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Why aren’t more doctors being trained in N.J.? Start with 1996 rule congressional leaders are trying to change

There was the incredible number: The country is expected to have a shortage of 120,000 doctors by the year 2030.

And the incredible local number: New Jersey is expected to be short 2,500 doctors next year.

And then there was the even-harder-to-believe number: Holy Name Medical Center is only allowed to train six medical residents a year, thanks to a regulation based on 1996 statistics.

In that year, Holy Name had just six residents — thus, that is its limit today.

U.S. Rep. Josh Gottheimer (D-N.J.) is looking to change that, proposing what is called the Graduate Medical Education Bill that would allow hospitals to get reimbursement to train as many doctors as they are able.

It’s a way, he said, of tackling the coming physician shortage head-on — improving health care for state residents and the state economy at the same time.

“Our legislation corrects the arbitrary cap, which will help us recruit and retain more talented physicians to help our New Jersey medical community grow,” he said. “It will make graduate medical school slots available to hospitals that have been locked out for decades now and allow hospitals to invest in teaching programs to attract medical students to Jersey and keep our health care workforce competitive.”

Gottheimer, flanked by U.S. Sen. Bob Menendez (D-N.J.) and U.S. Rep. Bill Pascrell (D-N.J.) at an event at Holy Name in Teaneck, is confident the GME bill can get through. Menendez and Pascrell said they will use their status in their legislative houses to see that it does.

“It’s just common sense to have more hospitals to have our new doctors train here in New Jersey,” Gottheimer said.

Holy Name CEO Mike Maron agrees. But, he does so knowing that nothing about the current regulations make sense.

Maron, the well-respected health care thought leader, has been stymied by this ruling for years. He points to nearby hospitals to show just how arbitrary the cap is. Simply put, every hospital is capped at the number of residents it had in 1996 — unless the hospital in question didn’t have a program. Those medical centers can add residents at will.

“Palisades General had none in 1996, now they have over 100 residents — and they are getting fully reimbursed, because the rule says if you had zero in ’96, you’re free to go,” he told ROI-NJ. “(Valley Hospital CEO) Audrey Meyers could do this unencumbered tomorrow. She wouldn’t have to do anything special. She could just start it and get paid for it. I can’t.”

All because of something that happened more than two decades ago.

“What happened in 1996 was a (Centers for Medicare and Medicaid Services) regulation,” Maron said. “And, in order to change the regulation, you need new legislation. So, 1996, believe it or not, is the base year for how Medicare reimburses hospitals today across all services.

“The (system) Medicare uses to pay us is based on 1996 practice. Graduate medical education is a component of that system. And, so, what they did is, they just froze it.”

Despite this, most hospitals are not impacted today. Many did not have programs in 1996. Others have since joined greater health care organizations.

“There aren’t many of us left,” Maron said, refereeing to standalone hospitals.

This confusion, he said, caused a previous version of this bill to be presented poorly.

“The (Congressional Budget Office) marked up the bill all wrong,” he said. “I remember the headline: It said this bill would cost more than building a wall. How are you going to get that passed?”

Menendez said he is hopeful the new bill can be attached to upcoming legislation on Medicare.

Maron said it can’t happen soon enough.

He said no one in the state would object, saying more than 300 graduates last year did not have residency programs available. Holy Name, he said, would gladly take them.

And Holy Name already has a bigger partner ready to help provide students and assistance: Mount Sinai Hospital in New York City.

Mount Sinai Chief Medical Officer Ben Kornitzer said the hospital is ready to partner.

“We understand the resources and investment that are needed to be made for this to be a successful program,” he said. “We are 100% committed to working with the excellent leadership here and identifying what those resources are, what those strategies are, so we can be partners and help support further growth of this residency program.”

Maron said new rules — and a new partnership with Mount Sinai — could help change another number: The small percentage of medical graduates who actually want to become the doctors that are needed most: general practitioners.

“Many of the major academic centers want to train specialists because the general perception out there is that there’s more money to be made being a specialist and better work hours,” he said. “What we’re trying to do is dispel that myth.

“We’re going to show doctors that you can have a balanced lifestyle and have a very rewarding career as a primary care physician. We think we can move that needle significantly by exposing them to how we do things here.”

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NJR Chairman, CEO Downes to retire; Westhoven named successor

New Jersey Resources announced Friday its chairman and CEO, Laurence M. Downes, is retiring.

Downes said he will retire on Sept. 30 after spending 34 years with the company and 24 at the helm. NJR also announced Steve Westhoven will be succeeding Downes and will take over as CEO and president on Oct. 1.

The Wall-based energy provider, also the parent company of New Jersey Natural Gas, said Downes will continue to serve as chairman of the board until the company’s annual shareholder meeting.

File photo
Steve Westhoven will become CEO of New Jersey Resources.

Downes joined NJR in 1985 and was named treasurer in 1986, followed by vice president and treasurer in 1988. He was then promoted to senior vice president and chief financial officer in 1990 and executive vice president of NJNG in 1994. Downes was the named CEO, president and chairman of NJR’s board of directors in 1996.

“It has been a privilege to be a part of the New Jersey Resources family for more than three decades,” Downes said. “I’m grateful to the women and men of our company, past and present, who have made us the organization we are today. Their hard work has earned us 13 J.D. Power Awards — more than any other utility in New Jersey; significantly improved the performance of our delivery system; increased the value of our company more than tenfold and helped over 1,800 community service organizations annually across New Jersey. I know our team will continue to deliver on our commitment to our stakeholders for many years to come.”

Westhoven joined the company in 1990 and was named vice president of NJR Energy Services in 2004 and senior vice president in 2010. He was then promoted to executive vice president and chief operating officer in 2017, followed by president and chief operating officer in 2018.

“Larry’s outstanding leadership has driven strong performance at New Jersey Resources for more than three decades. His passion for customers, employees and the communities we serve has delivered consistent results. On behalf of the Board, we sincerely thank Larry for his contributions over the years.” said Donald L. Correll, lead director of NJR’s board. “The board is confident, under Steve’s leadership, we will continue to grow our business, serve our customers and communities, support our employees and deliver performance for our investors.”

Downes also served as chairman of the New Jersey Economic Development Authority board until resigning earlier this year.

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Heated to a boil: Experts say N.J.’s merger market is on fire — and there are few regrets

When you spend three decades officiating mergers and acquisitions, you’re going to see more than a few partnerships that everyone involved regrets.

Bob Anderson, shareholder at Lindabury, McCormick, Estabrook & Cooper P.C., certainly has seen his share.

Anderson, however, believes bad breakups are at an all-time low. Buyers and sellers pleased with their bottom line are often finding ways of making things work out in spite of quibbles.

“What’s making deals successful right now is the fact that, when the acquisitions are made, it’s in the context of a very good economy,” he said. “Even if you don’t find that operations are ideal at the company you’ve acquired, the fact that the economy itself is so strong — that tends to pull companies along regardless.”

For that reason, New Jersey’s merger market has remained at the busiest point in Anderson’s 30-year career over the past two years.

“People are buying and selling businesses at a rate I’ve never seen,” he said. “Sometimes, in the past, you’ve had different industry segments pick up an activity — with one area hot and one slow. Right now, there are buyers with money and sellers who see right now as a time to cash out in every industry.”

Other experts in these transactions, such as Jeffrey Cassin of Scarinci Hollenbeck, have been saying the same.

The defining story of dealmaking as of late has been the mixture of high levels of private liquidity, the recent tax overhaul leaving companies flush with cash and baby boomer company leaders retiring. With these ingredients, the market continued to heat to a boil, Cassin said.

M&A is all about buyers, as well as sellers, trying to predict the future. So, you can look at what businesses have done in the past, but now the future is making some people nervous because of the tariffs. It makes it difficult to predict what the next five years will look like.” — Bob Anderson

Although Cassin said a lot depends on particular circumstances when asked whether deals are more often successful today, he did say that he’s noticed both the buyer and seller side of the coin come to these transactions far more prepared than they did in the past.

“M&A actors have gotten more sophisticated using their legal, accounting and other advisers,” he said. “That allows them to ‘spec out’ their deals, basically just using those advisers to make better deals. And it’s the same on the sell side. Overall, it’s a cleaner process.”

Everyone agrees that sellers probably stand most to gain from deals today, due to the higher prices companies are fetching as larger businesses and private equity firms compete for the same deals.

Cassin said what’s fetching a higher price than ever today are companies that specialize in “human capital.” That means sales forces, IT teams and other employee-heavy operations.

“I think that’s a cool trend, because it means companies are really valuing people,” Cassin said. “And it might not have to do with general unemployment —and firms struggling to find talent —but just what businesses most need today.”

Even if the pricing of businesses is in flux, Cassin doesn’t expect any near-term issues that will make deals more difficult to pull off.

“Even when there is economic slowdown, M&A activity doesn’t always take a hit because you might just see a flip to it being more of a buyer’s market,” he said.

Anderson, on the other hand, wonders how much the international trade situation and new tariffs could start to deflate the ever-expanding appetite for acquisitions.

“M&A is all about buyers, as well as sellers, trying to predict the future,” Anderson said. “So, you can look at what businesses have done in the past, but now the future is making some people nervous because of the tariffs. It makes it difficult to predict what the next five years will look like.”

Without having seen any sort of impact yet, Anderson suspects that the economic saving grace less than perfect partnerships have had over the last few years might soon be a thing of the past.

“As it becomes more difficult to make predictions for what things will look like a few years out, that will make some more uneasy about what deals they’re putting together,” he said. “So far, activity is held up in the face of all that. We’ll have to see if that changes.”

Conversation Starters

Reach Bob Anderson of Lindabury, McCormick, Estabrook & Cooper at: randerson@lindabury.com or 908-233-6800.

Reach Jeffrey Cassin of Scarinci Hollenbeck at: jcassin@sh-law.com or 201-896-4100.

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Youth movement: Unions are using everything from video games to history lessons to recruit next generation

You won’t find any scolding labor leaders telling youth to put down the video game controller and get to work.

Instead, they’re handing them the controllers, so they’ll get to work.

IUOE#825
Greg Lalevee shows U.S Rep. Mikie Sherill how to use the crane simulator at the union’s training center.

Greg Lalevee, business manager for the International Union of Operating Engineers Local 825, said his organization is enticing millennials — and the generation that precedes them, too — with video game-like simulations of the sort of heavy machinery his members work with.

It has been a hit.

“So, for young people into their Xbox, we have this great opportunity now to easily transition them to this work,” Lalevee said. “These young people get to make an informed choice about whether this is something they want to continue down as a career path in a way that interests them.” 

It’s just one of the ways unions are trying to stay ahead of the curve on the demographic shifts that have every organization scratching their heads.

What’s the best way to appeal to millennials? Lalevee isn’t sure labor unions have it totally figured out yet, but he’s certain that these organizations realize the importance of the question today — given this demographic’s increasing majority in the workplace.

His organization has found a mix of technology and education to be the missing pieces of the puzzle. The Springfield-based Local 825 is transforming its training program into a two-year technical college that’s responsive to the latest robotics, artificial intelligence and virtual reality tools.

“We want to be at the college fair with mom and dad and tell them that blue-collar work isn’t such a bad place to be,” Lalevee said. “The pay is decent; the benefits are terrific. And, oh, by the way, we’re not abandoning your child’s educational path. We can continue it.”

The end-goal is connecting with a young base of workers that can bolster union numbers that have steadily fallen over the course of millennials’ lives. 

In 1983, the first year that U.S. Bureau of Labor Statistics had union membership data available (and also nearly the cut-off between millennials and the Generation X population before them), there were 17.7 million union workers. The number of wage and salary workers in unions stood at 14.7 million in last year’s BLS total.

Union leaders such as Lalevee are confident that millennials generally respond favorably to the idea of organized labor participation, even if they grew up during the tail-end of the country’s sharpest declines in union density.

In New Jersey, the impression young people have of labor unions is dictated largely by what part of the state they come from, according to Tom Walsh, president of a union that represents workers in retail manufacturing and a variety of other industries.

“I’ve found that there’s two different types of millennials: The millennials from urban areas are more receptive and eager to listen,” he said. “But, then, when we go towards the suburban areas, they don’t even want to talk to you.

“They think things are going to just pan out for them no matter what, so they don’t want to hear it. It’s a very strange dynamic.”

Walsh’s Local 262, like most unions, needs to win over millennial workers in order to continue to thrive. That’s not always easy. Millennials, even with the reputation that precedes them of being engaged do-gooders, aren’t always predisposed to see the value in union membership.

Walsh described an attempt to organize an ambulance group in suburban New Jersey that went awry when the company found out employees were talking to the union.

Tom Walsh

“They just completely stopped answering the phone,” he said. “But, at a place I’m organizing now in Elizabeth with a lot of millennials, one of their coworkers got fired — and that’s just making them feel more strongly about it. Now, they really want the union in there. They’re constantly calling, day and night, giving me information and asking me what they can do.”

There are young workers — and future union members, Walsh hopes — that have become some of the union’s staunchest advocates.

“And any time we ask if they’ll come to something, they’ll always be there,” he said. “You can’t count on that from all young people. Especially those from suburban areas, they have so much more fear.”

Walsh believes that, taken as a whole, unions have excelled at keeping up with technology and appealing to millennials in through digital channels. At the same time, he also thinks there’s a disconnect.

“Kids coming out of school are so often thinking that government officials are doing something like minimum wage bills out of the kindness of their hearts, and not community groups and unions pushing for this change for years,” he said. “We need to do a better job educating kids from an early age on what unions have done throughout history to improve the safety of workplaces and quality of life, because that’s neglected.”

With millennials in the workplace, have been handed an opportunity to reintroduce labor unions to a working population that doesn’t share many of the same preconceptions as other generations.  

“We’ve been unfortunately stereotyped for a long time,” Lalevee said. “But I can go through our membership and introduce you to the Little League coaches, the Boy Scout or Girl Scout leaders, the PTO president. These are regular people involved in their communities. That’s who we are.”

And, as far as who these unions will continue to be — that’s up to millennials.

The other face of Janus

Last June, the Janus decision shook labor leaders. 

The landmark U.S. Supreme Court ruling overturned union-favorable law that held for four decades prior, suddenly making public-sector union support optional for employees.

Tom Walsh of Local 262 said the expected immediate impact was that it would make the job of keeping union members active in the public sector extremely difficult. It didn’t directly affect his organization, but he was concerned about the blow it would strike to all labor unions.

Almost exactly a year into the change, no labor leader is saying unions are down for the count.

“If I’m just going off what sister (labor unions) have told me, it hasn’t really hugely affected them at all,” Walsh said. 

One step back, two steps forward. That’s how Greg Lalevee of Local 825 described it.

“From what I understand, the public employee unions that Janus was a direct hit on have maintained or increased membership since,” Lalevee said. “And even us, though not necessarily affected by it, we’re getting more and more calls after it from people interested in unionizing their workplaces.”

Conversation Starter

Reach Greg Lalevee of Local 825 at: glalevee@iuoe825.org or 973-671-6900.

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CBD solution: Rosenbaum liked how cannabis-derived oil helped her anxiety … so she created her own company

Alexis Rosenbaum had no desire to experience cannabis, she said, until she developed debilitating anxiety in her late 20s. 

“Then, I figured, what have I got to lose?” she said. 

Her experience was positive — so much, in fact, that Rosenbaum, now 32, founded Rosebud CBD in Jersey City last year as a woman-owned and -run provider of cannabidiol, or CBD, oil.

The business has been a stunning success. Rosenbaum, the CEO, said she had more than $1 million in sales in its first year. And she’s not surprised.

“If this plant has affected me the way it has, who better to tell this story in order to help others open their eyes and perspectives, too?” she said. 

Originally from Cincinnati, Rosenbaum said moving to Hoboken in the summer of 2017 was a key catalyst for her entrepreneurship — and great for business. 

“Establishing myself as a ‘new’ Jersey girl who wants to have a company rooted here, to bring in product and money for the state, has been a huge pro,” she said. 

CBD oil can be taken a variety of ways, including mixed in beverages.

And, much like her product, Rosenbaum said the business’s unfolding has been rather organic, with “amazing” connections having fallen into place. 

“I’ve just tried to be real and honest and show my face while talking about the things I’ve experienced so that I can be here for our customers,” she said. “The plant has been stigmatized, but Rosebud is a safe place in which to continue to ask questions.”

Her search for answers, Rosenbaum said, is what led to her success, after all. 

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After graduating from Morehead State University in Kentucky with a degree in social work in 2011, Rosenbaum said she worked a variety of jobs that gave her lots of opportunity to observe leaders in small businesses, including as a front desk assistant, a sales representative, a personal assistant and a home manager. 

“My husband was chasing his pro baseball career, and it was difficult to have a full-time job and still make time to travel and see him,” Rosenbaum said. 

Her husband, Danny Rosenbaum, played professional baseball for several years, including with the Washington Nationals, Colorado Rockies and Boston Red Sox organizations. 

That is what gave Alexis Rosenbaum the idea for her first successful business. 

“I saw a niche in my husband’s industry that no one was filling,” she said. “I would go to team stores and would not resonate with any of the gear, because everything marketed toward women was pink and bedazzled.” 

Rosenbaum said she therefore began manufacturing and selling items created from leftover baseball glove laces with her sister, Hannah King, in 2013. 

“We made bracelets, lanyards, keychains and more, engraving personal messages onto the leather,” she said. 

With a patent and licensing deals with Major League Baseball teams, the pair was able to take a $100 investment and build a six-figure business in less than two years, with a 70 percent revenue growth year-over-year. 

But, when her husband left baseball, Rosenbaum said she lost interest and sold  Game Day Feels in 2017 before relocating to New Jersey. 

“My husband was offered a job here and we believed we had maxed out our potential in Ohio,” she said. “It seemed like an exciting opportunity to challenge ourselves within a totally new space, next to one of the biggest cities where the possibilities are endless.” 

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Upon relocating, Rosenbaum said she found work as an on-call remote director of business development for a small marketing and communications agency. 

But her anxiety only grew worse — until her sister convinced her to try full-flower cannabis. 

“I saw immense changes in my life and stress levels, but, without being able to microdose, I sometimes became paranoid,” Rosenbaum said. “So, I hunted for something else to use.”  

That’s when she discovered CBD, or the most prevalent phytocannabinoid found in the cannabis plant. 

“It helped me catch my breath, feel more in control and slow down,” Rosenbaum said. 

Because it is non-intoxicating, CBD is legal in all 50 states, regardless of other laws legalizing cannabis.

CBD, Rosenbaum said, can safely reduce anxiety, inflammation and pain in both humans and animals. 

“But the products I was exploring, I still couldn’t identify where the hemp was being grown or how many people touched the product before it reached me,” she said. “That opened the door for me to explore the possibility that I might be able to do this on my own.” 

Rosenbaum said that, through some research and explorative networking, she was able to connect and have several conversations with a farm in Eugene, Oregon, with which she ultimately would establish a relationship and trust over six months. 

“I also was buying, testing and selling their oil in bare packaging, seeing if people would want and enjoy this product as much as me,” she said. “Finally, in the spring of last year, I decided to launch my own brand — and tell my own story — using the products grown at their farm.” 

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Rosebud uses nothing but organic coconut oil and organic hemp in its full-spectrum CBD oils, whereas competitors often use ingredients such as fillers, additives, flavorings or preservatives. 

“We also don’t spray a single thing on our plants, as they are fed with everything they need from the earth,” Rosenbaum said. 

Each 15-milliliter bottle contains nearly 30 servings, with a 350mg bottle ($55) serving nearly 12mg of CBD per drop and a 1000mg bottle ($125) serving nearly 33mg. 

Rosebud also has partnered with Lauren’s All-Purpose Salve to produce a 350mg CBD salve ($75) to help relieve ailments such as psoriasis and eczema, Rosenbaum said.

“The cost of running and growing a successful business, of working directly with a small organic farm, of paying our farmers and their employees a fair wage and of applying for certain certifications — all of that was taken into consideration when creating the pricing for our elevated, high-quality product,” Rosenbaum said. 

Because it is non-intoxicating, the 2018 federal Farm Bill legalizes hemp (from which CBD is extracted) as long as products derived contain no more than 0.3% THC.

“That’s why having a direct connection with our farm is really important. Our product is handled by the same people all the way from seed to bottle, so there isn’t a lot of room for error.”

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After running the business herself for nearly a year, Rosenbaum said she brought on several independent contractors to help manage customer service, retail sales, marketing, design, events business development and operations in January. 

“I’m creative and I like having the flexibility to work on different projects as they come up, so I like working with people who also value that type of lifestyle,” she said. “But, as a small team, it’s difficult to get ahead.” 

With Rosebud now in more than 100 retailers nationwide (including small cafes, yoga studios, barbershops and more in New Jersey) and moving more than 1,500 units per month online, Rosenbaum said she is now seeking investors to help her grow the business. 

“During the first half of this year, we have been making sure our product, packaging and marketing is up to date with all of the new and upcoming regulations,” she said. “In the second half, we will be all about expanding.

“We want to be that real, authentic, transparent brand that people feel they can trust and talk directly with.” 

Industry challenges 

Alexis Rosenbaum said there are several challenges to working within an industry associated with cannabis.  

“Banks are not usually interested in taking on the risk of working within an industry that is not yet regulated,” she said. “And there are a lot of barriers to running an e-commerce business in this space, like credit card processing, website hosting, using mail services such as Mailchimp and, especially, digital marketing.” 

Rosebud, for example, cannot advertise on social media sites such as Instagram and Facebook. 

“People are afraid of playing a role in the growth, marketing and sale of a legal product in an unregulated market with no real guidelines yet on how business should be handled,” Rosenbaum said.

Conversation Starter

Reach Alexis Rosenbaum at: hello@rosebudcbd.comor, for more information, visit: rosebudcbd.com

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More than (a) fair: Construction Industry Career Day has built successful comeback around next generation

Labor unions and the employers they negotiate with in the construction sector both agree: They’ve got to build better bridges with Generation Z and its millennial predecessors. 

The annual Construction Industry Career Day is just that sort of opportunity.

Like other industries, the construction trade sits on the shaky workforce foundation of Baby Boomers a few years from retirement — meaning there is a tremendous demand for replacements.

So, the annual event, held at the end of May, is when those in the industry get to tell high school students why working in the sector provides a stable career with good starting salaries and benefits. Best of all? The kids have a career path without college debt. That’s especially relevant now that millennials are lugging around tons of it.

A student, top, gets hands-on experience building a wooden toolbox from a trade professional.

Jill Schiff, the executive director of operations at Associated Construction Contractors of New Jersey, the organization that hosts the event in concert with other groups, busily coordinated the affair. And busily is the right way to put it — the event has grown tremendously.

“We see the word getting out about this, and not just to vocational schools,” she said. “This year, we have 75 different school districts coming here from all of New Jersey’s counties. That’s up from about 60 last year.”

This represents a triumphant return for the event. It was first started back in 2001 but was paused eight years later — in the middle of the country’s Great Recession — and only resumed two years ago.

“We had to put it on hold when the economy plummeted,” Schiff said. “We didn’t feel it was the right thing to do to bring people into an industry with around 40 percent unemployment. We were asked to bring this back in 2017 and we’ve had a lot of success with it since.”

Thousands of Garden State high school juniors and seniors, career guidance counselors and others showed up at the New Jersey Expo Center in Raritan Center to speak to representatives of trade unions and other industry groups about job positions in the sector. 

They also got to pound nails and smooth mortar at mock jobsites, exposing prospects for the first time to what it’s like to work in the industry. Today’s attendees are also able to experience the construction jobsites remotely through virtual reality and other simulation technology.

“You have to introduce them to this in a way that appeals to that generation,” Schiff said. “And our trades go out of their way to do that.”

Robert Lewandowski, communications director at New Jersey Laborers-Employers Cooperation and Education Trust, said his organization and others haul in more of these devices every year to get attendees as close as they can safely be to construction equipment. Having technology be part of the students’ first impression of the industry is necessary, he said.

“It tells these students that this isn’t your grandparents’ construction industry anymore,” he explained. “I think there was a time you hired most construction workers from the neck down, mostly due to the type of work that carpenters and other trades were doing. But these jobs are more complex today.”

A student, left, gets a lesson in welding. ­

Although youth might be attracted to tech-minded industries, union leaders admit they’ve sometimes underestimated their patience for more tactile experiences. 

During last year’s event, for example, Lewandowski’s organization came in with the idea that high school students would be glued to their phones. So, his team figured they would be entertained by activities such as photo booths with hard hats and lumberjack-like beards for silly social media selfies.

They were wrong.

“It just didn’t work at all,” he said. “Rather than having their phones out, the kids were just so engaged; they wanted to get in there and practice building scaffolding or do pipe fusion.”

What works today might not tomorrow, but Lewandowski would put his money on authenticity remaining a constant in reaching the next generation of workers.

“I think kids today are suspicious of too much of a salesman,” he said. “They want to figure things out themselves — and they get to do that here at booths not filled with salesmen, but tradesmen. That resonates with them.”

Resonating with today’s young people isn’t just important for the continuation of the construction industry as it rebuilds a fast-retiring workforce. Lewandowski doesn’t have any illusions about every high school student attending Construction Industry Career Day and going out to buy a hammer the next day.

But the trade and its affiliated unions still want to nail the first impression, because that can last a lifetime.

“Ultimately, this isn’t just for the transaction involved in getting people into these careers, but it’s also about transforming peoples’ attitudes,” he said. “So, maybe when they go off to be an accountant, they can say they know what construction trades look like: It’s impressive and it’s an advanced career.”

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Why ex-Horizon exec founded new business in NYC, not N.J.

A former Horizon Blue Cross Blue Shield of New Jersey executive has started a company that aims to bring value to businesses — largely health insurers — looking at data of their customers … but it isn’t based in New Jersey.

No stranger to entrepreneurship, Minal Patel, former senior vice president and chief strategy officer of Horizon, has started a couple of companies in the past. One was based in Hoboken and another in Springfield.

But Abacus Insights, the latest, is based in New York City.

“This one, the reason why I (started) in New York City, was really to have the most accessible geography to talent,” Patel said.

“It’s not that New Jersey doesn’t have the talent. We have quite a few people who travel from New Jersey into Manhattan. But I also have people traveling from Brooklyn and Queens that otherwise may not have joined us if they had to make one more leap over the river. So, my New York office is based, literally, four blocks from Port Authority, two blocks from Penn Station, all the subway lines run through here — so there is no one that can tell me they can’t join us because of the commute.”

The company announced May 30 the completion of a $12.7 million Series A financing round, led by CRV, along with existing investors .406 Ventures and Echo Health Ventures.

Patel started the company in August 2017, and has hired employees from along the East Coast, from Florida to Massachusetts.

His target client is the health insurance industry, where data is being collected in droves but not being used well, he said.

“Watching the struggle of trying to get data in order to try to create any kind of value, whether you’re an entrepreneur, physician or any kind of health plan … it just didn’t matter,” he said.

“Because we understood the pain points so much, what we wanted to do and how we wanted to accomplish it was very clear.”

Rather than stay at Horizon and create the software, where it was likely to hit several speed bumps and be a low priority as part of a large organization, Patel chose to leave and spend all his time working on the idea.

Being a startup has its advantages, such as the flexibility to hire remotely. It also allows the company to be nimble, and adapt to changes in technology quickly, Patel said.

“The technologies in the space continue to innovate,” Patel said.

“The two things that really allow this to happen now versus five years ago or 10 years ago, from the technical perspective … is that, one, data is more digitized today than it’s ever been … and the second thing is, now you have data up until three to five years ago, to give us the ability to really leverage the advanced computing capabilities to take large sums of data and really make sense out of it.”

The cloud, specifically, is where all the magic happens.

“Over the last 24 months what has really happened is the clouds — Amazon, Google, Microsoft — they’ve recognized that, if they want to be in the health care space, not only do they have to provide the computing capabilities to do the financial services and for other industries they work with, but health care also has very specific privacy and security requirements,” Patel said.

“Even in the time that we have existed, Amazon, for example, has matured a lot of its components to become more HIPAA-friendly and HIPAA-compliant. That has allowed us to leverage those capabilities in a much more rapid fashion. So, when we first started the company, we had used third-party software, because Amazon’s wasn’t quite ready yet. But in the six to nine months since we started, their products did mature to the point where we could use them. That cycle of innovation in months — not years, and sometimes in quarters — is really difficult for one single entity to keep up with.”

The hope, Patel said, is to have the buy-in of insurers as well as health care business in general — including doctors — but the platform is likely to be able to serve a broad range of business types so entrepreneurs can take advantage of the data analysis he wants to provide.

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Bringing health care home: St. Joseph’s CEO says tech will help move treatment

Kevin Slavin knows the world of health care is changing, which is why his small hospital system is looking for partners.

Between a change in the way hospitals are being paid, the increasing demand for in-home care and increasingly tech-savvy patients, hospitals have needed to adjust and scale faster than ever before.

Kevin Slavin

“Where home care is going, with technology and diagnostics and the explosion of innovation, there will be more care in the home,” Slavin, CEO of St. Joseph’s Regional Healthcare System, told ROI-NJ in a recent interview.

It’s something he candidly tells his staff: There will be more people providing care in the home than there will be at hospitals.

“Everybody will want to be treated at home if they can, and more and more things are moving in that direction,” Slavin said.

St. Joseph’s Regional Healthcare system already has an affiliation with Trinitas Regional Medical Center for behavioral health, and with Hackensack Meridian Health for home care.

But the partnerships and affiliations need to grow to help the system maintain its independent identity, Slavin said.

One of the key things he and his team have determined, in the requirements of a partnership, is that the system would remain Catholic and retain the governance structure currently in place through the Sisters of Charity.

“That is non-negotiable,” Slavin said. “We’ve made it clear to all the organizations. So, if they can’t live with that, then don’t submit a proposal.”

There is also an emphasis on access to capital, ability to develop new services and focusing on population health — especially because St. Joseph’s serves a vulnerable population in Paterson.

But Slavin isn’t coming to the table empty-handed — despite the fact that the revenues for the hospital relies heavily on Medicaid, charity care and self-pay.

“That’s obviously the big challenge we have,” Slavin said. “We’ve really continued to strengthen ourselves financially — we’re stronger than we’ve ever been before — we’ve focused a lot in the last three or four years on our balance sheet.”

He detailed how.

“We were one of the last to have a defined contribution pension plan …. so, we de-risked the balance sheet,” he said. “We’ve refinanced the debt, saved money on the bond interest rates and reorganized all of our investments. So, our balance sheet is stronger. We can certainly remain independent for the foreseeable future.”

One of the biggest things St. Joseph’s has been able to do to make a name for itself in the recent past is develop the Alternatives to Opioids, or ALTO, program. 

As the name suggests, it’s simply avoiding prescribing opioids and searching for alternatives.

And hospitals around the country have been calling St. Joseph’s for the last two years to learn how to implement it.

That has caused some problems with insurers, who are less willing to approve more costly drugs and topical pain relievers — but the model was passed by Congress and is now a federal law, with federal money to boot, and has been adopted broadly by the state Department of Health and the New Jersey Hospital Association.

St. Joseph’s is getting attention for its ALTO opioids program.

Here are some of the other topics Slavin discussed with ROI-NJ.

ROI-NJ: Aside from finances, what are you bringing to the table for the other organizations who might be interested in partnering with you?

Kevin Slavin: One of the things that makes us attractive is our expertise with the poor, vulnerable populations — whether it be Medicaid or uninsured. We have 150 years of understanding how to work with those groups and have them access the care; it’s not just the recent health coalition, but the Sisters have been doing this for years.

We have a center for what we call ambulatory physician care for Medicaid and uninsured — we don’t like to use the word clinic. They get the same care as anyone will get in a private office.

ROI: How did that center come about?

KS: It used to be five different centers all throughout Paterson. That included pediatric, internal medicine, family medicine, HIV and specialty. We consolidated a couple of years ago into one efficient, more accessible location.

ROI: I hear a lot of focus on social determinants of care — so, things in the home or home environment — and transportation being a barrier to care. With this consolidated location, what is being done about transportation?

KS: That’s a big one. We think we should be more into the transportation business. We know what we are good at as a health system, so that might be another avenue for us to look for a partner that really knows medical transportation.

A good example of one of the things we are doing is we run the WIC program for not just Passaic County, but a couple of counties, for many years. That is in a location in Paterson that is not on the bus route. So, we are moving it. It’s going to cost us more money to move it, but we are going to move it at a renovated place down the street — and that’s going to be on the bus route in June. It’s about a half-a-million-dollar renovation into an existing building where we had our IT department before. 

ROI: St. Joseph’s also helped start the Health Coalition of Passaic to focus on social determinants, emulating the type of collaboration that began with the Camden Coalition. How is that going and what is the next step?

KS: We’ve been looking at this whole high-utilizer topic that Dr. (Jeffrey) Brenner started in Camden. Learning from it, Nicholson Foundation (which partnered to launch the Coalition) is big on learning small and then growing. So, we recently launched this past year after we built up the staff. We have a program where we are case-managing 86 of the highest emergency room utilizers in certain ZIP codes and finding all kinds of things. For example, the biggest challenge for that population is housing. Not necessarily being homeless, but substandard housing. We’re hopeful to be designated as one of the pilots for the supporting housing project that NJHA and the Housing and Mortgage Finance Agency are working on.

ROI: What else is on the horizon?

KS: We are hopeful to get a grant to launch an innovation center here. (The grantor) felt it was important that a safety-net organization be able to do innovation just like the more affluent systems that can take $5 million and put it in a fund and say, ‘Here, go create things.’ We are putting some of our own resources in it, but it’s a different approach than others have taken.

This is to learn the discipline of innovation and learn how to do innovation. Things like human-centered design, prototyping, very specific skills that successful companies have instilled. A lot of it comes out of Kaiser Permanente. They drive this through their culture through innovation. Do projects along the way, but also learn from a leadership team perspective and then drive it to the rest of the organization. So, it’s not a program, it just becomes the way you do things.

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Tax factor: Reforms’ effect has some businesses looking at M&A in new light

Companies are finding a new reason to go out shopping for other businesses or post their own For Sale signs: There might be a favorable tax bill in their future.

It doesn’t exactly top the list of reasons a business participates in merger and acquisition activity, but more private entities are considering whether there might be tax benefits in forging new partnerships under the country’s new tax code.

So said Stephen Ehrenberg, an accountant who, like any other, wants his clients to make sound tax decisions. And, these days — under 2017’s Tax Cuts and Jobs Act regime — there’s a lot of his favorite decision-making to do when it comes to buying or selling a business.

“It has really changed the landscape for buyers as well as merger candidates for many reasons,” Ehrenberg said. “The benefits along with the potential downsides strictly from a tax perspective have given a lot of people food for thought.”

The recent tax reform, effective as of last year, made changes such as cutting the country’s federal tax rate for corporations to 21 percent, down from 35 percent. 

Ehrenberg, a partner at Sax LLP, said that tax rate reduction is one of the most obvious ways the overhaul is coming to bear on M&A activity.

“The U.S. used to have a higher corporate tax rate than other countries, so it became sometimes more difficult to succeed with some arrangements,” he said. “With the lower rate now, there’s a different consideration from buyers looking beyond the country’s borders.”

On the other hand, the lowered tax rate is upping the likelihood that a business in a newly favorable tax circumstance will want to keep the doors open, he added. Likewise, private entities have extra incentive to stay in business by securing more market share with acquisitions, potentially affecting what those businesses are willing to pay for a partner as a result.

Eligibility for the Qualified Business Interest deduction, which can shave 20% off taxable income, has also been relevant for both sides of the coin.

The Tax Cuts and Jobs Act had little to say about the direct tax implications of M&A transactions, so how businesses are structured — and thus how much tax they owe — is what matters most. 

That said, Ehrenberg said there are many components of the new tax system that have consequences, however indirectly, for these transactions. 

New rules around the deduction of business equipment and other assets incentivizes agreements wherein a buyer purchases certain assets of the business being acquired. Federally designated Opportunity Zones and the tax benefits they now bring has given those of the seller side of acquisitions potential to defer gains.

However, as much as Ehrenberg is a tax guy — he said it’s not everything when it comes to the decision to buy or sell a business.

“You never want to let the tax tail wag the dog,” Ehrenberg said. “You’ve got to look at things holistically. You don’t go with merger candidates just because you can save 20 percent on your tax bill — because if you’re not making money in that arrangement, it won’t matter.”

Tariff tribulations

Tariffs are being talked about again — and no one doing mergers and acquisitions is happy to hear it.

When it comes to buying and selling businesses, Stephen Ehrenberg of Sax LLP said involved parties value certainty. So, when there’s news about intensified trade battles, buyers and sellers get antsy.

Even when it doesn’t appear to have an effect on a business transaction, there can easily be an indirect impact when two companies are looking to combine, Ehrenberg added.

“If you’re selling your business to a company selling washing machines made in Canada, they may be facing tariffs that they weren’t hit with before,” he explained. “And when it comes to (M&A), it could work in your favor, or it could just as easily be a detriment. It’s hard to say.”

The trade situation is especially nerve-racking for businesses in the middle of transactions, as Ehrenberg said there’s often no predicting impending tariffs or retaliatory measures.

“Some businesses are having to pause to ask, ‘Am I going to buy a company when I’m going to be stuck with tariffs that are 10 or 15 times greater than they were six months ago?’” Ehrenberg said.

Todd Polyniak, also of Sax LLP

Todd Polyniak, also of Sax LLP, said there have been recent instances of private equity firms purchasing businesses and being unhappy with returns because of how the trade environment has evolved.

Due to that, Polyniak said businesses putting themselves up for auction should expect a whole lot more due diligence going forward.

“It won’t be as easy as it was even a year ago,” he said.

Conversation Starter

Reach Stephen Ehrenberg of Sax LLP at: sehrenberg@saxllp.com or 212-661-8640.

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First National Bank of Elmer may not be down the Shore, but it’s making inroads with seafood industry

When the First National Bank of Elmer got started 115 years ago, it was founded in a barbershop in its namesake Salem County borough. That’s at least an hour’s drive from the Shore.

So, when the bank recently went fishing for a customer segment, what it came up with might be a surprise.

“What we have down in South Jersey is a concentration of seafood businesses,” said Brian Jones, CEO and president of the bank. “And, because of banking industry consolidation, there’s fewer players in that market down there today than there were five or six years ago. And these seafood businesses need new banking partners.”

Not keen to tell the tale about the big one that got away, this community bank is pursuing clients in the South Jersey fishing industry, adding to the small and midsized businesses it already serves in its footprint across Cumberland, Gloucester and Salem counties.  

And the sector is a big one. Nationally, the seafood industry — between harvesters, seafood processors, wholesalers and retailers — generates about $129 billion annually, Jones said. Combined, the country has more than a million jobs in this sector.

The Upper Deerfield branch.

Locally, the combined port of Cape May/Wildwood is one of the largest commercial fishing ports on the East Coast, he added. A recent report put the value of this South Jersey industry at $85 million.

Cold Spring Fish & Supply Co., one of the region’s largest seafood businesses, contributes about 500 jobs to the Cape May County economy — making it one of the county’s largest employers. Another Cape May business, Snow’s/Doxsee, has the nation’s largest allocation for fishing and harvesting ocean clams.

There are more businesses in the region’s fishing industry, mostly tightly held operations that have been handed down from generation to generation. These businesses are looking for banking partners who have similarly long-held ties to the industry.

Therein lies the catch.

“For that reason, this type of lending is not the easiest to break into,” Jones said. “You need to know how to work with this sector if you’re going into it, or you’re in trouble. But if you can do it, you’re in demand.”

The First National Bank of Elmer got into the market with the assistance of Elizabeth Hulitt, the bank’s new senior vice president. She’s a transplant from an acquired banking entity, one of those along the Shore that once eagerly angled for fishing industry clients. She has an expertise in the local industry and has closely worked with the Massachusetts-based regulators that monitor it. 

The amount of harvesting of scallops or clams that can be done locally is controlled by permits those regulators issue. The high price tag on those permits is one of the reasons the industry keeps close ties to bankers.

“You have to maintain your vessel and your fleet, which can be very capital-intensive,” she said. “Also, when there’s an opportunity to add a permit to fleet’s ability to harvest, you have to be in a good liquidity position to do that.”

Like the banking industry, fisheries and seafood suppliers have consolidated over the past few years, which has only increased the value of those permits.

Hulitt added that the industry’s borrowing activity is driven by a swarming number of vertically integrated companies with a fleet of commercial fishing vessels, as well as facilities for freezing and processing products.

“That provides many opportunities for a traditional community bank to work with these companies to provide financing for equipment, real estate and other assets,” she said. “As a bank, we’re very fortunate to have a financing need that we’re able to understand and also see and touch in our own backyard.”

To make sure a loan is successfully recorded under the terms and conditions set by the U.S. Coast Guard, legal experts are often called in for the loan term. 

Some aspects of these loans can be complicated, but Jones said working with his bank’s growing customer niche is not altogether different from other banking relationships. 

And his belief is that — like a number of other industries — the seafood sector prefers a community bank’s more personalized model to the sometimes-wide net cast by larger institutions.

“With people who are running these boats, a lot of their business relationships involve buying and selling in a hands-on way with people they trust, so they want the same thing on the banking side,” he said. “That’s something we want to offer.”

Conversation Starter

Reach Brian Jones of The First National Bank of Elmer at: bjones@elmerbank.com or 856-358-7000, ext. 0100.

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