A few states are letting small companies without health insurance buy no-frills coverage. The problem: as states have required health plans to include ever-more coverage -- even in vitro fertilization in some states -- small companies' premiums have soared. (Larger companies can escape mandates by self-insuring.) If there were no mandates, estimates economist Gail Jensen, some 16% of companies without insurance would buy it. So Oregon last year began allowing bare-bones plans for uninsured companies, and Washington and Virginia just passed similar laws. Other state bills are pending.
A handful of start-ups are selling an antidote to information overload: customized business news. One example: Cambridge, Mass.-based Individual sorts news wires electronically for stories that fit a subscriber's interests -- and then builds personalized newsletters that are faxed or sent by electronic mail overnight. Such services aren't cheap: typical annual base fees range from $1,995 to $7,500. At current prices the market is limited, notes technology expert Esther Dyson -- but that could change as costs come down.
Despite current credit tightening, some banks are increasingly interested in equity -- or equitylike -- kickers to loans. So reports Christopher Snyder, whose New York-based Loan Pricing Corp. tracks commercial loan pricing. By taking stock or a fee that increases with company sales or profits, banks hope to be compensated for the risks of growth. Snyder advises entrepreneurs to realize that some banks, especially regional ones, have come to prize such kickers in the past few years -- and to bargain accordingly.
So much for the myth of the high-tech entrepreneur as a lone individualist. In a recent study of electronics company CEOs by Ernst & Young and Electronic Business, 71% of those with sales under $100 million said their companies have strategic alliances, and 85% said such alliances will be key to their five-year strategy. Marketing agreements are most common by far, but 35% of the companies receive equity capital from alliance partners. By 1995 CEOs think alliances will provide as much funding as private investors -- including venture capitalists.
More health maintenance organizations are trying to woo small companies from traditional insurance by offering an open-ended option. With it, employees can use non-HMO doctors, usually with less coverage. The pitch: now small companies can join HMOs without restricting employees' doctor choice or coping with multiple health plans. The open-ended idea is still new nationally, but an InterStudy survey found 13% of HMOs were offering it by mid-1989, up 47% in a year. The most common motivation cited? A desire to appeal to small and midsize employers.
-- Martha E. Mangelsdorf
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