Industry leaders gathered Friday to discuss the potential impact of President Barack Obama's re-election and other issues in a roundtable discussion hosted by the Rockland Economic Development Corporation (REDC).
Leaders in finance, healthcare and real estate gathered at the IBM Executive Conference Center in Palisades before the REDC’s annual awards luncheon. Jim Tully of CB Richard Ellis acted as moderator with featured speakers Fernando Garip of TD Wealth, Philip Patterson of Bon Secours Charity Health System, and Tim Jones of the Robert Martin Company, LLC.
“No matter what side of the aisle you are, you can anticipate that we’re going to be in a high regulatory environment, a higher tax environment,” Tully said. “We’re going to have to deal with greater debt based on the quantitative easing approach to the growth of the U.S. economy.”
Tully added that one silver lining from the “quantitative easing is that we maintain historically low debt rates.”
Healthcare was a major topic of discussion, from where the actual industry itself is heading to th Affordable Care Act, otherwise known as Obamacare. Jones, whose company has gotten into franchising by purchasing Dunkin’ Donuts, talked about how it could affect future investments.
“On our bottom line, it has a big, big impact. It’s probably, depending on the store, it could be anywhere from 20 to 30 percent of our income, and that’s before debt service,” he said. “It’s going to have a real impact on our willingness to build new stores. There’s just no question about it.”
Jones added that he “can’t help but think that is going to be the case for a lot of people who are making those investment decisions.”
He also said he thinks small business is the source for new jobs in the country, and the Affordable Care Act could hurt that.
“Anything that impacts people’s willingness to make that investment, I think, is very damaging to our economy,” he said.
There are other issues in the healthcare industry moving forward, however, and Patterson spoke about those.
“The biggest, probably, industry change we’ve seen over the last two years is there is a lot of for-profit, private equity money being pumped into healthcare,” he said. “That doesn’t do much for us here in New York. We are the only state, right now, that is hindered from taking advantage of private equity funding in healthcare. What does that do for us? Puts us at a disadvantage. Everybody to our north and everybody to our south is taking full advantage of that.”
He added that healthcare is seeing more consolidation and one way Bon Secours has helped itself is by operating in seven states, which has allowed it to not take on debt like many hospitals.
“We leveraged our size and leveraged our ability on the bottom line early on to supplement ourselves by purchasing physician practices,” he said. “We continue to expand in each community. What we were able to do is invest in our own infrastructure to be able to coordinate and better change.”
Patterson added that Bon Secours has also helped its standing through transitioning to new kinds of care.
“We have to do more with less, we’re being paid less. We’re being paid less by the government both on the Medicare and the Medicaid side as needs to be, but at the same time, we’re also transitioning our care,” he said. “More outpatient, more network-based. We’re starting to employ physicians at a record pace again. We will outpace the early ‘90s, the HMO years.”
Garip said that while tax rates are going higher and many people will focus their attention on increased rates for the wealthy, the financial industry is looking at another issue.
“The bigger issue for us in the capital markets and investments is the tax on capital, tax on capital meaning an increase in taxes on dividends,” he said. “If you do increase marginal tax rates, obviously you pay taxes on ordinary income or income that you generate from bonds, for instance, at your marginal tax rates. So the tax on capital can become a real drag on gross domestic product.”
He also talked about a recent report that the United States could become the world’s leader in energy.
“This is a huge tax cut. Every time energy prices go up, you hear the economists talk about that it’s equivalent to ‘x’ amount of increases in taxes, because everybody pays for fuel on some level. Well, you know the opposite is true,” he said. “If, in fact, the science in correct, and due to our technological ability to extract oil and gas from shale, if in fact we do become the world’s largest energy producer in the next 10 or 15 years, that’s going to have a big significant impact on our domestic economy. Make no mistake about it, and the longer I’m in this business -- I’ve been in it for a couple of years -- the more I realize that the impact of energy costs is very, very significant. Oil prices matter, they just do. And when they go down, it makes a huge difference in things like the inflation rate, because oil is denominated in dollars. It makes a huge difference in the cost of operating everything, from transportation to heating to your home. So that is a very significant positive that I think the U.S. has going for it.”