Tag Archives: insurance companies

financial institutions - bank

Understanding The Function, Purpose, Regulation Of Financial Institutions

The functions and regulations of financial institutions have changed since our most recent recession and will likely continue to be governed at a higher level going forward. This is critical for the success of our future economy.

Financial institutions help provide opportunity for our economic growth and improve our living standards. They do this by assisting as a liaison for those who have savings (dollars) and those who have a need for capital. Institutions typically will raise dollars from other institutions or individuals then loan those dollars to other entities at a cost (interest rate). This is how financial institutes help aid the flow of money through our economy.

There are several types of financial institutions, such as banks, credit unions, brokerage companies, insurance companies and trust companies — all of which have different primary functions and assist with the transferring of funds from investors to companies in need of funds.

Banks

Banks are corporations with a state or federal charter, which can accept deposits, invest in securities and make loans to businesses or individuals. Loans are considered to be the most valuable assets for commercial banks and deposit accounts are their main liability. Some banks may provide other financial services for its members. Banks are regulated on a federal level and have government protection for their depositors (FDIC insurance).

Credit unions

FDIC insures depositor accounts for commercial banks and most non-bank thrift institutions, such as credit unions. Credit unions have similar services as banks but are focused more for small savers and checkable type of transactions. They provide lending services and are owned by their members.

Brokerage companies

Brokerage companies are large corporations and are an intermediary to investors and investment companies. They offer financial services typically to buy and sell stocks for clients.

Insurance companies

An insurance company is another type of financial institution that offers investment vehicles for investors along with other products which may provide financial protection by way of insuring businesses or individuals.

These financial institutions are the backbone of our economy. With improved regulation, we hope they will continue to prosper and develop a strong foundation for our country.

For more information about the financial institutions discussed in this column, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Health Care Reform in Arizona - AZ Business Magazine Nov/Dec 2010

Business And Community Leaders Are Trying To Figure Out What Health Care Reform Will Mean In Arizona

For government and business, providers and patients, the U.S. health care reform legislation promises a new world of costs and care.

Most individuals without insurance will be able to get it. Those who have insurance already probably will have to pay more for it. Hospitals, doctors and others in the front lines of health care will begin to change long-established ways of doing business. State governments and many businesses, already battered by recession, will face new costs and possibly some benefits.

But beyond these generalizations, little is certain about what health care reform will mean in Arizona and across the country. The bill is vague in many areas and leaves important details of implementation to be determined by federal regulators and other officials in the weeks and months ahead.

“Quite frankly, we won’t know the financial impacts until we move through the process and see what the federal government and insurance companies do,” says Donna Davis, chief executive officer of the Arizona Small Business Association (ASBA).

Barry Broome, president and chief executive officer of the Greater Phoenix Economic Council (GPEC), says it is too early know what the bill will mean.

“It sounds very good to be able to cover the uninsured, but what the costs are and how they are going to be distributed are still not clear,” he says.

Marjorie Baldwin, director of the School of Health Management and Policy and assistant dean at Arizona State University’s W. P. Carey School of Business, says it is important to note that the law’s primary purpose is to cover the uninsured.

“This bill is about access,” Baldwin says. “It’s designed to cover the uninsured. There is much less in it about quality of care and little about cost controls.”

On what the price tag for health care reform will be, Baldwin says, “The one safe prediction is that it is going to cost much more than anticipated.”

Hospitals and doctors
Whether the health care overhaul is ultimately deemed a success will be determined to a large extent by what happens inside the nation’s hospitals, clinics and doctors’ offices.

Peter Pavarini, a health care lawyer for Squire, Sanders and Dempsey and an adviser to health care organizations, believes hospitals are actually well-positioned to adapt to the new law.

“Hospitals have been anticipating something happening for some time,” Pavarini says. “Hospitals have the resources to prepare better than some of the other players in the health care system.”

Several provisions in the law are expected to lead to a dramatic shift in the way hospitals are paid by insurance. Under the existing system, providers receive set rates for specific medical procedures. The new law moves toward a system in which hospitals receive a set amount for treating an overall condition or a so-called “bundled payment.” This shift is expected to require more detailed treatment plans, coordinated care and closer cooperation among hospitals and physicians.

“With the bundled payments, you have to have a more integrated approach and an approach that aligns physicians and hospitals,” says Suzanne Pfister, vice president of external affairs at St. Joseph’s Hospital and Medical Center in Phoenix.

The hospital already has been moving in this direction, according to Pfister. St. Joseph’s has forged a series of partnerships with area health care organizations, including outpatient and short-stay providers United Surgical Partners and SimonMed Imaging
.
“We are continuing to look at moving from acute care to a continuum of care,” Pfister says.

Pavarini believes the new payment systems for Medicaid and Medicare will bring big changes to care at hospitals. When the system is in place, hospitals will get a set payment for delivering all of the care a patient receives from 72 hours before admission to 30 days after discharge, he notes.

“That’s a whole different model from what we have now,” Pavarini says. “This means it’s not good enough just to get the patient in and out of the hospital. It means testing can’t be duplicative. And it means patients better be ready for discharge when they’re released.”

Pavarini says doctors and hospitals will need to cooperate more closely as the law is implemented. He sees hospitals forging formal alliances with physician groups and appointing more practicing physicians to their boards of directors.
A more basic concern for hospitals is how much they will be paid. Because expansion of Medicaid is a key feature of the law, hospitals are concerned about long-term revenue.

“Payments are going to shift more to the level of Medicaid, and Medicaid has not been a particularly good payer,” Pfister says.

Officials at Phoenix-based Banner Health, one of the largest nonprofit health care systems in the country, are still examining the legislation to assess its consequences.

“This reform is primarily about health insurance, not health care reform,” the organization said in a statement. “It will result in expanded AHCCCS (Medicaid) coverage in Arizona and access to insurance, but the need remains to address reducing the cost of health care.”

The bill includes a number of provisions that will increase the role of primary-care physicians. Medicaid fees will go up for primary-care doctors, who also will be eligible for bonuses from Medicare.

St. Joseph’s is concerned about being able to find enough physicians as health care reform is implemented in the coming years, according to Pfister.

“Arizona has fewer physicians per capita than the national average, so we face that already. Arizona does not have enough primary-care physicians and even some specialists,” she says.

The larger hospitals that have formal ties to physicians and other providers probably will fare best under health care reform, according to Pavarini. But he believes smaller, more isolated hospitals will struggle and some will close.

“Arizona has a number of smaller hospitals in less populated areas,” he says. “I think the outlying hospitals in rural communities could have difficulty.”

Businesses
While all businesses will be affected by the health care reform law, some will feel it more than others. Probably least affected will be firms that already provide health insurance now and have a pool of employees large enough to allow the companies to self-insure.

“For most large businesses, fundamentally there’s not a lot of change,” says Keith Maio, president and chief executive officer of National Bank of Arizona. “For us, we’ll have to be a little more paperwork conscious.”

ASU’s Baldwin says the principal effect on large employers will be slightly higher expenses, as they absorb some of the cost of the system’s expanded coverage.

“For larger employers, the law is not going to mean a big difference, but they are going to see their costs go up,” she says.

Smaller businesses though will face new uncertainties, and, for some, significant new costs.

“I would say that there is a cloud of concern generally for small businesses,” says Maio, whose bank has many small business customers. “People who have been through the recession and are still slugging it out have learned to survive. But they still have trouble seeing how they can get back to where they were . That’s why something like the health care bill can have such an impact.”

The law offers a complex mix of incentives and penalties designed to spur employers to offer health insurance. In 2014, employers with 50 or more workers who do not provide coverage will face penalties of $2,000 or $3,000 per employee. Some employers who provide insurance and have fewer than 50 workers will be eligible for tax credits.

“In a sense there is both a carrot and a stick,” says Bradford Kirkman-Liff, professor in the School of Health Management and Policy at W. P Carey. “The idea is to create a very strong incentive to provide insurance.”

The tax credits could offset as much as half of the insurance costs for some employers, Kirkman-Liff notes.

“Arizona has a high number of small employers. Many of them don’t provide health insurance, but some do. This would give them a reason not to drop it,” he says.

The law also instructs states to establish insurance exchanges, where small employers and individuals can purchase policies from insurance companies. The exchanges are designed to bring down the cost of insurance by combining groups of buyers into large pools.

But even with government subsidies and insurance exchanges, some businesses will find the burden too large, according Maio.

“The greatest impact will be on those that employ entry-level employees,” he says. “Arizona has a lot of lower-wage businesses who won’t be able to afford to provide insurance. I think some will opt to pay the fine. Then what have you accomplished?”

Another problem that Maio sees is the 50-employee threshold for the coverage requirement. Employers with fewer than 50 can escape penalties for not providing insurance.

“Have you given them a disincentive to adding people?” he asks.

Davis at ASBA says most business owners are focused on short-term challenges and do not have a clear picture of how the law will affect them.

“For some small businesses who fit the prescribed requirements, it will help offset some of their costs,” Davis says. “For others, it simply won’t.”

healthcare onsite for large employers

Healthcare Solutions Center Provides Onsite Health Care To Large Employers

Time and money are two things few people can afford to waste, especially these days. In an effort to save both, people often put their own health concerns on the backburner. After all, who wants to take time away from work or family to go to the doctor, wait around to actually see the doctor, and then get a diagnosis and a prescription that has to be filled for a hefty fee (not to mention the cost of the visit)?

But Frances Ducar is changing the way health care is handled in the workplace and making it much more convenient for people to confront their health concerns. As founder and director of Healthcare Solutions Center, she strives to save Arizona employers and their employees money. And she’s saving lives along the way.

Ducar spent more than 20 years in the health care industry in various positions, including first assistant to some of the country’s top surgeons and as a family nurse practitioner.

“I’ve worked with some really amazing specialists, and a little piece of each of them is what makes me who I am today,” she says of her mentors.

In her experiences over the years, she saw how companies were being “eaten alive” by insurance companies. She knew she wanted to find a way to help employers offer their employees quality health care and help employees afford the health care they deserve. With that, Healthcare Solutions Center was born in 2003.

Healthcare Solutions Center offers large companies (with 500 employees or more) an onsite health care clinic staffed by a family nurse practitioner. With HCS onsite clinics, employers save money on their overall health care costs. Employees save money because HCS eliminates co-pays and deductibles and reduces prescription costs to as little as $4. Employees also receive confidential and top-notch care from a nurse practitioner. In addition, HCS has a relationship with a network of some of the state’s finest specialists. If a patient needs further examination beyond what the nurse practitioner can provide, HCS can arrange a timely appointment with a specialist — sometimes even the same day.

“A company is only as healthy as its employees,” says Ducar, adding that people are much more likely to visit an onsite clinic because it eliminates the need to take time off work to travel offsite to a doctor’s office.

Employees don’t just see the nurse practitioner if they are sick. HCS onsite clinics also offer wellness programs to help patients quit smoking and lose weight.

“Knowing you are helping everyone you see in one way or another, seeing a person change their lifestyle, and seeing companies save money and put it back into their wellness plans — these are just a few of the immense rewards of this business,” Ducar says.

She feels good knowing that employers are saving millions on their health care costs and that HCS is helping employees appropriately utilize every avenue and benefit of the company’s wellness plan, including counseling and beyond.

But there are challenges as well. Ducar personally selects her family nurse practitioners, and she admits that placing the right nurse practitioner with the right company is one of the hardest and most important, parts of her business.

“My nurse practitioners are a reflection of me,” she says. “They become the advocate for their patients who just don’t know where to go.”

Ducar must have a knack for placing her nurse practitioners because she says she’s never had a dissatisfied patient.

“The patients trust (the nurse practitioners), and they are all happy to have us there,” she says.

The entrepreneur predicts huge growth for the future of her company, but she says her business will remain in the state for the long haul.

“Love of medicine and the desire to help Arizona companies afford their health care is what drove me to start this company,” Ducar explains.

test tubes

Biotech Startups Need To Take Ideas From Concept To FDA Approval

Arizona has always been known as a great place to start and grow a business. While some industries have been staples of our economy for some time, there’s another growing industry that is bringing jobs, capital, and most of all, innovation, to our state. Arizona has, in recent years, become home to a growing number of biotechnology and medical device companies.

At the heart of every one of these companies is an entrepreneur with a vision and an idea. Some of these entrepreneurs are starting a biotech or medical device company for the first time. That’s scary enough. But the biotech world comes with a whole other set of hurdles that makes it even harder to go to market. One of the first and most important hurdles is getting U.S. Federal Drug Administration clearance. This is a challenging process every biotech, medical device and pharmaceutical company has to face. Here’s an inside look at how startup biotech companies gain clearance for their products and bring them to market.

For starters, which companies need FDA clearance and which ones can bypass the process? Basically, if a company plans to sell its product directly to physicians and hospitals, and wants insurance companies to pay for it, it needs that FDA clearance. All entrepreneurs in this space need to ask themselves that same key question when they start a new venture: Who are you selling this to?

For a small startup biotech business, or even just an engineer with an idea, the FDA process may seem daunting, costly, and in some cases, unnecessary. Many companies try to shortcut the system or choose instead to market under homeopathic regulations, which are quite different than the FDA’s. In these cases, there is often (but not always) less testing or insufficient data to support claims of what the product can do. In some cases, small businesses think the FDA makes the process so difficult and costly they simply can’t do it. It’s important for these startups to remember that gaining FDA clearance should be seen as an investment in their company that allows them to market effectively. It may seem stifling, but it also opens doors to sales channels that wouldn’t be available otherwise and can be very lucrative.

The public often doesn’t realize there are different types of FDA clearances biotech, pharmaceutical or medical device companies can apply for.

Pharmaceutical companies apply for a new drug application, while medical devices fall into three categories:

Class 1 —
This is for low-risk devices and it costs almost nothing to submit for this clearance.
Class 2 — This is for devices that are substantially equivalent to other devices already on the market. This process can cost about $4,000 just for the submission, not including the cost of testing and developing the submission.
Class 3 — This is for new devices or devices that are deemed life supporting/assisting and can cost millions of dollars after testing and the application process is complete. It’s important to remember that only products with a Class 3 are FDA approved, while the others are FDA cleared. FDA approval simply means that the FDA was involved in the testing and it was a new product unlike any other on the market.

Any startup biotech company will want to spend ample time researching the guidelines and class definitions before applying for FDA clearance. It seems like a tedious process, but it is a sound time investment and helps ensure the company only needs to go through the process once per product. Any mistakes along the way can result in going back to the drawing board and starting the process all over again.

To avoid this, these companies need to hire employees and consultants who have been through the process and can lend guidance from experience. Also, it is strongly advised to open a dialogue with people at the FDA. They are there to help companies get through the process smoothly and efficiently, and can help a startup overcome challenges along the way.

So when should you start the process? In most cases, a company will wait until it has a product prototype or a design it’s happy with before starting the application. The process to apply can often begin at the start of the business, but the real work begins once the company has something that can be tested for safety and efficacy. The good news is once the submission is complete, and if everything in the application meets the FDA’s requirements, it will only take 60 to 90 days on average to hear back from the FDA.

Once a company considers FDA clearance they can also expect some changes to their business. As with every form of government licensing, the FDA has rules and guidelines that must be followed, and these are known as the quality systems requirements. This is simply a form of management by the FDA that ensures biotech companies offer a consistent level of quality in every aspect of their business and are marketing products in a way that will not deceive or misguide the public.

In the end, every biotech company has to decide how they are going to grow their business. As we see more and more medical device and other biotechnology companies emerge in Arizona, we’ll see them go to market in vastly different ways.