Region's Business -- 28 February 2013 by Independence Media

STATE BRACES FOR SEQUESTER’S IMPACT HOW TO STAY CLEAR OF CITY’S TAX MAN

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REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

AS OBAMACARE TAKES HOLD, TIME FOR A

CHECK UP Consolidation and infrastructure are just part of a new, shifting landscape.

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28 FEBRUARY 2013

REGIONSBUSINESS.COM

CONTENTS

3 1519 Walnut Street

Bracing for Obamacare

Consolidation continues but even as plans to implement new health care legislation, only one thing is clear: Not much is clear. !

Marketing the Region to the World One company is bringing patients to the region, making medical travel an economic driver.

Care 24 Direct Gains Ground Some doctors trade the comfort of a large practice for more time with individual patients. !

33 Hidden Costs 36 Hidden Savings

Obamacare introduces a whole host of new taxes and fees. !

Efficiently leveraging technology can save hospitals money. !

How to Avoid State Braces the City's for Sequester Tax Man The debate over the

If you left the city to avoid the tax burden, you may not be out of the woods quite yet.

REGION’S BUSINESS Independence Media Corp. 600 West Germantown Pike, Suite 400 Plymouth Meeting, PA 19462 feedback@regionsbusiness.com Online: RegionsBusiness.com To subscribe: 877.700.6245 or 215.627.6397 Circulation & Distribution: CCN - www.ccndelivery.com Advertising information: 610.940.1656

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federal sequester may be taking place on the national stage, but the impacts will be felt on a very local level.

“If you want to run for office, I think you need to do what is in the best interests of the commonwealth, not necessarily what’s in your best interest to get re-elected.”

2013: YEAR OF THE INNOVATOR

Giving Doctors A View

An initiative by Blue Cross gives doctors a 360-degree view. !

PRESIDENT AND PUBLISHER James D. McDonald EDITORIAL DIRECTOR Karl M. Smith ASSOCIATE EDITOR Terrence Casey

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28 FEBRUARY 2013

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EDITOR’S DESK

Seeking Clarity on Obamacare’s Impact

Karl Smith is the Editorial Director for Region’s Business. You can contact him at ksmith@regionsbusiness.com.

The expected - and unexpected - impacts of the Affordable Care Act ... Obamacare ... are becoming more clear. Between reading through the material for this week’s edition of Region’s Business and scouring the web for background material, a few trends are starting to emerge. The most obvious? There’s a lot of work to do and most businesses are really unprepared. That shouldn’t be a terrible surprise. After all, most everyone - politicians, businesses, insurance companies - had put Obamacare on the backburner for most of 2012, waiting for the outcome of November’s election. Even after Romney endured a severe ballot box beating, some wondered if Congress would gut the legislation through the budgeting process. Only now, when it’s clear that Obamacare, in its current configuration, will become the law of the land, are insurance companies, medical providers and businesses getting serious about implementation. The second obvious trend is that, there’s still a lot to figure out. The ACA is a massive piece of legislation (about 1,000 pages long) but the devil

is in the details and the devil isn’t really made clear in those pages. Insurance and medical providers are working quickly to figure out how this is all going to work. The biggest downside to Obamacare has always been clear - everyone is going to pay more. Period. To find some upside, you have to cut through all the noise. One of the biggest positives seems pretty simple, almost common sense. Of course, maybe that’s why it hasn’t happened yet. Because of the ACA, your medical information will become portable. This will increase convenience by an unimaginable factor - think of how many times you’ve had to fill out a medical history form. That will save you time, it will save medical providers time, it will save everyone time. And time is money. More importantly, it will improve medical care, identifying things like dangerous drug interactions. So medical care becomes safer and more efficient. Another subtle message coming out of all this is that we are finally getting to the core reason

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that our health care costs are skyrocketing: We don’t take care of ourselves very well. Insurance providers and businesses are coming to realize that if they encourage - actually, if they create incentives for - people to be healthier, costs will go down. This is the primary way in which the cost equation should be attacked. Working to reduce the cost of treatment is important. Creating efficiencies in care delivery to reduce cost is important. But reducing the need for treatment cuts to the core issue. We’re not talking about groundbreaking ideas here, but simple, common sense things can have a dramatic impact. Figures from the Centers for Disease Control and Prevention show that smokers cost the country $96 billion a year in direct health care costs. So every time you see someone smoking, imagine they are smoking a $20 bill they took out of your pocket. A similar situation exists with American’s well-documented obesity problem. We’ll learn a lot more in the coming months, but for now, we’ll pay more and gain some efficiencies while trying to get healthier.

28 FEBRUARY 2013

REGIONSBUSINESS.COM

CATHOLICISM

Vatican Confirms Philadelphia for 2015 Meeting

Pope Benedict XVI submitted his resignation February 11, effective February 28. His replacement will attend the 2015 World Meeting of Families in Philadelphia. THE CATHOLIC CHURCH

The Vatican confirmed this week that the 2015 World Meeting of Families will be held September 22-27 in Philadelphia. The visit — which is expected to bring tens of thousands of Catholics from around the world to Philadelphia — will be the first by a pope to Philadelphia since Pope John Paul II’s in 1979. This will mark the first time that the World Meeting of Families is held in the United States since it was established in 1992 by Pope John Paul II. “This special event is not only an opportunity to welcome families from around the world but an opportunity to celebrate our distinctive religious heritage as a state and a nation,” Governor Tom Corbett said. HEALTH CARE

Endo Names CEO Endo Health Solutions, of Chadds Ford, Pa., named Rajiv De Silva — president of Valeant Pharmaceuticals International — as president and CEO, effective March 18. Mr. De Silva succeeds retiring CEO David Holveck and will join the De Silva Endo board of directors.

WEEKLY BRIEFING

City’s Summer Jobs Programs Seeking Business Participants BY ALEXIS SACHDEV Following the success of last year’s WorkReady summer employment placement, Mayor Michael Nutter is again challenging Philadelphia employers this summer. Last year, more than 6,000 area teens were placed into internships through the WorkReady program, according to the Philadelphia Youth Network, which oversees WorkReady. But demand trumped supply, and organizers were unable to match the 15,000-plus applicants to internships. About 5,000 positions have opened up, and the mayor said he plans to campaign for businesses and non-profits to create more — 10,000 to be exact — through his 10,000 Jobs program. Employers can become involved with the program by hiring and hosting interns with wages, financially supporting an internship at a small business or nonprofit if you are unable to host an intern at your worksite, host an unpaid intern at your worksite, or run a summer internship program for area youth that meets the WorkReady Seal of Approval. The program has mutual benefits, said a CEO of a WorkReady-affiliated worksite.

KAIT PRIVITERA/CITY OF PHILADELPHIA

“These young people are our future,” said Anthony S. Bartolomeo, president and CEO of Pennoni Associates, Inc. “Providing them an opportunity to experience what our industry has to offer as a career could change the course of their lives. “Exposing these students to the workplace and getting them interested in our profession helps us to create a pipeline of future talent in our industry.” Additionally, program involvement indicates social awareness for worksites, and can cut training and recruitment costs while increasing productivity. This year’s investors include Aramark, The Children’s Hospital of Philadelphia, Wells Fargo, U.S. Department of Labor, Philadelphia Council AFL-CIO, Brandywine Realty Trust, and others.

PENNSYLVANIA LOTTERY

PENN STATE SEX ABUSE SCANDAL

Camelot Lottery Bid Extended

DePasquale Questions NCAA’s Jurisdiction

Camelot Global Services and the Corbett administration agreed late last week to extend the British company’s bid to manage the Pennsylvania Lottery through March 18 after Attorney General Kathleen Kane declared the contract unconstitutional. Governor Tom Corbett has until March 16 to decide whether to challenge Attorney General Kane’s decision in the courtroom. Camelot is seeking a 20-year deal.

The NCAA has filed suit to overturn a new state law that would require Penn State’s $60 million fine — for the school’s response to the Jerry Sandusky sex abuse case — to be spent exclusively in Pennsylvania, claiming the law interferes with a private deal between the NCAA and Penn State. This suit follows one filed by Governor Tom Corbett against the NCAA that sought to dissolve penalties agreed to by Penn State. Auditor General Eugene DePasquale said he want to see the NCAA’s jurisdiction clarified.

JOBS

State’s Largest Employers 1) Federal Government 2) State Government 3) Wal-Mart Associates Inc. 4) City of Philadelphia 5) Trustees of the University of Pennsylvania 6) Pennsylvania State University 7) Giant Food Stores LLC 8) School District of Philadelphia 9) UPMC Presbyterian Shadyside 10) University of Pittsburgh Bucks County 1) St. Mary Medical Center 2) Central Bucks School District 3) Giant Foods Stores LLC 4) Bucks County 5) Northtec LLC Chester County 1) Vanguard Group Inc. 2) QVC Network Inc. 3) Siemens Medical Solutions USA Inc. 4) Federal Government 5) County of Chester Delaware County 1) The Boeing Company 2) Crozer-Chester Medical Center 3) Delaware County 4) Villanova University 5) United Parcel Service Inc. Montgomery County 1) Schering Corporation 2) Abington Memorial Hospital 3) State Government 4) Main Line Hospitals 5) Montgomery County Philadelphia County 1) Federal Government 2) City of Philadelphia 3) Trustees of the University of Pennsylvania 4) School District of Philadelphia 5) Children’s Hospital of Philadelphia PENNSYLVANIA DEPARTMENT OF LABOR AND INDUSTRY

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REGIONSBUSINESS.COM

WEEKLY BRIEFING

HIGHER EDUCATION

Swarthmore Receives $20M Donation Swarthmore College received a $20 million donation from alumnus, philanthropist and Board of Managers Chairman Giles Kemp (Class of 1972) and his wife, Barbara Guss Kemp, the college recently announced. The gift includes $8 million for financial aid, $7 million for enhanced community spaces and $5 million in planned gifts as a lifetime pledge to the college. Swarthmore received its largest donation ever — $50 million from philanthropist Eugene Lang (Class of 1938) — late in 2012. The previous record ($20 million) was set by Mr. Lang in 1997.

White House: Sequestration Hurts PA Research, Education BY THE NUMBERS

Pennsylvania Impact If sequestration takes effect, here is the impact it will have on Pennsylvania, according to the White House.

$900M

Cuts to loan guarantees to small businesses

HIGHER EDUCATION

$600M

PA School System Chancellor Named Peter Garland, executive vice chancellor of the Pennsylvania State System of Higher Education, was formally appointed acting chancellor of the state university system, effective March 1. Chancellor John Cavanaugh is leaving to lead the Consortium Garland of Universities of the Washington Metropolitan Area, according to The Patriot-News. Mr. Garland will hold the role until November 1 or a successor is chosen. PHARMACEUTICAL

Merck, State Settle on $8.25M Deal Pennsylvania reached an $8.25 million settlement with Merck, maker of prescription drug Vioxx, Attorney General Kathleen Kane announced last week. About $6.9 million of the settlement will support the state’s prescription assistance program, PACE, which helps seniors pay for medications. “Merck had a clear legal obligation to disclose known harmful side effects from Vioxx to both the medical community and patients,” the attorney general said in a statement.

Funding cut to the Federal Aviation Administration

$26.4M

Fifty-one detailed reports were released by the White House Sunday highlighting how possible $85-billion budgetary cuts will affect each state and Washington D.C. Though some lawmakers say the threat of sequestration is exaggerated to mobilize GOP members, others see it as a reality that small businesses, schools, public sector employees and others will have to endure. Some highlights of the Pennsylvania report include: Unemployment: Emergency Unemployment Compensation benefits could be cut by nearly 11 percent per person. Long-term unemployed individuals could lose an average of more than $450 in benefits. In 2012, Pennsylvania was the No. 1 state to pay out improper unemployment benefits, totaling $690 million, according to the federal Department of Labor. Jobs: The sequester would reduce loan guarantees to small businesses by as much as approximately $900 million. Private sector resources will be restricted, which will likely result in more than 1,000 fewer jobs created than expected and leaving $50 million in private sector investment untapped.

Education: Head Start and Early Head Start services would be eliminated for nearly 70,000 Pennsylvania youth. Title I education funds would be eliminated for 2,700 schools, cutting support for 1.2 million disadvantaged students and putting 100,000 teacher and aide positions at risk. Research and Development: The National Institutes of Health would delay scientific projects and make hundreds of fewer research awards. The research sector could see several thousands lose their jobs or necessary funds. The National Science Foundation (NSF) would issue approximately 1,000 fewer research grants and awards, impacting an estimated 12,000 scientists and students, delaying or discouraging scientific research. National Security: U.S. Customs and Border Protection would have to reduce its work hours by the equivalent of more than 7,500 border patrol agents and officers. At major airports, including Newark, average wait times could increase by 30 percent to 50 percent to over four hours or more.

Loss of funding for primary and secondary education

$7M

Cut to Army base operation funding in Pennsylvania

26,000

Civilian Department of Defense employees who will have to be furloughed

5,280

Children who will not receive vaccines

$849,000 Loss of funds used to provide meals to senior citizens

28 FEBRUARY 2013

REGIONSBUSINESS.COM

MUST-HAVE APP

Expedia Smartphone users can save up to 60 percent with Expedia Mobile Exclusive hotel deals. Now, users can also find the best flights around the world using the Expedia app (free on both iOS and the Android market). A tablet app is coming soon, according the company website. T he app defaults to your current location to help speed up the process. Users who are signed in can book a room or a flight in fewer than 30 seconds.

EXECUTIVE BOOKSHELF

The Disaster Experts In the wake of 9/11 and Hurricane Katrina, many are asking what, if anything, can be done to prevent large-scale disasters. How is it that we know more about the hazards of modern American life than ever before, yet the nation faces ever-increasing losses from such events? Where is the logic in creating an elaborate set of fire codes for buildings, and then allowing structures like the Twin Towers — tall, impressive, and risky — to go up as design experiments? The Disaster Experts takes on these questions, offering historical context for understanding who the experts are that influence these decisions, how they became powerful, and why they are only slightly closer today than a decade ago to protecting the public from disasters.

WEEKLY BRIEFING

Testing How Well You Know Philadelphia Neighborhoods

WHO TO FOLLOW

@FrugalPhillyMom Linda Vertlieb The host of website FrugalPhillyMom.com always knows what’s new and fun for Philadelphia families. RT @FrugalPhillyMom: FREE admission to @ConstitutionCtr today from 12p-5p courtesy of @PwC_LLP #Philly

BY SANDY SMITH For many years, local newspaper columnist Clark DeLeon asserted that there was one sure way to separate true Philadelphians from neophytes: A true Philadelphian could answer the question “Where is Swampoodle?” If you know the answer to that question, you will enjoy testing your wits against a new online geography quiz called “Click that ‘hood.” (Click-That-Hood.com) And if you don’t, the game is a great way to learn Philly’s geography and the identity of its 143 neighborhoods. “Click that ‘hood” is a map-based game based on open data and developed by Code for America’s 2013 Louisville fellowship team. Currently, visitors can test their famil-

GOTTA-HAVE-IT GADGET

3Doodler 3Doodler, called “the world’s first 3D Printing Pen,” takes the 3D printing world and puts it in the consumer’s hands — literally. Over the weekend, a Kickstarter for 3Doodler raised almost $2 million, far surpassing the goal of $30,000. All donors who gave $75 or more will received a 3Doodler pen from WobbleWorks LLC. The Kickstarter fundraiser will continue through March 25.

iarity with the neighborhoods of 43 cities — 39 in the United States, three in Canada and two in Germany. The developers have allowed room to grow — users can add their own cities to the list. The game lets you race against the clock to identify 20 randomly selected neighborhoods in Philadelphia. Those with more intestinal fortitude can try identifying all 143 in one sitting. We recommend setting some time aside for this task, for we’ll bet that even natives and longtime residents will find neighborhoods they never knew existed playing this game. It’s a great way to let your inner map freak run free while learning more about Philadelphia. This article originally appeared on PhiladelphiaRealEstate.com.

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Atlantic City on Top 100 Club List The 2013 Nightclub & Bar Top 100 list ranked nightlife venues across the United States by revenue. Three Atlantic City spots made the list; no Philadelphia venues were included.

$80-90M 2012 total revenue for XS Nightclub and Marquee LV, both in Las Vegas

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$5-10M Mixx at the Borgata

28 FEBRUARY 2013

REGIONSBUSINESS.COM

DEALBOOK

FINANCE

SPORTS

HEALTH CARE

Hamilton Lane Acquires Shott Capital Firm

PPL Buys Arena Naming Rights

AmeriHealth Buys Chartered Health

Private equity asset management firm Hamilton Lane, of Bala Cynwyd, acquired Shott Capital Management, of San Francisco. Financial terms of the deal were not disclosed. Shott Capital Management provides private equity and distribution management services for institutional investors, including major public and private pension plans, foundations, endowments, and other financial institutions. “We are excited by the opportunity not only to acquire new talent and additional capabilities, but also to provide high-quality private equity management to new clients,” said Hamilton Lane CEO Mario Giannini.

PPL Corp. entered into a 10-year agreement for the naming rights of the new, $272 million Lehigh Valley Phantoms hockey arena set to open in September 2014. Financial terms of the deal were not disclosed. In February of 2010, PPL purchased the naming rights to the Philadelphia Union soccer arena in Chester, Pa. for $20 million over the course of 11 years.

Philadelphia-based AmeriHealth Mercy has agreed to acquire parts of Washington, D.C.-based Chartered Health Plan for $5 million, according to The Washington Post. A judge was asked Friday to approve the sale. Chartered Health Plan is “the largest manager of health care for low-income D.C. resident,” according to the Post report, adding that AmeriHealth is seeking to enter the Medicaid business in the nation’s capital. Unpaid medical claims filed with Chartered Health Plan could total more than $40 million, the Post reported, so the sale to Amerihealth will not be enough to cover Chartered’s debt. The company did not declare how it plans to cover the remaining claims.

HEALTH CARE

PREIT Planning Health Care Facility in Exton Pennsylvania Real Estate Investment Trust will add ambulatory health care facilities in retail space at the Exton Square Mall, the company recently announced in a statement. Main Line Health will open a 32,000-square-foot facility on the lower level of Exton Square Mall, one of PREIT’s suburban Philadelphia assets. The facility will include a broad range of diagnostic and treatment services, including Main Line Health family medicine physicians, obstetric and gynecology specialists, oncologists, pediatricians and other specialty physician practices.

28 FEBRUARY 2013

REGIONSBUSINESS.COM

POLITICS

In Hearing, Senator Blasts Private Label Wine, Liquor BY MELISSA DANIELS HARRISBURG — Whether you’re in the mood for Merlot or Moscato, the taxpayerfunded private label TableLeaf wine may have something to fit your taste. That is, if you’re OK with buying government-subsidized alcohol. Officials from the Pennsylvania Liquor Control Board testified Monday before the Senate Appropriations Committee budget hearing, and among the many topics discussed was TableLeaf, the often controversial private label wine the PLCB has sold and marketed in its wine and spirits stores since 2011. State Sen. Pat Vance, R-Cumberland, asked how much the PLCB spends on producing and marketing Table Leaf. “I walked into my state store last week and was distressed to see that your TableLeaf wine was displayed right in the front, very predominantly,” Sen. Vance said. “I do have a problem with your competing with the private sector.” Board member Robert Marcus addressed Sen. Vance’s question, appearing to read a prepared statement from a binder of notes on the table in front of him. He called TableLeaf “a huge success” and said the wine, at one point, was the 17th bestselling wine in the nation. “Our private label program is part of our ongoing program to give consumers more and better low cost choices and to simultaneously increase the money we return to the General Assembly,” Mr. Marcus said. TableLeaf often is criticized

as government-buoyed competition to private wine retailers. And it’s been criticized for using a California winemaker, Brono Wine Co., to make the wine. But the PLCB maintains its delivering consumers what they want. “Opponents who don’t think the PLCB should be in the business at all most certainly don’t think the PLCB should get into the private label business,” Mr. Marcus said, “but that is the ideological view, not a position driven by customer service. Pennsylvanians are voting with their wallets on these products and we believe in the revenue maximization.” Priced between $6 and $15 a bottle, TableLeaf products are considered a value-priced option, on shelves since 2011. PLCB now makes seven varietals, spanning the flavor and body spectrum in offerings from an average 750 milliliter bottles to its 1.5 liter options. The brand proves popular. Since the beginning of the program, the PLCB has made nearly $7 million off of the sale of five different varietals totaling more than 761,000 bottles. The PLCB’s private label program includes several other wine brands, like Dialed In, LA MERIKA, Hayes Valley and Las Parcelas, and one spirit, Copper Sun vodka. Critics of the private label, including Sen. Vance, argue against the brands on the basis of their very creation. “Government tax dollars competing with private dollars, there is no excuse for doing that,” Sen. Vance said. Mr. Marcus gave no indication of how much PLCB

spends on producing or marketing TableLeaf and the other wines and spirits. But a December report from The Pittsburgh Tribune Review found the agency spent about $474,000 of its marketing budget for its own brands. Senators asked multiple questions about the possibility for privatization, at a time when Gov. Tom Corbett has a plan to sell off the state store and create new liquor licenses. The PLCB operates more than 600 retail wine and liquor stores throughout the state. Gov. Corbett’s plan to auction off licenses would allow for up to 1,200 stores, and change sales rules for bars, convenience stores and grocery stores. Parallel to that discussion, some state senators, both Republicans and Democrats, have pushed for legislation that would “modernize” the current operation — either before a state store sell-off or instead of privatization altogether. Such changes could include how products are priced to expanding Sunday hours, bringing in as much as $100 million more a year according to Senate estimates. “We are going to fight like hell to make this system more sustainable for now and in the future,” said state Sen. Jim Ferlo, D-Allegheny. Board Chairman Joseph “Skip” Brion, who Gov. Corbett appointed less than two years ago, said he does not believe the state should be in the liquor business, but modernization laws would help. “My attitude is if we are going to have a liquor busi-

ness make it the most profitable and best that you possibly can,” Mr. Brion said. In 2010-2011 fiscal year, the PLCB transferred $105 million in cash to the state’s General Fund, and generated about $391 million in tax revenue, according to a February 2012 Senate hearing. More than $20 million was transferred to Pennsylvania State Police to fund liquor control enforcement operations, and another $7 million was transferred to the Department of Health Drug and Alcohol programs. This article was originally published at PaIndependent. com.

28 FEBRUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Obamacare Resistance Practical, Not Political

Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm. CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Remember Nancy Pelosi telling the nation we’d have to wait to find out what was actually in the so-called Affordable Care Act? As states turn to the daunting task of implementing the gargantuan health care restructuring, those words seem hauntingly prophetic. States late last year took center stage in both the ongoing debate over Obamacare and in navigating the technical difficulties with implementation. Most state legislatures and governors were Republican controlled but were asked to put into effect a financially unsustainable law rammed through a Democratic Congress. There are two key elements facing the states. First is the setup of the “exchanges,” the bureaucracies that will regulate the structure and sale of health

insurance for the more than 30 million people who will have subsidized coverage. The other is the issue of whether states opt to expand their Medicaid coverage to include individuals below 138 percent of the federal poverty level (the federal government would use taxpayers’ money to make all the payments for the first few years). The states were slow to set up exchanges. HHS extended deadline after deadline. On December 12, Gov. Tom Corbett rejected the state-run health insurance exchange. At the end of the year, only 18 states had set up exchanges. Seven others set up hybrid models “partnering” with the federal government. There’s more than one ironic twist in these machinations. States that tend to be more conservative and pro-state’s rights

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are punting the exchanges to the federal government. Meanwhile, the promised subsidies, at least according to the statute, apply only to exchanges set up by states. States’ reluctance is not political; it’s coldly practical. Obamacare has proven to be much more difficult and costly to implement than advertised. States were not given adequate time or information. The states gain no advantage by establishing exchanges; they are essentially vendors to HHS. If Obamacare doesn’t work out as promised, voters in the states would blame governors and legislators for problems created in Washington. It will cost a lot of money to set up exchanges. States like PA already regulate insurers and will continue to do so, regardless of who sets up the exchange.

And there’s a fail safe for states like Pennsylvania. If they decide that they would like to replace the federal exchange later, under the Act they can do it. There’s simply no rush to act. The Medicaid expansion decision boils down to basic cost analysis. While the provision for the federal tax dollars to be used for the initial payments is meant to be attractive to the states, there is no doubt that as early as 2019 the expansion would become a very heavy financial burden for the states. It is increasingly obvious that Obamacare is not the panacea its proponents promised. It is a bureaucratic nightmare. Pennsylvania and the majority of the states are simply not willing to carry the water for the feds and take the blame when things don’t work out.

28 FEBRUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Committee Approves Living Wage for Airport Workers

Timothy Holwick is a freelance writer covering Philadelphia government. Find more coverage at citycouncilmatters.com. CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Philadelphia City Council’s Committee on Commerce and Economic Development recently heard testimony on a bill that would apply the 21st Century Minimum Wage and Living Benefits Standard to airport workers and other employees of companies with concessions or leases from the city. The standard is an effort by City Council to leverage the city’s business with private companies and contractors for better benefits for the employees of those companies, who are assumed to be mostly Philadelphia residents. At the committee hearing, several airport workers testified about their economic situation. They stated how they make minimum wage, $7.25 an hour. They described their living situations where many family members are stuck in small

residences. “I don’t want to be living like this. I want my own place,” said one baggage handler, who went on to describe how the increased wage rate would increase the level of dignity in her life. The wage under the bill’s changes would increase their hourly rate to $10.88 an hour. A wheelchair attendant testified that “I work hard, but I’m hungry.” She promised that she works hard, and loves taking care of senior citizens at the airport. She described how her monthly wages practically equal her rent, and her income is supplemented by food stamps. Despite the public assistance, she stated that she and her children are still hungry. According to workers like this wheelchair attendant, the low

I DON’T WANT TO BE LIVING LIKE THIS. I WANT MY OWN PLACE.’ —UNIDENTIFIED BAGGAGE HANDLER AT THE AIRPORT

wages create high turnover at the airport, and the improved wages will not only help her individually, but will also increase the quality of service at the airport. The Nutter Administration sent a representative to state that the administration has no objection to this bill, and its attendant increase in wage for employees of companies holding contract or lease arrangements with the city. Councilman Wilson Goode chairs the Commerce and Economic Development Committee. He listened attentively to the testimony of the airport workers, but neither he nor any of the

other council members present asked questions. They simply voted unanimously for the favorable recommendation of the bill. On Thursday, February 28th, the bill is scheduled to be up for final passage on City Council’s agenda for their weekly meeting. At that time, airport workers will be able to offer their comment on the larger stage before all of council, which will then vote on the bill. Given the lack of objection from the administration and council’s commitment to promoting a living wage for Philadelphia residents, the bill should pass with ease.

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POLITICS

The Man Reevaluating Philadelphia BY EMILY DICICCO Alan Butkovitz isn’t concerned with how history has dictated his job responsibilities. Previous City Controllers in Philadelphia audited this city by checking to see if the numbers added up properly in different departments. That is what was expected of them, and that is what they delivered. But Mr. Butkovitz sees his role as that of a true public servant, not just a numberscruncher. As controller, he believes, he is responsible for making sure Philadelphia residents get what they deserve from a city that uses tax dollars wisely. First created back in 1854, the position of Philadelphia City Controller has remained largely unchanged. It’s his or her task to serve as the city’s chief financial watchdog, an independent check on all city departments. Throughout his two terms, Mr. Butkovitz has earned a reputations for being more aggressive than his predecessors. A former Democratic member of the Pennsylvania House of Representatives, Mr. Butkovitz was first inspired to become involved by his grandmother, who immigrated to the United States in the 1920s. “[She] was a very strong Roosevelt backer; her husband was a very strong union organizer. I think that her passion for it communicated to me,” he said. As a child, he was always fascinated with politics, volunteering since he was a teenager. As an adult, he represented the 174th district of Pennsylvania from 1991 to 2005. A year later, Mr. Butkovitz was elected City Controller. Since taking office, his administration has used investigative audits to go after wasteful prac-

Alan Butkovitz at his office in 2012.

REBECCA SAVEDOW

THERE’S A WHOLE NEW GENERATION OF PROSPECTS THAT ARE BEING CONSIDERED FOR 2015.’ tices in the city. These audits have identified more than $500 million in potential revenues and savings. An audit of construction in North Philadelphia exposed “contempt and disrespect” towards local residents by contractors. Another audit pointed out that half of police cameras to be mounted in high crime zones were either kept in storage or were not operational. But identifying problems is less important than finding

solutions, he said. After a report from his office exposed that Philadelphia’s Emergency Medical Service units were arriving late 40 percent of the time, he took action, giving the city suggestions to manage the rescue squads more efficiently. The Butkovitz team also received national recognition for a review of the Sheriff ’s Office, which was holding more than $17 million that belonged to people who lost their homes in a Sheriff ’s Sale.

“Before the City Controller’s office just did checks of essentially whether numbers bounced. But we have made a substantial move in checking out how the City Departments to see if they are succeeding or if they are falling short,” Mr. Butkovitz said. “We view our job as being more in real time, and more of a probe to getting customer service. Not just coming back and checking the numbers later.” Because of his aggressive audits, Mr. Butkovitz has received heightened attention across the city as a possible mayoral candidate in the future. But while he said he is “really flattered to be included

on that list,” he said he is focusing on his reelection in 2013. “When you’re running those services, when you’re the mayor or the people working for the mayor, there is always going to be a built-in requirement that you put the best face on things, it’s part of the job,” he said. “You can’t expect to get that same objective review from management as you get from someone whose job it is to check up on services.” That doesn’t mean he isn’t eyeing the City Hall office. “There’s a whole new generation of prospects that are being considered for 2015...There are people talking to us, and we will evaluate it at the right time,” he said.

28 FEBRUARY 2013

REGIONSBUSINESS.COM

POLITICS

Butkovitz Faces Challenges in Reelection BY VICTORIA CRAM AND KEEGAN GIBSON

CHALLENGERS

he year 2013 isn’t a blockbuster year for Philadelphia politics. The mayor’s office and city council seats go up in 2015, and District Attorney Seth Williams looks to cruise to a second term. But one race in particular is worth watching this year: the City Controller. Alan Butkovitz faces some opposition and difficult demographic realities as at least two challengers prepare to face off with the seven-year incumbent. Mr. Butkovitz is a former state representative and current leader of the 54th Ward. While even his strongest allies might concede Mr. Butkovitz is charismatically challenged, he is also known for being bright and hard working. And he’s eying a run for the mayor’s office in two years. Most of the time in politics, an incumbent would rather face two or three challengers than just one. More names on the ballot means no one candidate gets the benefit of any anti-incumbent ire. In some ways Mr. Butkovitz was the accidental controller. He was unexpectedly elected in 2005 when Judge John Braxton, the leading contender and only African American in the race, bungled his financial disclosure form and was bounced from the ballot. This left Mr. Butkovitz as the only candidate in the race and a sure winner. But in 2013 Mr. Butkovitz is not likely to have the same good luck. In 2009, he defeated Judge Braxton and Brett Mandel — taking 42 percent of their three-way primary. Mr. Butkovitz faces a reelection battle next year against a growing field of Democrats. Mr. Mandel is a resident of the Fitler Square neighborhood in Southwest Center City. The former director of the Financial and Policy Analysis Unit in the City Controller’s Office, Mr. Mandel ran unsuccessfully for the city controller post against incumbent Controller Mr. Butkovitz in the 2009 primary. In that race he failed to gain traction against the incumbent and finished third. Despite his 2009 showing Mr. Mandel is back for round two and is already holding fundraisers to bring in the considerable funds necessary for a credible citywide campaign.

Melvin Johnakin Jr. Republican candidate Mr. Johnakin was an original member of the East Falls Development Corporation Board of Directors. He lost to Councilman Curtis Jones, Jr., in a 2007 City Council election.

Brett Mandel Mr. Mandel, a Democrat, is the former director of the Financial and Policy Analysis Unit in the City Controller’s Office. He lost to Alan Butkovitz in the 2009 primary election.

Alan Butkovitz is sworn in as city controller in 2009.

Mr. Butkovitz’s strength comes from the predominantly white areas of Philadelphia including the northeast and Center City. Mr. Mandel could cut into that base. That becomes more relevant in the case of a crowded primary. Joining the familiar faces in the running for the office is relative newcomer Michael Williams. Mr. Williams, a gay African-American Catholic man, has a law degree from the University of Pennsylvania and some impressive background experience, including being the chairman of the Forensic Audit group at Picciotti & Schoenberg and a former senior attorney for the Child Welfare unit of Philadelphia. If elected, he would be only the second openly-gay elected official in Philadelphia. It remains to be seen whether Mr. Williams will raise the money or the support to pose a credible threat to Mr. Butkovitz. The gay community and especially the African American community wield considerable influence in city politics. The final likely democratic candidate is Mark Zecca, a senior attorney with the City’s Law Department, who recently stepped down from his position prompting speculation that he was intending to make a run for the seat. Along with his reputation for honesty

Terry Tracy ALAN BUTKOVITZ

and sincerity, he also benefits greatly from the fact that his father served as a deputy mayor under former Mayor Frank Rizzo as well as worked for two other former Philadelphia mayors. Mr. Butkovitz hasn’t been sitting around. He has long been an outspoken critic of Mayor Michael A. Nutter and City Council. In recent speeches before Northeast civic associations, Mr. Butkovitz has heavily criticized them, and opponent Mr. Mandel, for their support and role in developing the Actual Value Initiative. The AVI is Philadelphia’s long-overdue overhaul of its property tax laws and methodology, which has resulted in citywide property reassessments and widespread changes in the cities property tax code this year. Nobody likes to pay more property taxes. In a large field of Democratic candidates, the GOP in Philly also has candidates ready to run for the Controllers seat. Melvin Johnakin Jr. is a local entrepreneur who dabbles in public affairs. He was also the Republican candidate that lost to Councilman Curtis Jones, Jr. for the city council seat in the Fourth District in 2007. The other GOP candidate is Terry Tracy, part of the party’s reform wing. — This article originally appeared on PoliticsPa.com.

Mr. Tracy, a Republican, worked with David Oh in his successful 2011 bid for City Council. He graduated from Temple and earned a master’s degree in government administration from Penn.

Michael Williams Mr. Williams, a Democrat, hopes to be the second openly-gay elected official in Philadelphia. The former chairman of the Forensic Audit group at Picciotti & Schoenberg is also a former senior attorney for the Child Welfare unit of Philadelphia.

Mark Zecca This Democrat recently stepped down from his role as a senior attorney in the city’s Law Department. His father worked for three Philadelphia mayors.

28 FEBRUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Future Spending, Not The Sky, Is Falling

Eric Boehm is bureau chief/news reporter for Pennsylvania Independent.

THESE CUTS WOULD HAVE MACROECONOMIC CONSEQUENCES. NATIONWIDE, HUNDREDS OF THOUSANDS OF JOBS WOULD BE LOST.’ —JASON FURMAN ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY

President Barack Obama visits Roosevelt High School in Gary Indiana.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

HARRISBURG – It makes for a good headline, but even the most serious consequences of the coming federal budget cuts are little more than a drop in the bucket for Pennsylvania and the nation. But that’s not the message you’ll hear from the White House and — for the most part — from the media. While politicians and the media take a “sky is falling” approach to $85 billion in funding cuts that take effect on March 1, the dirty little secret is that the reductions in future spending will not result in a single dime of actual cuts. For those who are still in the dark about this so-called “sequester” deal, here’s the nuts and bolts: In August 2011, as part of a deal to raise the federal debt ceiling, Congress and President Obama agreed to schedule $85 billion in future budget reductions for March 2013. Those cuts were “across

the board,” meaning they fell on Republican favorites like the military as well as Democratic favorites like entitlement spending. In theory, those cuts were supposed to be so serious that the mere threat of them going into affect would be enough to bring Obama and Congress together on some kind of grand bargain to reduce the nation’s deficit, reform entitlement programs and balance the budget. Now, as the deadline ticks closer, the White House is running a very effective media blitz on the sequester designed to both confuse the public about the financial realities of the deal and to make it look as though Congressional Republicans are to blame for the impending cuts — which, again, aren’t really cuts. In a lengthy missive released to media outlets on Monday, the White House gave a stateby-state breakdown of what the sequester cuts would mean.

JOEY LAX-SALINAS

“These cuts would have macroeconomic consequences. Nationwide, hundreds of thousands of jobs would be lost,” said Jason Furman, assistant to the president for Economic Policy, during a conference call on Monday. In Pennsylvania, the biggest hit will be $26.4 million in funding for primary and secondary education would be cut by the sequester, leaving 360 teaching jobs “at risk,” according to the White House. But put that number in context. When federal, state and local sources of revenue are considered, Pennsylvania spends more than $26 billion on education each year. That means the cuts from the sequester would equal about 1 percent of total education spending in the commonwealth next year. What kind of realworld budget cannot be cut by at least 1 percent? And keep in mind that those

supposedly-devastating cuts in spending are actually nothing more than reductions in the rate of future spending growth. For decades, most major parts of the federal budget have been on autopilot to grow at about three percent annually. The sequester arrangement will reduce some of those future line items’ growth over the next 10 years, but will not result in any actual reductions in spending for the current year and will not decrease any federal line item in terms of real dollars. In fact, federal spending will increase by $1.6 trillion next year with the sequester cuts in place, as opposed to $1.7 trillion without them, according to research by the Mercatus Center, a free market think tank. It’s sad, really. The wailing over the sequester says more about the state of discourse over federal spending than it does about the actual costs of those cuts.

28 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

MEETUP CALENDAR

Philadelphia LadyHacks

IBC Health Care Data Initiative Gives Doctors ‘360-Degree View’

Philadelphia LadyHacks: A Hackathon for Women will be held 6 p.m. Friday, March 1 to 9 p.m. Saturday, March 2 at WHYY, Independence Mall West, 150 North 6th Street, Philadelphia, Pa. Philadelphia’s Women in Tech community invites area women developers, designers and students to the city’s first women-only hackathon. Tickets are $10, and 100 percent of the registration fee will be donated to TechGirlz and the Girl Develop It Philly scholarship fund.

Philly Tech Meetup The March 2013 Philly Tech Meetup will be held 6:30 p.m. Wednesday, March 6 at Quorum at the Science Center, 3711 Market Street, Floor 8, Philadelphia, Pa. Two startups and one investor will present after time for networking, followed by a happy hour at Han Dynasty.

Overview of SBA Loan Programs The Overview of SBA Loan Programs will be held 5:30 to 6:30 p.m. Thursday, March 7, at Prudent Lenders Corporate Office, 630 Freedom Business Center Drive, King of Prussia, Pa. At this event, small business owners and service providers (lenders, CPAs, attorneys, realtors and loan brokers can network to discuss how SBA lending can assist small businesses in the Philadelphia area. MEETUP.COM

Independence Blue Cross, Abington Health and Lumeris recently announced the creation of an accountable care initiative that uses Lumeris cloud-based data platform to distribute information — claims, preauthorizations, hospitalizations and lab results — to Abington Health and IBC. This is the first such initiative in Philadelphia and one of a limited number across the nation, according to IBC. “This will give doctors at Abington a 360-degree view of all the care a patient is receiving. Abington’s physicians will see not only their patients’ data from Abington Health’s physicians and specialists, but also services their patients receive from other network physicians,

hospitals, and outpatient surgical centers,” IBC said in a statement. Additionally, Lumeris will provide consulting services physicians at Abington Health. “Independence Blue Cross is proud to be a leader in the new era of accountable care, with progressive programs that help transform the delivery and quality of health care,” said Daniel J. Hilferty, IBC president and CEO. “This initiative with Lumeris and Abington Health advances our organization’s efforts to share real-time data with physicians and hospitals, improve collaboration and coordination, and provide safe, high-quality, and costeffective care for consumers.

Wharton Health Care Business Conference Brings Together Industry Professionals The Wharton Health Care Business Conference, organized by MBA students February 14-15, brought together speakers from health care services, IT, public and private payers, finance, pharmaceuticals, biotechnology, and medical devices. Speakers included: Kent Thiry, co-chairman and CEO of DaVita Healthcare Partners and Bruce Broussard, president and CEO of Humana. Panel sessions included: Strategic Impacts of an Aging Population, Mobile Health, Healthcare Opportunities in Emerging Markets, Healthcare Policy: Paying Less, Kent Thiry, DaVita Covering More, Modern Epidemics: Obesity and DiaHealthcare Partners betes, Personalized Treatments.

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2013: YEAR OF THE INNOVATOR

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Inaugural DreamIt Health Reviewing 2013 Applicants DreamIt Health, the first Philadelphia-based health care accelerator, is reviewing applications from entrepreneurs now that the application period has ended. The DreamIt Ventures and Venturef0rth program powered by Independence Blue Cross and Penn Medicine provides an opportunity for entrepreneurs to take advantage of health care opportunities. Accepted groups will participate in a four-month boot camp and be provided with $50,000, office space and access to mentoring and resources. Offers will be made to participating companies on March 8 and companies will have two days to accept, according to the DreamIt Ventures website, DreamItVentures.com.

The program will begin officially on April 8 (though there will be a “kickoff weekend” before then) and will end August 9. Similar to other DreamIt programs, DreamIt Health will have a Demo Day July 31, at which participants can present their new business model to investors and health care professionals. More than 80 companies have been launched from DreamIt events in the last four years. Those companies have raise more than $80 million in combined investment capital and have a combined value of nearly $330 million, according to DreamIt Ventured. DreamIt Health offices will be at Venturef0rth, a co-lab working space, at 417 North 8th Street, #201, Philadelphia.

Personal Health QR Code Wins 2013 Startup Weekend Health A personal health QR code called mICE (my In Case of Emergency) took first place at Startup Weekend Health, held the weekend of February 15 at VentureF0rth. The winning proposal called for carrying a QR code that emergency responders could scan to access a victim’s personal health information, such as allergies or preexisting conditions, MedCityNews. com reported. Additionally, the program includes an app that could send an alert to pre-set contacts. As a prize, the winning team won an interview with DreamIt Health for its accelerator. Startup Weekend Health,

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a 54-hour hackathon, has participants build a web or mobile application for businesses. The weekend brought together “people with different skillsets — clinicians, software developers, graphics

designers and business people — some to passionately pitch their ideas and find a team, others looking to join a team to build a compelling solution,” according to the event’s website, healthphl.startupweekend.org. Of the 13 finalists, Jose Morey (US Med Experts) took second place, and Kerry McLaughlin (KnowMe) finished third. US Med Experts “enables remote patients...to have test results read by doctors at top hospitals,” and KnowMe “helps nursing home staff maintain daily records of residents’ moods, symptoms and habits,” FlyingKiteMedia.com reported.

28 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

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BY BRANDON BAKER

he presence of Independence Blue Cross is difficult to ignore in the Philadelphia region: Its mammoth tower protrudes from the skyline as a staple of Philly architecture, and its insurance services extend to a staggering 2.3 million people in Greater Philadelphia — more than a third of the region’s entire population. IBC, one might say, is Philadelphia’s standard bearer for the health care industry. The insurer, which celebrates its 75th year of business in 2013, currently employs 6,987 people and, in 2011, reported revenue of $9,211,537. To say the least, the company walks away from its financial physical healthier than most 75-year-olds. “What I think is unique about us is we really participate in all aspects of health insurance — whether we’re talking about Medicare, Medicaid, individual markets, small-group or large-group markets, state-run programs like CHIP, subsidized programs for low-income people, etc.” said Scott Post, vice president of corporate and association affairs. “We operate on all levels of health care and not just niche segments, which I think sets us apart.” IBC’s company culture encourages its employees to abide by what it calls “Rules of the Road” guidelines, which, to cite a few, include being respectful of the work environment, “parking egos at the door,” respectful disagreement in the workplace and — naturally — “having fun.” Beyond the limited scope of the Philadelphia region, IBC insures 3.1 million people. To best serve these people in the future, the company is focusing most of its recent efforts on adapting to reforms setup by the Affordable Care Act. “We’re used to operating a lot in a businessto-business model, but now we expect a larger amount of individuals in the market, so that’s going to change our marketing practices and make us become a more retail and consumer-oriented company,” Mr. Post said. Mr. Post said the company has had an open dialogue with the Obama administration and Health and Human Services since before legislation was passed, trying its best to be prepared for possible changes to Medicaid and monumental changes to the individual market that loom on the horizon. “The trick here becomes, looking at the act, and saying, ‘OK, now what do we mean by preventive care?’” Mr. Post said. “There’s going to be a lot of people who may not have had insurance in the past, and we want to answer their questions and help them understand how to navigate the system. That’s a lot of what planning is about now.”

@IBX

BEARING THE

BLUE CROSS FOR PHILADELPHIA

In its 75th year, Independence Blue Cross is trying to stay a step ahead of policy changes

/IBX

www.ibx.com

28 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

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Benjamin’s Desk Announces Expansion, Additions

As Benjamin’s Desk distances itself from its initial launch period, it’s begun to load up its calendar with more and more networking events for its patrons and, in a surprising shake-up, has begun construction that will expand the co-working space’s office facilities. Region’s Business checked in with Michael Maher to get a breakdown of what lies on the horizon for Spring 2013. “Benjamin’s Desk is excited to announce several additions to

the company’s dynamic work founder of 2820 Press, a content environment and community. strategy and copywriting serWe have begun construction vices firm that has consulted for on the 8th floor of the historic the likes of Philadelphia startAllman Building at 1701 Wal- ups like Curalate. 2820 Press nut Street to double the size of will be assisting to develop and our co-working space to include launch Tuesday Night Business additional private offices, event Club, exclusive curated prospace and breakout areas to gramming and workshops at further facilitate in the collab- Benjamin’s Desk. The weekly programs beginorative environment already established on the 7th floor. The ning April 2 with a preview 8th floor will open between June on March 26 will cover topics and August of 2013. including social media, content We are thrilled to be partner- strategy and productivity. The conference room at Bening with member Joe Taylor,

DIARY OF A STARTUP jamin’s Desk will place host to these events. There will be limited seating available to further highlight the intimate, exclusive nature of the workshops. There will be a dial-in option available for those interested in attending the event but may not be able to make it into the city, or able to get a seated ticket. In the tradition of Startup Finally, we will be hosting Weekend, lawyers will exercise the first-ever FirmUp Weekend their entrepreneurial muscles from March 22-24 in conjunc- join teams and collaborate to tion with Julia Shapiro, founder build a novel law firm concept within a weekend.” of Hire and Esquire.

Common Bond Connects ‘Student Borrowers, Alumni Investors’ Business: CommonBond Founders: David Klein, Jessup Shean, Michael Taormina Contact: molly@commonbond.com

BY BRANDON BAKER The team at CommonBond is wide awake to the problems today’s would-be student faces in acquiring loans that don’t cripple a bank account post-graduation. To address this problem, they’ve put together an investment pool that makes taking out a loan a little easier to swallow — particularly for those attending Ivy League business schools. “We are a student loan crowdfunding platform, which means we connect student borrowers with alumni investors,” said David Klein, CommonBond co-founder. “Borrowers are able to save a bit over $25,000 over the life of loan

repayment, and the alumni investors are able to expect a competitive financial return for loaning those students money.” The seeds of Brooklyn, NY-based CommonBond were planted in 2011 after Mr. Klein realized while attending Wharton that his interest rates weren’t as ideal as he’d envisioned. “At the time I got in to Wharton I knew it was going to be expensive, but I didn’t realize how much so until I started researching how expensive fixed-rate loan options were, both from the federal government as well as private banks,” Mr. Klein said. “So in July 2011 is when I realized there were no good fixedrate options out there for creditworthy students — at that point, I thought, ‘Hey, what if I make a website, get someone to sponsor my loan and promise people a certain percentage return on the money they give me?’ Then I thought, ‘Why

not make it a broader platform? ‘” The company accepts investments from accredited individuals – by their standards, those with a net worth of more than $1 million or an income of more than $200,000 for the past two years — and uses that money for loan allocations for students. Investors receive a return on their investment, and incoming students face a less daunting fixed interest rate of 6.24 percent. MBA students looking to refinance their loan, meanwhile, see a slightly lower fixed interest rate of 5.99 percent. The platform has so far launched at Wharton, but aims to extend to 25 MBA schools — MIT, Columbia and others — across the country in 2013, before broadening its horizons in 2014 to medical, law and undergraduate programs. CommonBond will seek a second round of funding estimated to close in the second half of 2013.

28 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

Out of Philadelphia, Not Out of Tax Manâ&#x20AC;&#x2122;s Reach

Mark A. DiAntonio, Esq. focuses his practice on civil litigation and employment law matters.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Regionâ&#x20AC;&#x2122;s Business.

If youâ&#x20AC;&#x2122;ve done business in Philadelphia, but no longer do, donâ&#x20AC;&#x2122;t be so sure youâ&#x20AC;&#x2122;ve escaped the clutches of the Tax Man. If youâ&#x20AC;&#x2122;re not careful, you may still face legal action courtesy of Philadelphiaâ&#x20AC;&#x2122;s Department of Revenue. To generate additional tax revenues, Philadelphia retained an outside entity named Revenue Collection Bureau, Inc. (â&#x20AC;&#x153;RCBâ&#x20AC;&#x2122;), which identifies professionals and business owners alleged to owe taxes to Philadelphia for work performed in the City. In some cases, the individuals donâ&#x20AC;&#x2122;t owe any taxes; nevertheless, the City Solicitor will file a lawsuit against the (sometimes unwitting) person, demanding payment of up to $10,000 plus court costs. Some individuals only become aware of the cityâ&#x20AC;&#x2122;s claim after receiving the lawsuit.

There may be ways to avoid this uncomfortable scenario, and there are typically remedies available to individuals wrongly accused of not paying taxes. Business owners in the crosshairs of the RCB and the city are in three categories: 1. Those who work, or have worked, in Philadelphia; 2. Those who filed Business Privilege Tax and Net Profit Tax returns in Philadelphia, but no longer do so; and 3. Those who received 1099 Forms at a Philadelphia address regardless of where they performed the work. Typically, the RCB first sends a letter indicating that it believes tax returns havenâ&#x20AC;&#x2122;t been filed for taxes that may be owed to the City. The RCB requests written confirmation disputing any alleged tax liability, or comple-

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tion of a worksheet regarding services performed in the City. Ignoring the letter is a bad idea. If the RCB receives no response, the City Solicitor will file a Code Enforcement Complaint in the Philadelphia Municipal Court. The claim typically alleges the individual owes penalties and fines â&#x20AC;&#x201D; in some cases, up to $10,000 â&#x20AC;&#x201D; plus payment of court costs. Typically, a hearing date is set within about two months. If you donâ&#x20AC;&#x2122;t respond to the claim or appear for the hearing, a default judgment may be entered in the amount demanded even if you donâ&#x20AC;&#x2122;t owe any taxes. Here are some ways to avoid or reduce the pain inflicted by this taxing matter: Make sure you or your accountant file Philadelphia tax forms for all years you

performed work in the city. When you no longer do work in the city, cancel your Business Privilege License. If you have offices in multiple locations, and you receive 1099 Forms, make sure the issuer knows the specific address to which the form should be sent. If you receive a notice letter from the RCB, donâ&#x20AC;&#x2122;t ignore it. Itâ&#x20AC;&#x2122;s easier to resolve the issue before legal action commences. If youâ&#x20AC;&#x2122;re served with a Code Enforcement Complaint, donâ&#x20AC;&#x2122;t ignore it. Again, itâ&#x20AC;&#x2122;s much easier (and certainly less expensive) to address it before entry of a default judgment. If youâ&#x20AC;&#x2122;re subject to a default judgment, hope may not be lost completely. You may still have some rights and remedies to rectify the situation, or at least mitigate any potential loss.

28 FEBRUARY 2013

REGIONSBUSINESS.COM

AS OBAMACARE TAKES HOLD, TIME FOR A

CHECK UP The move of smaller medical practices into larger networks continues as the industry braces for 2014.

arcus Williams was discouraged after more than seven years as a physician in private practice until health care consolidation carried him into hospital employment. Like the Clinton health care reform plan that drove it, the consolidation wave that carried Dr. Williams into hospital medicine 18 years ago has crested and crashed. Now he is preparing to leave Chester County Hospital and Health System to go back out on his own. “I think hospitalist medicine has been on the forefront of how medicine is practiced,” he said. But “I think that era of change and innovation has peaked.” This time, however, Dr. Williams is swimming against the tide. Hospitals and health systems once again are buying up medical practices and hiring physicians in the wake of another Democratic president’s push for health care reform, and as with President Barack Obama’s Affordable Care Act, an ebb looks unlikely. “Some pundits believe that all doctors will be employed by hospitals and systems. I don’t believe that,” said Craig Holm, a senior vice president at consultant firm Health Strategies & Solutions in Philadelphia. Still, “the trend is here to stay.” Consolidation is rampant, said Mr. Holm, who has written two books about hospital-doctor relationships. “Some systems are just throwing money at doctors.” In Philadelphia, a city dominated by health systems with private academic medical centers such as Jefferson Health System, Penn Medicine, Temple Health, and Einstein Healthcare, bigger appears to be better, and health systems are staffing up, often by buying practices, to control the care continuum. “In many ways this market is ripe for consolidation” because the payers are super-concentrated while the care providers are super-fragmented, said Larry Kaiser, the dean of the Temple University School of Medicine and president and CEO of Temple Uni-

Text by Michael Jacobs, Illustration by Don Lee

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Taking Region’s Health Care Worldwide A company that emerged from the health care consolidation of the 1990s has survived and thrived into Philadelphia’s current consolidation. Philadelphia International Medicine came together as a partnership of Thomas Jefferson University Hospitals, Temple University Hospital and Fox Chase Cancer Center in 1999 after the city went through layoffs, consolidations and hospital closures, said the president and CEO, Leonard Karp. “One of the strategies … to perhaps slow down that process was to look for patients outside the U.S. and bring them here,” where health care is a major employer, he said. “We’re looking at medical travel as a means of economic development.” After nearly $280 million in economic impact since 2001 and market changes that include the merger between owners Temple and Fox Chase, PIM is still bringing patients to Philadelphia. Most come for cancer care, neural sciences, pulmonary care and specialty procedures such as bone marrow transplants. “It’s an easy process. We work with you very closely,” Mr. Karp said. PIM arranges for medical reports in English and has doctors review them to ensure the trip is worthwhile. “We tell quite a number of patients there’s no reason to come.” If Philadelphia health care can help, PIM provides a cost estimate and works with the patient’s insurer or government on the cost, then helps make hotel or apartment arrangements at facilities ranging from the Ronald McDonald House to the Ritz-Carlton for stays that can last more than a year. PIM provides discounts, but its “mission is on the for-profit side, not to bring charity care,” he said. Some patients get sticker shock. “We’re never going to match the price of India. We can’t compete with Thailand or Costa Rica on a price basis. … We have to compete on quality. When people are looking for the gold standard in medicine, it’s still American medicine.” Mr. Karp said Philadelphia also competes with other U.S. medical centers but has an advantage because no other city has a company like PIM. The difference can show in nonmedical services. PIM helps with anything the patient and family need, from grocery shopping and restaurants to entertaining, as well as support services such as translators. The company delivered $24 million in economic activity in 2012 with almost 600 patients from 38 countries. “It’s a very small aspect of our business, but we’re very much open to international patients,” said Larry Kaiser, the president and CEO of Temple University Health System. PIM focuses on the Middle East, the Caribbean and

WE’RE LOOKING AT MEDICAL TRAVEL AS A MEANS OF ECONOMIC DEVELOPMENT.’ —LEONARD KARP, PHILADELPHIA INTERNATIONAL MEDICINE

FLICKR.COM/DR AEK MULDOON

Canada. The draw for Canadians, whose nationalized health system often is contrasted with the American system, is that they don’t have to wait six months to get cancer care or even MRIs, Mr. Karp said. “It’s a matter of timely access.” Health care is becoming more and more of a global service. Americans are getting health care in countries such as Mexico, Costa Rica, Thailand and India, and people from those countries are coming to America, Mr. Karp said. “That’s going to increase over the next decade.” To keep an edge, PIM is expanding beyond its core mission of bringing in patients: Bm aZl eZng\a^] Zg ^q^\nmbo^ iarlb\Ze ikh`kZf _hk business clients. Bm bl [kbg`bg` lmn]^gm gnkl^l _khf ;^kfn]Z <hee^`^ to Temple University Hospital to do clinical rotations, starting this fall. :g hg`hbg` mkZbgbg` ikh`kZf [kbg`l bg ;kZsbebZg hospital administrators, usually in October. : \hgmbgnbg` f^]b\Ze ^]n\Zmbhg ikh`kZf [^Zfl ebo^ video of a Philadelphia professor to faculty at Queen Elizabeth Hospital in Barbados. IabeZ]^eiabZ ^qi^kml Zk^ \hglnembg` hg ma^ \hglmkn\& tion of two academic medical centers in South Korea. PIM is always looking to expand into new parts of the world, as long as the people have the right mix of disposable income and a gap in top-quality specialty care that Philadelphia can fill. “The research that goes on here keeps us a step ahead, and it keeps us a step ahead of most places around the world,” Mr. Karp said. The question PIM always has to ask: “What can we do here that’s unique?”

versity Health System. He said systems must grow to efficiently manage the rising pressures on costs and the focus on outcomes instead of admissions. “We set out a fairly broad-based strategy to really grow the enterprise,” Dr. Kaiser said. “One of the ways was to recruit outstanding physicians” because people go to see doctors, not buildings. Temple Hospital has bulked up across specialties, particularly on cardiac surgeons, cardiologists, and cancer doctors, and brought in such leaders as new chairs of medicine and surgery. The acquisition of Fox Chase Cancer Center in July boosted the expansion of its cancer staff. Temple Physicians Inc. (TPI), meanwhile, has aggressively purchased primary-care and specialty practices to expand the health system. Doctors “are looking for an alliance, looking to affiliate with an academic institution,” and Temple offers an appealing vision, Dr. Kaiser said. “The TPI organizational structure works very well for them.” Dennis Olmstead, the Pennsylvania Medical Society’s chief economist and vice president of economics and payer relations, estimates that 60 percent to 70 percent of Pennsylvania physicians are now employees of hospitals, health systems, or large practices instead of being independent. Sixty-one percent of physicians were employees in 2012, compared with 43 percent in 2000, and a projected 64 percent will be employees by the end of 2013, according to a national Accenture report based on a survey last May. It’s a familiar cycle for Mary Pat Whaley, a physician practice consultant in North Carolina who has clients across the country. In the 1990s “a lot of hospitals bought physician practices, then found out they didn’t know how to manage it,” she said. Many hospitals “released them back into the wild.” That consolidation was about capturing referrals and driving patients to hospitals’ services, but it turned out, Mr. Holm said, that hospitals didn’t fill more beds by employing more doctors. Now, however, “the deal is not so much to drive business into hospitals,” Mrs. Whaley said. “The deal is to have better outcomes and keep people out of hospitals.” Integrated health systems are making money by keeping people well and creating savings for the insurance companies, government agencies, and others paying for care. The care providers benefit by sharing the savings. The Affordable Care Act plays a big role in that shift. The 2010 law promotes accountable care organizations, or ACOs, which aim to coordinate care to reduce redundant and unnecessary tests and procedures, promote wellness, prevent illness, and improve the quality of care, all while reducing costs. The primary-care physician is the key to that coordination, Mr. Olmstead said, so primary care is a focus of consolidation in Philadelphia and

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Direct Care Proves Viable Alternative Whether it’s called concierge medicine or a boutique practice, the end result is more time with a doctor and less time dealing with insurance companies. Most doctors are consolidating into larger practices and health systems, but some are moving in the opposite direction. “We have just seen a really big upsurge in new practice start-ups” in the past halfyear, said Mary Pat Whaley, a consultant at North Carolina-based Manage My Practice. “It kind of surprised us.” That shift, however, fits with the findings of the Physicians Foundation’s 2012 biennial survey of 13,575 physicians. Results released in September showed that more than half of doctors plan to reduce their number of patients, work part-time, retire, move to concierge medicine, or otherwise cut patient access within three years. Many physicians who became employees of big practices, health systems, or hospitals for income security are chafing at their lack of control, Mrs. Whaley said. After being trained to solve problems and be independent thinkers, “when they get into corporate health care, so to speak, a lot of them can’t stand it.” But those doctors know the old “Marcus Welby” practice doesn’t work anymore, so they are trying different models. These range from the bare-bones micropractice, in which a physician rents an exam room in another medical practice and sees a limited number of patients with no staff; to the house-call practice, revived by the aging-in-place movement and increased Medicare payments for the service; to an orthopedist whom Mrs. Whaley said has no office but has contracts with primary care practices to provide their orthopedic care. The most popular option appears to be concierge medicine, also called boutique care, direct primary care, fee for care, and retainer-based care. The idea is that a doctor charges a monthly or annual fee in exchange for standard services, such as annual physicals and routine sick calls, and applies insurance for special needs, from MRIs and lab work, to surgery and treatment of serious disease. That approach is similar to car care, for which most people pay out of pocket

for routine and preventive maintenance and turn to insurance for big, unexpected repairs. Like auto insurance, concierge care is not just for the wealthy. Mrs. Whaley said there always will be a demand and supply for luxury health care, and traditional health insurance isn’t going away. But direct primary care provides a middle path. In exchange for $1,500 to $2,500 a year for a full concierge approach, or perhaps $39 a month for direct primary care that might include a $10 charge for office visits, patients get to spend at least half an hour with their doctors instead of the 10 minutes typical in traditional practices. Doctors who carry fewer patients often offer them additional access by phone, email, and other electronic means. Including health insurance for catastrophic care, the total price can be an affordable alternative to traditional, covereverything health insurance, especially for young families, Mrs. Whaley said. The Physicians Foundation survey found that 6.8 percent of physicians plan to try a concierge approach within three years, little changed from 7 percent in 2008. That interest is much lower in Pennsylvania at 4.5 percent, according to a Becker’s Hospital Review report on the survey. The decade-old American Academy of Private Physicians said the United States ended 2012 with 4,400 concierge doctors, a number projected to double within three years, Bankrate.com reported. The Find a Physician search on the academy’s site produced six listings in Pennsylvania, the closest to Philadelphia being in Newtown and Washington Crossing. MDVIP, whose doctors charge $1,500 to $1,800 a year, arrived in the area in February 2005 when Wayne internist Jon Yardney joined. About two dozen of MDVIP’s 600 affiliate physicians are within 40 miles of Philadelphia, including four with full practices. Sometimes health systems accommodate a concierge practice, an approach that works for MDVIP because it provides

I WAS COMPLETELY AGAINST OBAMACARE, LIKE MOST PHYSICIANS, BUT WHOEVER CREATED THIS DIRECT PRIMARY CARE OPPORTUNITY – THEY MUST HAVE BEEN A VERY ASTUTE PERSON.’ — DR. MARCUS WILLIAMS

support services without owning or managing practices. Wynnewood primary care physicians Daniel Lazowick and William Schetman, for example, became MDVIP affiliates Feb. 26 while remaining with Main Line Health. University of Pennsylvania Health System also is trying the concierge approach. Gary Dorshimer and Gary Crooks offer Penn Personalized Care for an annual fee to supplement Medicare or insurance coverage. Another direct care model coming soon to Lionville is MedLion, which started in California. Marcus Williams, a doctor at Chester County Hospital, hopes to have his practice running by May; it will be the first MedLion practice on the East Coast.

About 40 percent of MedLion patients have no insurance, and the company helps them negotiate cash prices for X-rays, labs, and specialty care. The rest of the patients have insurance. The direct care practice provides 60 percent to 70 percent of patients’ care. “We learn their insurance and work with it,” Dr. Williams said. “We become a patient care advocate and help them utilize their insurance to their best advantage for their health.” Doctors traditionally have avoided considering patients’ insurance when caring for them, choosing not to “look at the 800-pound gorilla in face,” Dr. Williams said. But, for example, sending a patient to an ear, nose and throat specialist for a sinus infection is dumb. Direct care doc-

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WE HAVE JUST SEEN A REALLY BIG UPSURGE IN NEW PRACTICE START-UPS.’ —MARY PAT WHALEY, MANAGE MY PRACTICE

tors are slower to make referrals. In a traditional practice, doctors need as many patients as possible to come into their offices. Otherwise, they can’t bill the insurance and don’t make a profit. But when doctors are working under a monthly retainer and aren’t billing insurance anyway, they can take care of things like prescription renewals and blood pressure checks through telemedicine, phone calls, and email. “We can take care of a lot of things through the Internet in a secure fashion. That keeps the office visits down so we can spend time with those who are sick,” Dr. Williams said. The twist with his practice is that he won’t have his own patients. Instead, he’ll partner with four or five nurse practitioners and physician assistants, each of whom will build a panel of 1,500 patients, half the typical amount for a traditional practice. Dr. Williams will be available to consult and advise as needed for any of those patients. Taking advantage of the skills of nurse practitioners and physician assistants and treating them as equal partners will help address the long-term shortage of primary care doctors, a gap medical schools won’t be able to fill for decades, he said. Direct primary care also will help with the shortage by paying primary care doctors more money, making it a more attractive specialty, he said. “I was completely against Obamacare, like most physicians, but whoever created this direct primary care opportunity – they must have been a very astute person.”

ennsylvania has felt a big impact from a health care overhaul that preceded the March 2010 passage of the Patient Protection and Affordable Care Act. The commonwealth is fifth in the nation in federal money paid to health care providers as incentives for implementing electronic health records (EHRs). From January 2011 to December 2012, 10,558 care providers received a total of $479,493,494, according to the Health and Human Services Department. The money was made available under the Health Information Technology for Economic and Clinical Health Act, part of the 2009 economic stimulus law. It remains to be seen whether the three-stage EHR rollout will meet its goals and prove the meaningful uses of the systems. A New York Times report Feb. 19 indicated that the real winners in health information technology so far are big software companies. Amid other reports of expensive systems not meeting expectations and not communicating with one another for one of the Stage 2 goals, health information exchange, health care organizations from the American Medical Association to the American Academy of Family Physicians have asked the federal government to slow down the EHR program. Stage 2 of the incentive program begins next January, and the final Stage 3 starts two years later. Medicare providers could be penalized for failing to show Stage 2 meaningful use as soon as 2015. “This is a historic opportunity to reform and revitalize the nation’s healthcare system,” wrote Susan Turney, the president and CEO of the practice management association MGMA. “However, considerable work must be accomplished in order to make effective HIT widely available.” Along with a practice management and billing system, an EHR system is one of the two essential pieces of software a medical practice needs and a potential obstacle to creating or maintaining a practice, said Mary Pat Whaley, a medical practice consultant. The records system can cost $30,000 to $40,000 per physician, plus the annual expense of maintenance and training, plus upgrades to meet higher federal standards and goals as they are rolled out. Free systems are available if physicians are willing to have ads for medical devices and drugs pushed at them, but those systems make it tougher when physicians attest each year that they met the EHR goals and earned the incentives. Much like the annual filing of income tax returns, the process of attesting to meaningful use and facing government audits of those claims has proved to be an economic stimulus for accounting firms. (The deadline for 2012 Medicare attesting is Feb. 28.) Garden City, N.Y., firm Figliozzi & Co., whose partners include longtime Philadelphia health care CPA Carl Zampetti, last year was awarded a $3.13 million contract to conduct meaningful use audits for three years. Other firms have stepped up to help physicians make it through the audits. Hospitals, meanwhile, are Pennsylvania’s biggest beneficiaries of the incentive grants, with $290 million split among 215 facilities. More than $316 million of the state’s $479 million total came directly from the federal government for Medicare records; Pennsylvania distributed the rest of the money to Medicaid providers.

PLENTY OF MONEY WRAPPED UP IN PATIENT MEDICAL

FILES Millions of dollars in

incentives are helping to drive upgrades to electronic health records

FLICKR.COM/REDJAR

Only Texas ($913 million), California ($807 million), Florida ($790 million) and New York ($610 million) have received more of the $10.5 billion spent on EHR incentives so far. The flow of funds should continue for years. Pennsylvania now has 13,536 hospitals and other providers registered for the Medicare incentives, 4,906 registered for the Medicaid incentives, and 132 hospitals registered for both. Health care professional participating in Medicare can receive up to $44,000 each over five years; Medicaid professionals can get $63,750 over six years. Doctors have to choose one program or the other to apply for the grants. Hospitals can receive grants totaling millions of dollars over four years from Medicare and Medicaid.

26 across the nation. “The long-term driver is the thought that systems will become ACOs,” Mr. Holm said. But unlike the 1990s consolidation, driven by government programs such as Medicare and Medicaid, the private sector is leading the change now, he said. Insurance companies and other commercial payers are basing their contracts with providers on value rather than volume, and the government is following along. “The market drives a lot, and the ACA drives the market in some respects,” Mr. Olmstead said. The sheer numbers involved as the ACA moves toward full implementation also are important. “We’re counting down to Jan. 1, 2014, to see what an almost completely insured America looks like,” Mrs. Whaley said. Many patients who now arrive in emergency rooms without insurance will have coverage then, presenting the opportunity to change their care from treatment losses to prevention profits. Other people who have largely stayed out of the health care system could be drawn by the chance to use their new insurance. Both groups will strain the capacity of health systems and increase the need for primary care doctors. “Access to insurance doesn’t necessarily equate to access to care,” Mr. Olmstead said. “It will be more difficult to access care as more people try to access it. It’s a conundrum.” For physicians, becoming employees boils down to one word, Mr. Holm said: security. Big medical groups and hospitals can provide job and income security, he said. “If you’re by yourself, it’s hard to match this concept of security…Individual physicians have it pretty tough.” He said large groups can negotiate rates 15 percent to 50 percent higher than what independent physicians get from payers. A secure income is huge for most doctors completing their residency because they carry so much debt from years of college, medical school, and training, Mrs. Whaley said. Perhaps reflecting that need, as well as hospitals’ evolving approach, recruitment firm Merritt Hawkins reported in July that only 1 percent of its physician recruiting assignments from April 2011 to March 2012 were for solo practitioners, compared with 22 percent eight years earlier. Merritt Hawkins projects that by 2014, three-quarters of newly hired physicians could be hospital employees. “Nobody wants to be Marcus Welby anymore, practicing alone or with a partner, and fewer hospitals are seeking solo doctors for their communities,” Merritt Hawkins founder James Merritt said in a news release. “Physicians today almost have to be part of larger

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practices or be employed by hospitals.” Sometimes the numbers just don’t work for physicians who want to go solo, Mrs. Whaley said. “Not every physician can just say, ‘This is what I want to do; this is the kind of practice I want to do.’” It’s not as simple as the right paycheck, Mr. Olmstead said. Other factors that favor being an employee include benefits, working conditions, payment of malpractice insurance and continuing medical-education costs, not being on call 24/7, access to better equipment and support services, and opportunities to consult with and learn from colleagues. “I think a lot of that is financial-related, hassle-related, and administrative-cost-related,” Mr. Olmstead said. “It takes more practice resources, more and more administrative overhead, to make less money,” Mrs. Whaley said. Less money has been available to primarycare physicians who want to launch practices or need to invest in information technology. “Primary-care doctors have been beaten, battered, and bruised,” Dr. Williams said. Doctors sell knowledge, which isn’t something you can use to secure loans. “We really need investors,” he said, and they have to understand that it takes three to five years to build a successful practice. “It’s not like opening a McDonald’s.” In the Accenture survey, 87 percent of doctors cited business expenses as a reason to leave private practice. More than half also mentioned the prevalence of managed care, the difficulty of managing a staff and the federal government’s new requirements for electronic medical records. “It’s becoming very problematic for physician practices to stay on top of everything they have to stay in compliance with,” Mr. Olmstead said. “I do it as a full-time job, and it’s difficult for me to stay on top of all the administrative and regulatory requirements imposed.” Being part of a large practice or a health system eliminates those hassles for the doctor in an efficient, economies-of-scale way. “Economies of scale are all that more important,” Dr. Kaiser said, foreseeing small systems combining to form large systems and large systems getting together to form even larger systems. “There’s going to be more consolidation in this region as well as around the country,” he said. Mr. Olmstead said long-term societal factors also lead younger physicians to skip private practice. They put more emphasis on family time, Little League games, and Girl Scout events than doctors did 20 or 30 years ago. “Lifestyle is more important than in the past. That’s not just physicians; it’s everybody.” All of those reasons for consolidation apply beyond primary care. Mr. Holm said few inde-

IN MANY WAYS THIS MARKET IS RIPE FOR CONSOLIDATION.’ —DR. LARRY KAISER DEAN TEMPLE UNIVERSITY SCHOOL OF MEDICINE AND PRESIDENT AND CEO OF TEMPLE UNIVERSITY HEALTH SYSTEM

SOME PUNDITS BELIEVE THAT ALL DOCTORS WILL BE EMPLOYED BY HOSPITALS AND SYSTEMS. I DON’T BELIEVE THAT.’ —CRAIG HOLM, HEALTH STRATEGIES & SOLUTIONS

pendent practices remain among the lowerpaying cognitive specialties, rheumatology, and endocrinology. Also part of the consolidation trend are specialties that have a tougher time getting malpractice insurance, including cardiologists and brain surgeons. By contrast, he said, orthopedics is probably the least-consolidated specialty, although the seven partners of Booth Bartolozzi Balderston Orthopaedics joined Aria Health on Jan. 1. “Teaming with Aria and creating a new Bucks County practice location will enable us to simultaneously expand our reach while maximizing the patient experience,” Robert Booth Jr. said in a news release. In the end, Mr. Holm expects up to 75 percent of physicians to be employed or to be tightly integrated into hospital health systems. But the same family focus that makes working for a large practice appealing can make a hospital job unbearable, Mrs. Whaley said. The typical hospital schedule calls for working 12-hour shifts for seven consecutive days, then having seven days off. Every other week, there’s no family time. Some doctors simply want to reclaim their independence or test new care models, such as concierge care. “You see physicians really having a hard time with the loss of autonomy,” Mrs. Whaley said. The more consolidated physician practices become in an area, the more she sees some doctors, especially hospitalists, wanting to break out. “If I had my own business, I’d make my own decisions and do what I want to when I want, as opposed to when my employer wants,” Mr. Olmstead said. “If somebody has gone from a situation of independence to somebody making decisions for them, it can make them unhappy.” Dr. Williams, a client of Mrs. Whaley’s, is an example of a physician looking for autonomy. He expects salaries for hospitalists to decrease and some hospitals to shut down as ACOs clamp down on spending. “I see a unique opportunity at this point in time for doctors to go back into primary care,” Dr. Williams said. Dr. Williams plans to open a direct primarycare practice in Lionville, New Path MD, in May, in which patients pay a monthly fee to cover standard care and save insurance for big-ticket items. He is excited about the chance to innovate with direct primary care, which he calls the “silver lining in Obamacare,” a law he opposed. “A lot of physicians are burned out now,” he said. “That’s why there’s consolidation.”

Freelance writer Michael Jacobs lives in the Atlanta area.

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DANIEL TROPEANO’S

HEALTHY FOCUS ON SMALL BUSINESS As the Executive Director for United Healthcare in Delaware and Pennsylvania, he’s working closely with small businesses, which will feel the initial impact of Obamacare, though he admits, there are still a lot of uncertainties.

More online For the complete Q&A, go to RegionsBusiness.com.

Q&A Region’s Business: It seems that what we are hearing is a lot of questions more than answers about the healthcare reform act ... could you talk a little about that. Daniel Tropeano: Yes, unfortunately there still are a lot of questions. Our focus primarily, right now especially, is trying to create portfolios of plan design and options for small employers, two to 50, who we feel will be most affected initially. Obviously everybody will be affected to a degree but I think the smaller employer market stands to have the greatest disruption. RB: If I come to you, United Healthcare, as a small business owner and said “I’m lost.” What type of guidance would you give to a small business owner who is feeling overwhelmed? DT: And we have. These are the conversations I am having and we are having as an organization every day because we feel that (and I am so happy that we were able to talk with you today), small employers especially are not aware of what’s coming or don’t have a full grasp of what’s coming so we have been making efforts to educate them as well as the brokers or consultants that work with them and that is the first question I get after I have laid this out in my little talk that that is the first question I get. RB: There are still some murmurs that the GOP would try to pull some of the threads out of the ACA. Are you sensing any wait -andsee on some portions of this? Does that affect the way you would try to implement this? Is it kind of disruptive to you to not have a 100% certainty on the direction that it is heading? DT: Well, I can’t really speak to political back and forth. It is our intent here, we are moving forward under the assumption that the Affordable Care Act as it exists today will be the law of the land on January 1, 2014 as it is projected to be. So we are going forward under that premise. If changes occur, changes occur and we will adapt as quickly as possible. But we are going forward assuming that that is going to be the law of the land. We cannot wait for all the details because if we do, we won’t be ready in time. RB: What is the future of ... being able to incentivize people to make healthier choices which of course over the long term would be probably the best tool for suppressing medical costs? DT: The key right now to helping control costs or medicate costs is to improve people’s health. Don’t quote me on the statistic, but in seven years, 75% of all health issues could be avoided through behavior is the stat, something like that. So how do we adjust that behavior? We’ve been for some time focused on wellness in all of our programs.

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REAL ESTATE

AVI Offers Bigger Tax Break for New Construction BY SANDY SMITH Thus far, most of the commentary on the Actual Value Initiative has focused on those hardest hit by the citywide property reassessment — in particular, the residents of neighborhoods that were largely slums or abandoned prior to the 1990s but have experienced significant redevelopment and gentrification since then. Though relatively few in number, the size of the tax hike they will likely experience still has officials trying to figure out how to ease their pain. But, as noted before, there are people who will come out ahead as a result of AVI. One of the largest groups of beneficiaries will be the buyers of new homes. While higher property taxes may dilute the value of existing homes sold, new construction homes will continue to enjoy the full 10-year tax abatement

offered by the city for new and improved residential structures. Because that abatement is calculated based on the assessed value of the improvements, buyers of new properties in those same neighborhoods whose current residents may face much higher tax bills will enjoy bigger abatements than their neighbors did when they bought. This will have the effect of shoring up house values in the affected neighborhoods and possibly even raising them in neighborhoods like Francisville and Old Kensington that are only now experiencing significant waves of new construction. Not to mention that it will continue to encourage the relatively robust pace of residential construction, rehabilitation and conversion within the city. In the long run, that will make it worth the short-term pain. This column originally ran on the Philadelphia Real Estate Blog at www. philadelphiarealestate.com.

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REAL ESTATE

How Will AVI Affect Local House Values? BY SANDY SMITH Regardless your opinion of the worth of or need for taxation, it is true that every dollar a person pays in taxes is a dollar that then can’t be spent elsewhere. So it should stand to reason that a rise in property taxes will either put some homes beyond the reach of buyers who could have afforded them before or cause sales prices to take a hit. In other words, the Actual Value Initiative (AVI) will have an impact on actual house values in Philadelphia, especially in areas where taxes are expected to rise sharply. How will this work? Let Noah Ostroff, principal of Noah Ostroff & Associates, explain it for you: “Let’s assume you’re buying a home with a 30-year mortgage at a 3.5

percent fixed interest rate,” Mr. Ostroff said. “Every $1,000 of that mortgage will cost you $4.50 a month, and every $100,000 of it will cost you $450 a month. “If the property taxes on a home rise by $1,000, that will cost the homeowner an extra $83.33 a month. That translates into about $18,500 worth of buying power or purchase price.” In other words, if a would-be home buyer could afford a house worth $250,000 ($1,125 a month using these assumptions) under the old assessment system, but that house’s taxes have risen by $1,000 under AVI, then for that home buyer to afford it, it would have to be priced at $231,500. That’s a pretty good-sized drop off the top. Read more from this column on the Philadelphia Real Estate Blog.

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FINE ESTATES PREVIEW

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28 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

Fees, Taxes Will Make Health Insurance Less Affordable T Margaret Anderson is Executive Vice President, Business Development Brokerage Concepts.Learn more at HealthNow.org.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

per month. Insurers he Affordable Care Act are beginning to reflect (ACA) will result in this tax in rate quotamillions of currently tions for plans that uninsured people having health extend into 2014. insurance, but as we implement Comparative Effecthe law, we continue to work tiveness Fee. This fee with policymakers at the state will help fund research and federal level to improve on the comparative aspects of the law that will effectiveness of medical increase premiums. The ACA treatments undertaken includes a number of new taxes by the new Patientand fees that affect insurers and Centered Outcomes employers. These new taxes Research Institute. and fees are scheduled to take The fee affects those effect in the next couple years with fully insured and and will add to the cost of insurself-insured plans that ance. THIS NEW TAX CONTRADICTS EFFORTS TO end on or after OctoOf particular concern is the CONTROL THE SOARING COSTS OF HEALTH CARE.’ ber 1, 2012. The fee is health insurance tax, slated to $1 per covered life for begin in 2014 and estimated to the first year and $2 add hundreds of dollars annuper covered life for the second year, indexed insurance will pay an added $4,772 over 10 ally to premiums for individuals, families, to medical inflation thereafter for seven years. Families in Pennsylvania with insurbusiness owners, and the elderly. years. Insurers will pay the fee for their ance through a small employer health plan This is a tax on health insurance itself and fully insured business, while self-insured will pay more than $6,200 over 10 years and it begins at $8 billion in 2014, rising to $14.3 employers will pay it directly. an average of $7,000 if they are receiving billion by 2018. The tax increases annuThere are other aspects of the ACA that insurance through a large employer. ally after 2018 in proportion to increases will raise premiums as well, especially for Insurers have begun reflecting the tax in in premiums nationally. Congress’ Joint younger individuals with higher incomes. their renewals that extend into 2014. Committee on Taxation projects that the These include limits on age rating, and the Small businesses will pay a disproportax will total $101.7 billion over 10 years. requited additional benefits. tionate share of the tax because the tax is The Committee also estimates that the tax Age rating limits: Most states allow allocated to those who purchase insurance will add $400 a year to family premiums in insurers to offer much lower premiums to coverage. Many large employers self-insure 2016 alone. younger individuals to reflect their lower instead of buying insurance, and the tax will This new tax contradicts efforts to control health care costs and to encourage them to not apply to them. the soaring costs of health care, does nothpurchase insurance. The ACA limits insurThe bottom line is that this tax will make ing to improve patient health, and will burers’ ability to use a person’s age as a factor in health insurance less affordable. Congress den middle-class families in Pennsylvania. developing premiums. In most states, this should work to repeal this tax, and focus on This tax will hit individuals, small business will result in higher premiums for many finding ways to improve health care while owners, and the elderly the hardest. younger people while lowering premiums making it more affordable and accessible. For example, according to America’s for older people. The law contains some other taxes and Health Insurance Plans a person workNew Requited benefits: The new “essenassessments on businesses: ing at a small business will pay on average tial health benefits” package will include Reinsurance Fee. This is a lesser-known $2,760 more in premiums over 10 years. more comprehensive coverage than many tax that goes into effect next year and conThe National Federation of Independent individuals and small businesses purchase tinues through 2016. This fee is designed to Business says small business owners will see today. The help stabilize premiums for individual maran increase of nearly $5,000 for family covThe Congressional Budget Office estiket coverage offered on the health insurance erage by 2020. That business owner could mates that benefit-related changes in the exchanges. Health insurers and third-party buy more than 1,400 gallons of gas to transACA would increase costs in the individual administrators who offer self-insured plans port goods to market. And, the BlueCross market by up to 30 percent. will pay this fee on a per-capita basis. It BlueShield Association says a senior Our goal is to make health care coverage is estimated the fees will total $12 billion enrolled in Medicare Advantage could pay more affordable and new taxes and fees in 2014, $8 billion in 2015, and $5 billion an additional $3,590 over a 10-year period. challenge those efforts. We are working to in 2016, although states are allowed to Over 10 years, Pennsylvanians will pay limit the burden on individuals and busiincrease the fees. The fee is estimated to an additional $8 billion as a result of this ness owners in Pennsylvania. cost between $5.25 and $7 per member tax. The typical Pennsylvania family buying

28 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

Touted as Savior, Bundling Medicare Will Lead to Bungling

M Marilyn M. Singleton, MD, JD is a board-certified anesthesiologist and Association of American Physicians and Surgeons (AAPS) member. Learn more at AAPSonline.org.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

from the soon-to-be-required U.S. y long-time self-paying ICD-10CM system. This Internapatient opined that the INSTEAD OF MORE COMPLEX tional Classification of Diseases— end of fee-for-service FORMULAS, WE NEED MORE Clinical Modification system is payments (payment for what you based on the 1992 World Health get) was imminent. I lightheartTRANSPARENCY ... Organization ICD-10 codes. It edly asked her how physicians increases the number of diagnoswould be paid. Would they be tic codes in the current ICD-9 housed in military barracks and system from 17,000 to 68,000, given vouchers for necessaries? including different codes for right Perhaps she read section 3023 or left side. Providers will have of the “Patient Protection and to be much more specific in their Affordable Care Act” (PPACA or coding. “ObamaCare”), the National Pilot Even though providers will have Program on Payment Bundling, to do much more work to code which applies to certain Mediand do other documentation tasks, care beneficiaries. The program’s the bundled payments cannot be stated goals are to improve more than what would otherwise access to care, quality, coordinabe paid for the beneficiary’s care. tion, and efficiency (i.e., reduce It is not clear who all will have to costs) of services. Pilot programs, share the payment—perhaps the which started this year, will be hospitalist, perhaps the patient’s conducted for 5 years, or longer own physician, along with all the if extension results in improved team members needed to provide quality and reduced spending. whatever the Secretary deems An earlier “pilot program” on appropriate. payment by diagnosis (DRG or The changes in “payment methdiagnosis related group), regardodology” may be seen as a power less of what the patient did or struggle. Rick Mayes wrote in did not receive, simply became 2007, “For the first time, the fednational practice in 1983 witheral government gained the upper out looking at the results. Then hand in its financial relationship there’s the HMO method of paywith the hospital industry. Mediment by the head (capitation), care’s new prospective payment regardless of care or lack thereof. system with DRGs triggered a How will payment by the bundle FLICKR.COM/QUINN.ANYA shift in the balance of political be different? and economic power between the A bundle or an episode of care providers of medical care (hospiincludes the three days prior to an emergency room after hospitalization, tals and physicians) and those who paid for admission to the hospital, the hospital stay, incidence of health care acquired infections, it—a power that providers had successfully and 30 days (not 31 days) after discharge efficiency measures, measures of patientaccumulated for more than half a century.” from the hospital. It comprises “applicable centeredness of care, and measures of Some claim that bundling is a way to save services”: acute inpatient services, all physipatient perception of care. Medicare, previous measures including the cians’ services in and outside the hospital, What do these things mean? Does “funcSustainable Growth Rate (SGR) fee cuts outpatient and emergency room services, all tional status” mean ability to perform ADLs having failed. In reality, it simply adds to post-acute care services (e.g., skilled nurs(activities of daily living)? What if patient is the opportunity for bureaucratic bungling, ing facility, rehab, home health), and other so disabled that his ability to do ADLs can’t while moving payment still further away services the Secretary deems appropriate. improve? What if he still needs a lift to get to from the value of care to real live patients. The amount of payment will depend the toilet, but can now beat his grandson at Instead of more complex formulas, we partly on “quality” measures developed gin rummy? Does that count as an improveneed more transparency so that beneficiaby the Secretary in consultation with the ment? What about the ultimate measure of ries can make their own informed decisions Agency for Healthcare Research and Qualfunctional status—being alive rather than about their individualized medical care, ity. The measures include: functional status dead? Might a hospital’s “efficiency” rating without interference from bureaucrats and improvement, reducing rates of avoidable be better if the patient dies, instead of being the special interest groups that feed on the hospital readmissions, rates of discharge readmitted or acquiring an infection? current muddled system. to the community, rates of admission to The bundle will be characterized by a code

28 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

College Students: Prepare To Be Stung By Obamacare C Dr. Alieta Eck MD is past president and current member of AAPS. Learn more at aapsonline.org

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

ollege students will soon wake up to the fact that they have been had. While they were overwhelmingly supportive of the Patient Protection and Affordable Care Act {PPACA or “Obamacare”) when their charismatic President was championing it, they will not be pleased when they find out that there is a huge price they will have to pay. Obamacare will be anything but affordable. Apparently, New Jersey is the only state in the nation that currently requires all college students to have healthcare coverage. This has always been a bare-bones plan costing from $100-600 per year. The new healthcare regulations will force these plans to be phased out, as the mandated coverage under Obamacare will cause the premiums to rise from a few hundred dollars to $1,700 per year. In an amazing example of irony, New Jersey Democrat Assemblywoman Celeste Riley is sponsoring a bill to eliminate New Jersey’s mandatory health insurance for college students. Wait. Didn’t Democrats overwhelmingly support the President’s plan when it was being debated? Aren’t college students citizens that should be required to purchase governmentapproved coverage as defined by Obama’s PPACA? College students are getting an object lesson in progressivism. They will learn that their choices are being obliterated when it comes to what must be included in their plans. An edict came down that a college plan must cover 30 mental health outpatient visits as well as inpatient mental health benefits. It must cover substance and chemical abuse treatments, all preexisting conditions, pregnancy, wellness/ preventative care visits, contraception, and abortions. One of my patients is enrolled in Christian Care Medi-Share, a faith-based health-sharing ministry whose members are exempt from Obamacare. All Medi-Share enrollees must sign a pledge that they will avoid tobacco, illegal drugs, and excessive alcohol. They also pledge to abstain from sex outside

College students are getting an object lesson in progressivism. They will learn that their choices are being obliterated when it comes to what must be included in their plans. PENN STATE LIVE

of marriage. Any college student can have a remarkably inexpensive plan costing as low as $50/month for comprehensive sharing of bills up to $1 million. This is not barebones, but real help when needed most. It is a choice that patients ought to be able to make, a plan that enables them to benefit when they can choose to behave responsibly in a manner that enhances their own health and reduces their own chances of needing high-cost care. But New Jersey colleges will not accept this method of taking personal responsibility, only the Obama way. New Jersey Congressman Frank Pallone, self-proclaimed author of Obamacare, forthrightly stated that young people needed to buy costly Obamacare plans in order to provide a subsidy to older and less healthy people. So here it is, college

students, a valuable civics lesson that your college professors never made clear. It is amusing to watch the Democrats backtrack. Faced with the specter of students dropping out of college because they can’t afford the required health coverage, Democrats are now beginning to recognize that the Obamacare mandate for young people might not have been a good idea. Of course, under the PPACA, students could choose to pay a small tax instead, starting in 2014. But that will not help if the colleges still require coverage. PPACA was deceptive from the start. We can only hope that bright students will challenge it before it is too late. Perhaps they will learn a lesson in liberty, and work to restore the principles and values that made our country great.

28 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

Hospitals Can Leverage Technology to Save Money W

Richard Hodge is Chief Executive Officer of Winola Lake Healthcare IT. He can be reached at rhodge@ winolalake.com.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

ith Obamacare’s new healthcare systems on their way, healthcare providers, hospitals, and patients are on the verge of seeing big changes As technology continues within care plans. For those of us in the industo advance so should try of healthcare technology, we fear we may be on the cusp patient care of also seeing cuts that could hinder patient care, nurse no matter the cost. satisfaction, and overall treatment provided within hospital systems. It is imperative that hospitals continue to advance the technology to try to help prevent clinical mistakes to save them from repeat visits and re-admittance where they won’t be receiving funding. If a patient is re-admitted for the same condition or a complication from a condition within thirty days of being released— Medicare and Medicaid will not reimburse the hospital. Therefore, hospitals must be able to provide accurate and real-time information to caregivers and physicians so that these instances can be prevented and avoided. The new realm of technologies available to hospital systems are endless and can take the majority of human error or bedside mistakes out of the equation. Everything from bar RICARDO DIAZ code scanning at the bedside to the use of smartphones for patient monitoring on and off Meaningful use standards require hospitals premises can advance the hospitals opporto implement electronic health records so tunity to get it right during the first effort. that there is a seamless sharing of informaThese technologies, new software and tion between hospitals, doctors’ offices, and hardware, are time-saving and life-saving pharmacies. Now with Obamacare, there and I fear the repercussions will be serious are new technologies and systems that have if these innovations and advancements fall to be implemented. Concerns are whether to the wayside as hospitals budgets are hurt there will be technology to support these by reimbursement cuts. new systems and whether the hospitals Meanwhile, will all the new standards have the right leadership teams in place to and rules being put into play by Obamimplement the software while continuing the meaningful use projects that directly acare, hospital CIOs are still managing and effect funding. In some cases, this may juggling the meaningful use requirements cause a backlash and hospitals may stop that were put in place several years ago.

implementing technologies that will be more helpful to patient care than the new standards of Obamacare. The biggest area I urge hospital systems to use their technology advancement dollars for is off-site patient monitoring. Technology has to move outside the four walls of the hospital into physician offices and the patients’ home. The more information we can give to caregivers after the patient leaves their hospital stay, the better the patient care plans will be. These technologies, although sometimes costly, will end up saving hospitals in the long run. Home patient monitoring technology is advancing every year and is becoming one of the most beneficial advancements for physicians and caregivers. It is our hope that cuts in reimbursements will not effect the implementation of this software into the everyday lives of those who need it most. With Obamacare, since no one will be denied health coverage, payers —whether businesses or individuals — are going to see a rise in costs. That being said, patient education about their care plans and making them responsible for checking back in with their physicians and following the explicit directions for post-stay health is imperative. As technology continues to advance so should patient care no matter the cost. For the future of precise treatment and low annual visit numbers, these strides are important. When Obamacare is officially implemented in 2014, patients will see a difference in the availability of prompt appointments and service. Technology is here to help these matters to lead to quick, accurate visits that result in a healthy, educated patient at home with physicians being able to predict and advise while monitoring the post stay experience. This is the future and although we know this will not be easy next year, hospitals cannot forget that technology is a friend not a foe.

28 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

Enough Rhetoric, Time To Make Obamacare Work

t has been almost two years since Congress passed, and President Obama signed, the Affordable Care Act. Since then, Democrats have thumped their collective chests, hailing the legislation as the greatest thing since sliced bread and Republicans have shrieked in horror, seeking ways to gut or destroy it outright, citing it as the socialization of America’s health care industry. It didn’t take long for both sides to realize that very little would happen until the end of 2012 as the presidential election became a referrendum on the economy and, in some ways, Obamacare, as the legislation has become known. Then-presidential candidate Mitt Romney promised that he would overturn (or replace, depending on the specific point in the election cycle) Obamacare. Republican lawmakers voiced strong support. American voters did not, however, and with Mitt Romney now simply a footnote in American political history, the time has come to accept that Obamacare is - and will continue to be - the law of the land. Those two years of lost time have caught up with America and now everyone is scrambling. One of the worst parts of Obamacare - and there’s plenty to dislike - is that it leaves many details undefined. So insurance companies, medical providers, state governments, businesses large and small, and consumers are trying to figure it all out. And everyone must do their part moving forward.

Insurance companies need to develop packages that fulfill Obamacare’s mandates, but also provide meaningful options to businesses. Businesses need to get educated on their obligations. There are a lot of variables and each business needs to know what it must do moving forward. Likewise, businesses need to engage with insurance providers to discuss the wide range of options available, looking for solutions that provide the most affordable and effective coverage for employees. Both need to work to find proactive solutions to rising health care costs, such as employee wellness programs that provide incentives for behaviors that will contain those costs over the long term. Employees should be engaged with their employers, preparing for potentially dramatic changes not only in the cost of their benefits, but the way in which it is delivered. This is not, however, to get to the end game. On the contrary, what were are eduring now must be considered a transitional phase in American health care. With the legislation leaving so many things up in the air, it can only be seen as a starting point. The responsibility for moving forward will lie initially, not with Washington, but insurance companies, medical providers, business owners and employees, who all must put stern, persistent pressure on Washington to make the adjustments necessary to create a world-class health care system for all Americans at affordable prices.

COMMENTARY FROM ACROSS THE WEB

Corbett Re-Election Bid Labeled a ‘Toss Up’ Premiere pundit Larry Sabato of the University of Virginia came out with a complete ranking of 2014’s most competitive gubernatorial races and [Pennslyvania Governor Tom] Corbett was listed on “orange alert,” apparently firmly on the highway to the danger zone. The Pennsylvania race rates a “toss-up,” Sabato and his crew of experts wrote in the latest edition of The Crystal Ball. THOMAS FITZGERALD ON PHILLY.COM, 22 FEBRUARY 2013

The Problem with Presidents Day Our first president, George Washington, was born 282 years ago [...] . Fewer and fewer Americans know this because his national holiday, approved in 1879, is now the generic “Presidents Day.” To have George Washington, and other great presidents, lumped with not so greats James Buchanan (handed Lincoln the war) and Woodrow Wilson (federal income tax, World War I) is absurd.

EDITORIAL BOARD CEO and President James D. McDonald Editorial Director Karl Smith Associate Editor Terrence Casey

Reason to smile today: Philly isn’t on @Forbes new “America’s Most Miserable Cities” list. 22 FEBRUARY 2013

holiday, a day on which we contemplate — what? Grover Cleveland’s love child? Jimmy Carter’s duel with an angry rabbit? (Both true — including the April 1979 rabbit rout.). J.D. MULLANE ON PHILLYBURBS.COM, 19 FEBRUARY, 2013

Philadelphia Has a Pulse

And yet America is content with this phony

REGION’S BUSINESS

@ThePhillyPost

There are burdens that we’ve borne for years in this city, and too many of us — from media and government to the communities that are most affected — have remained silent in the face of the suffering. We have not asked why. We have not asked why not. We’ve simply watched entire sections of our city fall by the wayside. Still, I’m heartened by the outcry surrounding AVI. Such a united and strident response means we have a pulse.” SOLOMON JONES ON NEWSWORKS.ORG, 22 FEBRUARY, 2013

HOW TO CONTRIBUTE To contribute, send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.

28 FEBRUARY 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

40.3

Millions of people who watched the 2013 Oscars broadcast, a 2.5 percent increase of 2012 and the first time the Oscars had more than 40 million viewers since 2010 and the 19th most viewers ever.

Approximate increase, in years, of life expectancy in the United States between 1960 and 2010.

$7,730

Approximate increase, in years, of life expectancy in Japan between 1960 and 2010.

FLICKR.COM/ALLYAUBRY

21.4

Millions of fans at NHL hockey games for the 20112012 season.

17.6

Millions of social media conversations about the Academy Awards during the show, including the red carpet pre-show, according to Networked Insights. Jennifer Lawrence was the most-popular topic.

Percentage of Pennsylvania’s children considered obese in 2010-11. The national average was 31.6%.

11.4

20%

Percent of Canadian GDP spent on health care in 2010, highest among members of the Organisation for Economic Co-operation and Development. FLICKR.COM / IMAGES_OF_MONEY

Increase for costs to treat selected medical conditions in Philadelphia between 2008 and 2011, outpacing the national average of 13 percent.

$96,000,000,000 Amount spent in the U.S. on tobacco-related health care costs between 2000 and 2004.

8.9

29.7%

Percent of American GDP spent on health care in 2010, highest among members of the Organisation for Economic Co-operation and Development.

Number of Best Actor Oscars won by Daniel Day-Lewis, who won his third for “Lincoln.” No one has won more.

Difference in height, in inches, between President Abraham Lincoln (6-foot-4) and Daniel Day-Lewis (6-foot-2).

Pennsylvania’s per capita expenditures for health care in 2010-11, seventh-highest in the nation. The national average was $6,815.

15,000,000

Twitter followers of Oprah Winfrey as of November 2012, part of the reason she was determined to be the CEO with the strongest influence in social media. She also had a Klout score of 92. She was the only woman in the top 10 and the only minority in the top 20 on the list calculated by Klout and Reuters. No one from Facebook broke the top 20, though LinkedIn, Foursquare, Twitter, Buzzfeed, Tumblr, Mashable, del.icio.us, Groupon and Etsy were.

$2,800,000,000

Amount spent in Canada on tobacco-related health care costs between 2000 and 2004.

$2,940,657,200

Approximate amount payroll for all of Major League Baseball on Opening Day 2012.

$1.60

Excise tax in Pennsylvania for a pack of cigarettes, same as Delaware. In New Jersey, it’s $2.70, while in New York, it’s $4.35. The federal excise tax is $1.01.

FLICKR.COM/KK+

$429,000,000

Tax refund coming Facebook’s way, thanks to the tax deductibility of executive stock options, according to Inquisitr.com.

$1,100,000,000 Pre-tax profits earned by Facebook in 2012.

Average tax rate in 2011 for America’s 10 most profitable companies.

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