New health care law hits Dukal bottom line

Gerry LoDuca, president of Dukal Corp., seen at

Gerry LoDuca, president of Dukal Corp., seen at his office in Ronkonkoma Friday, Jan. 31, 2014. LoDuca says the Affordable Care Act is not working for his company. Photo Credit: Danielle Finkelstein

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Despite all the good intentions of the Affordable Care Act, there are consequences for companies.

Dukal Corp., a Ronkonkoma manufacturer and supplier of medical, dental, spa and veterinary supplies, says it's feeling pain from ACA. With 70 full-time employees, it is required to offer health care, and the physician market that it serves has shrunk as doctors flee private practice and join hospitals. Then there's the new 2.3 percent tax on medical devices sold to professionals.

"While everyone knows that health care has to change, the ACA, as it is written, is not an adequate, workable solution, and there was no consideration of a cause and effect," says Gerry LoDuca, president of Dukal.

ACA is forcing companies to change the way they look at benefits, "re-evaluating what makes sense for the company and for employees," says Evan Branfman, a partner with Kuttin-Metis Wealth Management, an Ameriprise practice in Melville.

What can companies like Dukal do?


"ACA should not be used as an excuse not to grow," says John Klimchak, an adviser for Economic Evaluation Group, a group benefits consulting firm in Melville.

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Consider a self-funded plan, he says, in which a company pays for its employees' covered health care claims directly, while a third-party administrator processes claims and handles other tasks. Companies with fewer than 250 employees can self-fund and typically purchase stop-loss insurance, which puts a ceiling on the maximum amount the employer would pay in claims. Such plans can save employers money, compared to paying the set monthly premium of a fully insured plan, explains Klimchak.

Another potential money saver is a professional employer organization (PEO), which works with small to midsized companies to bundle employee-related administration for things such as payroll and health and retirement benefits.

For sure, Dukal, which has annual revenues of more than $80 million and has been around since 1991, wants to mitigate costs associated with the ACA. But when it switched health insurance providers last year and the new plan had a higher price tag, the company decided to take most of the hit rather than require employees to make a big jump in their contributions. Dukal will see an increase in excess of $75,000 in its cost of coverage from 2013 to 2014.

"We have absorbed a significant increase," says LoDuca.

And the new medical-device tax is salt on an open wound. He expects it to cost the company more than $40,000 in 2014.

With all these factors hitting Dukal's bottom line, LoDuca says the company is "making adjustments where we can to stay profitable and watching expenses in all areas."

There's no magic pill for ACA's ills, but experts offer this advice:


Reassess all products, looking for places to improve profit margins. "Which products should be eliminated and which should be increased?" asks Jim Grew, president of The Grew Co., a business consulting and executive coaching firm in Portland, Ore. Consider, too, diversifying into new products and markets to complement the existing base, says John Murphy, author of "Zentrepreneur: Get Out of the Way and Lead" (Career Press, $15.99).


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"Dukal's employees may not understand the huge gesture their company has done [absorbing premium increases] on their behalf," says Alicia Wellington, CEO of WSi Healthcare Personnel in Denver and a member of The Alternative Board, a business coaching and peer advisory organization.

Communicate that gesture, says Karen LaCroix, founder of SuperiorHR, a consulting company in Frisco, Texas. If employees understand the company's burden, the stage is set for future cost-sharing, she says. And raising employee contributions is so common it's not likely to cause recruitment and retention issues.


Avoid mistakes by getting help from a health insurance broker or other advisers. For example, companies shouldn't hire only part-time workers to avoid providing benefits, says LaCroix. "This can be an effective cost-reduction strategy, but you must have the systems in place to track and report hours over the course of the year to ensure that they fall below the minimum required."

While ACA poses challenges, it is also a call to action. Says LoDuca, "It's up to us to develop a value proposition where we offer high quality, innovative products . . . at the best price."

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Company: Dukal Corp., Ronkonkoma

President: Gerry LoDuca

Employees: 70 full time

Revenues: $80 million-plus

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