Tri-Cities Business Journal May 2015 by The Business Journal of Tri-Cities TN/VA

Tennessee Reconnect Governor Bill Haslam pitches his plan to use colleges of applied technology to raise the quality of the stateâ&#x20AC;&#x2122;s adult workforce.

Plus: A New Offer for the Model Mill

and

Bill Haslam with Elizabethton TCAT Director Dean Blevins. Photo by Adam Campbell.

Big Changes Coming in Residential Real Estate Closings

MAY 2015

$3.00 Volume 27 Number 9

BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

To our valued team members and colleagues, thank you. YO U M A K E T H E D I F F E R E N C E .

It is you, our dedicated team members, who allow us to deliver nationally recognized quality care to our families, our friends and our region. Thank you for your compassion and your commitment to excellence. You are real heroes.

MountainStatesHealth.com

People. Trust. Experience. 2

The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

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BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

Business Journal The

| COVER STORY

of Tri-Cities Tennessee/Virgina

Tennessee Reconnect

What’s Up with the Docs? Physicians are understandably curious about where they fit in the Wellmont-Mountain States merger plan. We talk with those who know those answers as well as anyone can.

Compressors Turns the 16 Bristol Corner

Commercial and Residential Real Estate

Kingsport’s Mayoral Candidates Talk Incentives Dennis Phillips is not standing for re-election in Kingsport. Whomever replaces him could have lasting impact on the region.

British firm opens new recycling facility in Bristol, Va.

MANAGING EDITOR Scott Robertson srobertson@bjournal.com 423.767.4904 ASSOCIATE EDITOR Jeff Keeling jkeeling@bjournal.com 423.773.6438 SALES & MARKETING Jeff Williams jwilliams@bjournal.com 423.202.2240

What Economic Development Experts Say Representatives of the International Economic Development Council were in the Tri-Cities last month. Their recommendations confirm what many already believe.

CREATIVE Derby Publishing, LLC Graphics Director / Judd Shaw jshaw@bjournal.com 423.833.2726

The Business Journal of Tri-Cities Tennessee/Virginia is published monthly by Derby Publishing, LLC 1114 Sunset Drive, Suite 2 Johnson City, TN 37604 Phone: 423.854.0140 ©2015 Periodicals postage paid at Johnson City, Tenn. and additional offices. ISSN#10406360

| DEPARTMENTS 7 From the Editor 9 FYI 26 On The Move

Nulife Cuts the Ribbon

ASSISTANT PUBLISHER Jeff Derby jderby@bjournal.com 423.306.0104

Robin Williams rwilliams@bjournal.com 423.794.6938

The former General Mills site in Johnson City loses one potential buyer but gains at least one more.

Bell Helicopter Lowers Expectations A softening international market for its services pushes Bell Helicopter to announce voluntary separations at its Piney Flats, Tenn., facility.

Not so long ago, the company was announcing layoffs. Now it’s expanding production and hiring new full-time employees.

PUBLISHER William R. Derby bderby@bjournal.com 423.979.1300 Photo by Adam Campbell

| FEATURES

OFFICE 423.854.0140

Governor Bill Haslam was recently in the Tri-Cities, pitching his plan to utilize colleges of applied technology to provide free higher education to adult students.

28 Med Briefs 30 The Last Word

The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

POSTMASTER:

Please send addresses to

Business Journal of Tri-Cities, TN/VA 1114 Sunset Drive, Suite 2 Johnson City, TN 37604 Subscription per year $35.

The 23rd annual recognition of the extraordinary individuals and organizations that go above and beyond the call of duty every day.

For more than 20 years, The Business Journal of Tri-Cities, TN/VA has honored these heroes on behalf of the business community they serve. Without healthy employees and customers, business cannot survive. Healthcare Heroes keep our region’s people and businesses well cared for. To nominate an individual or organization today, email news@bjournal.com with a letter of recommendation telling what makes them a Healthcare Hero. Deadline for nominations is the close of business on May 22nd. In addition to recognizing general Healthcare Heroes, five special Cup of Kindness© Awards will be presented from the following categories: INNOVATION AWARD: To a provider whose inventive thinking furthered the delivery of care. DISTINGUISHED SERVICE AWARD: To a provider who has shown leadership and excellent service over a sustained period of time. COMMUNITY SERVICE AWARD: To an individual or organization for excellence in public health. MERITORIOUS SERVICE AWARD: To an individual who has shown excellence in administration. SUPPORT SERVICE AWARD: To a provider for outstanding assistance in the field of health care. Nominations are judged based on the impact nominees make on the community, the difficulty of their accomplishment, innovation of their work, their leadership qualities and the quality of the nominee’s documentation. The 2015 Healthcare Heroes Luncheon will be held Thursday, July 9th at the Johnson City Country Club.

BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

| FROM THE EDITOR

Straight talk, straight from the lawyers L

awyers, journalists and politicians all get a bum rap. We’re easy targets because often we are the messengers who deliver bad news. If you hear that your taxes are going up, that your spouse is filing for divorce or that the government is turning a bad idea into a policy with its own department (complete with bloated budget), you probably are hearing it from a lawyer, a journalist, or a politician, if not all three. But some of the clearest thinkers I know are lawyers, journalists and politicians. This month, I had the chance to sit down with a lawyer who used to be a politician, Steve Darden, and a lawyer who used to be a journalist (and is still a columnist), Bruce Shine. Both discussions were fascinating and enlightening, at least for me. Darden, widely respected as a labor lawyer generally representing management, talked with me about the concept of “ambush elections.” That’s the process by which a union can force a vote on whether a company’s workforce will accept its representation in as little as 11 days, with most taking place within 21 to 24 days. In 2014, the median number of days from petition to election was 38 days. Traditionally, that interim has been around 42 days. These rules of engagement between management and organized labor changed April 14 with a policy action by the National Labor Relations Board. The NLRB is, since a Democrat is in the White House, made up of three Democrats and two Republicans. The House and Senate both voted to change the policy, which they describe as NLRB over-reach, but the President exercised his veto power, and the Senate failed to override the veto. Darden’s main point was that a business owner’s best chance to win a unionization vote is to not have one. Unions win better than three out of five elections even with 42 days for management to counter their arguments, he said. When that number drops to 21 days, union success rates rise to closer to 75 percent. But fewer and fewer elections are even being held, Darden said, because employers know that if they’re fair in the first place, listen to their employees’ needs

and desires (unionization votes are rarely about wages anymore), and communicate clearly and often, then the employees won’t see the need to hand over their individual negotiating rights to a collective bargaining body in the first place. Shine also handles labor cases, though he is generally better known for representing employees. The two executives who left Wellmont at the same time CEO Denny DeNarvaez left earlier this year were Shine clients (DeNarvaez was not). Shine and I talked much more about Wellmont and its future than we did about labor law. Shine was a key speaker at the August 18, 2014 community forum that started the ball rolling for the Mountain States merger. At the time, DeNarvaez was advocating a merger with one of two outside companies. After the meeting in which Shine spoke about the legal process of bringing MSHA together with Wellmont, momentum shifted away from outside control toward the merger that would be announced April 2. Shine shied away from being labeled part of the “Hole in the Wall Gang” that orchestrated the August meeting and the public and private lobbying effort to bring Mountain States and Wellmont together. He characterizes his involvement as simply providing information relevant to the discussion. But he has remained in the discussion, at least on the fringes, through a column he penned for the Kingsport Times News advocating transparency in the merger process. I was particularly impressed by one point Shine made: anyone in the business community who advocated for local control of the merged system because they wanted to have some influence on the running of the company had better start talking with company leaders now, if they haven’t done so already. The companies this month announced the formation of a joint board task force charged with “providing a conduit to the existing boards of directors about the progress being made as the two systems undertake due diligence and transaction analysis and pursue a potential definitive agreement.” Once the new company is formed and all the papers have been signed, Shine said, that company will be what it will be. The time for local businesspeople to attempt to influence the process of that company’s formation is now – and even now, there are no guarantees such attempts would meet with success. That may not be what anyone wants to hear. But it’s straight talk.

BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

| FYI

Inside the Numbers:

Regional Banks, Full-year 2014 data (minimum assets: $300MM) Bank

Average tangible assets (millions)

Tier One capital

Leverage capital ratio

Risk-based capital ratio

2014 income (millions)

2013 income (millions)

Nonperforming asset

Andrew Johnson

$302.70

$30.20

15.6

$3.546

$2.878

0.427%

Bank of Marion

$354.10

$39.40

11.1

21.3

$2.878

$2.682

2.069%

Bank of Tennessee

$920.60

$83.00

14.3

$10.000

$7.602

0.574%

Citizens Bank

$662.60

$82.40

12.4

28.8

$10.411

$10.440

1.635%

Elizabethton Federal

$326.90

$105.80

32.4

97.5

$2.358

$2.875

1.826%

First Bank and Trust

$1,346.60

$160.70

11.8

17.6

$18.709

$17.721

1.406%

First Community

$2,608.20

$231.30

8.9

15.7

$25.868

$23.180

0.995%

Highlands Union

$604.90

$46.70

7.7

14.2

$2.978

$2.241

3.034%

HomeTrust

$2,356.80

$231.90

9.8

14.4

$7.646

$11.905

1.740%

Mountain Commerce

$401.90

$38.80

9.7

13.2

$2.501

$6.546

2.327%

New Peoples

$661.20

$54.10

8.2

15.7

$1.056

$2.138

5.583%

Renasant

$5,450.50

$503.30

9.2

13.1

$62.417

$35.485

1.644%

TriSummit

$318.20

$28.60

13.4

$0.204

$1.006

1.359%

TruPoint

$430.20

$34.90

8.1

17.8

$1.719

$2.692

1.919%

Source: BauerFinancial Inc.

&Downs

Ups

A quick check of the conventional wisdom on who’s going what direction in Tri-Cities business

Armstrong Construction – This Kingsport-based firm recently celebrated its 100th anniversary in business. In a world where companies come and go in less than 100 days, you know there’s a heritage of commitment to doing things right when a firm celebrates its first century.

South-West and East – Speaking of being in business for a century, SouthWest Insurance Agency, which was founded in 1908 with locations in Southwest Virginia, recently merged with Sam East Insurance Services, based in Johnson City to create a growing, two-state firm.

Speedway Motorsports – In NASCAR, the period between seasons is referred to as silly season. In investing, silly season comes four times a year, as publicly traded companies release quarterly reports and some investors invariably over-react. Speedway Motorsports reported a first quarter loss and immediately saw a drop of more than 10 percent in its price per share.

Alpha Natural Resources – The Bristol, Va.- based coal company faces delisting on the New York Stock Exchange after its common stock value stayed below $1 per share for 30 consecutive days. The NYSE notified Alpha of its failure to satisfy requirements April 16. Alpha executives must satisfy the NYSE they will return to compliance or face delisting. The company’s stock was trading at 75 cents per share as of this writing. Alpha missed earnings and revenue estimates in the first quarter. The company has six months to re-establish compliance. BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

| COVER STORY

Haslam launches Tennessee Reconnect Aims to make adults better ready for workforce opportunities By Scott Robertson

ichelle Sparks is like many Tennesseans. She works a fulltime job. She’s a mother. And because she wants to make a better life for her family, she’s been going back to school, even though it’s been something the family had to save up for. “I needed to get the best education I could possibly get for our budget,” Sparks said of her return to education after years in the workforce. “My husband and I do not make the right amount of money to qualify for any grants other than the Pell Grant, but we do not have extra money laying around.” Sparks began taking classes at the Tennessee Center for Applied Technology (TCAT) at Elizabethton. But when unanticipated expenses left her school fund empty, it appeared her dreams would go unfulfilled. Sparks went to her financial aid advisor at the Tennessee Center for Applied Technology (TCAT) at Elizabethton, hoping for a miracle. That miracle came in the form of Tennessee Reconnect, a grant program that has been in existence for several months, but was officially launched last week by Governor Bill Haslam. “Through what we call the Tennessee Reconnect program, we will provide a last dollar scholarship to any adult in the state who wants to attend a TCAT,” Haslam told a joint Johnson City-Kingsport-Bristol Chamber luncheon May 1 at the MeadowView Conference Resport and Convention Center in Kingsport. “Anyone in the state who wants to go to a TCAT gets to go free.” Tennessee Reconnect is a grant program that asks adult students to secure grant funding from traditional sources like Pell Grants first, then covers the rest of their tuition and fees at any of the 27 TCATs. The program is part of Haslam’s Drive to 55 program, aimed at ensuring 55 percent of Tennesseans have either a college diploma or professional certificate by 2025. By that time, it’s estimated that 55 percent of all jobs will require a diploma or certificate. Tennessee Promise, the more highly publicized portion of Drive to 55, pays for the first two years of community college for any Tennessee High School senior willing to meet certain conditions. 10

The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

Tennessee Reconnect is targeted toward adults who have returned to higher education or are considering doing so. “We learned with Tennessee Promise that people understand ‘free,’” Haslam said. “You can market all you want, but at the end of the day, if you can say, ‘free,’ people will understand. Of course there is no such thing as a free lunch, and anytime a public office-holder starts talking about free things, many observers immediately ask the same question: How’s this being paid for? “The cost to the state is from the same pool of money that we’re using for Tennessee Promise,” Haslam said. “We took the balance of some Hope Lottery Scholarship funds and moved it over. So it’s not costing the state’s general fund anything.” While the Tennessee workforce is still well short of the 55 percent goal, Haslam said Tennessee Reconnect is designed to make the most of the talents and skills that have lain dormant in many adults who are currently being underutilized by the marketplace. “There are a whole lot of adults in Tennessee who either have some college credit or community college credit who had to drop out because of some sort of life circumstance,” Haslam said. “We found that when we got adults to go back to school, they did really, really well. Of our community college population across the state, about a third of the student body (is) adults. But they make up about 50 percent of our graduates. Once adults come back to school, they are more mature and more serious.” The TCAT system was put in place in 1965 as the State Area Vocational/Technical School system. At that time, state legislation mandated that there be at least one of the schools within 50 miles of every Tennessee resident. “We are basically post-secondary career and technical education institutions for adults and recent high school graduates,” said Dean Blevins, director of the Elizabethton TCAT, which serves all of Northeast Tennessee. “We teach things like diesel mechanics, welding, HVAC, electricity/electronics, and nursing.” Just as the state’s community college system earned praise from Haslam during the build-up to Tennessee Promise for its ability to quickly design and implement programs to meet the specific needs of employers in the region served, so too does the TCAT system earn the same praise. “We pride ourselves on being proactive and quickly reactive to the needs of business and industry,” Blevins said. “We can react quicker because we can approve programs quicker than a college or university can, due to our flexible shop spaces. If a company comes in and needs a particular kind of training, we have an industry training lab. We can bring in their equipment

Student Michelle Sparks speaks as Governor Bill Haslam and Eastman Senior Vice President David Golden look on. Photos by Adam Campbell.

“

and train students on it. We can change Of our community college gears pretty quickly.” population across the state, about That training lab is essentially spec a third of the student body (is) space for training, Blevins said. Just as a business would appreciate a community adults. But they make up about having a spec building ready to populate, 50 percent of our graduates. so too do businesses appreciate having Once adults come back to school, training spaces ready to fit with the exact equipment on which their employees will they are more mature and more need to train. serious. - Gov. Bill Haslam Haslam was effusive in his praise of the work being done in the TCAT system. “Of those who start school at a TCAT, 80 percent graduate. Talk to anyone in higher education anywhere in the country, an 80 percent graduation rate is strong. Even more impressive, of those who graduate, 85 to 90 percent get jobs right out of the gate.” TCAT Elizabethton is recognized across the nation as a model for student success, Blevins said. “We’re actually a little higher. We have a 90 percent completion rate for the college in all programs and a 92 percent placement rate. For programs that require a license like LPN nursing or CNA, we have a 96 percent license-pass rate.” Any adult Tennessee resident, regardless of age or education history, may begin the sign-up process at tnreconnect.gov, and Blevins expects many to do so. Historically, around 1,000 students per year have enrolled at the Elizabethton TCAT. “With Tennessee Reconnect, we see that projection going up substantially,” Blevins said. “To date, we have 162 Tennessee Promise students registered to start this fall. We Haslam addresses the Media. have 175 Tennessee Reconnect students

already signed up and ready to go. This represents an increase of about 34 percent for our college.” Blevins said he is confident the TCAT system will be able to handle the increased student load without experiencing a drop in the quality of education provided. Tennessee Reconnect, he said, shows the state is serious about providing its citizens with improved employment opportunities and providing employers with an everimproving workforce. Said Sparks, “There will be stories just like mine all across the state. A Tennessee Reconnect grant will break down financial barriers for students. This grant is literally the only way I will be able to walk across the stage and receive my diploma.” Haslam summed up the project by saying, “We want to be certain that Tennessee provides the workforce that is needed, whether it be Eastman, Mountain States, Wellmont, or anyone who needs a trained workforce. We can do that at TCAT. Folks know they will get the training they need and they will get a job.” And while Haslam talks in terms employers want to hear, Sparks may be doing an even better job pitching the program than the governor is. “If there are any words I can give to those thinking about returning to school as adults,” Sparks said, “those words would be, ‘Just do it. With the financial barriers eliminated, the only thing holding you back is yourself…I promise this will not be a decision you regret.’”

BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

| FEATURES

Physicians address merger’s impact on clinicians By Jeff Keeling

peaking at the Wellmont Health System-Mountain States Health Alliance merger announcement April 2, Dr. Jeff Farrow praised the proposed deal’s benefits for physicians. Farrow, a pulmonologist and Mountain States board member, said a combined system could, “help us attract the best and brightest physicians to our region.” He added that a goal for the combined system would be, “to become one of the most fulfilling places in the country to practice Dr. Jeff Farrow medicine” and to be “one of the nation’s best providers of care.” That said, Farrow acknowledged, “there will be smart, thoughtful questions about the proposed merger, especially from physicians, nurses and other clinical professionals.” Farrow and a Wellmont colleague, board member and anesthesiologist Dr. Bill Smith, sat down with the Business Journal April 22 to discuss the proposal from a physician perspective – albeit that of system board members. Their bottom line? The Affordable Care Act, and health care reform in general, are changing the landscape so rapidly that many traditional concerns about issues such as anti-competitive situations, doctors losing independence to giant hospital systems and others are rapidly losing relevance.In addition, Farrow and Smith said, the greater Tri-Cities has specific challenges that can better be addressed by a combined system, and specific opportunities that can better be capitalized on, particularly with East Tennessee State University’s health sciences programs more formally in the mix. Business Journal: This merger envisions a sea change in clinical approach. (Wellmont board member Nelson) Dr. Gwaltney talked about “our ability to impact the patient not in the hospital but in their home.” If I’m a 12

The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

Bill Smith: Doctors that are talking to me are talking about the Affordable Care Act, but also about this justpassed (Medicare) sustainable growth fix, in which the federal government has said, ‘the way we’re going to reimburse physicians is going to change. We’re going to change the way we do it, and it’s not going to be based on volume, we’re going to base it on outcomes and on quality.’ So this is very timely, I think, for the specialists in this area in that we’re actually Dr. Bill Smith Photos by Jeff Keeling out ahead of that just a little bit. …We’ve been hearing specialist, or in an area more inpatient and about this our whole career, that medicine’s acute care-related, and I hear that, I might going to change – well, I’m convinced it’s think, it sounds like there’s some obvious pros finally here. I’ve been waiting for it for almost to population health, some obvious reasons 30 years, so this merger opportunity is kind to do this, but from a personal perspective, of like an opportunity to be in on the ground I’m like, ‘ok, what gives here – what can I floor. Not intentionally, but it’s turning out to expect?’” be perfectly timed. Jeff Farrow: With the Affordable Care Act and the emphasis on population health it’s not a Northeast Tennessee issue, it’s a national issue. It’s basically us responding to being told what health care is going to look like in the next 10 years, towards the end of mine and Dr. Smith’s practice. Those of us who are specialists … know that we have to be part of that system, and it can’t go forward without those individuals as well. Change begets concern; it should, and hopefully it begets a thoughtful approach to sorting out what’s the best way to deliver health care in the future, which is going to change. ... Whereas for Bill, like me, it’s always been about productivity, because it was fee for service, see as many patients as you can see responsibly and effectively, it’s going to change. It’s going to be managing groups of individuals to better care for those individuals, and we’re learning about that.

BJ: How much difference might having a single platform for electronic medical records make in the success of a merged system? Farrow: One of the things that will be successful in a merger like this is the opportunity to share information. When an individual’s admitted to the ‘other’ hospital system, they have a discharge and it’s really hard to get that information. Sharing the information technology amongst a large system will streamline that for the primary care physician, who never saw that patient in the hospital. They have everything they need right there at their fingertips. They don’t have to, if they’re in the other system, try to track down an X-ray at Wellmont, that kind of thing. That’s a huge plus. I suspect that if you surveyed the primary care physicians in the region who had access to both systems at their fingertips, it would be a really small number, yet they have patients who are in

either. I hear that over and over again. Physicians struggle with that and need quicker access and better access to do the things we’re talking about for their patients.

portant is it that in a patient centered home or an accountable care organization there be this growing array Smith: Readmissions are a negative outcome of people who are of that. That’s a big thing. If you get admitinvolved in keeping ted to any hospital, and you get discharged, people healthy? That’s there’s not an automatic mechanism that your a lot different than primary care doctor’s going to know about ‘productive medicine.’ that. Your primary care doctor would want to follow up pretty quickly after a hospitalization Farrow: I assume to check on you, to make sure that we’re doyou’re meaning ing everything we can to keep you on an out- growth in advanced Farrow and Smith share a light-hearted moment. patient basis. When the systems are separated nurse practitioners, like they are now, that’s not guaranteed. With case managers, and the systems separated, readmissions could if you think about it, that’s what the ACA’s vaping, which is something we don’t know occur more often, and the penalty’s going to designed to do is basically manage a populaenough about yet. So there’s going to be new occur. (Medicare imposes financial penalties tion, sick or not. Individuals who only sought and innovative problems that we’re going to for what it deems higher-than-recommended out medical therapy if they had a problem have to solve. … So one of the real potentials readmission rates.) There’s more financial is a much different model than what we’re of this merger is on the research side. This is a risk. The government is rightfully pushing us headed toward, so we need those individuals perfect incubator for a group of investigative in a direction of, ‘we’ve got to do better.’ to manage that population. physicians to undertake a look at the effects of vaping. So if we had the resources to do that, BJ: Has either of you had any colleagues, BJ: When we talk about this region – sicker; first off you’re going to attract doctors who friends, during the course of this process pull poorer; poor health indicators and poor want to do research. That’s an upside. you aside or say, ‘hey, can we sit down for health habits – is it both exciting and a little awhile, I want to talk to you,’ who were very daunting to think about this vision moving BJ: (ETSU President Brian) Dr. Noland has concerned, and were you able to dialogue from where it is in early 2015 to where it spoken to that, and that was spoken to in the with them and bring them to a comfort level? could be in 2020 and 2025? runup to this when this merger was being advocated by some, as a large upside. What are Farrow: I would steer you towards the idea Smith: It’s not daunting. It’s a steep hill to the things, if the system comes into place, that of this integration council, which to me is climb, but it’s all upside. There’s no downside are going to help attract the best and brightest probably as key as anything, maybe as key as there. and make this one of the most fulfilling places the board makeup. The integration council, in the country to practice? made up of individuals who have some BJ: With the traditional fee-for-service model expertise in population health, who have going away, do you think most physicians find Smith: When we recruited two years ago, my some expertise in the culture of this region that appealing, since it is a matter of trying to group, we had an anesthesiologist we were having been here a long time, are going to keep people healthier instead of treat them trying to recruit who had done his cardiac be able to sit down and work out things that when they’re sick? fellowship at Mass General, and he had done the average physician, including myself, have his residency at Yale, and we were within concerns about. I think anybody who sees Farrow: A lot of us who started out in an eyelash of getting him because this was this big change in the future is going to have practice who treated people once they were the type of area that he and his wife wanted some concerns. They should. It should make sick have realized how much more benefit to move to raise their family. But he had a them think about what they need to do in it is, at least in my own personal practice, research idea that he really, really wanted to their practice, what’s the best way to manage to address the issues before they get sick. pursue, and he’s at the Mayo in Jacksonville those patients in a new system that combines Preventive medicine was what we used to call now… I saw him at a national meeting last all of these hospitals – three large hospitals, it. It’s got other names including population week. We lost him – although he would basically. Whenever I speak to them I just health and management. But I think those of openly say they’d rather be raising their kids refer them to the idea that much of the ideas us who have been in practice a long time are here than in Jacksonville, Florida. that are going to implant are going to come recognizing that if we can get things done on out of that council. the front end – in my case smoking cessation BJ: So if you could plunk down a more robust – it makes a big difference long term for those research environment, he might have... BJ: It really seems that the possibility is for individuals. Moreso than whatever I do for a ramp up in job growth in non-physician them in the hospital when they’re sick. Smith: He’d be giving anesthesia in Bristol care, and maybe in primary and internist type today. So there’s a very concrete example of of care. Is that something you all see, and as Smith: Teenage smoking is lower nationwide SEE IMPACT, 14 doctors in the roles that you are in, how imthan it’s ever been, but what’s on the rise is BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

| FEATURES IMPACT, CONTINUED

what we’re talking about. BJ: Was this something that either of you can honestly say you had thought would be a good thing if it could ever happen before the strategic process that Wellmont undertook began? Smith: I used to joke about this a long time ago, that that would be a good thing. The Wellmont board went through a strategic options process that I don’t think the Mountain States board did, so I come at this with a very different look, because I have this history of what all we went through to get here. And of all the options on the table, this is the only one that’s truly transformative. Everything else is transactional – this is transformative. We’re envisioning something new that is kind of out of the box. It’s really exciting. BJ: Are you hearing any of your colleagues coming to you and actually talking excitedly and with a lot of hope? Understanding that,

yeah, there’s a lot of variables and moving parts to this, but are some of the folks really catching this vision and getting extremely enthused about, ‘gee whiz, I can’t wait to see what this looks like in six years?’ Farrow: Yes, and I love hearing Bill’s perspective because I have been on the Mountain States board for a long time. I always dreamed that that would be an optimal way to practice within the region – to begin to look at how we manage our population and then deal with insurance companies, and Medicare and Medicaid as a whole, as opposed to still having to determine who we’re dealing with (as a patient base). So when we began to look at the options, when we made our proposal to Wellmont it was clear to me that this wasn’t just the best choice for the region, it was the right choice for our region, and that we really needed to impress on them how eager we are to make this happen. I’m just so amazed at what’s happened with health care in our region after 25 years, and likewise colleagues feel the same way – never thought that that could possibly happen, but the opportunities,

as we began to think about them, are huge, that we never really thought were possible before because of the way that the system was divided, pretty much down the middle. BJ: Do you think one of the things physicians are excited about, whether they’re verbalizing it or not, would be those health indicators that (ETSU College of Public Health Dean) Randy Wykoff has hammered on every year, that maybe in a decade they can say, ‘here’s where those indicators went nationally, and here’s where our region’s went,’ and we look better? Farrow: That’s what we’re working for, and this is the best way to do that. To do it in a concerted effort, with the focus being on the care of the individuals and the population, and not so much how you’re going to compete with a different service at your facility and those sorts of things that often were discussions before. Those will basically just disappear, because it’ll be, ‘what does the system do for our region and our community to make things better for them?’

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Bell Helicopter cutting global workforce; layoffs possible at Piney Flats By Jeff Keeling

ell Helicopter is in the throes of what its CEO mentioned in January would be “another difficult year,” and the company announced April 28 it plans to shed around 1,100 workers worldwide, with the possibility of some layoffs at its Piney Flats facility. Fort Worth, Texas-based Bell employs about 500 people in Piney Flats. The company Chad Nimrick, plans to get as many eligible workers as posgeneral manager sible to take voluntary buyouts over the next month, before turning to involuntary layoffs, spokeswoman Sue Gordon told the Business Journal via email. The company cited continued softness in the commercial “medium market” that is significantly below company forecasts, as well as reduced customer parts purchasing. “We are making reductions to our workforce around the globe and it is possible these will include involuntary reductions at all of our facilities including Piney Flats,” Gordon said. The local operation provides, among other services, finishing for Bell’s commercial manufacturing, which is headquartered in Mirabel, Canada. “We could see as many as 30 employees affected at Piney Flats,” Gordon said, adding, “that number could be lower pending participation in the (buyout program).” In early 2013, Bell was featured in a Business Journal article that outlined its plan to invest $10 million and create at least 125 new jobs, bringing local employment over 600. The company also was instrumental in the development of specialized aviation courses at Northeast State Community College as part of the Tennessee Aviation Initiative in order to prepare a local workforce for expected growth in the aviation field. The federal sequester hurt Bell’s military business in Texas, where the majority of labor reductions are planned. Bell’s parent company, Textron, released its first quarter earnings April 28 and noted that revenues at Bell, a subsidiary, were down, “as expected,” according to Textron CEO Scott Donnelly. The earnings report stated that Bell would adjust production levels, “and take additional cost actions” to achieve its targeted profit margin ranges of 11 to 12 percent. Bell’s overall first quarter revenues of $813 million were down $60 million from the same quarter of 2014, and its first-quarter profit, $76 million, was down from $96 million a year earlier. Gordon said Bell has 8,700 employees worldwide, and that about 1,000 of them are considered eligible for the early buyout the company is calling a “Voluntary Separation Program.” To qualify, an employee must be at least 55 and have at least five years of service, or at least 54 and have at least 10 years’ service. She said Bell will notify employees who could be involuntarily laid off in the coming weeks. Those layoffs would occur by the end of summer.

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Bristol Compressors to add 110 full-time jobs By Scott Robertson

ristol Compressors, which at one time was considered a textbook example of a company hit hard by the economic downturn, is continuing its remarkable turnaround. The company, which produces compressors for use in air conditioning, heat pump and refrigeration systems, announced last month it plans to add 110 full-time jobs this spring. Bristol Compressors currently has 628 full-time employees at its Bristol location. It first moved 50 seasonal workers into permanent positions, then added 60 new positions during April, bringing the number of full-time positions to 738 at the Bristol site. “This is a two-phase ramp-up of our Bristol operations,” said Rick Nunley, executive director of human resources. The additional jobs will support increasing international and domestic demand for the company’s products,

according to Joel Moseley, senior vice president of marketing and sales. “The global market for air conditioning and refrigeration products is very Ed Gniewek File Photo dynamic,” Moseley said. “We’ve recently expanded our sales reach by establishing a sales office presence in the Jebel Ali Free Trade Zone of Dubai in the United Arab Emirates, and we have expanded our office in China to improve customer support. Due to our robust design and reliability performance in very demanding climates, Bristol Compressors enjoys a marketleading position in overseas markets.” Bristol Compressors is also positioned to respond to Saudi Arabia’s recent environmental sustainability and protec-

tion initiatives, which include implementation of regulatory laws that reduce carbon dioxide emissions, such as ozone-depleting refrigerants used in air conditioning systems. “The global air conditioning market is rapidly evolving, and it is critical that Bristol Compressors continues to invest in new products to support these changes,” said Ed Gniewek, CEO of Bristol Compressors. “There are global drivers to reduce emissions, and next on the slate is identifying new Low Global Warming Potential (LGWP) refrigerants. “Our business in the United States also remains strong,” Gniewek said. “We are excited to have this opportunity to grow and add 110 high-quality jobs to our Bristol location. Furthermore, we look forward to responding to global market demands by continuing to invest in the efficiencies of our company and our products.”

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2004 ‘Eureka’ moment in England leads to 2015 jobs By Jeff Keeling Simon Greer never intended to make his fortune by recycling cathode ray tubes (CRTs) from old TVs and computer monitors. But then, television manufacturers probably never expected to have to help pay for those CRTs environmentally friendly disposal. Nor, most likely, did the series of dairy operations that occupied a building along Bristol, Va.’s Gate City Highway expect consolidation would ever mean an end to those operations.

All those things did occur, and April 9, Greer joined city, regional and Commonwealth officials in cutting the ribbon on the 90,000-square-foot building that last saw use in late 2008. The facility will hold an expanding pile of monitors and televisions as Nulife – which has a similar operation in upstate New York – completes the environmental permitting process. Greer said the Bristol site, which should

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employ about 50 people, must obtain a raft of air quality permits basically identical to those procured in New York. The recycling process separates lead from glass in an electrical furnace Simon Greer at temperatures around 2,000 degrees. The de-leaded glass has been used as an aggregate replacement in construction products, among other end uses. Officials from Bristol Mayor Catherine Brillhart to Virginia Secretary of Commerce and Trade Maurice Jones lauded the project for its job creation and adaptive reuse elements. For his part, Jones praised Bristol for its efforts to revitalize and attract jobs. “You have found what it takes to revitalize, re-energize, continue to grow a community in an area that overall has taken some hits, historically, and I’m grateful to you,” Jones said. Greer grew the business from one that took used computers from large organizations and resold them. “We wanted to stand apart from other people, and this was in the ‘90s, and we said we’d recycle everything,” Greer said. He found other companies to recycle metal, plastic and other components, “but they didn’t want the cathode ray tube. I scoured the Earth, and they didn’t do anything with it.” He said no one had even tried to crack that recycling mystery. “They were just absolving themselves of responsibility. The manufacturers were like, ‘we’ve sold the TV, it’s not ours.’” Now, manufacturers have a responsibility to deal with old TVs, and pay for it. And Nulife cracked the mystery. After checking into chemical processes to dissolve the glass – they didn’t work – Greer happened to be dining with his mother, who is from Waterford, Ireland, home of leaded crystal. Greer went on to work with a crystal glass maker in England. “About 2004 was the Eureka moment, where we finally squeezed a little bit of metallic lead out of the glass. So at that point I knew which way the chemistry was and what we had to do and from there it was just trial and error.” BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

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Prospective buyer would restore Johnson City mill By Jeff Keeling

n entrepreneur who has restored two century-old railroad depots in downtown Johnson City hopes to do the same with the 106-year-old former General Mills building nearby. Joe Baker made an offer on the 4.8-acre, Chamber of Commerce Foundation-owned mill property April 24. If it’s accepted, Baker hopes both the Chamber of Commerce and East Tennessee State University’s arts programs will be among the 50,000-squarefoot building’s tenants – so much so that he plans to invite both entities to inhabit space there essentially rent-free. “We’ve had an interest in the mill for some time now, and believe we have laid out a vision that creates long-term benefits for downtown Johnson City and preserves an important piece of our history,” Baker told The Business Journal late last month. Elements of the multimillion dollar plan include a shell space for a new Chamber headquarters (rent-free for 15 years), a potential new location for ETSU’s bluegrass program and several other uses suited to the space. Top ETSU leaders have responded positively after an initial meeting. Baker’s offer, made by his real estate representative Greg Cox, came after a purchase contract fell through with a developer wanting to construct a five-building apartment complex that would have involved razing the mill. The Business Journal’s sister publication, Johnson City News and Neighbor first reported online April 7 that deal, which had created significant controversy, was essentially dead. On April 10, Chamber of Commerce CEO Gary Mabrey said he expected fresh offers on the property, which the Chamber Foundation purchased for $400,000 in 2008. When it bought the property, the Chamber planned a mixed-use development that would include a new Chamber headquarters. After years of trying to sell, the foundation entered into a contract with North Carolina’s Evolve Development in late 2013. Evolve also planned to use the adjacent 1.8acre tract where the now-closed Mize Farm 18

The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

and Garden store sits. May 4, Mabrey said the Evolve contract’s dissolution wasn’t complete, which prohibited him from saying much. Mabrey A preliminary drawing by local architect Uwe Rothe showing the exterior of a and a committee restored mill building. of 14 Chamber and foundation board members who will vet Johnson City and its downtown. new offers can’t do that prior to the contract’s “We’d probably move right into the dissolution, he said. Their real estate agents, project after the brewery is finished, but it Jerry Petzoldt and Andy Burke of TCI Group, takes a year to put together a project,” Cox “are able to seek offers, talk, do whatever. We said of the mill. “And although it’s structurcannot see nor talk about any of their efforts ally sound, it’s still a massive undertaking.” until we have a dissolved contract.” In addition to a purchase price, Baker’s Cox said it was Burke who contacted offer includes a six-figure donation to the him around April 8 and told him TCI would Convention and Visitors Bureau, an arm of accept offers for a limited period of time. “I the Chamber, for “sports tourism” infrastructhought Joe would be excited to learn that, ture (ballfields and the like). It also offers, and he was,” said Cox, who has represented rent-free for 15 years, enough unfinished Baker in several purchases of historic down- “shell space” inside the restored mill to house town real estate. “His interest in downtown a new chamber headquarters. Johnson City has only increased since the The Foundation bought the property property went under contract in late 2013.” from Mennel Milling, the last company to Cox’s work with Baker downtown operate the mill, for $400,000. It’s currently started with the 2012 purchase of the former appraised for tax purposes at $559,300. Carolina, Clinchfield and Ohio depot at Baker said he has had an “exciting discusBuffalo Street and State of Franklin. That sion” with ETSU President Dr. Brian Noland building now houses Tupelo Honey Cafe. about locating music-related programs, Following that historic renovation, Baker – a particularly bluegrass and possibly WETSco-founder of Ole Smoky Tennessee MoonFM, inside a renovated mill. shine – purchased the former East Tennessee “ETSU’s bluegrass program is internaand Western North Carolina depot across tionally renowned, and putting its students State of Franklin, along with an adjacent and faculty in a more accessible location three-story building that was once a hotel. inside a historic building could help the The former ET&WNC depot is scheduled program and go a long way toward enhancing to open as a new, sizeable craft brewery, downtown’s revitalization,” Baker said. “Dr. Yee-Haw Brewing, later this month. A Noland has expressed his interest in expandrestaurant, White Duck Taco, also is going in ing the university’s presence downtown, and our initial discussion about these specific that building. Like Mabrey, Cox wouldn’t be surprised possibilities was positive.” Noland’s chief of staff agreed. if the Chamber receives offers in addition “With developers like Joe Baker and othto Baker’s. The one he’s brought forward ers we’ve had conversations centered around is decidedly non-standard in its approach, Cox said, and reflects what he said is Baker’s what can we do to improve or enhance Johnson City, and we’re very interested in growing commitment to and interest in

that dialogue going forward,” Jeremy Ross said. With construction set to begin on a new performing arts center, Ross added, potential space elsewhere for a program like bluegrass could allow the university to use the new PAC for other programs. Many unknowns remain, Ross said, and faculty input would be important. Still, Ross said, Noland wants to answer this question: “Is there a possibility that some of the university’s Joe Baker programs or needs could be placed in a private development, which would enhance those programs, enhance the city and enhance the developer’s situation?” He added that ETSU officials have sought for some time to increase the university’s presence downtown. Meeting with Baker and a couple of his associates last month, Noland and Ross’s interest was piqued. “Beyond that, I’ve toured some of their buildings downtown and listened to some of their vision for Johnson City, and to say that the university is intrigued is an understatement,” Ross said. And with craft brewing continuing its meteoric rise – a recent Fortune magazine article says volume grew 18 percent in 2014 to

reach 11 percent of total U.S. market share – Baker also sees potential in some type of higher education program related to the fast-growing industry. Whether the Chamber’s leadership deems such a comprehensive offer the best option remains to be seen. Other offers, likely much more cut and dried and potentially with a higher base purchase amount, are certainly possible. Mabrey said April 10 the Gary Mabrey Chamber representatives considering the right choice for the property are a savvy group of businesspeople. Ultimately, any recommendation they make will go before the Chamber’s full 47-member board. “We will pursue with great diligence and vigilance and business acumen to sell the property,” Mabrey said. “I’m confident those 47 directors will give careful scrutiny to anything presented to them, and will arrive at a decision the same way we looked at all the precursors to the Evolve contract. “I’m totally confident we’ll look at it, come up with a result and negotiate in the best interest of the organization, the best interest of the folks who … we may enter into a deal with, and obviously, the best decision for the community.”

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Tri-Cities Residential Market 2015 YTD 2015 March Year-to-date County Market Pulse YTD Sales

Y-Y ch

YTD Total

Lee

50.0%

Washington, VA Erwin/Unicoi Wise

33.9% 25.0% 15.8%

79 30 22

Greene Hawkins Washington, TN

13.4% 7.8% -0.4%

110 83 246

Carter Sullivan

-2.4% -8.9%

81 286

Scott Johnson

-29.2% -44.0%

17 14

SOURCE: Northeast Tennessee Association of Realtors (NETAR). NOTE - Erwin/Unicoi is a combined number. City reports are collected by school district and that jurisdiction has a county school district and no city district.

2015 March Year-to-date City Market Pulse YTD Avg. Price

Y-Y ch

YTD Avg. Price

Greeneville

66.2%

$154,628

Bristol, TN Johnson City Erwin/Unicoi

13.2% 4.7% -2.4%

$135,612 $195,096 $118,528

Kingsport Elizabethton

-5.6% -6.8%

$155,308 $96,071

Bristol, VA

-10.96%

$80,907

YTD Sales Bristol, VA

Y-Y ch 45.0%

YTD Units Sold 29

Erwin/Unicoi Elizabethton

26.1% 10.0%

29 33

Greeneville Bristol, TN Kingsport Johnson City

-3.4% -8.7% -9.4% -10.4%

28 63 106 116

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Summer to bring new mortgage headache By Scott Robertson

top us if you’ve heard this one before. The federal government attempted to do something to protect consumers, but in doing so created unintended consequences that may well have deleterious effects on the very process it tried to fix. The latest example is in the field of residential real estate, where an attempt to eliminate the practice of pressuring last-minute changes on unsuspecting home-buyers is about to make home sale closings take longer and cost more. On Aug.1 of this year, the new TILA-RESPA Integrated Disclosure forms will replace the previous HUD-1 and Good Faith Estimate forms. The changes come from the Consumer Financial Protection Bureau (CFPB), because HUD, which had overseen the process, did not provide specific consumer protection. “They want to help consumRodney Robinson ers, and no one disagrees with that goal,” says Melanie Lamb, an attorney with Wilson, Worley, Moore, Gamble & Stout and an agent for Fidelity National Title Insurance Group, “but they lack knowledge about the closing process.” Starting in August, the old Good Faith Estimate and TILA forms will be combined into one Loan Estimate (LE) form, while the old Closing Statement and Final TILA will be combined into a single Closing Disclosure (CD). The problems arise from the fact that in its eagerness to avoid last-minute changes being foisted upon buyers, the CFPB put in place change-free waiting periods. “The LE has to be issued when the application is made,” says Rodney Robinson, past president of the Tennessee Mortgage Bankers Association, and a mortgage production manager with Regions. “If anything changes, it has to be revised, and there can be no revisions closer than seven days from closing.” In other words, if a change is agreed to within a week of the scheduled closing, that closing must be put off until seven days pass.

“The CD has to be issued to the buyer three days prior to closing,” adds Robinson. And like the LE, if there are any changes within that time frame, the closing must be delayed until the requisite number of days has passed. “With more hoops to jump through, the obvious unintended consequence is that closings will take longer,” Robinson says. “What currently is a 30-day contract appears as though it will become a 45. What was a 45 will become a 60.” The burden of creating the new documents falls on the lender, not on the attorneys or settlement agents. For the banking industry, it’s just another example of the federal compliance focus run amuck. “In 2010, we averaged 11 full-time equivalent employees per loan that closed. This year, that number is more than 26 FTEs per loan closed,” Robinson says. Melanie Lamb The new process also requires training and new software, Robinson says, and that holds true not just for the banks, but for the attorneys and title companies as well. “We’ve been sending our paralegals to seminars already,” Lamb says. “But we’re still not sure what everything will look like in its final form.” Lamb says the American Land Title Association has already seen that some information that attorneys are required to present in the process is nowhere to be found in the new paperwork. “So ALTA is creating a separate settlement statement to itemize things that are assessed to the borrower,” Lamb says. “The new (LE and CD) forms may be simpler for the customer to understand, but we are still obligated to tell the buyers what they are paying for.” In the long run, Robinson says, the greatest unintended consequence may be the exact opposite of what the CFPB had in mind. “This adds cost to the financial industry. When we have to pay more to ensure compliance, it makes it more expensive to borrow money.” BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

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Economic development consultants: high wage jobs, collaboration should be focus By Jeff Keeling Quit fighting within the Tri-Cities for jobs. Focus more on attracting manufacturing and other “primary employers” and less on retail development. Develop a unified vision and then market it to the world with a consistent message. Support existing industry and make sure entrepreneurs have access to a “no wrong door” system as they try to grow. Those were among key messages from outside economic developers who spent April 19-22 working intensively with leaders in Washington, Carter and Unicoi counties thanks to a federal grant procured by the Washington County Economic Development Council (WCEDC). “We recommend that an umbrella regional economic development partner-

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said at Johnson City’s Millennium Centre April 22. While the WCEDC had opted to begin discussions within the Johnson City MSA, the consultants had one more major recommendation: when you get together, bring Sullivan County in as soon as possible. “That partnership, based on the feedback we heard from you, needs to cover at a minimum Carter, Sullivan, Unicoi and Washington counties,” Burkhardt said. Burkhardt was among a group of five, led by the International Economic Development Council’s Louise Anderson, who met with workforce and economic development professionals, and folks from the manufacturing, medical, real estate/

planning, small business/ entrepreneurship, finance and lifestyle/tourism sectors. “There does not appear to be an evident vision for the region yet,” a colleague, Joy Wilkins, said. “Right now we’re not hearing a consistent message you can use to market your region.” Burkhardt said in developing a regional partnership, business, government, education and not-for-profit sector Larry Burkhardt partners need to be at the table “from day one,” and the public needs to be brought along, “to understand the importance of job creation, of the competitiveness of the job creation process.” That competitiveness should no longer operate within the region, Burkhardt said. “If you’re going to build a regional approach, there has to be an agreement that everybody within the region is working together. The partnership should develop an inter-regional no poaching agreement or code of ethics.” He provided examples from other areas that stressed communication between cities and counties and their economic development teams, including regular, focused meetings as well as a commitment to let a neighboring community know if one of its employers is calling about a potential move. “Communication can head off misunderstandings, it will enhance effectiveness, so we really feel strongly about this recommendation.” Much intra-regional competition has centered around attracting retail development. Burkhardt cautioned against such an approach. “We understand that sales tax drives a lot of competition in this area,” he said. “While we recognize that as the reality, we also would suggest to you that classic economic development theory starts with what we call primary employment.” Primary employers generate the majority of their revenues selling products or services outside the region. “That’s the fuel of your economy. That’s what brings new dollars into your economy. That’s the only thing that provides support for your retail, your service and professional sectors.” Burkhardt said any partnership ought to focus on developing additional raw land for new or expanding employers. “In some cases property that probably should be set aside for industrial development had instead been developed in a retail fashion. Make sure as you go forward that you identify those potential sites and put appropriate zoning on them so that they remain protected.” Wilkins had plenty of positive comments about the region, its potential, and its people. Like Burkhardt, though, she stressed the importance of a regional partnership. The next steps, if any are to be taken, are up to the leaders of the counties and cities involved, Wilkins said. “How that manifests itself are details that will have to be worked out.” BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

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Kingsport mayoral candidates address incentives By Jeff Keeling

heir aspirations will be sorted out May 19 in Kingsport’s first-past-thepost mayoral election. The evening of April 27, the five candidates vying to be the Model City’s next mayor each had at least a little something to say about economic development during a candidate forum hosted by the Kingsport Chamber of Commerce. Candidates include current alderman John Clark; retired city employee Mike Freeman; Gary Lane, who ran in the last mayoral race; Tom Parham, a current alderman; and former State Rep. Nathan Vaughn. One question from moderator Jim Bailey dealt specifically with the candidates’ views on economic development incentives, including tax increment financing, infrastructure grants, material

24 The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

grants, payment in lieu of taxes, etc. “to expand existing business and attract new business.” Clark: “My position is we should use every opportunity, every incentive, every grant that’s known to man to help us improve our city and to grow our existing businesses and also attract new businesses. But I think before we do that we do need a five-year growth plan and that’s one thing I’d like to drive in the first 100 days of taking office, is to host a summit with our business and community leaders … to put together a five-year game plan that really lays out exactly what we want to do to help our existing businesses grow … to attract new businesses to grow and also to create the jobs that we need.” Parham: “Economic development and job creation is really the cornerstone

of my campaign and what I want to accomplish. Like John, we need to use all the tools that are available, but we must keep these in balance with city services and our taxes. We must have a balanced approach. Not only incentives are necessary, financial incentives, but also job creation requires trained employees. We need to provide top-notch city services and balance the cost, make it an attractive community for all of those reasons. I think we need to be prudent in the use of all of those tools.” Freeman: “First of all, everything intertwines with everything, and basically we’ve got to get a handle on our debt and a handle on our infrastructure and our tax rate. This is the first thing businesses look at when they come to town – I’ve dealt with them for years. They’ve got a list, all your franchises, and they check everything

off, they check roof counts – it’s unbelievable if you’ve ever had to deal with them how they check things. We’ve got to make sure when they start checking off stuff, we’re meeting what they’re looking at.” Lane: “We’re at a time when Kingsport debt is growing about 3 to 4 percent annually, with a projection of $230 million this year. With this in mind, economic incentives need to be looked at with a lot of scrutiny on how much and where it’s given. The state of Tennessee was willing to give us $950,000 to put a sidewalk up Stone Drive. If we could go and lobby and try to get that money maybe channeled into our existing infrastructure and existing sidewalks I think that would be money a whole lot better spent by the state and Kingsport if they’re going to put $50,000 of the city’s money in it. But the economic impact of the businesses also needs to be considered to determine what incentives and how much incentive can we give to those businesses. And the businesses relocate to another town usually when the incentives are up just to go get them from another place.” Vaughn: As everyone has said, you keep all your options open. A mechanic doesn’t take some of his tools out of his bag because he’s not using them all the time. He has to be prepared for all alternatives. This again is another one of my strengths. I have both economic development experience at the local level and also at the state level. You look at 99 House members and 33 Senate members all fighting for a piece of a pie that makes up the State of Tennessee, and I believe I am well-positioned to fight for the things that are important for this community, I understand the process, and I believe I can be an effective leader in making Kingsport work.”

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BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

| ON THE MOVE Banking and Finance First Bank & Trust Company and its parent holding company, First Bancorp, Inc., have announced that Richard W. Buchanan has accepted the position Richard W. Buchanan to head the bank’s mortgage division. Buchanan is a graduate of Emory & Henry College. For 14 years, he was owner, president and CEO of Four Leaf Financial, a Southwestern Virginia-based company. He brings 38 years of real estate experience to First Bank & Trust Company, including his former positions at Charter Federal Savings Bank and Commonwealth Community Bank. “I look forward to this new challenge and to growing the real estate lending division at First Bank & Trust Company,” Buchanan said. “This is an exciting time for the real estate industry.” Jennifer Howard has joined Peoples Community Bank as a loan officer. Previously she served as a mortgage loan officer at Regions Bank and at First Tennessee Bank. Jennifer Howard Howard also served as a mortgage processor, underwriter and loan officer at Countrywide Home Loans. “I am very excited to be joining the team at Peoples Community Bank,” Howard said. Howard is a graduate of Waumbonsee Community College. Citizens Bank Chairman and CEO Joe Laporte, III, is pleased to announce that CeeGee McCord has joined the Board of

26 The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

Directors at Citizens Bank. McCord is the manager of Global Public and Community Affairs at Eastman Chemical Company. McCord is responsible for corporate CeeGee McCord philanthropy, the company’s corporate social responsibility initiatives, corporate events, economic development and education partnerships. Prior to joining Eastman, McCord worked extensively in the nonprofit and public service sector. She earned her bachelor’s degree in management from Georgia Institute of Technology, and a master’s degree in public administration from Kennesaw State University. She has served in many volunteer leadership positions in community and service organizations. She serves as a board member of Appalachian Sustainable Development, the Kingsport Economic Development Board, and the Kingsport Chamber of Commerce. She currently serves as vice-chair for the Kingsport Chamber.

Board of Directors and previously serving as the president of the United Way of Greater Kingsport. “East Tennessee is home to me, and I see great prospects for our region’s future,” Greene said. “Chase has the right products and the right people to help local companies grow and achieve their full potential.” Greene is a graduate of the University of Tennessee-Knoxville and holds the Certified Treasury Professional designation and graduated from ABA’s National Commercial Lending Graduate School.

Executive The Barge Waggoner Sumner and Cannon, Inc., Board of Directors elected five new vice presidents at the 2015 Annual Stockholders’ Meeting on April 18. Among them was Nelson Nelson Elam Elam, a 28-yearemployee with the firm. Elam is a Registered Land Surveyor in Tennessee, Kentucky, and Virginia. As office manager of the Tri-Cities office, Elam’s overall responsibilities include Jerry Greene has joined Chase as a client satisfaction, design and technical senior banker in Kingsport, where he will be leadership, business development, mentora part of the bank’s Middle Market Banking ing and resource management. His current & Specialized Industries team. He will call on clients include Eastman Chemical Company, commercial clients across the Tri-Cities area. City of Kingsport, and BAE Systems. He Greene has more than 25 years of resides in Gate City, Va., with his wife, Lisa. experience in the financial services industry and joins Chase from Capital Bank, where he Health Care served as a senior vice president and senior Laraine Dover has been named commercial relationship manager. He has director of Contracting and Provider Support been active in the community throughout Services at CrestPoint Health. his career. His involvement includes being Dover has been with CrestPoint since on the Johnson City Symphony Orchestra 2011, when she was hired as the organization’s

Credentialing and Enrollment manager. In her new role, Dover will be providing support and education for providers, along with overseeing database reporting and financials for Network Laraine Dover Operations. She’ll also be supporting the Medicare Shared Savings Program and directing the credentialing and enrollment department. Prior to joining CrestPoint, Dover worked in the medical staff services department at Mountain States Health Alliance, where she assisted with physician privileging and database administration. Dover graduated from East Tennessee State University in 2000 with a bachelor’s degree in human resources. She then earned her MBA from Milligan College in 2008. Jeremy Mikles, a nurse for 13 years who has received positions of increasing responsibility at Bristol Regional Medical Center, has been promoted to the hospital’s director of critical care and trauma.

Mikles’ responsibilities will include oversight of Bristol Regional’s emergency department, Level II trauma center and intensive care units. It’s the latest advancement Jeremy Mikles for Mikles, who came to Bristol Regional in 2013 as a clinical leader in the emergency department. A year later, he was named director of the emergency department and trauma services. “We have been extremely impressed with Jeremy’s performance since he joined our staff,” said Tim Anderson, Bristol Regional’s vice president of patient care services and chief nursing officer. “He has proven to be an excellent leader who consistently produces beneficial results for our patients and the hospital. We’re fortunate to have him as part of our leadership team.” OnePartner welcomes Darren Ramsey as chief technology officer to lead operations for its 9,200 square foot Advanced Technology & Applications Center, the nation’s first

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Tier III commercial data center, providing high-availability and advanced security with a proven record of 100 percent uptime. Ramsey will direct the overall network and Darren Ramsey hardware functions ensuring network availability and redundancy of the center, supporting clients from various industries around the world and providing solutions to support their individual needs. With nearly 25 years of experience in information technology, Ramsey most recently served as a pre-sales systems engineer at Cisco Systems in Franklin Tennessee, where he focused on healthcare and retail verticals. Additionally, Ramsey previously served at Wellmont Health System as the director of technical services and chief architect. During his 17-year tenure at Wellmont, he constructed an award-winning medical grade network, implemented an elastic private cloud compute environment, and retrofitted legacy data centers to accommodate Wellmont’s new EPIC electronic medical record system.

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FOR MORE INFORMATION CALL 423-989-7200 BJournal.com | May 2015 | The Business Journal of Tri-Cities TN/VA

| MED BRIEFS Wellmont, MSHA Name Joint Board Task Force Wellmont Health System and Mountain States Health Alliance leaders have appointed a joint board task force as work continues to explore the creation of a new, integrated and locally governed health system. Wellmont’s joint board task force members are: • Dr. Nelson Gwaltney, of Bristol, Tennessee, a member of the Wellmont board of directors, president of Highlands Physicians Inc. and a general surgeon on the medical staff of Bristol Regional Medical Center; • Bart Hove, of Kingsport, Tennessee, president and CEO of Wellmont Health System; • Roger Leonard, of Bristol, Tennessee, chair of the Wellmont board of directors and a senior adviser to England & Co.; • Roger K. Mowen Jr., of Kingsport, Tennessee, a member of the Wellmont board of directors and retired senior vice president of global developing businesses and corporate strategy for Eastman Chemical Company; • Dr. Doug Springer, of Kingsport, Tennessee, a gastroenterologist on the medical staff of Holston Valley Medical Center, a member of the Wellmont board of directors and immediate past president of the Tennessee Medical Association; • Dr. David Thompson, of Bristol, Tennessee, a physician with Wellmont Medical Associates in Bristol, who also practices in Abingdon, Virginia, and is a Wellmont board member and chairman of the Wellmont Medical Associates board of directors; and • Keith Wilson, of Kingsport, Tennessee, who owns a

secondary residence and a farm in Scott County, VA, a member of the Wellmont board of directors, publisher of the Kingsport Times-News and president of Northeast Tennessee Media Group. Mountain States’ joint board task force members are: • Barbara Allen, of Johnson City, Tennessee, chair of the Mountain States board of directors and general manager of Stowaway Storage, a family-owned business in Johnson City; • Bob Feathers, of Kingsport, Tennessee, a member of the Mountain States board of directors and president and CEO of Workspace Interiors, Inc.; • Alan Levine, of Johnson City, Tennessee, president and CEO of Mountain States Health Alliance; • Dr. David May, of Elizabethton, Tennessee, a member of the Mountain States board of directors and immediate past president of the medical staff at Sycamore Shoals Hospital; • Dr. Rick Moulton, of Johnson City, Tennessee, medical director of clinical integration for State of Franklin Healthcare Associates and chairman of the SoFHA patient centered medical home committee; • Gary Peacock, of Marion, Virginia, a member of the Mountain States board of directors, former chair of the Smyth County Community Hospital board of directors, and retired senior vice president of Royal Mouldings; and • Clem Wilkes, Jr. of Johnson City, Tennessee, a member of the Mountain States board of directors and co-manager of Citizens Investment Services, a subsidiary of Citizens Bank Tri-Cities.

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11/

| THE LAST WORD

An open letter from the Chambers of Commerce

he Chambers of Commerce of Kingsport, Bristol and Johnson City/Jonesborough/Washington County endorse the proposed merger of Wellmont Health System and Mountain States Health Alliance to an integrated single system. We believe this offers the best opportunity for the betterment of our region’s healthcare. Each Chamber board met with the individual health systems while Wellmont was pursuing three alternatives. The business community has been all too aware of the extraordinary challenges facing healthcare from delivery, outcome, and cost. The business community has scrutinized the proposed merger and believe the merger of two local systems into one will enhance the health of the people who live here and will generate economic growth to the region. Each of the two systems brings assets and strengths that complement the other. Those combined and complementary strengths will be a formidable force against their financial headwinds. All indications are that investments from repurposing, prioritizing, and research will be made to expand and improve services. Frankly, a significant and comprehensive health care system is an asset to retain and recruit business. We are aware this is not a “done deal.” Like any large merger, there are requirements from the government to ensure that the transaction will comply with the laws. Both health systems will have to remain separate until the state of Tennessee and the Commonwealth of Virginia approve the merger. In the meantime, planning the integration of two distinct healthcare systems will take time, some give-and-take over governance, and finesse. Wise administrators must

produce an effective business plan and physician involvement is crucial to ensure integration never compromises patient services. A strong partnership with East Tennessee State University and the Quillen College of Medicine and Gatton College of Pharmacy and other institutions of higher learning will ensure a robust pipeline for new physicians and research opportunities. The Chambers were concerned that there would have to be a major culture shift now that two former fierce competitors are on the same team. After discussions following the announcement, that concern has faded and both parties have worked together to develop the initial merger concept. No one is looking in the rear view mirror - the focus is “becoming better together.” Sometimes living in close-knit communities where relationships matter says it all. It is a merger of two local systems. There isn’t a takeover from outside. We know the decision makers. They live and work here. They are our friends and neighbors. They, too, get their healthcare here. This isn’t them; it’s us. From a business and community perspective, we greatly appreciate the tremendous amount of time, attention and analysis that went into making this extremely critical decision. We are so fortunate both systems have such compassionate and dedicated doctors, nurses, volunteers and staff and we remain encouraged they will now be one, unified and focused team. With trust comes responsibility. The Chambers believe that both Mountain States and Wellmont understand this and with great care have come to the decision to merge. We wish them Godspeed.

Isaac Webb Chairman of the Board Kingsport Chamber of Commerce

Jeff Jones Chairman of the Board Johnson City/Jonesborough/Washington County Chamber of Commerce

Jim Maxwell Chairman of the Board Bristol Chamber of Commerce

Miles Burdine President/CEO Kingsport Chamber of Commerce

Gary Mabrey President/CEO Johnson City/Jonesborough/Washington County Chamber of Commerce

Paula Hurt Interim President/CEO Bristol Chamber of Commerce

30 The Business Journal of Tri-Cities TN/VA | May 2015 | BJournal.com

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Like all moms, I’m always concerned about my children’s well-being. But sometimes they get sick. Sometimes they get hurt. That’s why I’m so grateful we have children’s hospitals. If any child needs a miracle, they’ll do everything in their power to make one happen. Please join me in giving sick and injured children every chance to get better. Put Your Money Where the Miracles Are. Give to your Children’s Miracle Network Hospital. Children’s Miracle Network Hospitals® raises funds and awareness for 170 member hospitals that provide 32 million treatments each year to kids across the U.S. and Canada. Donations stay local, fundiing critical treatments, pediatric medical equipment and charitable care. Find out why children’s hospitals need community support and find your member hospital at CMNHospitals.org and facebook.com/CMNHospitals.

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