Sales-support tools are for support; you still need to do the selling

By Marcia Gauger, for SBT

Question: I’ve used PowerPoint for formal presentations and would like some tips about how to design meaningful presentations to use during sales calls. Can you help?

Answer: Technology offers many wonderful new sales tools. You have to remember that whatever support materials you use on sales calls, they’re just that — support materials. Don’t rely on any support piece to do your selling for you.
Sales tools should be utilized to pique interest, help explain concepts that apply to each individual buyer’s unique interests and support solutions that you can provide to specific customer needs.
If well designed, you may be able to use the same PowerPoint presentations you’ve been using during customer calls. Whatever medium you choose to communicate your company’s capabilities, make sure it’s flexible enough to address individual needs and solutions.
If you use a generic approach, you’ll be communicating to customers that you don’t really care about their needs, only about what you can do. You don’t need to tell your customers everything that you can do. You will seem more capable if you focus on what you can do to support their needs and emphasize those capabilities only.
If you are unsure about the type of presentation that you should make, ask your customer! You may simply say something like, "How would you like to see the information presented at our meeting?" or "Would you like to see a more formal presentation of our capabilities or an interactive exchange?"
By gaining insights about the customer’s needs and who will be attending the meeting, you will gain insights as to the type of presentation to make.
Laptop presentations can appear more "formal" or rigid than other sales methods. Don’t let your laptop become a pitchbook. Here are some guidelines for utilizing technology effectively in a sales call or presentation:
Know your technology – If you are preparing a laptop presentation, be sure you understand how everything works and how to fix anything that could happen during your presentation. If you are not comfortable with the technology, take a class and practice utilizing it prior to your calls.
Make prior arrangements with the customer – If you are presenting to a committee or large group of people, make sure you understand room setup, lighting, power needs, etc., prior to arriving for your meeting.
I was recently involved in a competitive sales situation. I saw my competition leaving with suitcase in hand prior to my meeting. When I was greeted by the person who is now my client, she expressed how frustrated she was with the sales person.
She went on to explain that she didn’t know the salesperson was planning on using a projector system. Valuable presentation time was spent setting up, the system crashed three times and all while the president of her company waited patiently for an interactive discussion of their needs.
Follow the 3×4 rule – The biggest mistake I see salespeople make in designing PowerPoint presentations is that they tend to put too much on the screen. A good rule of thumb is no more than three rows of four words, or four rows of three words. Use bullet points and talk to those points.
Don’t read to the customer. If you have technical information that you think the customer needs, consider leaving a handout when you leave. Or, send information prior to your presentation for your customer to read and be prepared to discuss the information at your meeting. Use a serif font – they are easier to read.
Involve the customer – Plan questions that would engage your audience in your presentation. If you are working one-on-one with the customer, technology can be a wonderful way for customers to customize their own solutions. For instance, formulas calculating return on investment are a wonderful way to emphasize cost-benefit relationships in a meaningful way for the customer.
Emphasize value for the customer – Too many presentations focus on features and benefits. Take it a step further by emphasizing value.
In other words, why should the customer care? Use value statements as bullet points and talk about how you accomplish those values through the benefits and features of your products. This is especially important early in the presentation to gain interest.
Your technology should be transparent – Regardless of the sales tools that you employ, they should be transparent to the customer. If the customer is focusing more on your medium than on the solutions that you can provide, you’ve missed the boat.

Marcia Gauger is the president of Impact Sales, a performance improvement and training company with offices in Wisconsin, Florida and Arkansas. You can contact her at 262-642-9610 or marciag@makinganimpact.com. Her column appears in every other issue of SBT.

April 4, 2003 Small Business Times,Milwaukee

As real estate developers ponder the best uses of land on the north end of the Port of Milwaukee, a lake ferry could ultimately spur development on the south end.
Lake Express LLC, a group led by Milwaukee investor David Lubar of Lubar & Co. Inc., is securing the financing to launch the Lake Express ferry line that would enter at the port’s south end and dock near the base of the Hoan Bridge.
The ferry will carry up to 250 passengers and 46 automobiles per trip between Milwaukee and Muskegon, Mich.
The ferry would operate from May 1 through Dec. 31, making three roundtrips per day. Each trip across Lake Michigan would last about 2 and a half hours.
Kenneth Szalli, director of the Port of Milwaukee, told Small Business Times that an announcement about the progress of the ferry service would be made soon.
"They are working out the details now," Szalli said. "They’ve signed the shipyard contract, and they’re finalizing the long-term financing. The equity is in place."
Lake Express received a $500,000 loan from the Milwaukee Economic Development Corp. last month, and a Milwaukee Common Council committee recently endorsed a lease for a $2 million terminal to be built at the south end of the port in the Bay View neighborhood.
David Lubar was out of the country and unavailable for comment on the ferry project.
"We’re still working with the financing," said Oyvind Solvang, a partner with Lubar & Co.
In its filing with the city, Lake Express estimated its total cost at $22 million and predicted the project would create about 40 full-time jobs. Sources said the ferry could carry as many as 100,000 passengers per year.
The site of the proposed terminal for the ferry is near a US Coast Guard station and a US Naval & Marine Corps Reserve Center at 2401 S. Lincoln Memorial Drive.
Those two buildings eventually could be razed or renovated to make room for commercial businesses that would be compatible with the ferry service, according to sources involved with the ferry project.
The emergence of a commercial district to cater to ferry tourists from Michigan could funnel traffic into Bay View and could be the catalyst for the redevelopment of Kinnickinnic Avenue, Szalli said. (See accompanying Q&A.)
Ald. Suzanne Breier, who represents the Bay View neighborhood, is "thrilled to pieces" about the prospects of the ferry loading and unloading thousands of tourists in her district.
"It would benefit my district, and it would benefit the whole downtown," Breier said.

April 4, 2003 Small Business Times, Milwaukee

Economic picture may be bleak now, but there’s reason for optimism

Commentary, bu Bob Chernow, for SBT

The economy is in painful contraction. News of layoffs, plant closings and bankruptcies pervade us daily. The stock market seems like a ski slope with no snow. State and local governments are cutting into muscle and bone. The dreaded "disinflation" word is common lingo. War, justified or not, gives us nightmares.
Times are hellish. Yet what we are seeing and feeling is but the downside part of a transformation that happens once every 55 or 65 years.
This present adjustment is similar to the process set in motion with the introduction of the automobile in the early 1900s. Will Durant, who founded General Motors and Chevrolet and subsequently lost General Motors twice, personifies the development. It was a time period characterized by numerous start-ups, inventions, innovation and great productivity improvements. Electricity became a new source of light and power. The telephone made its way into homes and businesses. The car and truck supplanted rail. Mass production replaced crafted products.
That transition was not smooth. There were numerous recessions and depressions, with accompanying business failures and mergers, as well as government and business fraud and corruption. Fortunes were swiftly made and then precipitously lost. Stocks and bonds boomed and busted.
Does this sound familiar? This is not a lesson of history, since few learn from the past. Rather, I am illustrating that parallels in economic cycles exist.
I believe that we will soon surface from the negative part of this cycle soon.
Many companies and industries will disappear. But new businesses and industries will emerge. This is the Darwinian in our capitalistic system – part good, part cruel, but always dynamic.
Wang Computers was once one of the top 100 companies in the US. Its product was superior; its expertise sought. But today that company and its products no longer "exist." Wang could not overcome change and the future passed it by.
Examples of developing technologies coming to the front include: advanced biochemistry, genetic engineering, digital electronics, microwaves, photovoltaic cells, fiber optics, lasers, optical data storage, artificial intelligence, fiber reinforced composites, new polymers, molecular designing, thin-film deposition, and high tech ceramics. Nanotechnology, a subject of science fiction a few years ago, is now part of the experimental landscape.
Many of these "new fields" have the potential to increase productivity on an exponential scale, with increases of 5,000% to 10,000% attainable. Impossible, you say? History has demonstrated that the magnitude of such gains is feasible. The downside is that many old industries will be obsolete.
After the American and French revolutions, there was a period when we saw productivity gains even higher than 5,000% to 10,000%.
Those productivity gain giants included the introduction of the cotton gin, the sewing machine, the McCormick reaper, steam power and the ability to transport and store food.
In the last century, we had the introduction of the automobile and truck, electricity (and the ability to transfer it over a long distance), the telephone and short wave radio. Here we begin to comprehend the magnitude of change that occurred in the early part of the last century.
It was not without significant social and economic disruption.
The key, of course, is not only the "invention" but also the adaptation and acceptance of the innovation. Human capital and human adoption of innovations are the crucial variables in this equation. For example, while development of the fax preceded that of the telephone, its use has only gained wide acceptance in the last 25 years. On the other hand, wireless phone and the Internet have had much speedier adoption.
While I anticipate an upturn in the current cycle, there will definitely be winners and losers.
For example, thin-film deposition could radically alter the razor blade industry by providing a permanently sharp razor. It easily follows that such an advance would eliminate the need for replacement blades.
In the health industry it is not unimaginable that diagnostic equipment will assess patients, while nurses assume many of the general functions of physicians. Our health care system will feature highly specialized physicians, but relatively few general practitioners.
What point am I trying to make? It is simply that the road ahead is bright and optimistic. Right now we see only darkness. Businesses are failing. People are being laid off. The stock market continues its retreat. Yet, when we view where we are in a historical perspective, we see this as part of a cycle, a cycle that will turn upward. New industries will spring up from the ashes of the old, and prosperity that we have only dreamed of will be within our reach.
It is always darkest before the dawn.

Bob Chernow is a Milwaukee businessman and a futurist.

April 4, 2003 Small Business Times, Milwaukee

A group of churches representing Milwaukee’s inner city is pushing for a list of requirements on the redevelopment corridor cleared by the removal of the Park East Freeway at the north end of downtown Milwaukee.
Milwaukee Innercity Congregations Allied for Hope (MICAH) and a coalition of community and labor groups planned a meeting April 3 at Mt. Zion Baptist Church, 2207 N. 2nd St.
MICAH leaders had already met with city aldermen and personnel at Milwaukee County and the Milwaukee Department of City Development.
John Goldstein, president of the Milwaukee County Labor Council, is among those spearheading the movement toward community benefit agreements (CBAs), as they are referred to in a MICAH position paper.
Goldstein discounted the idea that existing forms of regulation, such as zoning and land use rule, could help accomplish MICAH’s goals.
Zoning for redevelopment uses that deliver higher-wage jobs, rather than retail or hospitality jobs, would not resolve the problems of unemployment and low-wages for neighborhood residents, he said.
"Even if you are talking about retail, we should be raising the bar," Goldstein said. "There is no reason someone in retail in this downtown area should be making only $6 an hour."
According to MICAH lead organizer Jose Perez, the group would like to require the majority of jobs in the corridor to pay $9 per hour or more.
CBAs for redevelopment in the Park East corridor, according to the position paper on MICAH’s Web site, should mandate:
— Use of locally-owned operators and contractors.
— Maximization of union jobs or neutrality agreements to protect workers’ rights to organize.
— Programs to make job opportunities in the corridor available to residents of neighborhoods with high unemployment. Employers would be forced to hire a percentage of workers from specific zip codes or work through a community group recruiting workers from the outlying area.
— Contributions to a fund to be used to improve parks in the city’s poorest neighborhoods.
— At least 20% of the housing built in the corridor must be affordable, defined as housing priced low enough that low-income families can afford to live there.
While proponents of relatively unrestricted development in the Park East corridor claim that allowing development to progress unhindered will lead to job opportunities and higher property values for those in surrounding neighborhoods, MICAH leaders claim that higher property values may actually hurt neighborhood residents.
"The development should take into consideration the people who live near it," said Harold Owens, MICAH treasurer and Mt. Zion Baptist Church trustee. "My church is just north of Brewer’s Hill. There were a lot of people who were forced out of their homes (by increasing property taxes) when those property values went up."
"Our members would love to be able to afford to live in Brewer’s Hill," said MICAH president Joseph Jackson, pastor of Evergreen Missionary Baptist Church.
Jackson and Owens said the types of jobs they want for their neighbors are the types that GE Medical Systems would bring if it moved its IT department downtown.
"Every one of those jobs would pay more than $9 a hour," Jackson said.
Perez characterized the CBA proposal as a moderate, but deliberate, effort at spreading the wealth to be created in the Park East corridor that should not adversely affect smaller businesses with limited ability to monitor their hiring and compensation practices.
"It is a very intentional approach," Perez said. "Smaller businesses are fine, as long as they are paying people. All we want is 15% above the poverty standard and only 75% of the jobs meeting the poverty level."

April 4, 2003 Small Business Times, Milwaukee

Focusing on a 10-year time frame is a good thing when it comes to investing your money, according to Jim Westphal, senior vice president and partner of the Cobey-Westphal Investment Consulting Group of Wachovia Securities in downtown Milwaukee.
"If you can do that, don’t worry about what’s going to happen next week or next month or even the next year," says the 20-year investment industry veteran, who with his partner John Cobey formed their company almost three years ago.
The key, Westphal says, is to determine your income needs, properly allocate stock market investments for 10-year periods and "stay the course."
"The market goes through cycles that might not be predictable but which are familiar to those of us who have experienced it over the years," he says. "Not that we saw this last cycle coming and knew that things were going to be as dramatic as they are, but history tells us that, over time, these things are going to happen. It also tells us that over the last half of the 20th century, common stocks have grown about 12% each year."
So Cobey-Westphal and its clients discuss the risk side of the investment equation and determine a proper allocation of their investments designed to reduce risk. It’s a long process, but worth it, Westphal believes. "We need to balance one asset class against another to decrease volatility and increase the probability of a positive return," he says.
The firm’s money managers allocate their clients’ investments on large cap stocks, small caps, mid caps, international and global.
"These are basic to any good long-term asset allocation process, and putting those together in the right mix and sticking with the balance strategy is very important," according to Westphal. "Mathematically, if one class does better than the others, then your mix gets a little out of whack and you have to rebalance it. Our money managers run the investments for us and we manage them," Westphal says.
Then his firm builds bond ladders for its clients to assure income or cash flow, whatever a person is looking for, over rolling 10-year periods of time. Once that’s done, it’s easy to put everything else into the market for long periods of time, according to Westphal.
Building a bond ladder, he explains, involves buying zero-coupon government bonds that come due in one year, two years, three years, all the way up to 10 years.
"Because these are zero coupons, you pay less dollar amounts for 10-year bonds than you do for the one-year bond," Westphal said. "A good example today would be a three-year bond, which might cost you 94 or 95 cents on the dollar. A 10-year bond might cost you 65 cents on the dollar. When they mature you get back the dollar. You don’t get the interest on the way; you’re simply getting the money back at maturity. By buying a new bond every year out, in the 10th year you basically dollar cost average into a 10-year rate. It comes down to simple math," he says.
According to Westphal, if you look at volatility and the effects of time, you will mitigate much of that risk by making a good allocation decision, staying the course, and monitoring that course. "I believe that for most people over a long period of time, all your investments should be in the stock market, because that’s where better returns are over that long period of time."
Westphal also believes that the stock market is still good for retirement age investors. The key again is asset allocation, he says. "The old axiom that you should have a percentage of your money in the bond market equivalent to your age doesn’t work with the amount of money people have accumulated in this day and age. Those who are 70 years old and have saved $2 million don’t need to have 70% in the bond market. If we’ve come up with the proper asset allocation and covered their income needs, the balance of their money should be in the stock market."

April 4, 2003 Small Business Times, Milwaukee

Community benefit agreements (CBAs) could hamper or even prevent the redevelopment of the 60 acres cleared by the removal of the Park East Freeway, developers and land owners in the freeway corridor say.
"We need to be very cautious when we consider placing demands on projects like the Park East redevelopment," said John Periard, spokesman for the Commercial Association of Realtors Wisconsin. "We shouldn’t jeopardize the project because we’ve placed demands that are so unreasonable, that developers throw up their hands in frustration."
Jim Barry III, president of James T. Barry Co., believes the intentions of the Milwaukee Innercity Congregations Allied for Hope (MICHAH) coalition leaders are good, but he may be close to reaching the point of frustration described by Periard.
"I think they may be laudable goals," Barry said. "I just don’t like the apparatus of trying to impose this on other developers and therefore add to the already formidable obstacles to development in the downtown."
Barry threatened to move his business, which is headquartered on North Edison Street near the former freeway, out of the Park East corridor and perhaps out of the city if CBAs are imposed.
"If we allow a third party group to dictate the way (the land) is going to be developed, you are going to sit here with fallow land for a long time," Barry said.
"If someone wants to relocate, they have a lot of options,’ Barry added. "But if something akin to what is in their proposal would occur, I would have to seriously consider moving my business out of this area and perhaps out of the city of Milwaukee – and we have been here for 80 years."
Barry stressed that, while development in the corridor will benefit from a tax incremental finance (TIF) district, developers aren’t looking for subsidies on the project but, rather, are looking for a development opportunity that makes economic sense. CBAs, he said, would make buildings more difficult to lease and land harder to sell.
"I feel it would have a devastating effect on the potential development of the Park East corridor," Barry said.
While the idea of being required to pay into a parks fund is a concern to Barry, he said he was particularly upset about restrictions on hiring.
"To say that a community group is going to handle all the hiring for any new commercial development, in my view, contradicts the whole notion of a free market system," Barry said.
Even without CBAs, bringing companies downtown is difficult, Barry said.
"The suburbs have lower taxes and free parking," Barry said. "But because of the attitude the city took during the ’90s, downtown became more attractive. A key reason for that is the ability of developers to get transactions done free of excessive regulation and excessive additional fees. Their proposal is that they want to go back to this old highly regulatory method and place fees on people. That does not make sense," Barry said. "Development under this system will not occur. Developers are economic actors, and they will go where it makes economic sense to develop."
If developers are allowed to meet the needs of the market, many of MICAH’s goals would be achieved, Barry said.
Milwaukee County economic development director Bill Hatcher agreed, adding that allowing the Park East corridor to be developed to its highest value use would increase county revenues, making funds available for programs MICAH supports.
The county would not only benefit from increased property taxes on land in the Park East corridor but also from higher sales prices, because the county is the largest landowner in the corridor.
"The more restrictions you put on the deed or on a company development agreement, the more depressed the value is," Hatcher said. "You are in fact restricting the developer or restricting his creativity. The county hasn’t made any decisions on what it is going to do, relative to the land we own on the Park East site. That will be a matter dealt with by the county board to determine if any or what restrictions might go on the deed or related development agreement."
Like Barry, Hatcher believes much of what MICAH wants to achieve through CBAs could be better achieved by allowing development to take place within the current guidelines outlined in the city’s redevelopment plan.
"You can’t assume from the start that no progress will be made towards any of those goals under a free market situation," Hatcher said. "Any straightforward free market is going to have positive outcomes – perhaps not always as direct as they would like to see. It is going to create jobs. In the past, it has provided housing opportunities. You really can’t start with the idea that if you don’t put these requirements on the deed that none of these things are going to happen."

April 4, 2003 Small Business Times, Milwaukee

Wallner is new Waukesha Chamber president

Patti Wallner will become president of the Waukesha Area Chamber of Commerce in February 2003, moving to that position from her current job as executive director of the Greater Brookfield Chamber of Commerce.

Wallner succeeds Ann Nischke, who resigned the position of chamber executive director last year after winning election as state representative to the 97th Assembly District.

The title of the position has been changed from executive director to president, following a trend of chambers of commerce around the nation, noted Ty Taylor, of Waukesha State Bank, chairman of the chamber’s board.

"We are thrilled to bring Patti on board as president of the Waukesha Area Chamber of Commerce," said Taylor. "Her enthusiasm and high level of expertise will further enhance the professional services the chamber offers to its membership."

Taylor said Wallner stood "head and shoulders" above the rest of the 120 applicants for the chamber presidency.

During her three years in Brookfield, Wallner’s accomplishments included increasing membership and the retention rate of members, improving participation and commitment from the board and members at large, and creating an identity for the Brookfield Chamber, Taylor said.

Taylor expects Wallner’s efforts will boost activity in the Waukesha Chamber. "We’re going to see some good growth of membership in the chamber. And we’ll be more active in issue advocacy," he said.

"The staff is excited to have our future president in place, as we position the chamber to become an even greater resource for Waukesha County," said Bobbie Peters, acting president of the Waukesha Area Chamber of Commerce.

Peters, who is expecting her second child in May, will assume the role of vice president at the chamber; she had been associate executive director before that position’s name was changed to vice president.

Wallner is a graduate of the University of Wisconsin-Milwaukee. She resides in Hartland.

Nischke has been named vice chair of the Assembly’s Economic Development Committee and a member of the Small Business Committee.

Jan. 24, 2003 Small Business Times, Milwaukee

Delavan biotech firm lands Polish potato pact

By Charles Rathmann, of SBT

A Delavan firm will license its potato crop-acceleration technology to a Polish firm as part of Lockheed Martin Corp.’s sale of F-16 fighter jets to the Polish government.

Quantum Tubers Corp. should be able to grow from a staff of 15 to a staff of 40 and construct additional facilities in Wisconsin as a result of the defense offset deal, according to Quantum Tubers president Robert Britt.

"This started out with NATO, which is requiring Poland to upgrade their military," Britt said. "Poland had put out a request for competition on fighter jets. It went to France, Sweden and the US. Along with the cost of the fighter jets, Poland said the winner would also have to contribute at least 100 percent of the cost of the fighter jets in the form of economic offsets."

The value of the offsets would be measured in terms of an increase in the gross domestic product.

"We did an economic impact study," Britt said. "By putting our project into place, we increase Poland’s GDP by $400 million a year. That’s just not one year. That’s forever."

The projected impact went a long way to balancing off the $3.5 billion cost of the 48 fighter jets.

Quantum Tubers has, since June of 2002, been planning to build the largest bio-manufacturing facility for production of zero-generation, pathogen-free seed potatoes known as minitubers.

The 50,000-square-foot plant, with a capacity of 20 million minitubers per year, would use technology developed with cooperation from the University of Wisconsin and NASA.

Currently in the design phase, the plant would only be the start of the biotech firm’s presence in the state, as dollars from the defense trade-off deal comes home.

The capital provided by Lockheed Martin to fund the Agreko Quantum Tubers, SA of Domaszowice, Poland, license for the potato acceleration technology should allow the Walworth County company to take a leadership role in what promises to be a $100 million agricultural market.

Britt and his Polish counterparts had been trying to find capitalization for the licensing deal even before Lockheed Martin came into the picture.

"Lockheed was almost an accident for us," Britt said. "We were in the process of developing some local funding in Poland for capitalization of the process. Our first reaction was, ‘What do potatoes have to do with fighter jets?’ I sat on that for two days before I wrote a letter to the chairman of Lockheed asking if this fit with what they were doing. I thought, ‘What are we going to do – create fuel for you guys, or spud guns?’"

However, the key to success had more to do with butter than guns. Poland is the world’s third-largest producer of potatoes. Access to Britt’s patented technology could move Poland’s economic needle substantially.

"We have mapped the trigger-point of a potato so we can force it to go through each one of the primary growth cycles that it needs to go through, and do it on our own life cycle arrangement," Britt said. "We do that in a closed, atmosphere-controlled facility. We trick the potato into thinking it as gone through spring, summer and fall in just a few days, so we can get about nine turnovers a year out of our building."

Britt said that while the sale of Lockheed Martin jets closed Dec. 28 of last year, the Polish government committee was still reviewing the offset agreement, which should be finalized within weeks.

A representative of Lockheed Martin did not return a phone call regarding the transaction.

Jan. 24, 2003 Small Business Times, Milwaukee

Irgens moving into Illinois market

Irgens Development Partner, the largest office developer in the Milwaukee market, is expanding into the northern Illinois market.
Irgens, which is based in Wauwatosa, will open a branch office in Northbrook, Ill.
The new office reflects the company’s intention of becoming a regional developer, according to Mark Irgens, president and chief executive officer of the firm.
"We are excited about the opportunity to enter the Illinois market," Irgens said. "We see a lot of opportunity and are ready to jump into it. If we are going to grow beyond Wisconsin’s borders, the Chicago market is the place to be."
The company says recent market analysis indicates a steady demand for new health care properties in the north and northwestern edges of the Chicago market.
"Due to an increase in northern Illinois’ population, we think the northern Chicago market is prime for our entry," Irgens said. "We believe our success in Milwaukee can permeate into larger markets such as the Chicago area."
Irgens has hired Michael McCall as senior vice president. McCall, who spent the previous 18 years with the Bovis Lend Lease firm in Chicago, will oversee Irgens’ new office in Northbrook.
"The decision to move into Illinois just makes good business sense," McCall said. "As the area’s population expands, the demand for health care facilities increases. Since medical buildings are clearly an area of unmatched expertise for Irgens Development, we couldn’t ask for a better time to make our mark in Illinois."
Irgens currently has an estimated $250 million invested in ongoing projects.

Jan. 24, 2003 Small Business Times, Milwaukee

Insurance purchasing pool proponents try again

By Charles Rathmann, of SBT

While a partial veto by former Gov. Scott McCallum prevented budget provisions for a health insurance purchasing pool for small businesses from coming to fruition last year, lawmakers and the administration of Gov. Jim Doyle are trying to hammer out an agreement to create the pool in the first few months of 2003.

According to lawmakers involved with the Assembly’s Small Business and Insurance Committees, gears are turning to implement the Private Employer Health Care Purchasing Alliance (PEHCPA) through the administrative rule-making process.

An administrative rule would not likely have to be voted on by the entire Assembly, but would need approval by committees in the Assembly and Senate involved with health, insurance or small business.

If a committee in either chamber had an objection to the bill, it would be sent to the Joint Committee for Review of Administrative Rules (JCRAR), which is chaired by the purchasing pool’s strongest advocate, Rep. Lorraine Seratti, a Republican from Florence County.

The pool is designed to moderate health insurance cost increases by making insured employees part of a larger pool. Insurers participating in the pool would offer packages that employers — or even individual employees — could choose from.

Premiums would be based on geography, age and sex of participants, but health status would not be a consideration. To prevent the pool from attracting only older, sicker groups, a variety of measures may be included in new legislation or an administrative rule, including a subsidy from Badger Care, the state’s program for working poor with children, and an exemption from state health insurance coverage mandates.

A group of consultants from Washington think-tanks and California’s successful insurance pool were in Madison Jan. 15 to advise state legislators on health care-related issues, including the purchasing pool.

The seminar, held by the University of Wisconsin-Madison’s Wisconsin Family Impact Seminar group and Wisconsin Health Policy Forums, was closed to the media and industry advocates.

Small Business Times spoke with legislators who attended the seminar and consultants who spoke at the event.

About 80 legislators attended the event, according to organizers.

According to Seratti’s office, no ad

ditional legislation should be needed to implement the pool as proposed.

A Seratti aide said the Office of the Commissioner of Insurance has been asked by Doyle to draft an administrative rule that would close the gap left by McCallum’s veto of rate band and funding provisions in the PEHCPA legislation.

The PEHCPA proposal originated as part of Wisconsin Act 9, the previous biennial budget bill.

While PEHCPA would be a self-funded private industry initiative, the biennial budget proposal included an $850,000 loan from the State Life Insurance Fund. In his veto message, McCallum characterized that funding source as unconstitutional, but PEHCPA sponsors pointed out that it was suggested to them by a fellow Republican – then-Senate Majority Leader Scott Jensen.

The team of consultants was adamant that rate-band provisions would be necessary for the success of the pool, despite the objections of the insurance industry.

The rate bands would restrict the degree above or below a midpoint premium for any group that could be increased in a single year.

A 15% rate band for health status-related increases currently exists in the state, but the budget proposal called for a 10% band that would apply to all small businesses in the state.

The Wisconsin insurance industry, led by Humana Wisconsin market president Larry Rambo and the Wisconsin Association of Health Plans (WAHP), claimed that most small businesses would see an increase in costs if the pool is put into place. That, in turn, would drive some employers and employees out of the market, they said.

One of the visiting experts, Rick Curtis of the Institute for Health Policy Solutions, Washington, D.C., presented legislators with the results of the study commissioned by the Wisconsin Private Employer Health Care Coverage Board (PEHCCP). The study results indicated that premiums would increase slightly for most small employers if the pool is created, because the drastically higher premiums paid by a small minority of very high-risk groups would be spread out over the pool market as a whole.

Curtis stressed that a remedy for that would have to be found, or the pool would suffer from adverse selection.

One solution Curtis proposed, reflected in a Jan. 14 advisory minute to Department of Employee Trust Funds from the PEHCCP board, would be to drop certain state-mandated coverages from policies written to pool participants.

"It might do a little to prevent adverse selection," Curtis said.

Another suggestion from Curtis was to leverage Badger Care dollars by offering subsidies to employers with low-wage employees who cannot afford health insurance.

"On a budget neutral basis or on a budget savings basis, it could do a lot of good," Curtis said.

Even critics of the purchasing pool concept were intrigued by the proposals.

"We have long been advocating for increased flexibility for small employers in choosing benefits plans," WAHP deputy director Joe Kachelski said. "If it’s a good idea for the whole market, it’s a good idea for the pool "

Rep. Gregg Underheim, an Oshkosh Republican who chairs the Assembly Health Committee, called the mandate exemption concept "interesting."

The insurance industry, which was instrumental in the demise of the pool last year, also cited increased costs as a prime concern.

However, according to Curtis and John Grgurina, the director of PacAdvantage, California’s insurance pool, insurers currently in the Wisconsin market have another reason to fear the pool.

"Before we put the pool and rate reforms in place, there were a lot of insurers sitting on the sidelines in California," Grgurina said. "Other established insurers were skimming off the good risk, selectively marketing to good risk. When someone proved to be a bad risk, you just jack up their premium 200%, which is the equivalent of telling them you don’t want to do business with them. So it all has to do with who has the best risk managers. By taking underwriting out of the picture, it is easier for new companies to come into the market without fear of being stuck with nothing but bad risk."

"It certainly makes for a better opportunity," Curtis said. "It is no longer a matter of who has the best actuaries. But if you are an insurer and you think you are good at risk management, you probably don’t want your competition to be able to come in and compete on a level playing field."

"They all think that they win if they play this underwriting game," said Tom Korpady, administrator of the Department of Employee Trust Funds. "The fact is there are winners and losers in that underwriting game. Underwriting really rewards young, healthy groups and punishes people who need the insurance."

Kachelski disagreed with the argument that the pool would attract insurers not already in the market.

"I would be shocked if the implementation of this pool introduced new insurers into the Wisconsin market," Kachelski said. "I am not aware of that scenario playing out in other states. We have an awfully competitive market right now."

Jan. 24, 2003 Small Business Times, Milwaukee

Members of Responsible Energy for Southeastern Wisconsin’s Tomorrow (RESET), the coalition opposing Wisconsin Energy Corp.’s plan to expand its coal plants in Oak Creek:

All Saints Healthcare
Allergy & Asthma Network Mothers of Asthmatics
American Lung Association – Wisconsin Chapter
Citizens for a Better Environment
Citizens for Responsible Power
Clean Air Task Force
Doublas Business Center
Franciscans International – North American Region Office
General Converters & Assemblers Inc.
LakeAir International
Michna Farm
Quick Cable Corp.
Racine Earth Service Corps Youth United
Random Lake Association
Rapids Business Center
S.C. Johnson & Son Inc.
Town of Caledonia
Wisconsin’s Environmental Decade
Wisconsin Interfaith Climate Change Campaign
Wisconsin Interfaith IMPACT

Matter is new Equitable Bank president

The Equitable Bank board of directors has promoted John P. Matter to the presidency of the Wauwatosa-based bank. Matter, who succeeds Charles R. Pittelkow, is the first non-family member to run the bank.

Pittelkow will remain as chairman of the board and chief executive officer.

Matter started his banking career as a teller with City Federal Savings and Loan in 1976. He joined The Equitable Bank in 1980, starting as a branch manager of the Brookfield office. In the years to follow, he assumed higher positions, starting with promotion to regional branch manager in 1981.

In 1983, he was named assistant vice president of sales and marketing. Subsequently, he assumed responsibilities for sale of annuity and investment products, consumer lending, mortgage loan origination and retail banking. Matter was promoted to senior VP in 2000, followed by chief operating officer later that same year, and executive vice president in 2001.

Pittelkow’s grandfather founded The Equitable Bank, then known as Equitable Savings Building and Loan Association, in 1927.

Prior to Matter’s promotion, the bank has been led by four generations of the Pittelkow family. According to Pittelkow, "I am proud to have John following me in the leadership of the bank. His leadership has been instrumental for the bank’s substantial growth in deposits, mortgage loan origination, and continued financial strength."

Matter is a graduate of UW-Milwaukee and received a master of business administration degree from the UW-Whitewater in 1993. He is a member of the American Marketing Association, Wisconsin Bankers Association, Wisconsin Mortgage Bankers Association, and the Exchange Club of Milwaukee.

Equitable originated more than $400,000,000 in residential mortgages last year. The Equitable Bank (www.equitablebank.net) operates an 11-branch network in the metropolitan Milwaukee area.

Jan. 24, 2003 Small Business Times, Milwaukee