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Workers’ Compensation: Changing the Experience Mod Calculation

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Paul Coderre, CSP, ARM, Vice President of Risk Management Services

What does it mean for your business?

  • It’s good and getting better / It’s bad and getting worse
  • Changes go into effect 10/1/2022
  • Intent: Incentivize companies to do better at preventing injuries
  • Withdraw from NCCI for multi-state operations

They say, “Change is good”

As you may have heard, the New York State Compensation Insurance Rating Board (NYCIRB) is changing the way they calculate your Experience Modification Factor (aka “mod”). They are also withdrawing from the National Council on Compensation Insurance (NCCI) and eliminating the “Merit Rating” system for small businesses. This would probably be interesting if you are an insurance person (Like me). If you’re not an insurance person, you probably just want to know how it’s going to affect you in insurance availability and cost.

First: How is Workers’ Compensation Premium Calculated?

Your workers’ compensation (WC) carrier calculates your organization’s premium, using data provided by you, the State of NY, and their own (approved) factors. The calculation follows a standard formula in which the underwriter uses your workers’ compensation classification codes, loss cost rates tied to those codes (set by the State) and your payrolls to calculate your manual premium, which is the first step in setting the premium for a guaranteed cost policy.

The manual premium would be the same for any two companies that do the same thing, have the same number of people, and pay their people the same in wages. It does not consider the loss performance of either company. This is where other factors, including the loss cost multiplier (LCM) and the experience modification factor (EMF) come in.

LCM: The loss cost multiplier is a factor that is developed by the WC carrier, and approved for use by the State. Carriers can have several LCM’s approved for use, and reflect the carrier’s “feeling” about how your company will perform. Loss cost multipliers can range from 1.10 to over 1.5.

EMF: The experience modification factor is calculated by NYCIRB based on your classification codes (what you do), three years of your payrolls, and three years of your losses (how well you do what you do). This is the thing that is changing as of 10/1/2022.

A key to remember about the LCM and EMF is that they are “multipliers” in the premium formula; meaning the underwriter takes that initial “manual premium” figure and multiplies it by both factors.

Manual Premium X LCM X EMF = Standard Premium

The standard premium is the important premium number. There may be other discounts introduced by the underwriter, but it is the true basis for your annual workers’ compensation premium. Needless to say, the lower either “factor” is, the lower the impact on that standard premium number. So, if you want to control your workers’ compensation premium, you need to do what you can to control the LCM and the EMF.

Control: Since the LCM is set by the underwriter, you have little control over the number itself. Your opportunity to control the LCM stems from your operations, your overall performance, consistency in performance and the presence and effectiveness of your risk management efforts.  It is really a more subjective decision by the underwriter whether you get an LCM of 1.12 or 1.45.

However, the EMF is a controllable factor. It is based on your injury costs over a three year period; if you minimize the frequency and severity of incurred losses, your modification factor will be lower, and will have a more positive impact on your premium. Unlike the LCM, the EMF can actually calculate to be less than one (<1). When the manual premium is multiplied by a modification less than one (called a Credit Mod) it actually reduces the ultimate premium figure (Yay!). So the bottom line is that in order to control your workers’ compensation premium, your best opportunity is to control your EMF.

This is why the State’s change to the EMF formula are so important to you and your business.

Second: Why is the State Changing?

New York State has been studying the performance of organizations from the standpoint of workers’ compensation injuries and costs. Those studies have revealed that companies performing very well (minimizing the frequency and severity of on-the-job accidents) are not realizing the benefit of their performance in their workers’ compensation premiums (remember, the EMF is based on performance over a three year period). The State also found that companies performing poorly in workers’ compensation outcomes are not being assessed adequately for their poor performance. (Note that the experience rating system is supposed to reward good performers and “incentivize” poor performers to do better) The bottom line is that the State felt it necessary to change the EMF formula to better affect what organizations pay in premium based on their performance.

Discontinue participation in NCCI:  The National Council on Compensation Insurance is an organization that provides EMF calculations for companies with operations in multiple states. While they do not cover all states, those companies whose operations are within a state that is a member of NCCI would have a common EMF for all such operations in all such states. Not all states participate in the NCCI system. In a case where a company has operations in both NCCI states and non-NCCI states, premiums will be calculated for NCCI States using the common NCCI mod, and for Non-NCCI states individually using the experience mod calculated for that state on its own merit. Since NY no longer calculates a mod the way that NCCI does, it needed to withdraw from the NCCI program.

Discontinue the merit rating system: Very small companies in New York (WC Premium < $5,000) have traditionally been treated differently in their workers’ compensation premium calculation than larger companies. They fell under a program called “merit rating.” With the changes made to the experience rating formula (specifically the variable split point) the State felt it was no longer necessary to have a separate means of premium calculation. Companies who previously qualified for merit rating will now be rated the same way as all other workers’ compensation risks in the state. The changes to the EMF calculation are designed to accommodate small, medium and large risks. (More on the variable split point in a moment).

What Has Changed?

Key elements of the experience rating formula have changed. It is felt by the State that those changes will result in the following:

Organizations that in the past have had a very favorable credit mod will likely see their EMF improve further. Those companies who in the past have struggled with a very poor debit mod will likely see their new mod get even worse. And those companies who have been in the middle (not great but not terrible) will see only minor changes to their newly calculated EMF. That is how the State described the expected outcome of changing the mod formula. Our early observations have shown a little more tendency for mods to move up slightly for those in the middle group.

Variable Split Point: A key change to the formula has been the establishment of a “Variable Split Point.” The split point defines what portion of incurred claim costs on a specific claim will be considered primary, and what will be considered secondary. The mod formula leans heavily on costs associated with small to moderately severe claims, and discounts high severity claim costs so they don’t over skew the mod.

This was a point in which a smaller company’s mod could be overly impacted by a single claim, while a larger company may not feel the impact of several claims as intended by the State. The new method sets the split point value based on the company’s payrolls and Expected Losses. A small company may have a split point of $1,500, while a larger company’s split point may be $60,000. The result is that if each company had a single claim that totaled $65,000: the small company would have $1,500 used in the mod calculation while the larger company would have $60,000 entered into their calculation. While it seems harsh, the larger company’s higher expected losses do soften the blow of the higher split point.

Caps and Limits

First Year Cap: During the first year of applying the new calculation (experience mods effective from 10/1/2022 to 9/30/2023), a mod calculated under the new method that generates result greater than 0.30 higher than using the old calculation will be capped at the mod calculated by the old method plus (+) 0.30. This will show up on the experience rating sheet provided by the State (NYCIRB).

Claim Count Limits: There is also a limit on the experience modification for organizations having only 1, 2, 3 or 4 claims in the rating period. This is another way for the State to limit the impact of a single or a very few claims having a severe impact on a smaller company’s experience rating; and for a larger company’s mod to be limited by a calculated cap (although this cap can still be fairly high).

  • For an organization having only 1 claim, their mod cannot exceed 1.12.
  • If the organization has only 2 claims, their mod is capped at 1.40.
  • If the organization has 3 claims, the cap is 1.75, and
  • If the organization has 4 or more claims the mod is capped via formula – (2 + 0.000003 X Expected losses)

 

The Bottom Line and What Can We Do About It?

The bottom line in the changes made to the experience rating formula is that it is here and it is real. The State (NYCIRB) has begun applying it to those mods effective on 10/1/22 or after. For many, their mod will go up; some slightly, others not so slightly. For others, their mod will go down and they will realize the benefits in their next policy renewal.

What we can do is:

  • Work with OneGroup to stay ahead of the game. We can do some prospective calculations of your mod to see (approximately) where it’s going to be at renewal time. This will help in making decisions relating to carriers and programs.
  • Work with OneGroup Risk Management and Claim professionals to help minimize the occurrence and severity of workers’ compensation losses. Remember, the only real option you have in controlling your experience mod is to control the losses driving it.

What Else:

If you want to know more about the details surrounding the change to the mod formula and the potential impacts of those changes:

CASH IS KING

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Kenneth C. Gardiner, CPA, CCIFP, CDA, Dannible & McKee, LLP

With inflation at its highest since the early 1980s, contractors are required to fund higher construction costs to perform the same construction operations. The cost of materials and labor have increased significantly, and cash requirements have never been higher. It takes money to make money, and contractors need cash to mobilize projects, fund payroll and stay afloat.

Here are 10 strategies to help preserve cash flow and reduce construction costs:

  1. Negotiate and ask for material escalation provisions– Historically, escalation provisions have been limited to asphalt and a few other commodities. It is becoming much more prevalent to obtain escalation on a wide variety of construction materials and equipment. Many contractors are approaching contract owners and negotiating inflation-oriented contract increases.
  2. Manage over- and under-billings – One of the best sources of cash flow is over-billings. Manage bid and pay items to front-load as much profit as reasonably possible into early construction phases. Use the early cash flow to reduce line credit borrowing and fund project costs. Conversely, minimize under-billings; discuss pay items with project engineers to confirm when items can be billed on applications for payment. Strategically time when significant material purchases need to be paid to suppliers to when you can bill the owner for these materials and equipment.

3.Explore new sources of products and materials– Now might be the best time to research new sources of products and materials. Inflation and ownership transition in the construction materials and suppliers’ industries may create opportunities to forge new relationships with vendors hungry for new business. We have seen relationships that were once deemed taboo turn into new opportunities for better pricing and/or payment terms. The Internet also may be a great source of new supplier opportunities.

4.Teamwork– Make sure construction teams work together with purchasing personnel to obtain the best price and delivery options. Don’t let construction teams purchase goods and services in a silo. Centralize purchasing as much as possible at the home office, or at least make sure large purchases amongst projects are coordinated to maximize volume purchase pricing and related discounts.

5.Contract outside advisors– Stay connected to your outside advisors. Industry professionals such as accountants, legal counsel and construction industry associations can help identify federal, state and local programs to assist contractors with programs, such as was the case with the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC), that can provide substantial government incentives to maintain your workforce and provide much-needed cash flow.

6.Billings, collections and year-end payments– Review your billing and collection policies. Consider emailing invoices, applications for payment and other communications with customers. Provide electronic payment options such as EFT and credit card options. Negotiate better payment terms with vendors. Offer wire transfer payments on a specified due date or use credit card payment services to provide additional cash flow or credit card rewards to extend cash terms or use rewards for future purchases.

7.Subcontractor and supplier buyouts– Despite having quoted prices, consider going back one more time to negotiate or obtain better pricing on significant subcontract or supply contracts. You might be able to hit on a few cost savings that could have an impact on overall job profitability.

8.Review equipment needs– For contractors with significant rolling stock and equipment operations, consider a review of equipment usage on current and future projects. Sell off idle or low-usage equipment for new purchases. Look at short- or long-term equipment lease options vs. financing purchases. The acquisition of new equipment requires a cash flow analysis, including an increase in cash for potential reductions in repairs and maintenance to replaced equipment and a decrease in cash for interest components of any long-term financing.

9.Evaluate estimated tax payment requirements– Whether you are a regular tax-paying C corporation or a pass-through entity, consider deferring estimated tax payments to assist in short-term cash needs. Most taxpayers believe you must make estimated tax payments equal to your prior-year tax. Evaluate current year profitability and determine if you can adjust estimated payments based on your current year’s quarterly taxable income.

9.Lines of credit– While most contractors have a line of credit, the best time to ask for an increase or expansion of your line is when you don’t need the money. It might seem counterintuitive, but banks may be hesitant to lend money when you need it, however, tend to be much more willing to increase or provide a line of credit when you demonstrate healthy cash flow management. With inflation and costs dramatically increasing, now might be the best time to request an increase in bank borrowing availability before it is too late.

It’s not likely the impact of materials inflation is going to reverse, and it looks like the “new” costs are here to stay. Additionally, there is no way to reverse labor inflation, so we are all going to have to manage the impact of increased costs. These are just a few suggestions to help you improve cash flow, manage costs and increase profitability.

 

Update on NYS Secure Choice Savings Plan Law

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By:  Brian Schiedel (Burke Group) and Earl R. Hall (Syracuse Builders Exchange)

On October 21, 2021, Governor Kathy Hochul signed the New York State Secure Choice Savings Plan into effect, in a move to join other states Nationwide which are establishing mandatory state-run retirement plans for private sector workers. When the enrollment window opens (exact date TBD), employers with ten or more employees who do not currently offer a qualified retirement plan must automatically enroll their employees in the NYS plan within nine months. 3% mandatory contributions will be made to Roth (after-tax) Individual Retirement Accounts (IRAs) – investment options and costs are currently unknown.

Background Information – Retirement Reality Check

Employers of all sizes have faced significant challenges when it comes to offering a retirement plan to their employees. In fact, there are an estimated 55 million working Americans who do not have a retirement plan available from their employer. Recent legislative and executive actions have delivered new ways to help employers deliver effective and efficient retirement plan solutions to their employees, enabling them to save for retirement. The challenges these employers face include:

  • Plan costs associated with offering a retirement plan
  • Fiduciary duties, responsibilities, obligations, and liabilities
  • Limited resources to manage the plan daily
  • Reduced focus on growing the revenues and profits of the company

The Solution – Multiple Employer Plan (MEP)

Rather than establishing a plan of its own, a business can choose to join with other employers in a Multiple Employer Plan (MEP). The entity that establishes the MEP is its sponsor, which typically designs the basic features of the MEP. These include the provisions that determine any waiting periods that employees must satisfy to participate, which types of contributions can be made to the MEP, when and in what form participants can take distributions from their account balances, whether other optional features are available, etc. Adopting employers have flexibility with respect to plan design for their participating employees.

The MEP sponsor also generally serves as the official plan administrator—the primary administrative fiduciary for the plan. It is the MEP sponsor that appoints the trustee and other service providers for the plan, communicates with participants regarding plan benefits, ensures compliance with regulatory rules, decides claims disputes and other plan issues, and determines available investment menus, among other duties. Certain fiduciary responsibilities are often delegated to hired professionals.

Costs are lower for participating employers because the MEP sponsor can negotiate lower fees from service providers based on larger participant numbers and account balances. Much of the fiduciary and legal risk is transferred to the MEP sponsor, administrator and hired professionals. Employees who participate in the MEP have access to the same low-cost investment funds that large employers can offer. Smaller employers can more easily compete with larger companies in recruiting and retaining workers.

A “closed MEP” covers employers within the same geographical region who meet certain commonality requirements (i.e., members of an Association). They are treated as a single retirement plan, file a single Form 5500 report annually, undergo a single audit and determine ERISA (Employee Retirement Income Security Act) bonding requirements on aggregate MEP assets.

Stay tuned as the Syracuse Builders Exchange is performing due diligence on a MEP plan solution for our member employers, and your employees, that may be available before the end of 2022.

David’s Refuge, Craig Zinserling, and the Pineview Run Celebrity Challenge

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By Christine Corbett, Director of Philanthropy, David’s Refuge

David’s Refuge is a growing local non-profit with a unique mission to provide respite, resources and support to parents and guardians of children with special needs or life-threatening illnesses in an effort to combat caregiver burnout.  They do this through an array of Respite, Wellness and Community programs which remind caregivers they are not alone, what they do matters, and that God and this community loves them.

In 2021, when planning for a unique event at Pineview Run & Country Club, Pierre Morrisseau, CEO of OneGroup wanted to include a charity component, and reached out to the team at David’s Refuge to explore the idea. At that point, The Pineview Run Celebrity Challenge was born, with local friends signing up to be trained on driving the 1.1-mile racetrack, with a light-hearted race day scheduled for 1 month later. 

During that month, drivers would raise at least $1,000 to support the mission of David’s Refuge.  As a competitive advantage, for every $1,000 that drivers raise, one tenth of a second is taken off their final track time. This means that the slowest drivers still have a great chance of winning the race and claiming bragging rights for the year.   

Board Member and recent celebrity driver Craig Zinserling began supporting caregivers after volunteering at a David’s Refuge event through his church.  Since that day, his desire to come alongside caregivers has only grown.  When asked why he chose to drive in the 2022 Pineview Run Celebrity Challenge, Craig shared “My wife and I have three children, all of whom are healthy, typical kids requiring no special care.  Marriage and kids have their own challenges. Like many, I find it hard to imagine adding full-time caregiving to the mix, yet these families do it every day. I am proud to support David’s Refuge and play my part in combatting caregiver burnout which is critical here in our community.  Fast cars and a racetrack just make it that much more fun.”  Craig succeeded in raising more than $6,500 for his race, all while introducing new friends to the mission of David’s Refuge.

The last two years have featured 24 amazing local “celebrities” in total and generated more than $75,000 in support of caregivers.

The 2023 Pineview Run Celebrity Challenge will take place in the Spring,  if you are interested in joining as a celebrity driver, please contact Christine Corbett, Director of Philanthropy at David’s Refuge, at christinecorbett@davidsrefuge.org.

LEGISLATIVE SESSION 2022 LEGISLATIVE ACTION REGARDING WORKERS’ COMPENSATION

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Annette Malpica, Vice President, Director of Claims & Legal Counsel, Lovell Safety Management Co., LLC

The following workers’ compensation bills were passed by the NYS Senate and Assembly in the 2022 legislative session. These bills must be presented to Governor Hochul before the end of the year either for veto or signature into law. If enacted, these bills will increase benefits by millions of dollars, resulting in higher costs for all NYS employers. Further, these bills will decrease the incentives to return to work, and radically change the landscape of the workers’ compensation law.

Bill A1118/S.768 – Amends WCL §15(2) to define temporary total disability as: “[t]he injured employee’s inability to perform his or her pre-injury employment duties or any modified employment offered by the employer that is consistent with the employee’s disability”

The bill’s Sponsor states that A1118/S.768 will encourage employers to establish return to work programs and will ensure that permanently disabled workers with serious injuries are given the opportunity to return to work. In addition, the

Annette Malpica, Vice President, Director of Claims & Legal Counsel, Lovell Safety Management Co., LLC

sponsor states that current wage replacement for workers receiving temporary benefits is insufficient. This legislation would mark a fundamental shift in the definition of disability and the way in which wage replacement amounts are determined in New York State.

➢The bill upends the case law definition of a temporary total disability by allowingfor unlimited awards at the temporary total rate for employees with mild ormoderate partial disabilities. A1118/S.768 eliminates the longstanding tenet of theWCL that defines temporary total disability based on medical standards andcreates a new legal standard. Under the current system, when a doctor finds thatan employee has partially recovered from an injury, that employee must eitherseek out work that is commensurate with their degree of disability, or risk losingtheir indemnity benefits. The language of A1118/S.768 would make it so that if theinjured employees could not return to their pre-injury employment or to a modifiedjob, they would automatically receive benefits at the higher total disability rate. Thischange shifts the burden to the employer-carrier to either provide a light dutyprogram or face paying lifetime total disability awards until such time the employeereturns to work. The majority of employers don’t have the financial or practicalability to accommodate light duty. Since the inception of the WCL, the responsibilitywas placed on the partially disabled employee to seek work within the medicalrestrictions in any occupation to receive benefits at the partial rate.

➢ This bill would eliminate the labor market attachment requirements for employees with partial disabilities. Longstanding court precedents require that a partially disabled employee demonstrate attachment to the labor market by seeking work within his/her physical restrictions in order to receive ongoing indemnity benefits. Employees who are deemed to have a temporary total disability are naturally precluded from the requirement due to their designated “total” disability. Additionally, a yet unknown consequence presented by this bill is whether the employer-carrier would be mandated to continue total disability payments when a partially disabled employee, who is separated from employment, decides not to search for other employment within their physical restrictions.

➢ We are also concerned that this new definition of temporary total would undermine the durational caps of the 2007 reform legislation. The historic 2007 reform capped indemnity benefits under WCL §15 3(w) to a maximum of 525 weeks for employees who sustained partial loss of earning capacity based on the medical evidence and determinations of other industrial factors. Should this bill be signed, the door is opened for those employees who have medical evidence of a partial disability and are capable of gainful employment to continue to receive lifetime, tax-free, total disability awards. Ending durational limits on payment of partial disability benefits would result in very significant cost increases. 

➢ This bill could increase the protracted healing periods for employees with partial disabilities subject to schedule loss of use awards. The statute provides for additional weeks of compensation when the number of weeks of total disability exceeds the statute’s protracted healing period noted in WCL 15(4-a). Therefore, a partially disabled employee, who is unable to be accommodated in a light duty position will continue to receive total disability benefits, which in many instances will exceed the normal healing periods resulting in additional weeks of compensation added to the schedule award.

If signed into law, this bill would be effective immediately. The New York Compensation Insurance Rating Board has not yet calculated the cost of A1118/S.768. We did a random sample of 25 recent claims that featured temporary partial benefits. When we recalculated the cost of these claims at the temporary total rate, claims costs increased by 39%

 

Bill A2020-A/S.6373-B – Amends WCL §10(3)(b) to eliminate the case law requirement that mental stress injuries be based on work-related stress that is materially and substantially greater than that experienced by similarly situated workers.

“Where a worker files a claim for mental injury premised upon extraordinary work-related stress incurred at work, the board may not disallow the claim upon a factual finding that the stress was not greater than that which usually occurs in the normal work environment.”

Bill A2020-A/S.6373-B would expand the statutory carve out that applies to police officers, firefighters, and emergency medical technicians who filed a claim for mental injury premised upon extraordinary work-related stress to include all employees. The 2017 legislature, in recognition of the high standard required by the statute for mental stress claims, and the occupational hazards/exposure experienced by first responders during emergencies, removed the restriction that a mental stress claim had to be greater than the stress sustained by a similar worker. This bill will permit all employees who allege an extraordinary work-related stress to file a mental stress claim irrespective of a work-related emergency. The onus to determine what qualifies as “extraordinary,” a standard that is not defined by statute, will be placed on Law Judges. If passed, this bill will result in extensive litigation on the issue of what constitutes “extraordinary” stress, increase administrative expenses (IMEs, witness, and medical testimony) and result in compensability determinations on minor/transient stress events. If signed into law, this bill would be effective January 1, 2023. The New York Compensation Insurance Rating Board has not calculated the financial impact of this bill. We believe that in addition to increasing the cost of litigation, this bill would transfer the cost of treatment and disability for psychological conditions that are now not considered work-related to the workers’ compensation system. Given the fact that close to half of all Americans in surveys complain of stress, the cost could be substantial.

Bill A7178-A/S.8271A – Amends WCL §15 (6) by increasing the minimum amount of compensation from $150 to not less than 1/5 of SAWW or employee’s full wages if equal to or less than 1/5 of SAWW.

“[C]ompensation for permanent or temporary partial disability, or for permanent or temporary total disability due to an accident or disablement resulting from an occupational disease that occurs on or after the effective date…of two thousand twenty-two …shall not be less than one-fifth of the New York state average weekly wage except that if the employee’s weekly wages are equal to or less than one-fifth of the New York state average weekly wage, the employee shall receive his or her full wages.”

This bill would establish a new minimum weekly indemnity benefit for employees who sustained new accidents (on or after the date the bill is signed) and index future weekly minimum indemnity to the State Average Weekly Wage (“SAWW”). According to the sponsor’s justification memo, the “legislation would provide equity and fairness to low-wage workers injured on the job and ensure that future benefits are adjusted automatically with inflation.”

The current minimum weekly indemnity rate for employees who earn more than $150/ week is $150. This bill would establish an increased minimum weekly benefit rate for new injuries at 1/5 of the SAWW. Effective July 1, 2022, the SAWW will increase to $1,688.19 for injuries occurring on or after 7/1/2022 – 6/30/2023. Employees who sustain accidents after June 30, 2022, would be entitled to weekly indemnity benefits of no less than $337.64 (1/5 of $1,688.19) an increase of almost double the current minimum indemnity rate of $150/week. Employees with wages less than or, equal to $337.64/week would receive full salaries.

The impact of this bill will be felt by employers who hire large populations of low-wage earners, part-time, or seasonal employees. The significant increase in the minimum weekly indemnity rate, which is tax-free, may deter certain employees from returning to work. The increase in the minimum rate will also have an impact on the cost of workers’ compensation costs/premiums. The New York Compensation Insurance Rating Board has not yet priced the cost of this bill.

As of the date of this writing the legislation has not been delivered to the Governor for signature or veto. Those members interested in opposing the 2022 workers’ compensation legislation should immediately contact their legislative representatives or Lovell Safety Management at 1-800-5-Lovell.

Loretto’s Innovations in Leadership Strategy Maximizing Clinic and Operational Expertise in Today’s Changing Healthcare Environment

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By: Becca Taurisano

L-R Lori Sakalas, COO and Dr. Joelle Margery, CNO

In response to the evolving and complex changes in a post-COVID healthcare world, Loretto Health and Rehabilitation installed two members of its leadership team in new roles to guide the future of eldercare in Central New York. Dr. Joelle Margery has been promoted to Chief Nursing Officer of Skilled Nursing, bringing her experience as the former Vice President of Skilled Nursing and newly achieved Doctorate of Nursing Practice to the role. Lori Sakalas was hired in February 2022 as Chief Operations Officer, bringing her extensive healthcare administration and operations expertise as the former Vice President of Operations for Guardian Healthcare in Pennsylvania. Together, Margery and Sakalas will work collaboratively to ensure seamless operations and efficient care, while maximizing their clinical and operational expertise in today’s changing environment.

Sustaining Healthcare in Challenging Times

The healthcare industry is facing a significant staffing shortage, thanks to the pressures of the COVID-19 pandemic, but Margery and Sakalas are prepared to meet the challenge in new ways. Part of that is keeping recruitment and retention plans at the forefront of their focus and empowering Loretto employees to be part of the solution. “Our employees are vital to running a successful referral program,” says Sakalas, ”potential employees are more likely to respond to someone they know.” Loretto is seeing an increase of applicant flows when their employees are fully engaged in the recruiting process, such as higher numbers of employee referral submissions and an increase in candidates attending hiring events. In May, Loretto launched the “Amazing Race” program which asks employees to give leadership 4 or 5 names of potential employees they know personally who would be interested in hearing about Loretto’s services and benefits. Reaching out to the community for potential employees is part of the plan as well. Loretto recruiters go on college campuses, work with nursing programs for clinical rotations, seek out high school students and reach out to local refugee centers. “We try to work with individuals who have that heart for healthcare and want to work in our industry,” says Sakalas.

“The critical workforce shortage is the biggest challenge we are facing today,” says Margery. To combat this, Margery and Sakalas are looking at growing and promoting Loretto employees from within, mentoring them for success in their current role and assisting them to advance into other roles. Loretto offers mentoring programs for employees to pass their Certified Nursing Assistant (CNA) or Registered Nurse (NCLEX-RN) exams and leaders encourage employees to seek out opportunities in other areas like social work, dietician, operations, and administration. “We recognize that individuals want to be part of a career path,” says Margery, “we guide them on how to move forward in their career.”

Many of Loretto’s 2,500 employees are single mothers or support extended families and are unable to attend school full-time without an income. To meet their needs Loretto, offers a Licensed Professional Nurse (LPN) apprentice program, the first in New York State to be approved. While attending the program, employees attend classes as well as receiving on-the-job training at the Loretto facility while earning a paycheck. “Our program gives them support while they are in school so they can be successful, we incorporate emotional intelligence and leadership traits which are not taught in schools,” says Margery, “they can support their families while advancing their career goals.”

Supporting the Community

Loretto is always looking to support Central New York and surrounding communities with innovative ways to provide care, including a recent expansion of their sub-acute care units. Having found a need to care for a more clinically complex patient than they have in the past, Loretto has opened their Restorative Care Unit (RCU). “Hospitals are under duress with a shortage of beds and staff ”, explains Margery. If Loretto can take those patients and provide a hospital-level of care, hospital community partners benefit. “We are working to ensure those individuals can get a hospital bed in the community where they live,” says Margery, “when we can step in, it helps the community, it helps the hospital partners, and it helps healthcare in general especially with cost.”

Loretto’s 19 locations offer a continuum of care to their nearly 10,000 residential and home-based patients, whether that is skilled nursing, assisted living, independent living, or in-home care through their PACE program. “Our services allow patients to stay in their home if they so choose, while receiving the community-based care they need,” says Sakalas.

In December 2020, Loretto opened a COVID-only building that served many surrounding communities with a little over 300 admissions. “When there is a need in the community, we are often the first reach. If we are able, we will provide the support,” says Margery.

In December 2021, the Department of Health asked Loretto to take short-term rehabilitation patients because the hospitals needed to free up beds to take additional COVID patients. Based on Loretto’s proven track record to be able to implement plans effectively with positive outcomes, the Department of Health allotted 18 National Guardsmen to serve as Certified Nursing Assistants at Loretto during this time. “I am always open to initiatives to promote the well-being of the communities we serve,” says Margery, “as a nurse it’s about the patient, the community and the employees.”

Recently, Loretto evaluated the need in surrounding communities to provide care for patients with both dementia and a psychiatric diagnosis. “This is a very specific population of patients to care for,” says Margery, “and no center of this kind currently exists in our area.” Margery says Loretto is planning to open a center to care for those patients in 2023.

Leading By Example

Sakalas began her healthcare career 25 years ago as a nursing assistant working her way through King’s College in Wilkes-Barre, Pennsylvania. She grew up in a close-knit family and seeing the challenges her grandparents faced, inspired her to help make the last years of their life as enjoyable as possible. After working her way through various administrative and operational roles with Genesis Healthcare, Guardian Healthcare, and Golden Living, she never lost sight that care for the patient comes first. Sakalas says Loretto’s history in the community, starting in 1926, and mission to provide exceptional care to families, aligned with her personal and professional values. Sakalas says, “We cannot expect from our team what we do not expect from each other. Our team needs to feel we are right there with them, that we believe in them and respect their opinion. At the end of the day, we know we can get through anything.”

Margery came to Loretto 15 years ago as Assistant Director of Nursing. She holds an Associate’s in Applied Nursing from St. Elizabeth College of Nursing in Utica, a Bachelor of Science in Nursing from Southern New

Hampshire University, a Master of Science in Nursing – Clinical Nurse Leader from Southern New Hampshire University, and in March 2022, awarded the Doctorate in Nursing Practice (DNP) from Capella University. “I’ve always been a caretaker,” says Margery, “the ability for us to provide care that is not typically done in the post-acute care world, that’s empowering. I want to push the limits and do at Loretto what nobody else in the community does. We are afforded the ability to think outside the box here.”

Both Margery and Sakalas are hands-on leaders, stepping in whenever their team needs their help. Leaning on their experience in the healthcare industry, they can relate to the challenges their employees face. “As leaders, we respect everyone no matter position or title,” says Sakalas, “we are motivators and inspirational leaders to our team because we have done what they do and we are right there with them.”

When New York State Department of Health regulatory requirements required employees to be COVID-tested twice a week, Margery stepped in to help with testing. “Knowing my team had their own fears, I couldn’t have my team test staff without me being there,” she says, “I was part of the team doing testing for a year. If your employees see you alongside them, they are more likely to do it also.”

Adapting to Change in Creative Ways

Creativity and thinking outside the box are critical to sustaining the healthcare industry during these challenging times.
Part of that is being flexible with their workforce, says Sakalas, working with the unions on scheduling and listening to their employees on what work-life balance they need. Loretto is embarking on a new Diversity, Equity, and Inclusion (DEI) initiative after surveying employees at the end of 2021. Earlier this year, senior leaders engaged in a 10-week comprehensive DEI training program. Next, training will be delivered to managers and they will initiate learning circles with frontline employees. Once education is complete, Loretto leadership will formulate action plans to improve employee experience with regards to DEI.

In order to provide leaders with the skills they need to lead teams during this time of tremendous change, Loretto is providing a manager training program, as well as investing in certification programs for frontline workers to develop specialized skills in areas like dementia care and food service to create career paths to improve retention.

Margery and Sakalas are dedicated to continuous improvement and look forward to collaborating on initiatives to support patients and employees. With four decades of experience between them in the healthcare industry, their combined operations and clinical experience gives them a solid foundation for building a bright future at Loretto. 

“This partnership between our clinicians and operations will be the key to operating smarter, innovating faster, and creating a cohesive care environment that grows our staff while providing the highest quality of care.” Lori Sakalas, COO

Retirement Income Planning: When Should You Start Taking Social Security?

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By: Jason D. Nickerson, CFP®, EA, Executive Vice President & Chief Operating Officer, John G. Ullman & Associates

When should we start thinking of retirement income planning? Given the change to the definition of retirement over time, the answer to that is very individualized. Our parents’ definition of retirement may have been different from what we are experiencing now. A growing number of people decide to retire from a primary career but are worried that they will be bored, so they take up another job/career. However, some still hold to the pure definition of retirement and postpone activities and hobbies to enjoy when they have time capacity to pursue them.

Regardless of your definition, whether you live it now or are postponing to the future, we need to fund it somehow. For some, continued work provides a portion of their cost of living. Hopefully, their diligent savings over many years has been managed smartly to provide income to their chosen way of life. Maybe there are pensions, annuities, or other forms of income that will support them. As you can see, this is a very robust area; each option or potential funding source comes with its choices and the need to make decisions.

So let us start with one piece of the income puzzle that continues to raise questions; Social Security. When should we claim our retirement benefits and how should we consider Social Security as a part of our retirement income plan? The answer to these questions are as individualized as our retirement plans themselves, but let’s look at some universal considerations that perhaps people have thought about already.

What we know:

– The math says to wait as long as possible to claim your benefits. This is because each year you wait past 62 (the earliest claiming age) you will see an 8% average annual increase in your benefit, up to age 70. That is a nice rate of return!

– If you expect to live past your late 70’s, the math works out that you will have benefited by waiting to claim at age 70 versus age 62.

– If you expect to work past age 62 and expect to claim social security at the earliest age, the maximum you can earn (in 2022) is $19,560 before your benefits are reduced.

– If you have a spouse whose benefit is lower, waiting until age 70 to claim will maximize their survivor benefit if you die first.

Now let’s look at other considerations that many overlook about social security planning inside the bigger discussion of retirement income planning.

Some alternative thoughts:

1. No one else will benefit from your Social Security upon your death other than a spouse. They will only benefit if your benefits are higher than theirs are. Your accumulated savings can be left to more than just your spouse. You can leave it to children, other family, friends, charities, etc. Also, there is flexibility of when you give it away.

2. Claiming sooner can help insulate your accumulated savings. Social Security benefits can offset the need to take untimely withdrawals from your portfolio. Leaving your portfolio intact longer means it is there for more flexible and/or lumpy spending like cars, trips, house expenditures and more.

3. Leaving your portfolio intact also gives you the opportunity to earn more than not claiming your retirement benefit. We know your Social Security benefit will grow by 8%, maybe your portfolio can do better, but it could also do worse.

4. Most states do not tax social security and it is not 100% taxed by the IRS. It may be more tax beneficial than your other choices for retirement income.

5. Maybe you have health issues and don’t expect to live long enough to hit the crossover point of your late 70’s. Also, just because you decide to delay taking benefits at age 62 doesn’t mean you have to wait until your full retirement age to claim them. You can change your mind the next day if you would like.

Many of the unique planning and claiming strategies have been eliminated from Social Security over the years, but that does not mean the approach to claiming Social Security has gotten any easier. As we often tell our clients and those that are exploring our services, we are going to challenge the standard thinking and bring as many considerations to the conversation as possible. This ultimately leads to a more robust and individualized solution.

Kata: Your Approach to Daily Continuous Improvement

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By: James A. D’Agostino, CEO, MEP Center Director

In last quarter’s edition, I wrote about Kata and its ability to transform organizations through the development of a culture of daily continuous improvement. With the continued headwinds that we’re all facing on multiple fronts, we need systematic, scientific ways of thinking and acting to achieve our goals and sustain improvements. This quarter, I want to expand more on Kata’s four-step scientific pattern and discuss its relationship with Lean.

As previously discussed, the four-step scientific pattern is as follows: 1- Set the direction or challenge for the organization. 2- Grasp the current conditions. 3- Establish your next target condition that represents a step toward the direction or challenge. 4- Conduct experiments to achieve that next target condition. When you successfully reach the next target condition, you establish another incremental target condition that represents yet another step toward the direction or challenge for the organization. Here are some additional key points about each step within the four-step scientific pattern:


Step-1: We often face challenges in life. But there’s no need to stress, because you don’t need to get all of the way there right away. A challenge often even gives us a useful sense of direction.

Step-2: It’s important to understand where you currently are before you set your next goal. Don’t pull goals randomly out of the air. A team should feel like its goals are meaningful.

Step-3: Break a big challenge down into smaller goals. Set an easier and closer goal that’s on the way to your challenge. When you get there, then you can set the next goal.

Step-4: You never know in advance exactly how you’ll achieve a goal. We need to test the ideas that we have, and a good way to reach a goal is through rapid experimentation. Try something, see what happens, and then adjust based upon what you learn. To learn from an experiment, you should write down what you expect and what actually happens so you can compare those two things.

So how do traditional Lean tools fit in with Kata and this scientific pattern? The great news is that Lean and Kata play well together. The obstacles that organizations identify through the effective use of the scientific pattern are overcome by the use of traditional Lean tools such as 5S, Kanban, TPM, Standardized Work, and others. However, when the scientific pattern is followed properly, the Lean tools are utilized only when they are needed. This scientific pattern of continuous improvement eliminates “recreational” activities that may, or may not, be an obstacle standing in between you and your challenge or direction. It also shifts an organization from a mindset of “what can we do today” to “what do we need to do today” to get closer to realizing their challenge or direction.

Once this routine is practiced enough, it becomes second nature. When employees at all levels of an organization are performing in this systemic manner, it quickly transforms into a high-performance culture able to tackle any obstacle it encounters. Scientific thinking is a basis for successfully pursuing seemingly unattainable goals in complex systems. This type of thinking also enables teams to make decisions close to the action and maneuver effectively and efficiently. These are all valuable skills in today’s hectic world.

A team that is pursuing continuous improvement will do well with Kata for developing new behaviors, habits, and culture, especially at the beginning of their journey. Kata is an incredibly powerful and transformative approach to daily continuous improvement. TDO’s team is fully certified to help manufacturers learn and implement these skills and develop the necessary coaches to sustain the habits. Reach out today to learn more and schedule a free consultation.

 

Where Has All the Talent Gone?

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By: Pierre Morrisseau, CEO, OneGroup

Organizations around the globe are struggling with a talent shortage. It is a serious topic
for CEOs looking not only to grow their businesses coming out of the pandemic, but to ensure they can continue to offer their customers the highest degree of products and services.

According to a recent ManpowerGroup Talent Shortage survey, globally, 70% of employers report challenges hiring in high-demand areas, particularly in logistics, manufacturing, IT, sales and marketing. Our area of specialty—risk management and insurance—is also facing a talent drain as our most knowledgeable workforce retires and new talent is hard to find.

To manage the talent shortage challenge, organizations need to think differently about how they source, acquire and retain top talent. For both short- and long-term success, we need to continually be building a pipeline of qualified, desirable candidates albeit from a smaller pool, and increasing our agility in matching candidate’s personal goals and speed to hire.

As our firm, like most, was hunkered down as we entered the pandemic, I recognized the need to find innovative ways to source candidates even as they retreated to their homes or moved to new locations. What I came to realize was the paradigm shift in the employer-employee relationship had opened more doors than it closed. We now had ready access to the best talent wherever they wanted to work and in the ways that better fit their lifestyles. The rapid advancement in technologies also gave me access to global resources that could tap into that talent pool.

In a recent conversation with Nick Hoadley, managing director of UK-based Insurance Search, industry recruiters as well as founder and host of the Insurance Coffee House podcast, the #1 Insurance Leadership and Career Development Podcast on iTunes and Spotify, we discussed new ways to find and retain talent.

I asked Nick what he sees as the most important things a candidate wants from working with a company. I asked if it was having job security, great pay or something else that we should be aware of. Nick, through his broad global experience defined today’s younger candidate as caring far less about job security or money. He found that the best candidates were those whose personal values best aligned with the company both in terms of their personal growth and fulfillment, but also in terms of social and community values. He pointed out that today’s generation is more about continually learning and progressing in multiple varied positions. This is the secret sauce to retaining the best talent.
This led me to thinking about how successful startups happen, which in turn led me to letting go of past norms and rethinking how we could be more flexible and innovative when it comes to growing talent. I realized if the typical young person fresh out of college was going to have 6-8 job changes, why couldn’t we create a process that let them do that inside of our company? We have seen great success with encouraging our employees to look around the company and if they think they would like to make a change, to try it. We have had people who were highly analytical but had not realized their passion until they tried their hand in a new area of our business. Furthermore, we continue to evolve our business model to foster “startups” within our larger business. We want our people to experiment and to feel they “own” it, that their investment is valuable and appreciated. A major part of this new thinking is providing flexible rewards that better match an employee’s personal goals. We have seen this not only empowers and invigorates the employee, it brings many new ideas to our firm and is boosting our productivity and profitability.

Another important point made by Nick was employers must continue to build a database of desirable candidates and to invest in building relationships with these candidates. He espouses using social media, advertising, media, website, blogs, and other means to share stories about your company. Storytelling is the best way to share our true values, how we treat each other, our culture and our commitment to community. Through consistent messaging, candidates come to know us and become familiar with us, leaving us to place our full focus on the candidate and what is important to them in their career choice. It allows us to speed their decision-making process, so we are less apt to lose great candidates in this highly competitive environment.

Where has all the talent gone? The answer is talent is all around us and we all must work a little harder and a lot smarter to find, attract and retain them.

I would love to hear what you are doing to build your workforce and always happy to share what we are doing to grow our business.

Your Construction Employers Association of Central New York (CEA CNY)

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By: Earl Hall, Executive Director, Syracuse Builders Exchange

From the beginning of the COVID-19 pandemic, the construction industry and the skilled crafts men and women who continued to work have been deemed a key component of New York State’s essential workforce. Contractors and their employees, while not immune from contracting or spreading COVID-19, have been able to complete vital projects, while limiting the spread of COVID-19 by following the latest health and safety recommendations from the New York State Health Department, New York State HERO Act, Occupational Safety and Health Administration (OSHA) and the Centers for Disease Control and Prevention (CDC).

Unfortunately, with the rise of COVID-19 variants, such as Delta, the construction industry is now subject to some of the same rules and regulations from 2020. Construction industry leaders believe that responding to the COVID-19 virus is of critical importance for the health and safety of construction workers throughout New York State, their families, and communities.

As a result, most industry leaders remain committed to encouraging all construction workers to get vaccinated unless there are underlying circumstances that would not permit one to receive the vaccine. Many believe a vaccinated workforce is vital protection for the employee and their fellow workers. A vaccinated workforce is also important for the industry and the contractors who have contracts in place to perform for a General Contractor or project owner.

Penalties for non-performance or an untimely completion of a scope of work is real and can be devastating to any business owner who failed to anticipate labor issues on a particular project.

On September 9, 2021, OSHA announced that it is developing a new workplace safety rule through an Emergency Temporary Standard. This new OSHA requirement covers all employers with federal contracts, as well as those employers with more than 100 employees. Covered employers will have to ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work. Additionally, many project owners, both public and private, are mandating all contractors and employees performing work on their site must be fully vaccinated or produce a negative COVID test result. These requirements are mandatory for all employers regardless of the number of employees employed.

At a time where there remains a significant labor shortage, losing valuable employees from an employer’s workforce due to some or many employees choosing to not being vaccinated poses unimaginable challenges for construction industry employers.
Without workforce compliance, construction industry employees will miss out on valuable work hours, while many employers may choose not to bid projects for fear of not being able to supply the appropriate work force to complete the project on time.

It is anticipated the industry will have a significant increase in building and infrastructure work over the next 5-7 years, in particular upstate New York. This construction work is expected to last for many years, but to bid on and secure these projects will require that all associated with the employer meet the OSHA, New York State and/or project owner rules for mandated vaccination or weekly testing. To ignore these rules means losing out on the billions of dollars in future projects and job opportunities. 

Additionally, ignoring such requirements exposes construction contractors to increased pressure to supply skilled labor to their projects, thus potentially jeopardizing the long-term viability of an employer.

While respecting personal opinions of whether vaccines should be mandated as a condition of employment, one being vaccinated addresses a government identified safety issue for employees and their coworkers while not limiting potential employment opportunities. And, equally as important, not causing undue pressure on employers who may not be able to supply enough skilled labor during an historic labor shortage era.

This is the new reality during the COVID-19 pandemic – governmental and project owner mandates on employees, all while employers endure a labor shortage crisis. The industry cannot afford to lose any more employees from the workforce for any reason.

Contractors rely upon a skilled and available work force. Each employee leaving the construction workforce poses great risks to contractors and project owners alike.

In the end, the COVID-19 vaccine will be the antidote that will attack a pandemic which has limited our freedoms, and may threaten our future.
Regardless of where one’s position is on vaccine mandates, personal freedoms, freedom of choice, etc., construction industry leaders must address this issue as an unvaccinated workforce impacts more than just the unvaccinated employee. It impacts others on the job site and the very contractors who employ them.

During an unprecedented era of significant labor shortages in the construction industry, employers today cannot afford to lose employees from their workforce. The project owners and governmental mandates may get more demanding over the next few months before such may be relaxed in 2022. While learning to live with COVID-19 in our day to day lives will someday be the new norm, it is evident project owners and government officials today are not ready to address this.

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