Lee County Business Climate Survey Report. First Quarter, 2016

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Lee County Business

Climate Survey Report

First Quarter, 2016

Prepared by:

Regional Economic Research Institute

Lutgert College of Business

Florida Gulf Coast University

February 19th, 2016

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First Quarter, 2016 Page 2

Introduction

We are excited to be entering the sixth year of partnership between the Horizon Council and Florida Gulf Coast University with the publication of the first Business Climate Survey of 2016. The quarterly survey provides primary research to the business community, elected officials, and other concerned citizens in an effort to gauge both the state of Lee County’s economy over time and impressions and concerns about it in the future.

Since the beginning of this partnership, the BCS has been comprised of three areas of focus. The first area—encompassed in the first seven questions of the survey—focuses on Lee County business executives’ impressions of economic conditions and trends with respect to hiring and investment. The second area has been the calculation of an Executive Business Climate Index. This EBCI provides a summary number which will allow one to quickly gauge whether the business climate in Lee County is improving or declining. Finally, the third area has been various questions that change from survey to survey. In the past, these “Special Topics” have focused on areas such as business executives’ concerns about interest rates and access to capital, firms’ demand for critical occupations and their ability to find workers within those occupations, the cost of doing business in Lee County, and even concern for employee wellness and wellness programs.

The BCS also allows respondents to voice concerns, kudos, and criticisms of Lee County’s economic environment. Every effort is made to include these comments in each survey. The Horizon Council FGCU Business Climate Survey is administered, written, and published by the staff and students working with the Regional Economic Research Institute in the Lutgert College of Business. We very much welcome your comments and suggestions regarding the report, including suggestions for Special Topics questions for future editions.

This survey would not have been possible without the many busy business owners and

executives who took the time to respond to it. I also thank Glen Salyer, Shane Farnsworth, and their colleagues at the Lee County Economic Development Office; Robert Beatty, Dean of Lutgert College of Business at FGCU; Russell Schropp, Chair of the Horizon Council’s Business Issues Taskforce; and Michael Quaintance of Keiser University. CareerSource Southwest Florida’s James Wall and Peg Elmore provided valuable input and advice.

Christopher Westley

Dr. Christopher Westley

Director, Regional Economic Research Institute Lutgert College of Business

Florida Gulf Coast University Fort Myers, Florida 33965-6565

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Executive Summary

The Executive Business Climate Survey provides a view of the local economy that is based on responses from senior executives from a range of industries across the county. An invitation to complete the internet survey was sent to 565 executives and business owners in Lee County. Ninety-seven executives completed the survey from January 25, 2016, through February 8, 2016. Four reminders were sent during the survey period.

This survey provides a key economic indicator for Lee County, the Executive Business

Climate Index. This index value is computed each quarter and released to the public as

a way to provide an established economic indicator on the state of the local economy. The index is computed using the two questions concerning the current and future economic conditions and a third question concerning the expected industry economic conditions. The index is an average of the responses, with substantially better equal to 100, moderately better equal to 75, same equal to 50, moderately worse equal to 25 and substantially worse equal to zero. The index value can range from 0 to 100.

The results from the first quarter survey reflect a three-point decline from the fourth quarter 2015 result, with the index falling from 71 to 68. This result marks the first time the EBCI has registered outside of a narrow band between 74 and 69 that has persisted for the previous two years.

The current survey’s Special Topics section focuses on health care coverage for Lee County’s workforce. Other findings of the Business Climate Survey for the first quarter of 2016 include:

 73 percent of executives stated that the current economic conditions have improved over last year, while 22 percent stated that they were the same;

 72 percent of the executives expect the economy to improve over the next year;

 61 percent of the executives stated that the current economic conditions for their industry have improved over last year, but 29 percent stated that economic conditions remained approximately the same, and 9 percent indicated they are moderately worse;

 65 percent of executives expect economic conditions for their industry to improve over the next year;

 60 percent of companies expect to increase investment next year while 4 percent expect to reduce investment levels;

 49 percent of executives had increased employment over the last year, while 4 percent had reduced employment;

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 48 percent of executives expect to increase employment at their companies during the next year and only 2 percent of executives expect to reduce employment;

 74 percent of executives offer health insurance to their employees;

 36 percent of executives believe their employees receive coverage through Medicare and Medicaid;

 71 percent of respondents indicated that they are satisfied with access to health care in Southwest Florida, while 58 percent indicated that they are satisfied with health insurance coverage in Southwest Florida;

 79 percent of respondents disagreed with the statement that the Affordable Care Act has improved the health care market in Southwest Florida;

 52 percent of respondents indicated that their firm or organization struggles to meet their health care obligations;

 65 percent of respondents indicated that the cost of health insurance premiums is shared between the employer and the employee, while 12 percent indicated that the employer pays all;

 57 percent of respondents indicated that health insurance has gone up for their employees, while 21 percent indicated that it had not changed;

 39 percent of respondents indicated that their firm or organization studies industry standards when designing health care strategies, while 36 percent indicate that they use a consultant;

 37 percent indicated that they meet with a salesperson when making health care strategies, while 34 percent indicated that they depend on informal discussions with others.

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I. Recurring Questions

Each quarter, the Horizon Council FGCU Business Climate Survey polls Lee County’s business leaders about the state of the economy in Lee County. These seven

questions are designed to provide a snapshot of short-term trends and perceptions regarding the state of the local economy, employment, and capital investment. Asking the same recurring questions allows for a side-by-side comparison of the economy during each quarter. The results from these questions for the first quarter of 2016 can be found in Figures 1 through 7 below.

Figure 1 reports that 73 percent of surveyed executives indicated that economic

conditions in Lee County were better compared to a year ago. This is a slight decline

from the fourth quarter 2015 measure of 77 percent as well as the measure from the first quarter 2015 measure of 81 percent. These results indicate that local business owners and executives are generally less pleased with the direction of the local economy over the past year.

Figure 2 reports on business leaders’ perceptions about economic conditions going into the next year. The survey found that 72 percent of executives indicated they expect

economic conditions in Lee County to be better in the next year. This is a decline from

the 2015 fourth quarter reported figure of 80 percent, as well as a decline from the 2015 first quarter report, which reported that 76 percent of surveyed executives expected conditions in Lee County to be better in the next year.

Figure 3 reports on executives’ perceptions about their particular industry and is more narrowly focused. The survey found that 61 percent of surveyed executives believe that

current conditions in their industry were better compared to a year ago. This was a

decline from the 69 percent recorded in the fourth quarter 2015 survey and the 73 percent reported a year ago on the first quarter 2015 report.

Figure 4 reports that 65 percent of surveyed executives expect conditions in their

industry to be better in the next year. This is a slight decline from the 2015 fourth

quarter report, which reported that 66 percent of surveyed executives expect conditions in their industry to be better in the next year, as well as a decline from the 2015 first quarter report, which reported that 70 percent of surveyed executives expect conditions in their industry to be better in the next year.

Figures 5 and 6 focus on employment. Figure 5 reports that 49 percent of executives have increased employment over the last year. This is a decline from the 2015 fourth quarter report, which reported that 57 percent of surveyed executives have increased employment over the past year, as well as a decline from the 2015 first quarter report,

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First Quarter, 2016 Page 7 which reported that 53 percent of surveyed executives have increased employment over the past year.

Figure 6 reports that 48 percent of surveyed executives expect to increase employment

over the next year. This is a decline from the 2015 fourth quarter report, which reported

that 55 percent of surveyed executives expect to increase employment over the next year, and a decline from the 2015 first quarter report, which reported that 57 percent of surveyed executives expect to increase employment over the next year.

Finally, Figure 7 focuses on capital investment. It reports that 60 percent of surveyed executives expect to increase investment over the next year. This is a decline from the 2015 fourth quarter report, which reported that 66 percent of surveyed executives expect to increase investment over the next year, but no change from the first quarter report from a year ago, which reported that 60 percent of surveyed executives expect to increase investment over the next year.

The full results from the recurring questions are presented below. Results from previous quarters’ surveys going back to 2012 can be found on FGCU’s Regional Economic Research Institute’s web site, at fgcu.edu/cob/reri. For charts depicting historical trends for recurring questions, see Appendix A below.

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Figure 2: Future Economic Conditions

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Figure 4: Future Industry Economic Conditions

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Figure 6: Employment Changes Over Next Year

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II. The Executive Business Climate Index

One of the key features of this survey is the calculation of an Executive Business Climate

Index. Each quarter, this index value of the current business climate in Lee County, is

computed and released to the public as a way to provide an economic indicator allowing one to quickly gauge whether the business climate in Lee County is improving or declining. The EBCI is computed using the two questions concerning the current and future economic conditions (reported in Figures 1 and 2) a third question concerning the expected industry economic conditions (reported in Figure 4). The index is an average of the responses, with substantially better equal to 100, moderately better equal to 75, same equal to 50, moderately worse equal to 25 and substantially worse equal to zero. The index value can range from 0 to 100.

The results from the first quarter survey reflect a slight decline from the fourth quarter 2015 result, with the index decreasing from 71 to 68. This is the first time in two years that the index has been outside a range between 69 and 74.

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III. Special Topics

Each Executive Business Climate Survey contains a set of questions not asked on a recurring basis. These special topic questions focus on areas of importance to the economic development of our region, with the intention of accessing the business community’s input and feedback to development officials, industry agents, and government officials.

The present survey attempted to measure the current state of healthcare in Southwest Florida. We asked Lee County business owners and executives questions about their firms’ health care strategies and coverage, including questions about their perception of health insurance coverage in Southwest Florida and suggestions they might have to improve the health care industry in the region. As shown in Figure 9, there seems to be no clear standard in making health care decisions in Lee County, as most options were utilized by numerous business executives. Figure 10 indicates that while a majority of respondents’ firms offer health insurance to their employees, 36 percent believed their employees received health coverage through Medicare or Medicaid. Figure 11 shows that majority of respondents share the cost of premiums with their employees, while Figure 12 shows that majority of respondents have seen an increase in the health care costs that are paid by their employees. Lastly, Figure 13 indicates that while the Affordable Care Act was not very popular amongst the respondents, majority of the respondents indicated that they were satisfied with both their health insurance coverage and access to health care in Southwest Florida.

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Figure 9: Health Care Strategies

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Figure 11: Health Care Costs

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Figure 13: Health Care in Southwest Florida

Respondents were also asked about where the health care industry excels in Lee County/Southwest Florida, along with what areas could use improvement in Lee

County/Southwest Florida. A summary of their responses can be found below, while a complete list of executive responses to the questions can be found in Appendix C. In what areas do you think the health care industry excels in Lee

County/Southwest Florida?

The responses indicated that executives feel Southwest Florida has adequate health care providers, as well as top quality physicians and hospitals. There are comments about:

 Variety of health care providers

 Educated physicians

 Exceptional service

 Medicare

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First Quarter, 2016 Page 16 In what areas do you think the health care industry needs improvement in Lee County/Southwest Florida?

The responses indicated that executives were concerned with the rising costs of

services and premiums, as well as the growing population. There are comments about:

 Seasonal influx of residents

 Rising costs

 Mental health coverage

 Better prescription drug plans

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IV. Comments, Suggestions, and Recommendations

Other comments, suggestions, or recommendations you would like to make regarding the regional economy or your business?

The comments indicated that executives were concerned with the national and

international economy as it relates to local activity, as well as some general comments of the workforce. There are concerns and comments about:

 Public Infrastructure

 Proper training

 Slow economic recovery

 Federal government

 Increasing costs

 Wage rates

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V. Company Characteristics

Each executive provided information about his or her firm, including:

 Business Type;

 Number of Employees;

 Company Location; and

 Geographic Client Base.

The following figures provide an overview of general characteristics of the responding companies.

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Figure 15: Employee Size of Firms Responding to the Survey

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Appendix A. Historical Trends of Recurring Questions

Historical trends of the seven recurring questions asked in each Executive Business Climate Survey can be found in this section.

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Appendix B. Full Comments, Suggestions, and

Recommendations

This list includes specific responses from the executives for the following question:

Please indicate any other comments, suggestions, or recommendations you would like to make regarding the regional economy or your business.

1. Again, more skilled workers needed.

2. Like the middle of the recession, my clients are getting angry again. The recovery has not had a meaningful impact yet. Their costs continue to go up.

3. The national and international economy seem to be putting a damper on local activity since the first of 2016.

4. Remove the strong hold that the government has on the Health care industry. While there are some aspects of Health Care that needed to be reformed but not allowing medications and prohibiting patient appointments due to authorizations will have long lasting effects of patient’s health.

5. As it relates to the healthcare our company offers, we work very hard to offer leading benefits including health insurance. We constantly evaluate what we are trying to achieve with our insurance and how our employees plan to use and need to use it. We pay a generous percentage of the premium, offer a generous contribution to HSA plans and try to be certain the plans themselves actually provide benefits. Yet, we still find we need to tweak benefits to balance increased premium costs. The effort put into this is staggering at times.

6. The governor is doing a good job, keeping all taxes off of capital equipment, and you will also start to see more manufacturing and jobs to all counties, not just Lee.

7. Since my customer base is nationwide and international, my concerns are far greater with the Federal government. In that arena it would be nice to have an administration that respects the capitalist system.

8. We forecast single digit growth for most of our client sectors, with the drop in scrap steel demand being the single largest drain on the rail freight business in this region. All other sectors are up.

9. Becoming increasingly concerned that infrastructure improvements such as roads and planning is not keeping pace with the growth.

10. Like to see monies available for existing businesses and not just attracting new business to the area

11. Control new construction Impact Fees and maximize the Tourist Taxes to account for their transient impact on local roads and public services.

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First Quarter, 2016 Page 26 12. We have a wonderful community that is generally well managed by our business

and political leaders. This combined with our wonderful weather will continue to make SWFL prosperous and a great place to live.

13. We (Southwest Florida business and Council Members) do not promote our area for outside companies to move in. Sure, we have HERTZ and that is great! We also have a very good airport and very little is done with moving, storage,

warehousing in this area. Southwest Florida is a destination and it does not need to continue to be. We need to rely on other things besides construction and real estate. The economy should be at a slow and steady growth pattern. The emphasis should be on maintaining a good solid base for any upcoming

movements or changes in the markets. We need to keep it affordable for people to come to the area. It seems that speculators and other are running up the housing market, thus not allowing the true investor/owner to make any grounds at establishing the "American Dream". Mortgage rates are low, house prices up, but incomes are not expanding, thus making it hard for the everyday Southwest resident to own. This needs to be addressed. In general we are growing in as much as we expand locations to serve. However, the density in restaurant growth in general, has slowed same store sales to 3% last year. We do not expect higher growth due to eroding market share with other restaurant competitors growing in our area as well.

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Appendix C. Full Comments on Health Care in Lee

County/Southwest Florida

This list includes specific responses from the executives for the following questions:

In what areas do you think the health care industry excels in Lee County/Southwest Florida?

1. Dental and basic health are adequate. 2. Strong in Heart Health services

3. Community organizations working together with health care (HealthyLee and an example). Horizon Council.

4. There are many service providers available

5. When the hospitals have a monopoly and individuals have no choices healthcare decreases

6. Cardiovascular, Cancer, Internal medicine

7. We are fortunate to have numerous specialists in the area. 8. Doctors

9. Medicare 10. Primary Care

11. LMHS is an excellent and well-run organization. 12. Availability and various clinic/health care choices 13. Good quality and access.

14. The region's wealth and diversity does provide a solid base for very good year round health care options.

15. Insuring the unemployed 16. Acute Care

17. Our quality of health care is a good as anywhere in the United States 18. Plenty of doctors to choose from.

19. Until the Affordable Care Act is changed, deleted, repealed or whatever Lee County can't excel. They are taking direction from the Federal government 20. Once the Children's hospital at Health Park is operational, it would appear we

have plenty of specialists in most every type of care.

21. Improved walk-in clinic access in Lee County. Overall good access to hospitals and specialty providers. Decent access to well visit level of care and or pediatric care. Good eye and vision facilities.

22. Excellent hospitals and health care professionals available. 23. Good variety of health care providers.

24. Overall access to physicians is pretty easy. The quality of physicians and hospital care is very good.

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First Quarter, 2016 Page 28 25. Providers are educated and offer exceptional service.

26. The amount of doctors that take Obamacare knowing that it decreases their

bottom-line. Most doctors and facilities have been very good at making this work. Obamacare is garbage!

27. Variety of Specialists to provide more services.

28. Availability of good quality healthcare providers and services. That does not mean that it is an area of good quality healthcare but rather it is available for those that do some research and can afford it.

29. Senior medicine

30. All aspects of physical health diseases and elder care are exceptionally achieved 31. Price

32. Southwest Florida has an excellent selection of top quality medical professionals. 33. Available to everyone. Great access. Non payers continues to be a problem,

especially in ERs 34. Access

35. Quality of physicians 36. CATH lab Ft Myers

In what areas do you think the health care industry needs improvement in Lee County/Southwest Florida?

1. Not have a monopoly 2. Mental Health

3. More preventative care and non-emergency walk in clinics are needed so that emergency rooms can be freed up for trauma cases and true emergencies. 4. Higher end service for those able to pay for it. Dealing with seasonal influx of

residents and visitors overwhelming the existing system. 5. Our hospitals. We need more competition. Insurance costs 6. Individual Health insurance

7. Not sure

8. Too much of the burden for non-payers who access the system is laid at the feet of the people who can afford to pay. This makes the costs disproportionate. 9. The Health Care Act has limited all medical aspects of patient care, from office

visits to medication.

10. Some specialty services not here.

11. There is always a need to continue to see sophisticated services added to the area.

12. More affordable options

13. Primary Care and long-term care

14. While the quality of healthcare is good...the economics and insurance costs are far too complex

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First Quarter, 2016 Page 29 15. Paperwork, one doctor to another, they could save so much time & money if they

had the common sense to share the basic paperwork filled out at every doctor’s office, get 1 form. Let the patient carry it in his or her cell phone, make changes when needed. But, I don't think there would ever be any change in my life time, because there is no common sense left in the world!!!

16. Let's get the Insurance companies involved... Making a competitive market... Even going so far as to have their markets multi states.

17. I am concerned that one entity owns all the hospitals in the area. Competition usually increases quality.

18. Too reliant on large cities (like Tampa and Jacksonville) to provide highly

specialized care and or trauma care. From an employer's perspective it would be beneficial for companies and employees both to have after work/school hour’s access to general health and or basic specialty care. Walk-in clinics are

wonderful, but are not the right fit for well visits, or specialty care. 19. Prices are outrageous.

20. Better prescription drug plans and closer monitoring so it does not have the easy access to abusers that we see now.

21. Very Expensive

22. Not sure at this time, seems to be working well for my family's needs. 23. Mental Health options. Shorter wait times to see the doctor of choice.

Monopolized Hospital system, lack competition of services provided. Affordable coverages for health insurance so more can participate. Health Insurance minimum qualifications for participation. Healthy Blue Zone City.

24. Improve accessibility to primary care, specialty care and particularly

mental/behavioral health. Community education to patients that they need to take responsibility for prevention of major illnesses and that wellness and prevention are cost effective in the long run. Continue and expand the efforts of Health Lee to have Lee/Collier recognized for healthy lifestyle.

25. Specialized areas; cancer; infectious diseases; brain. 26. Family medicine

27. Affordability and access

28. All aspects of Mental Health identification, treatment and housing are grossly underserved in Lee County. As well as Low Income Housing

29. Availability - long appointment lead times.

30. Our monopolistic hospital system limits its ability to maintain the highest quality and keep up with the best technologies and practices. Patient care and hospital efficiency have been less than optimal in the Lee Memorial system for decades. They lost any need for improvement when they obtained the monopoly. I have clients who are choosing the Naples hospital system for the better care, despite the inconvenience. In conversations with local doctors, there is a general feeling

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First Quarter, 2016 Page 30 of poor management and lack of caring for the quality of patient care. In talking with local contractors who have worked for the hospital system, there is an experience of poor business practices and inefficiency. Our hospital board has lacked new faces and ideas. There is also a conflict with Board Members having family members as employees in leadership and management roles within the hospital system.

31. More pressure needs to be placed on the insurance companies and outrages hospital charges. A vial of blood can't cost $1600.

32. Continue to move non payers to alternative means of health care vs the most expensive means

33. Walk in care.

34. The unbelievable amount of impenetrable paperwork associated with all levels of insurance coverage.

Lee County Business Climate Survey Report. First Quarter, 2016