A Letter from the President
I’d like to take this opportunity to introduce two new faces at TAG, both of whom work in sales and business development.
Mike Korte joined TAG in August of 2005 after spending 16 years in sales and management for a large newspaper. He received his mass communications major with a minor in Business Administration from Bemidji State University and is active in youth sports and many civic boards in Rochester Minnesota.
Greg Young started with TAG in December of 2005 and has nearly 20 years experience in the credit and collections industry. His experience includes extensive work in operations, sales and public speaking within the industry. Greg has a degree in Business Administration from Hamline University.
Both Mike and Greg exemplify the very best in business ethics and a desire to help people and solve problems. I’m proud they have chosen to share their talents with The Affiliated Group. Call upon any of us for your first and third party receivables management needs and see how TAG can help you.
Hospital CEOs Rank Bad Debt a Top Concern
According to a report released on Dec. 30, 2005, by the American College of Healthcare Executives, the top issues confronting hospital CEOs remained the same in 2005. The survey asked respondents to rank the three most pressing issues affecting their hospital and identify specific areas of concern.
Financial challenges far exceeded other issues as hospital CEOs’ number one issue. This year, 67 percent of respondents cited financial challenges as one of their top three concerns, reflecting a modest decline from 71 percent in 2004. Personnel shortages were ranked the second concern with 36 percent of respondents selecting this issue. Care for the uninsured rounded out the top three, with 35 percent of respondents indicating concern over this issue.
Within each of the top three issues, respondents also identified specific concerns facing their hospital. Within the issue of financial challenges, bad debt ranked third, with 68 percent of CEOs citing this as a concern. Medicaid and Medicare were the top two financial concerns. Bad debt was followed by revenue cycle management, which ranked fourth with 44 percent of respondents noting it as a concern. Also mentioned were managed care payments (42 percent) and other commercial insurance (30 percent).
For more information, please visit http://www.ache.org.
Healthcare Costs Pose Huge Threat to American Family Assets
Even wealthy Americans are concerned that rising healthcare costs will eat up their financial assets, according to survey findings released last week by The PNC Financial Services Group Inc. One in three (36 percent) of respondents said, “healthcare costs will ultimately consume a major portion of my financial assets.” Nearly four in 10 wealthy Americans, including one quarter of those over age 65, said that affording healthcare for their families is a top financial concern.
Highlights of the findings include:
Future of Medicare: Four in 10 respondents (42 percent) perceive the potential insolvency of the Medicare system as a threat or huge threat to their family’s wealth. About half (49 percent) of those between the ages of 45–64 think its demise would be a threat or huge threat to their family’s wealth. Among those with children, more than half (51 percent) agree their children will not benefit from Medicare in the future.
Long–term care costs and medical treatment also posed a risk for almost four out of 10 questioned (36 percent), with one–quarter (26 percent) of younger Americans, ages 18–44, with children under 18 expressing fear that their children would eventually have to pay for their long– term healthcare costs. Close to one–quarter (24 percent) of those with living parents worried about their parents’ lack of long–term care insurance.
Top Five Financial Concerns: More than half of respondents 52 percent) rated “providing for my health and wellness” as the No. 1 financial concern. This was followed by “sustaining and increasing my wealth” (47 percent); “providing for my family’s security” (41 percent); and “having enough money to support my lifestyle (41 percent).” Next was “affording healthcare costs for my family” (38 percent).
The serious concerns expressed by survey respondents about the costs of long–term care, medical expenses for family members and the potential for Medicare insolvency have not translated into related financial planning for many wealthy Americans. PNC’s survey found that asset protection preparations lag for many wealthy households. Survey results included:
More than two–thirds (69 percent) of respondents do not have a comprehensive financial plan.
More than one in 10 (13 percent) have not taken any of the appropriate to protect their wealth.
Three out of four (75 percent) have completed a will, but four in 10 (39 percent) have no healthcare proxy, which specifies an individual to implement a living will and make healthcare decisions when its statement of preferences do not apply.
While most have a will, less than half (45 percent) have established a trust to transfer wealth to heirs and only 26 percent have named a professional trustee.
Seven out of 10 (69 percent) have not purchased long–term care for themselves or a spouse. Among those who have not purchased long term care insurance, 36 percent felt it was unwise to spend money on a premium they may never use, 22 percent said was cost–prohibitive and 21 percent said they never thought about it.
Golden Era Returns as Many Industries are Flush with Cash
With record excess cash holdings, U.S. companies have the potential to significantly alter economic conditions going into 2006/07, according to a new report from RBC Economics, titled “Outlook for North American Business Finances.”
“As a result of these surpluses, we could see higher prices for both wages and producer goods as well as the potential for record–breaking merger and acquisition activity,” said Derek Holt, assistant chief economist for RBC. “In fact, if companies cannot find profitable uses for excess liquidity, have conservative investment plans, and/or are unwilling to hand cash back to shareholders, then they are exposing themselves to having someone else come along and find a use for their cash. Companies need to decide if they will maintain present levels of cash or redeploy the surplus into their own business.”
He continued: "Not since the Golden Era of the 1950s and early 1960s have companies experienced such cash surpluses."
Since 2002, with the bursting of the tech bubble, weakness in the U.S. economy and various shock–induced interruptions, business investment has dropped dramatically, compelling companies to keep cash close at hand. A rapid profit recovery over the past few years has exceeded the investment recovery, and when coupled with these pressures, has made many companies flush with cash. In fact, the ratio of cash and near–cash holdings to debt stand at record levels for many U.S. corporations.
The redeployment of funds will have a direct impact on the U.S. economy. It could result in higher inflation as increased wages and price hikes for raw materials could spark further interest rate hikes. Or it could be more of a disinflationary trend, as companies could reinvest in equipment upgrades, inventory investment and increased spending on R&D, thereby improving overall productivity and employment opportunities.
“We are forecasting that going into 2006/07, there will be a gradual disbursement of excess cash in an overall balanced set of conditions,” Holt said. “However, in the unlikely scenario that companies choose to redeploy these surpluses quickly, how they do so, becomes of paramount importance to the health of the economy."
Corporate credit quality also benefits from record cash holdings. Credit quality indicators continued to point to very strong conditions in 2005, largely due to prolonged strength in corporate profit growth. However, marginally higher interest rates, coupled with slower productivity growth will begin to trim cash reserves and weaken profit performance going into 2006/07, noted Holt.
Project Credit Despair Snares Alleged Credit Repair Scammers
The Federal Trade Commission (FTC), U.S. Postal Inspection Service (USPIS) and eight state law enforcement agencies announced on Feb. 1, 2006, a crackdown on 20 operations that deceptively claim they can remove negative information from consumers’ credit reports—even if that information is accurate and timely.
“Credit repair schemes are a big problem for consumers,” said Eileen Harrington, deputy director of the FTC’s Bureau of Consumer Protection. “Credit repair promoters generally charge hundreds of dollars, but don’t deliver on their claims. The fact is they can’t. No one can legally remove accurate and timely information from your credit report.”
The FTC began coordinating “Project Credit Despair” last year in response to thousands of consumer complaints, which it shared with the USPIS, the State of Louisiana Office of Financial Institutions and other state law enforcement agencies. The cases involved companies throughout the nation, many of which promised to remove accurate and timely information from consumers’ credit reports, and typically charged hundreds of dollars in advance for the service.
According to the FTC, Bad Credit B Gone LLC and its principal, Joseph A. Graziola III, made promises such as “The credit you always dreamed of!” and “If we fail to remove any negative credit from your reports, we’ll give you a refund plus $100.” Referring to “charge–offs, collections, tax liens, bankruptcies, repossessions, student loans, child support, late payments, and judgments,” they claimed: “On average, 80 percent of the derogatory information is deleted off your credit report within . . . three months.” The Philadelphia–based company charged $500 per individual and $700 per couple for its services, half of which was due up–front.
The FTC charged Bad Credit B Gone with violating the FTC Act by making false or misleading statements, such as claiming they can improve most consumers’ credit reports substantially and permanently by removing negative information that is accurate and not obsolete. The defendants also allegedly violated the Credit Repair Organizations Act by requiring advance payment for credit repair services and by making false or misleading statements. The FTC is seeking to bar them permanently from further violations, to require them to return money to consumers, and to give up their ill–gotten gains.
