September 16, 2019

Bucks Blog: Consumers Help Slow Growth in Health Spending

Growth in health care spending is expected to slow next year, in part because of a shift in consumer behavior, a report from PricewaterhouseCoopers’s Health Research Institute predicts.

The institute, the research arm of PricewaterhouseCoopers’s health care consulting practice, forecasts overall medical inflation of 6.5 percent in 2014 — down from the institute’s estimate of 7.5 percent for this year. The growth rate — which reflects changes in the actual cost to treat patients, and is influenced mostly by the cost of products and services as well as the number of services used — is often a crucial factor used by insurance companies in setting health insurance premiums.

The estimate is based on medical costs in the large employer market, which covers about 150 million Americans who have insurance through their jobs.

The net growth in spending — after employers tweak their packages of health benefits, such as by raising deductibles for workers — is expected to be about 4.5 percent.

The slower growth is notable, said Ceci Connolly, the institute’s managing director, because in the early 1990s, double-digit medical inflation was the norm. But changes in the health care delivery system — some driven by consumers, who are bearing more of the cost of their medical care — as well as some provisions of the new Affordable Care Act, are helping to slow the rate of increase.

As employers have shifted health care costs to workers by increasing their deductibles — the portion of care they must pay for, before their plan starts paying — consumers are becoming more interested in prices. “When consumers move into high deductible plans, they behave differently,” Ms. Connolly said. “They’re starting to become savvy shoppers.”

They are asking, for instance, whether care can be provided at a retail clinic rather than at a hospital, and requesting lower-cost generic drugs.

When the recession began, consumers started to cut back on medical care or to seek lower-cost options, like retail medical clinics, Ms. Connolly said. But even as the economy has improved, consumers have stuck with the clinics, which typically offer convenient hours as well as lower cost, she said.

According to the report, a visit to a retail clinic costs about $76, compared with about $120 for a visit to a traditional physician’s office.

Consumers are likely to continue seeking more affordable ways to get care, since medical costs aren’t falling, they’re just not going up as fast. Patients can also expect to get more direction from their employers about where to seek medical care, as companies contract directly with “high-value” health systems — those that are seen as delivering quality care at lower cost — to treat their covered employees who need complex care, like heart surgery, the report found.

Have you altered the way you seek medical care because of rising costs? What changes have you made?

Article source: http://bucks.blogs.nytimes.com/2013/06/18/consumers-help-slow-growth-in-health-spending/?partner=rss&emc=rss

No Matter Outcome, Cyprus Crisis Is Blow to Business

Also vitally at stake in this island country’s banking crisis is Cyprus’s credibility as a place for international companies to continue doing business.

Take Avid Life Media, the Canadian-owned operator of some of the world’s biggest online dating sites. Only a few weeks ago it set up an office here as a base for its international operations, attracted to Cyprus — as hundreds of other foreign businesses have been — because of its reputation for financial stability, a low corporate tax rate, a friendly banking environment and most of all, a strong rule of law.

Sure, the Avid Life Media executives were aware that a banking crisis was brewing, but they had ventured ahead. They were assured in part by a promise from President Nicos Anastasiades when he was elected in February that he would soon arrange an equitable bailout with the international organizations that have guided the euro zone through four previous bailouts while keeping bank depositors whole.

“We went from paradise to hell in a minute,” said Keith Lalonde, Avid Life Media’s top executive here. He recounted the cellphone call he got from his financial adviser a week ago Saturday while strolling under a bright sun on Limassol’s fine white beach.

“We have a problem,” the adviser told him. The Cypriot government had just declared it would seize nearly 10 percent of the €2 million, or $2.6 million, the company had on deposit in Cyprus — and about 7 percent of Mr. Lalonde’s personal funds — to help secure its bailout.

As haggling over the bailout terms continued since, the company’s bank accounts — and all others on the island — have been frozen, making it nearly impossible to do business. Hundreds of other foreign-owned companies in Cyprus are in similar straits, whether new arrivals like Avid Life Media or long-timers like KPMG, PricewaterhouseCoopers and Lukoil.

As soon as Mr. Lalonde got the call, he punched the speed dial to Avid Life Media’s chief executive in Toronto, Noel Biderman, to relay the news.

“We jumped into panic mode,” Mr. Biderman recalled the other day in a telephone interview.

Although Avid Life Media’s business model has stoked controversy, and the occasional lawsuit, for Web sites like CougarLife.com and AshleyMadison.com that critics say promote promiscuity, the company has seen its European and global traffic grow rapidly. About a quarter of the sites’ 18 million members are outside North America, almost 4 million of them in Europe, according to the company. Mr. Biderman says he chose Cyprus for the same business-friendly, tax-attractive reasons that have drawn so many other foreign companies.

Now, Mr. Biderman and Mr. Lalonde are wondering whether to pull up stakes. If that happened on a large scale, Cyprus, which has evolved into one of Europe’s most important financial centers in the past decade, would face a blow to the cornerstone of its economy. Other than mom-and-pop shops, most businesses in Cyprus have foreign owners.

“Most of the money here comes from foreign investors and companies like us,” Mr. Lalonde said. But given the enormous uncertainty churned up, “Why would anyone come here?” he asked. “They have put the nails in their own coffin.”

On Sunday, President Anastasiades and finance ministers from the 17-member euro zone were meeting in Brussels, hoping to find a resolution to the Cypriot financial crisis. Whatever they come up with, it may not be nearly enough to contain the damage.

Much of what has made Cyprus so alluring to businesses has blown up in the past week. Cyprus’s 10 percent corporate tax rate would rise to 12 percent under the tentative terms of the bailout. That would still be the lowest in the euro zone, still below Ireland’s 12.5 percent and well under the 29.5 percent rate in Germany and 33.3 percent in France. But to be a tax haven requires a stability that Cyprus has lost.

Article source: http://www.nytimes.com/2013/03/25/business/global/no-matter-outcome-cyprus-crisis-is-blow-to-business.html?partner=rss&emc=rss

DealBook: S.E.C. Charges the Chinese Affiliates of 5 Big Accounting Firms

Robert Khuzami, the Securities and Exchange Commission's enforcement director.Louis Lanzano/Associated PressRobert Khuzami, the Securities and Exchange Commission’s enforcement director.

WASHINGTON – The Securities and Exchange Commission charged China-based affiliates of the five largest United States accounting firms on Monday with violating securities laws, saying that the firms failed to produce work papers from their audits of several China-based companies that are under S.E.C. investigation.

In an administrative proceeding, the S.E.C. said that the accounting firms refused to cooperate with the document request in part because the accountants “interpret the law of the People’s Republic of China as prohibiting” them from releasing the papers.

The nine Chinese companies under S.E.C. investigation all have shares that are traded in the United States, making them subject to American securities laws. The accounting firms under investigation by the S.E.C. are the Chinese affiliates of Deloitte, Ernst Young, KPMG, PricewaterhouseCoopers and BDO.

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“Only with access to work papers of foreign public accounting firms can the S.E.C. test the quality of the underlying audits and protect investors from the danger of accounting fraud,” Robert Khuzami, the commission’s enforcement director, said in a statement.

“Firms that conduct audits knowing they cannot comply with laws requiring access to these work papers face serious sanctions,” Mr. Khuzami said.

Among the possible sanctions is a sort of accounting death sentence: forbidding a firm from practicing before the S.E.C., meaning that the firm’s audits of publicly traded companies would not satisfy securities laws.

The S.E.C. did not name the publicly traded Chinese companies that are the subject of its document request. But the commission has previously said it is looking closely at Chinese companies that have taken part in reverse mergers in order to gain access to American investors.

In a reverse merger, a company that has continuing operations takes over a company that already has publicly traded shares. Often, these are shell companies with no real operations and whose shares are listed over the counter or among penny stocks.

The S.E.C. already has de-registered the securities of nearly 50 such companies and has filed fraud cases against 40 foreign companies and executives. Earlier this year, the S.E.C. announced an enforcement action against the Deloitte affiliate, Deloitte Touche Tohmatsu, over failure to produce documents related to an S.E.C. investigation of one of its China-based clients.

The issue also has been the focus of the Public Company Accounting Oversight Board, an independent agency that oversees accounting firms that audit publicly traded companies.

Article source: http://dealbook.nytimes.com/2012/12/03/s-e-c-charges-the-chinese-affiliates-of-5-big-accounting-firms/?partner=rss&emc=rss