenges can be identified, met and overcome.” Proudly pointing to such projects as the east wing of Divine Providence Hospital and the original Roosevelt School — built during World War II and when the basic building materials of concrete and steel were in short supply — Lundy Construction Company is truly a model of success. The company is today widely considered one of the most recognized contractors for industrial and commercial construction, remodeling and renovations in central Pennsylvania — a credit to its wide range of services and core competencies. “We can design, estimate and deliver sophisticated light and high-tech manufacturing facilities with our staff, procedures and our highly skilled, dedicated and proven field personnel,” explains Lundy. “We are able to provide design construction services to most industrial, institutional, health-care and commercial customers that could locate or expand in our geographical area.” Lundy, for one, saw a new future in the area when he drove up from Philadelphia one day to assist his father with some business issues and noticed a convoy of what appeared to be drilling pipe loads on tractor-trailers heading toward Williamsport — at the beginning of the Marcellus Shale boom. “I learned a long time ago that if you want to build, you have to have someone to build for,” he says. “So, when you see others investing in an area, part of the collateral impact is construction. So follow the money.” At Lundy Construction, however, there is no secret to the company’s success. Notes Lundy, “It is what you can see that is our winning formula: Hard work, a desire to retain customers, a top-down requirement that the customer is the most important element in our business plan, and, finally, what feels like an inbred commitment to the Golden Rule.” For more information about Lundy Construction Company, visit www.lundyconstruction.com.

EDITORIAL > by Ralph Pontillo

Risking It All

Frank Lundy III is the chief executive officer of the family owned Lundy Construction Company.

Lundy Construction is widely recognized for its contracting work, including the Wenner Building on the campus of Divine Providence Hospital (shown here).

Lundy Construction Company is headquartered at 200 Arch Street in Williamsport, Pennsylvania.

March 2013 > www.mbabizmag.com > 5


Business Buzz EDC HONORS 2012 EMPLOYER, ENTREPRENEUR OF THE YEAR The Economic Development Corporation (EDC) of Erie County recently named Smith Provision Co., Inc. as its 2012 Employer of the Year and MKW Management Co. as its 2012 Entrepreneur of the Year, during the EDC’s annual awards dinner held on January 17 at the Bayfront Convention Center in Erie, Pennsylvania. Owned by the Weber family, Smith Provision is an Erie-based manufacturer of wieners, sausages, deli meats, bacon and hams. The company, founded in 1927, was honored as the 2012 Employer of the Year for its investment in the community during the past year and its commitment to the Erie region and its employees. Other finalists included the Warren Company and Viking Plastics.

MKW Management Company, founded by Michael Weaver, builds and operates facilities that extract liquid petroleum products, including propane, from oil and gas wells. The company, founded in 2008, was recognized as the 2012 Entrepreneur of the Year for its achievements as a newly established business and to celebrate the impact that entrepreneurship has on the greater Erie community. Other finalists included Appointment.org and Naturally Yours Designs, Inc. Also honored at the EDC dinner was Eriez Manufacturing, a world authority in advanced technology for magnetic, vibratory and inspection applications. The company, headquartered in Millcreek Township, was presented with the Keystone Award for its longtime community contributions. For more information about the EDC’s awards, visit www.edcec.org.

ERIE INSURANCE DONATES $100,000 TO STORM VICTIMS In the wake of the devastation of Hurricane Sandy, Erie Insurance (ERIE) has donated $100,000 to the American Red Cross to assist storm victims. The donation was to be divided among Red Cross chapters in ERIE’s footprint most impacted by the storm including chapters in Maryland, New York and Pennsylvania. “There is always a great need that follows catastrophes of this magnitude and the Red Cross is the go-to resource for shelter, food, and other assistance,” said ERIE President and CEO Terry Cavanaugh, in a press release. “We hope our contribution will help in the ongoing effort to rebuild lives and restore communities.” Since 2000, Erie Insurance has partnered with the American Red Cross through the Erie Insurance

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II-VI Incorporated is a global leader in engineered materials and optoelectronic components.

II-VI INCORPORATED ACQUIRES LIGHTWORKS OPTICS, INC. II-VI Incorporated, headquartered in Saxonburg, Pennsylvania, recently announced that it has acquired all of the outstanding shares of LightWorks Optics, Inc. The Tustin, California-based company manufactures precision optical systems and components, including visible, infrared, and laser-based systems and subassemblies for the defense, aerospace, industrial and life science markets. â&#x20AC;&#x153;We are excited about the acquisition of LightWorks and anticipate a unique partnership with our Exotic ElectroOptics (EEO) business unit, which is also

For more information, visit www.ii-vi.com. PNC ANNOUNCES NEW CENTER FOR FINANCIAL SERVICES INNOVATION PNC Financial Services Group Chairman and CEO James E. Rohr recently announced his companyâ&#x20AC;&#x2122;s support for the creation of the PNC Center for Financial Services Innovation at Carnegie Mellon University. According to a press release, The PNC Center for Financial Services Innovation will initially focus on research and education pertaining to the retail banking sector, seeking to capitalize on

new technologies and the effective use of data to advance the functionality of banks and the services they offer to customers. The center will conduct research that addresses emerging consumer banking topics, such as the integration of data and technology to help customers better manage their money, and the use of new channels such as mobile devices and social media. The center also will oversee curricula and project courses addressing the banking industry and executive education programs designed to address advances in technologies, processes and information. The PNC Center for Financial Services Innovation will be housed at Carnegie Mellonâ&#x20AC;&#x2122;s Tepper School of Business. For more information, visit www.pnc.com.

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Health Matters

EDITORIAL > By Stephen E. Perkins, MD

Health-Care Transparency Benefits Employers, Consumers When the subject is the cost and quality of health care, many consumers and employer groups are in the dark. Lack of availability to that kind of information is often cited as a factor in rising health-care costs. This could be changing. Both health plans and employer groups have been increasingly supportive of the concept of transparency — that would provide cost and quality information to healthcare consumers. Directly engaging consumers in decision-making can help reduce costs, and transparency is the best way to make this possible. How Transparency Can Work 1. For providers, it benchmarks performance, creating a way to measure their performance against others and to make improvements. 2. For insurers, it provides a way to recognize and reward quality and efficiency. 3. For patients, it provides a way for them to make more informed decisions and can help eliminate having different patients being charged different prices for the same services. Impact on Costs Consumers have the right to know the quality and cost of their health care, but they are largely uninformed about price differences or quality measures. Increased consumer education regarding the need and risk of health-care services is essential for transparency to be effective. Through health-care transparency, consumers will have the information necessary to make choices based on value. Reliable cost and quality information is essential to making these choices.

In theory, consumer choice should create incentives at all levels and motivate the health-care system to provide better care for less money. When providers compare themselves to one another, this can only spur improvements and cost reductions.

capacity to show comparisons of price, quality and efficiency. Health plans are interested in transparency, because by providing quality and price information to consumers in a way they can easily access and use is also a way to build trust with members.

Health-Care Expenses vs. Other Expenses A necessary first step in curbing costs is to have individuals become more responsible in managing their health and in purchasing health-care services through transparency. For example:

Transparency can be a way for providers to improve by benchmarking their performance against others. It encourages private insurers and public programs to reward quality and efficiency. Also, transparency helps patients to make more informed choices about their care. There will be concern, of course, that consumers might, at least initially, be confused by the new information, but, essentially, transparency is seen as something that will certainly become a benefit to consumers.

• Health-care consumers sometimes automatically associate cost with quality when that is not necessarily the case. • The decision-making process for health-care decisions cannot always be slow and deliberate. • Health-care decisions often have to be made under emergency conditions and at times of high emotional stress. • The cost of a procedure often does not take into account the actual cost of caring for a certain condition. Claims Data Can Drive Transparency Data derived from actual claims is most useful to health-care consumers. For instance, seeing what was actually paid to a hospital for a specific procedure can be used to determine what different hospitals in the region charge for the same procedure. Health plans will be essential to transparency efforts because they have the capacity to make price and quality information available at the local level and because they can offer consumerdirected plans for employers and individuals. They also have the

For more information about transparency at UPMC Health Plan, visit www.upmchealthplan.com.

Stephen E. Perkins, MD, is the vice president of Medical Affairs for UPMC Health Plan, which is part of the integrated partner companies of the UPMC Insurance Services Division. These include UPMC WorkPartners, LifeSolutions, UPMC for You (Medical Assistance), Askesis Development Group, Community Care Behavioral Health and E-Benefits – and which offer a full range of insurance programs and products.

March 2013 > www.mbabizmag.com > 9


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Legal Brief

EDITORIAL > By John Persinger

Protect Commercial Real Estate From Government ‘Takings’ The Dilemma When Coy Koontz Sr. wanted to develop 3.7 of the 14.9 acres that he owned in Florida, he faced a dilemma. The vacant property, located at a busy intersection of two major highways, fell within a Riparian Habitat Protection Zone that was overseen by the St. Johns River Water Management District. Under Florida law, local governments may refuse to issue permits until developers provide assurances that they will conserve more property than they develop. To obtain the necessary permits, Koontz voluntarily offered to place the remaining 11 acres of his property into a conservation easement. Even though no rare animals existed in this “habitat protection zone,” Koontz believed that preserving these 11 acres would sufficiently offset any of the development’s adverse environmental impacts. In the end, however, Koontz’s proposal to give away 75 percent of his property was not enough for the District. Instead, the District provided several counterproposals. Among these was the suggestion that Koontz improve 50 acres of government-owned wetlands located miles away from his property. Koontz’s expert calculated that these improvements would cost between $90,000 and $150,000. Faced with the dilemma of improving government property at his own expense or not getting the permits to develop his own property, Koontz chose a third option.

Amendment prohibits federal, state and local governments from “taking private property for public use, without just compensation.” Government “takings” occur both when the government physically acquires the right to the land and when a government’s regulations are so burdensome that a property becomes worthless. Despite the Takings Clause’s “just compensation” guarantee, many readers may be surprised to learn that federal, state and local government agencies are permitted to take property without providing any compensation at all. The Supreme Court has created a narrow exception to the Takings Clause when private property owners seek landuse permits. Under this exception, a government agency may require a property owner to turnover a part of their land for public use before the government issues the permits to develop the remaining portion. The government’s requirement, however, must meet two legal tests. First, there must be an “essential nexus” between the imposed requirement and a legitimate government objective. Second, the requirement imposed by the government must be “roughly proportional” to the adverse environmental impact of the proposed development.

The Taking After 18 years of working its way up the judicial ladder, Koontz’s case is currently pending before the Supreme Court.

These tests currently only apply to the taking of land. Koontz argues that the tests should apply to the taking of money, services and labor, in addition to land. For private property proponents, the concern is that local politicians and bureaucrats may abuse the exception by requiring developers to fund and improve “pet projects” in order to obtain government permits.

Koontz argues that under the Constitution it is unlawful to impose this type of financial requirement on him. The “Takings Clause” of the 5th

The Aftermath Koontz’s 18-year legal saga will come to a close before the Supreme Court recesses in June. After an engaging oral

He sued.

argument in January, it is unclear which way the Court will decide. Whatever the outcome, there will be real-world implications for property developers. If the Supreme Court sides with the District, property developers should be aware that government officials may impose monetary requirements, in the form of improving government land, as a condition to issuing permits. If, on the other hand, the Supreme Court sides with Koontz, then property developers should make sure that any requirements imposed by permitting agencies bear an “essential nexus” and are “roughly proportional” to the proposed development’s adverse environmental impacts. As always, property developers should consult an attorney on what to expect from the government permitting process. By doing so, individuals will hopefully avoid the same dilemma faced by Coy Koontz Sr. For more information about the Takings Clause, contact John Persinger at MacDonald, Illig, Jones & Britton LLP at 814/870-7702 or jpersinger@mijb.com.

John Persinger is an associate with MacDonald, Illig, Jones & Britton LLP and a former White House staffer. He represents individuals, businesses and nonprofits in their dealings with federal, Commonwealth and local government entities.

March 2013 > www.mbabizmag.com > 11


Eastside Medical Center, located at 2625 Parade Street in Erie, has been operating on the cityâ&#x20AC;&#x2122;s eastside since the 1980s and has been owned and operated by Medical Associates of Erie, the Clinical Practices of LECOM since 2006. The facility recently underwent a major renovation and expansion project and now boasts 10,000 square feet of practice space.


Eastside Medical Center Physicians Ronald Balderach, M.D., General Surgery Dr. Balderach received his medical degree from the University of Texas Medical Branch and completed his internship at Blodgett Memorial Hospital in Michigan and residency at Akron General Medical Center (Ohio) and Mercy Hospital of Pittsburgh. He is board certified in General Surgery and is an assistant professor of Surgery at LECOM. David Beaton, D.O., F.A.C.O.O.G., Obstetrics & Gynecology Dr. Beaton received his medical degree from the Philadelphia College of Osteopathic Medicine and completed his residency at Garden City Hospital in Detroit. He is board certified in Obstetrics and Gynecology and is a clinical assistant professor of Obstetrics and Gynecology at LECOM. Ravi Chekka, M.D., Pediatrics Dr. Chekka received his medical degree from the University of Toledo College of Medicine and completed his pediatric residency program at the Childrenâ&#x20AC;&#x2122;s Hospital Medical Center in Akron. He is board certified in pediatrics and is a clinical assistant professor of Pediatric Medicine at LECOM. Carlo DiMarco, D.O., MSc., F.O.C.O.O., Ophthalmology Dr. DiMarco received his medical degree from the Philadelphia College of Osteopathic Medicine. He is a professor and regional dean of Clinical Medicine at LECOM and director of the ophthalmology residency program at Millcreek Community Hospital. He is board certified in ophthalmology. David Fox, D.O., Family Medicine Dr. Fox received his medical degree from the Philadelphia College of Osteopathic Medicine and completed his internship and residency at Millcreek Community Hospital. He is board certified in Family Medicine and is a professor and department chairman of Family Medicine at LECOM. Paula Gunduz, M.D., F.A.C.O.G., Obstetrics & Gynecology Dr. Gunduz received her medical degree from the Universidad Autonoma Metropolitana, Mexico City and completed her residency at Metropolitan Hospital in Manhattan. She is board certified in Obstetrics and Gynecology and is a clinical professor of Obstetrics and Gynecology at LECOM. Steven Habusta, D.O., F.A.O.A.O., M.Ed., Orthopedic Surgery Dr. Habusta received his medical degree from the Philadelphia College of Osteopathic Medicine and completed his residency at Grandview Hospital. He is board certified in Orthopedic Surgery and is a professor of Orthopedic Surgery and director of the Orthopedic Surgery program at LECOM. Jason Lee, D.P.M., Podiatry Dr. Lee received his medical degree from Des Moines University and completed his residency at the Millcreek Community Hospital. He is board certified in podiatry and is a clinical assistant professor of Podiatry at LECOM. Gary Roesch, A.B.O., Optician Gary Roesch is a graduate of Ferris State University where he received his degree in Applied Science Health Optics and is certified by the American Board of Opticianry.

March 2013 > www.mbabizmag.com > 13


EDITORIAL > By John M. Bongiovanni, CFP, CLU, ChFC

Financial Adviser Health Insurance Exchanges: Public and Private The Patient Protection and Affordable Care Act (PPACA) survived both a Supreme Court review w and a presidential election. As 2014 approaches, the full impact of the law will soon be felt. Small employers will face several key questions: Will theyy continue to offer group health insurance? If so, will theyy continue to purchase it through their health insurance carrierr as they have in the past, or will they purchase it through a Health Insurance Exchange?

— Platinum, Gold, Silver and Bronze — representing decreasing levels of benefits. The employer will determine the dollar amount they are willing to contribute for each tier of coverage (single, family, etc.) and then employees will choose among the plans offered by the different insurance companies. A lean plan (Bronze)) may require a very small contribution by the employee whereas a richer plan (Gold) would require a larger employee contribution.

PPACA calls for the creation of statebased competitive marketplaces known as Health Insurance Exchanges (HIX) for individuals and small businesses to purchase private health insurance. According to the Department of Health and Human Services, the exchanges will allow ow for direct comparisons of private health insurance options on the basis of price, quality and other factors. These exchanges become operational in 2014.

HHS guidance calls for the federally facilitated SHOP exchanges to support small employers by collecting a single aggregated premium payment from each employer and distributing that payment to the various insurance companies based on participating employee’s plan selections.

A majority of states, including Pennsylvania, have decided not to establish their own exchanges, but rather permit HHS to create Federally Facilitated Exchanges to be set up in their own states. The Federally Facilitated Exchange in Pennsylvania will provide options for individuals to purchase individual policies, and also will coordinate eligibility for premium tax credits and other affordability programs. The Federally Facilitated Exchange also will establish a Small Business Health Options Program (SHOP).

Private Exchanges With the deadline forr public Health Insurance Exchanges just months away, manyy insurers are rolling out theirr own private exchanges to compete with the state and federally run versions. Unlike the public exchanges that will include several product offerings from multiple insurance companies, an insurance company’s own exchange may offer a wider selection off products, but only of their own policies, and possibly vision and dental coverage as well.

What is a SHOP Program? The SHOP program will allow employers to purchase group coverage for their employees. It is expected that the SHOP program will include health plans offered by multiple insurance companies that will be organized and identified by the level of benefits they provide

Final rules governing federal exchanges have yet to be issued and a tremendous amount off work is needed in a very short amount of time to create these exchanges.

An employer would decide which insurance company’s private exchange to use primarilyy based on pricing and provider network. As with the public exchange, an employerr will set the amount of cost they are willing to bear, and employees will be given the options to choose from that carrier’s product line.

The Manufacturerr & Business Association is exploring creating a private exchange, which may well include offerings from multiple insurance carriers. It would be a fullservice model providing members with complete compliance with all aspects of the law. This is something to keep a close eye on. Byy law, open enrollment forr the public exchanges is to begin October 1, 2013 for the Januaryy 1, 2014 plan year — less than seven months away. Given that final rules have yet to be issued, there are likely ly to be administrative and operational complexities surrounding the initial rollout. The health insurance marketplace continues to change rapidlyy and for most employers health insurance continues to be one of the largest and fastest-growing line items on their budgets. It will take ever-increasing skill levels for employers to manage these challenges effectively. For more r informa r tio t n, please contact John M. Bongiovanni, CFP CFP, CLU, U Ch C FC F att Lillis, McKibben, Bongiovannii & Co. at 814/452-4085 Ext. 229 orr john. bongiovanni@lmbco ni@lmbc erie.c rie.com.

John Bongiovanni, CFP, CLU, ChFC is a partner at Lillis, McKibben, Bongiovanni & Co., an Erie-based group benefits firm. He is a member of the Society of Financial Service Professionals and National Association of Insurance and Financial Advisors-PA.

March 2013 > www.mbabizmag.com > 15


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EDITORIAL > By Joe Bione and Steve Findlay

Business Management Have You Thought About Your Transition? Editor’s Note: This article is the first in a four-part series devoted to understanding the transitioning of a company from operational excellence, market intelligence and buy-side strategies, business valuations and exit strategies. This month’s column is focused on providing business owners with an in-depth view on specific parts of transition planning. It’s been a hectic few years with the economy being so unstable. Many businesses have failed, and those that have survived have had to make serious changes in the way they do business, with layoffs, financial hurdles, and a constantly changing business environment with more and more customer demands. Many business owners are wondering what to do next. Should they continue as is, which could cause them to go backwards, or should their company be performing at a higher level and do they have a plan to get there? Is it time to change the way things have always been done and go into an aggressive growth mode — possibly even buy another business, a competitor or a product line? Or is it time to start thinking about a transition strategy? The big question is where to begin. Critical Factors to Consider A good place to start is to determine whether the operation is running at its optimal potential. Once a company is performing at that optimal level, the business owner and management team have many options that can maximize value, regardless of the transition track they may want to pursue. To stay the course, maximizing performance makes life much easier for everyone, including owners,

management, lenders and customers. With the right set of metrics and key performance indicators (KPIs), they will have a “daily feel” of the company’s performance and profitability. When the economy and customers make changes that affect the business, business owners will have the information needed to react in a timely and aggressive manner. This “agility” is the difference between action and reaction. It drives success! For those looking to acquire a business or product line and grow their business, there are a few steps that will maximize these efforts. Once operations are performing at optimal levels, the next steps should be obtaining market intelligence to better understand the marketplace and the competition. This should provide the validation that the company is running at its full potential. The last thing that anyone wants to happen is a growth event that causes significant operational issues to existing business. The other option would be to start thinking about a transition strategy that may include everything from a management transition, to a merger or a complete sale and exit from the business. The next step would be to conduct a professional valuation, which will establish a realistic value range of the company prior to any transition. Once that value range is established, plans can be put in place to review the current operational performance to see if there are additional areas of improvement that can be addressed, thus improving the business valuation. Finally, if it is time for an ownership or management transition or even a complete exit from the business, there are many things to consider such as timing, the process, confidentiality, employee

and customer concerns and meeting the owner’s expectations throughout the entire transition process. The world is changing quickly. However, with a good plan, current operations running at a high level, up-to-date and accurate data, and a good team of advisers — including legal, accounting and transition services — there are many options for business owners to optimize their market value regardless of the route that they take. For more information on transition planning, please contact Joe Bione at The Whitehall Group at 248/519-1072 or bione@whitehallgroupllc.com, or Steve Findlay at The McLean Group at 814/4643749 or sfindlay@mcleanllc.com.

Joe Bione is the founder of The Whitehall Group, which has been assisting companies for more than 25 years in how to maximize current operations and improve the bottom line performance of companies all over North America.

Steve Findlay is the managing director of The McLean Group’s Erie, Pennsylvania office, an investment bank providing mergers and acquisitions (M&A), business valuation and strategic consulting services to middle market businesses. The McLean Group has been a partner of The Whitehall Group since 2012.

March 2013 > www.mbabizmag.com > 17


HR Connection OSHA RANKS TOP 10 WORKPLACE SAFETY VIOLATIONS The Occupational Safety and Health Administration (OSHA) recently released its preliminary Top 10 most cited workplace safety violations of 2012, including: 1. Fall Protection: Violations relating to the appropriate construction, installation and monitoring of safety systems aimed at preventing falls at the workplace (7,250 citations). 2. Hazard Communication: Violations involving the dangers of chemicals produced and imported in a workplace – and the communications regarding these hazards to the workers (4,696 citations). 3. Scaffolding: Violations involving the basic safety requirements surrounding the design and construction of workplace scaffolding (3,814 citations). 4. Respiratory Protection: Violations regarding the maintenance of MBAAds3_Layout 1 5/3/12 3:10 PM Page 3 respirators and the employer

5. 6.

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development of respirator protection programs (2,371 citations). Ladder: Violations regarding the general use of ladders and their requirements (2,310 citations). Machine and Machine Guarding, General Industry: Violations cover guarding of machinery to protect operators and other employees from hazards (2,097 citations). Powered Industrial Trucks, General Industry: Violations involve the operation, maintenance and design of powered industrial trucks, including forklifts and motorized hand trucks (1,993 citations). Electrical: Wiring Methods, General Industry: Violations cover the grounding of electrical equipment, wiring and insulation (1,774 citations). Control of Hazardous Energy — Lockout/Tagout, General Industry: Violations include performance requirements for the control of

hazardous energy during servicing and maintenance of machines and equipment (1,572 citations). 10. Electrical – General Requirements, General Industry: Violations cover general safety requirements for designing electrical systems (1,332 citations). For details on the Top 10 list, visit the National Safety Council’s website, www.nsc.org. REPORT: HOUSING MARKET SEES BRIGHT SPOT IN 2013 The nation's housing market is surging again, and the unique forces powering its return could last well into 2013. According to a recent article in The Washington Post, the number of homes for sale is at its lowest level since before the recession. Builders broke ground in December on the most new housing developments in four years. And interest rates on mortgages are expected to remain near all-time lows through much of the year.

Austin Every day E.E.Austin lays its tradition of construction excellence on the line. Our extensive list of satisfied clients is testimony to Austin keeping its longstanding promise: “Do the right thing... all the time”. It’s a promise we’ve kept with pride for more than a century... and it’s our promise to you.

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18 < www.mbabizmag.com < March 2013


DEPARTMENTS > Contact: Stacey Bruce

Make a Difference With Great Customer Service There is a current epidemic in this country, and itâ&#x20AC;&#x2122;s not the flu. Poor customer service seems to be the rule these days and it presents a great opportunity for those of us who are looking for ways to differentiate ourselves from our competition. From the surly sales clerk to the apathetic customer service phone representative, customers are beginning to feel less and less important. Great customer service is not rocket science and it can be a difference maker. Below are three keys to winning and keeping those valuable customers: 1. Everyone walks the talk. Every employee on your staff is in customer service, regardless of their job title. They are the face of your organization both on and off the job. Treat them well and they will be ambassadors for you and your business.

With more than 15,000 participants trained, the Manufacturer & Business Association is the leading resource for professional development and computer training in the area. For more information, please contact me at 814/833-3200, 800/815-2660 or dmonaghan@mbausa.org. I also encourage you to visit the Associationâ&#x20AC;&#x2122;s website, www.mbausa.org, to learn more about our upcoming offerings.

2. Everything matters. From the restrooms to the parking lot, from your website to employee appearance, you are giving current and future customers reasons to either do business with you or move on to someone else. 3. Take care of every customer â&#x20AC;Ś especially your regulars. We can assume that our regular customers will always be there and start to take them for granted. Guess what? You donâ&#x20AC;&#x2122;t own them and your competition would love to grab them from you. Remember, before they were your customer they were somebody elseâ&#x20AC;&#x2122;s. Great customer service is really common sense. The problem is, it is not common practice. Treat every customer like the future of your business depends on them â&#x20AC;&#x201D; because it does.

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Dan Monaghan is the director of Training at the Manufacturer & Business Association.

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YYYIQOKPKUGTKGEQO March 2013 > www.mbabizmag.com > 19


Altair Property Management Services We help Real Estate Owners with asset, facilities and property management. Our state-of-the-art accounting, property management systems and electronic document management allow for accurate, real time reporting on all aspects of property management.Â

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OntheHill

DEPARTMENTS > Contact: Lori Joint

Q&A With Senator Pat Toomey Since joining the U.S. Senate in 2011, Senator Toomey, R-Pennsylvania, has distinguished himself as a leader on economic, financial services and budgetary issues, striving to restore fiscal discipline to Washington and economic opportunity for all Americans. The Business Magazine recently asked the senator to comment on some major economic issues that the country is facing.

There has been much discussion about the U.S. trillion-dollar annual fiscal deficits and federal debt of $16 trillion, headed for $20 trillion in three years. In your opinion, does the United States have a spending problem or a revenue problem? The problem has always been spending. Since 2000, spending by the federal government has more than doubled. As recently as 2007, with the Bush tax cuts in place for all Americans, we ran a deficit of only 1.2 percent of GDP. It is true the recent recession caused a drop in revenue. However, even before the fiscal cliff deal, revenue was on track to return to its historical average of 18 percent of GDP by the middle of the decade. Spending, in contrast, reached a post-World War II high of one-quarter of our entire economy in 2009, and is expected to remain well above average indefinitely. Moreover, each of our major entitlement programs is growing at a rate that exceeds economic growth. As a matter of basic math, it is simply not possible to solve our debt crisis unless we get spending under control. There have been many pieces of legislation that have passed the House, but have stalled in the Senate. How can Congress work to overcome these roadblocks? The Senate is a deliberative body that functions better when minority rights are respected. To me, that means both sides have an equal opportunity to offer their amendments. Throughout my time in Senate, I have often been unable to get votes on my amendments to important legislation. The majority leader has used tactics that block all avenues to change a bill and thus a sufficient number of senators are unable to support the bill. As a result, legislative progress in the Senate has slowed to a halt. A bipartisan commitment to return to what is called regular order — a system that protects the rights of the minority to try to alter the bill and allows for robust debate — would permit the Senate to process more legislation. Many of our member companies are concerned about the increased cost of health care and compliance requirements associated with the Patient Protection and Affordable Care Act. How concerned should they be about this new health-care law? The concerns that many employers have expressed over the

anticipated full implementation of the president’s health law in 2014 are very real. In less than 12 months, large employers will be required to pay penalties of up to $3,000 per employee if they fail to provide qualified health coverage of a “minimum value” and if any employee receives a taxpayer subsidy to purchase health care in the exchange. Furthermore, new taxes on health insurance and medical devices are driving up the cost of health care. For example, the Joint Committee on Taxation anticipates that the new health insurance premium tax will increase average family premiums by $400 in 2016. For a company of 25, that translates into an additional $10,000 just to cover the health insurance premium tax. Many companies are reluctant to expand primarily due to the regulatory uncertainties in Washington, D.C. What can be done to address this problem? This is something I hear about everyday across Pennsylvania. From steel mill operators to farmers and just about everyone in between, they constantly tell me that Washington is getting in the way. I think two specific things can be done. First, I am a big fan of the REINS Act. That is short for the Regulations from the Executive in Need of Scrutiny Act and it would force Congress to vote on every major regulation proposed by Washington bureaucrats. Two, we should use Congress’ power of the purse to defund the ability of agencies to promulgate burdensome regulations. As you reflect on your last two years in office, what do you consider to be your biggest accomplishment and why? It is critical that we remove government-imposed hurdles that prevent businesses from growing and hiring new employees. I authored a series of bills that became the basis for the Jumpstart Our Business Startups or JOBS Act. The JOBS Act cuts regulatory burdens on small and medium-sized businesses and makes it easier to raise much-needed capital through public offerings, helping companies to expand, hire new workers, and create thousands of new jobs. The Senate passed the bill in a bipartisan fashion in March and the president signed it in April. It’s now the law of the land. Legislation like the JOBS Act removes unnecessary government obstacles to allow the private sector to thrive, and I am proud to have worked with members on both sides of the aisle to craft this law. March 2013 > www.mbabizmag.com > 21


Legal Q&A MY COMPANY IS ONLY INVOLVED IN RESIDENTIAL CONSTRUCTION. DOES THE PENNSYLVANIA CONSTRUCTION WORKPLACE MISCLASSIFICATION ACT (THE â&#x20AC;&#x153;ACTâ&#x20AC;?) APPLY TO ME? Yes. The Act applies to all commercial and residential construction in Pennsylvania. IF I CONTRACT WITH A COMPANY THAT INTENTIONALLY MISCLASSIFIES THEIR WORKERS AS INDEPENDENT CONTRACTORS, DO I FACE ANY LIABILITY UNDER THE PENNSYLVANIA CONSTRUCTION WORKPLACE MISCLASSIFICATION ACT (THE â&#x20AC;&#x153;ACTâ&#x20AC;?)? You could. Under the Act, an employer that intentionally contracts with another employer knowing that the employer intends to misclassify employees can be held in violation of the Act and face penalties. However, the Act allows for a good faith defense to an alleged violation if the hiring party believed, in good faith, that the individual performing the services qualified as an independent contractor.



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DEPARTMENTS > Contact: Tammy Lamary

Get to Know the Pennsylvania Construction Workplace Misclassification Act A few months ago we focused on how the federal government has stepped up its enforcement activities against the misclassification of workers. This month, we are expanding on the Pennsylvania Construction Workplace Misclassification Act (the “Act”) that was enacted regarding the classification of independent contractors in the construction industry. The Act sets forth criteria to be used to determine whether an individual working in the construction industry is an independent contractor or an employee. That Act states that an individual working in the construction industry is only an independent contractor if the person: 1) has a written contract to perform such services; 2) is free from control or direction over the performance of those services; and 3) is customarily engaged in an independently established trade, occupation, profession or business. The Act provides specific factors that must be satisfied to establish that the third criterion is satisfied, including: 1) the

individual possesses the essential tools, equipment and other assets necessary to perform the services independently of the person for whom the services are being performed; 2) the individual’s arrangement is such that the individual could gain a profit or suffer a loss as a result of performing the services; 3) the individual performs the service through a business in which he or she has a proprietary interest; 4) the individual maintains a business location separate from that of the person for whom services are being performed; 5) the individual previously performed these services for another person while free from direction or control, or is available to work for others who will not provide direction or control; and 6) the person maintains liability insurance of at least $50,000 during the term of the contract. If a violation of the Act is found to exist, the employer, its officers, and its agents may be held liable for monetary penalties, and, in extreme circumstances, may be

subject to criminal penalties. Due to the increased focus on the issue of the classification of independent contractors, it is wise for all businesses that utilize independent contractors to review their use of independent contractors and ensure that their workers are correctly classified. The Association’s Legal Services Division can assist you with a variety of employment law issues. Please contact me at 814/8333200, 800/815-2660 or tlamary@mbausa.org for more information.

Tammy Lamary is Labor & Employment Counsel for the Manufacturer & Business Association’s Legal Services Division.

March 2013 > www.mbabizmag.com > 23


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People Buzz MARTIN HONORED AS RUNNER-UP FOR FUNERAL DIRECTOR OF THE YEAR American Funeral Director magazine recently named John “Jack” Martin, president and owner of Dusckas-Martin Funeral Home and Crematory in Erie, as one of four runners-up for its 2012 Funeral Director of the Year award. Martin, who earned his mortuary school degree and license later in life, started out as schoolteacher in the early 1980s, before working summers for Gus Dusckas, who opened the funeral home in 1946. Martin received his mortuary school degree in 1987 at the age of 42, and later became the funeral home’s president and owner. In addition to his work as a funeral director, Martin is an active member of the community, volunteering his time at the Erie City Mission, the Highmark Caring Place, the Trinity Center, and a local nursing home. VNA OF ERIE COUNTY WELCOMES NEW EXECUTIVE DIRECTOR The Visiting Nurse Association of Erie County (VNA) recently promoted Christine N. O’Brien, RN, BSN as the agency’s 10th executive director. O’Brien will be responsible for leading the 107-year-old agency whose mission is to, “provide quality, cost-effective home health care and hospice services to residents of Erie County, regardless of the ability to pay.” O’Brien has spent the past 16 years as the agency’s director of Clinical Services where she was responsible for clinical operations of the agency to assure quality of care delivery and regulatory compliance for the Home Health and Hospice programs. With nearly 20 years of health-care experience, she has developed and implemented successful programs for the VNA throughout her career. O’Brien completed her undergraduate work in nursing at the University of Pittsburgh School of Nursing and has completed coursework toward a master of science degree in nursing administration from Gannon University.

DEPARTMENTS > Contact: Karen Torres

COMPOSIFLEX APPOINTS CHESLEY AS NEW PRESIDENT Composiflex, Inc., an Erie-based company that designs and manufactures advanced high-performance composites, recently promoted Michael Chesley to president. Chesley has been with Composiflex for seven years and most recently served as vice president and general manager. He replaces Alan Hannibal, the company’s former president, who will remain with Composiflex as chief executive officer. According to Composiflex, in Chesley’s new role, he will continue to leverage his extensive background in manufacturing and finance to drive business growth.

ERIE COMMUNITY FOUNDATION NAMES VP OF COMMUNICATIONS Erin Doolin Fessler has been named vice president of communications by the Erie Community Foundation, where she has worked since 2004. Fessler manages the foundation’s major events, including Erie Gives and the group’s annual meeting, as well as its advertising, media relations and social media. Fessler earned her bachelor’s degree from John Carroll University. She has worked at WSEE, the Community Blood Bank and PNC Financial Services Group Inc. She also is a founding board member and treasurer of the Northwest Pennsylvania chapter of the Public Relations Society of America.

AlbertAPPOINTED J. Isacks MALIN BERGQUIST’S ISACKS TO AICPA POST Director of Estate Services Albert J. Isacks, a certified public accountant with Malin Bergquist & Company, LLP has been appointed as a member of the Tax Practice Management Committee of the prestigious American Institute of Certified Public Accountants (AICPA) for 2012-2013. Albert J. Isacks is Director of Estate Services with the Erie office of Malin, Bergquist & Company, LLP, one of Erie’s oldest and largest certified public accounting firms. He is a certified estate planner and has more than two-and-a-half decades of experience in taxation, estate planning and estate administration. Among his clients are corporations, nonprofit organizations, partnerships and individuals, as well as clients of law firms and bank trust departments in a variety of states – ranging from Pennsylvania, Ohio, New York and New Jersey to Wisconsin, Florida and California.

Mr. Isacks has prepared hundreds of death tax returns during his career, involving federal estate, Pennsylvania inheritance, court inventory, court accounting and fiduciary income tax returns. In one notable example, he helped heirs pay tax on only a fraction of the market value of their inheritance, thanks to the use of a littleknown law. He also helps individuals with essential pre-death planning, including advice on how to name beneficiaries of assets and pension funds to eliminate or reduce income tax liabilities.

Isacks is a certified estate planner and has more than three decades of experience in taxation, estate planning and estate administration. For an engagement in Wisconsin, Mr. Isacks helped heirs save tens of thousands of dollars in taxes after their late father had set up a trust to benefit his second wife. In a California case, he served the beneficiary of an old, poorly drafted $4 million trust, which was in litigation for many years, and helped the client avoid a substantial federal estate tax assessment.

In addition, eight accountants have been promoted at the firm, including: Karen Burns (to manager), who serves as a member of the firm’s not-for-profit niche group; Ryan Heidt (to staff accountant II), who serves as an auditor with the firm’s not-for-profit and employee benefit plan consulting groups; auditor Allison Jones (to audit senior); Leah Kistler (to supervisor), who serves as a tax supervisor with the Erie office and is a member of the board of directors of Malin Bergquist Charities; John Kuhn (to tax senior), who serves a member of the Tax Group; auditor Gina Pelino (to senior); Lindsey Richards (to supervisor), who serves as an auditor with the firm’s not-for-profit/ tax exempt organizations and employee benefit plan consulting groups; and Brandon Woolslare (to audit senior), who serves as an auditor with the firm's employee benefit plan group, and specializes in audits of manufacturers and auto dealerships. Mr. Isacks helps prepare tax returns for clients of bank trust departments, utilizing proper techniques to lower the risk of audits. He has coordinated estate and income tax returns for clients who have inherited the assets of a pension plan, advising them on the election options and how to utilize them appropriately. Prior to joining Malin Bergquist in 1993, Mr. Isacks headed the Estate Administration Department for PNC Bank and First National Bank in Erie. He holds his MBA and bachelor’s degrees from Gannon University.

Community and Professional Service - Mr. Isacks serves on the Estate and Financial Planning Conference Committee of the Pennsylvania Institute of CPA, is Past President of the Estate Planning Council of Erie, Treasurer of Hospice of Metropolitan Erie; and serves on the Planned Giving Committee of Erie Homes for Children and Adults. He also is past President of the Erie Chapter, and past National Director, of the Institute of Management Accountants, and is a past Chairman Elect of the Greater Erie County Chapter of the American Red Cross.

aisacks@malinbergquist.com Web: www.malinbergquist.com 2402 West 8th Street Erie, PA 16505-4428 (814) 454-4008 Fax (814) 454-4018

3605 McKnight East Drive Pittsburgh, PA, 15237-6400 (412) 364-9395 Fax (412) 364-2661

The firm also announced that Allison Jones, CPA; John Kuhn, CPA, MBA; and tax supervisor Kathy Sisler, CPA have been elected to the board of directors of Malin Bergquist Charities, Inc., the nonprofit organization created by employees of the Malin Bergquist & Company accounting firm. March 2013 > www.mbabizmag.com > 25


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March 2013 Business Magazine  

March 2013 Business Magazine

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