Industry PERSPECTIVES

In the last installment, Central Penn Business Journal is delving into the minds of area business leaders to examine their perspectives and insights on the 2016 economic climate for their particular industry.

This weeks Industry Perspectives featuring:

Laurie Brubaker

President, PA, DE and WV Markets

Aetna

Tom Sposito

SEVP and market executive

Integrity Bank - a division of S&T Bank

Robin Zellers, SIOR

Broker of Record, President

NAI CIR

William Parker

Chief Executive Officer

Grandview Asset Management

Ross Kramer

Co-Founder & CEO

Listrak

Michael A. Young, FACHE

President & Chief Executive Officer

Pinnacle Health

David Cross

President

R. S. Mowery & Sons, hie.

Tom Sposito

SEVP and market executive

Integrity Bank - a division of S&T Bank

www.integritybankonline.com

As we begin a new year, we're grateful for our organization's success in 2015. It was the best year in Integrity Bank's history since its founding in 2003. We were joined by S&T Bank, whose roots in the community span nearly 115 years, allowing us to expand our footprint, retain a keen focus on our customers, and deliver full financial solutions through our seasoned and sophisticated bankers. We believe in this time of change, both regionally and nationally due to improving economic conditions and industry-wide mergers, customers have the right to choose their own bank, on their own terms.

But what does choosing on your own terms mean? For us, it's about alleviating the stress of choosing by providing customers with a simple and personal banking experience tailored to their needs. As we move into 2016, we're committed to doing just that: providing top-notch expertise through our talented bankers, innovative solutions that enhance your banking experience, and a continued dedication to serving the community. It's what sets us apart.

When you choose your bank, the team is a critical part of the equation. At Integrity Bank, our team is committed to your success and passionate about helping you achieve your personal and business goals. With particular emphasis on commercial loans and deposits, and expertise in cash management, mortgages, municipal finance and more, our bankers build upon their vast knowledge to ensure our customers are positioned for success. We consider our employees our greatest resource and best asset, able to provide a diverse delivery platform, utilizing an impactful combination of size, skill, and knowledge to deliver the right banking solutions, at the right time.

While the importance of technology continues to rise, we still believe in personal interactions with our bankers at local branches. By choosing Integrity Bank, you can complement the branch experience with anytime, anywhere banking solutions. We balance improvements with online and mobile banking, PeoplePay, and upcoming payment solutions with strong service in-branch, allowing us to be on the cutting edge of our customers needs. We do this while aggressively guarding your privacy and protecting your financial assets, all of which provides great value for our customers.

Perhaps most importantly, Integrity Bank has evolved without forgetting our history. We believe investing in the fabric of the community is a fundamental part of our identity. It helps us maintain a pulse on the regional market, build partnerships, and be better community members who are dedicated to serving those around us. In 2016, we will build upon the established foundation with local companies and customers to further strengthen the region.

You can expect the same Integrity Bank faces in your branches and name on the door in 2016. You can also expect new offerings designed with your personal and business growth in mind. We are here to support you throughout life's major moments & more!

When you choose your bank, choose Integrity Bank. Visit our team at your local branch or our corporate offices in Camp Hill to learn more about who we are, what we do & where we're going.

Michael A. Young, FACHE

President & Chief Executive Officer

PinnacleHealth

pinnaclehealth.org

My meetings at PinnacleHealth System usually start with the question: "How do we keep patients healthy and out of the hospital?" It may seem an odd question for a health system's president and CEO, but our focus continues to be on providing the right care at the right time in the right setting. That focus reduces hospital admissions. Our goal is first and foremost to keep people healthy. However, if they become sick, we are here to promote healing and work diligently to get them home sooner.

Illness is expensive. A greater share of the cost of care is falling on individuals through coinsurance and deductibles. The sicker you are, the more your care costs. When our patients avoid a serious progression of illness or complications from a disease, it improves their well-being and it saves money for everyone, including business owners in central Pennsylvania who pay increasing health insurance premiums and individual taxpayers who support programs like Medicaid and Medicare.

Just think about the difference between what's involved in a 30-minute office visit versus three days in the hospital. That's why we promote having regular visits with a primary care doctor. Health problems can be identified early and fixed before they become serious and expensive.

To that end, every primary care practice in our broad PinnacleHealth Medical Group network has adopted what is called the medical home model. A medical home is a team of healthcare professionals working together to provide a new model of expanded care to patients. A patient's care team works closely with each other and with each patient to provide comprehensive preventive care, manage any chronic conditions he or she may have, and coordinate medical treatment if the patient gets sick. Through this team approach, we can help each patient get the personalized treatment and services they need to get healthy and stay healthy.

The care team can include doctors, nurse practitioners, physician assistants, nurses, pharmacists, social workers, medical assistants and other staff members in the office. Everyone works together to make the patient's care as convenient, accessible and effective as possible while understanding and respecting the patient's wishes.

The medical home model is just one part of our on-going commitment to provide a patient-centered, integrated health system focused on quality, access and coordination of care. Our integrated care model-including a new electronic health record system and a soon-to-be-released, improved patient information portal called My PinnacleHealth-comprises coordinating components that reduce the number of repeat diagnostic tests and improves communication between providers and their patients.

By applying this high level of coordination and technology, you and your physicians have access to your test results and medical records anytime, from anywhere. The result: improved safety and reduction of errors, both of which reduce costs.

Furthermore, through coordination of care and services, patients can easily transition between inpatient and outpatient settings. No matter where the patient is being seen, all physicians will have access to the patient's information, which ensures continuity and appropriate follow-up care.

In implementing best practices for transitioning care, important communication occurs during an inpatient stay and again during the transition to home. We use these opportunities to ensure that the patient has all services and support needed, patients and families understand the care plan and the importance of follow-up care, and we have addressed any other practical concerns that the patient may have.

After a hospital stay, timely follow-up care with his or her primary care practice can help ensure that a patient understands the next steps based on the diagnosis, how they are progressing in their recovery, and what additional tests or physician visits, if any, are needed.

For outpatient services, follow-up care is equally important. For a patient who has visited the ER for a fracture, for instance, follow-up with his or her primary care physician helps the patient track their healing and arrange for additional services like orthopedic care or physical therapy, if necessary, and the primary care team can monitor progress in the treatment plan.

As part of our mission to provide the highest levels of patient-focused care, we are committed to being responsible for our patient's entire course of care-before, during and after they leave a PinnacleHealth facility. As a healthcare leader in central Pennsylvania, our entire team is dedicated to our community, focusing on prevention, follow-up care and helping patients manage chronic illness to promote wellness and healing for our families, friends and neighbors.

David Cross

President

R. S. Mowery & Sons, Inc.

www.rsmowery.com

There is a great quote by American songwriter David Allan Coe that states "It is not the beauty' of a building you should look at; it's the construction of the foundation that will stand the test of time.''

This statement could not be truer whether constructing a building or building a company. I was fortunate to join the R. S. Mowery and Sons team as President and COO in early November of 2015 and it is not lost on me the decision to bring an "outsider" into an almost hundred year old family owned business was a monumental one. Don Mowery set the bar very high and I am honored and grateful he selected me to take the company into the future.

As with any new leadership position, much of my time has been spent observing and absorbing the culture and foundation of the organization. What I quickly learned is R. S. Mowery & Sons stands behind their work and shows immense integrity in their approach to not only projects and clients but also their internal team. This "Mowery ... for the experience" approach can only be accomplished through a leadership example that places client and employee relationships first above all other aspects of business, and is the foundation of what R. S. Mowery & Sons delivers every day.

As an organization we are about to begin our annual strategic planning process and a significant consideration is to evaluate our current markets for expansion or contraction. During this process, new market areas may present opportunities for growth and we as an organization must be agile enough to move if and when the opportunity presents itself. We know in today's ever changing world, differentiation is a dynamic process that requires constant attention and focus. Staying on the cutting edge of technology with software such as BIM (Building Information Modeling is 3-D design) and focusing on our environmental responsibility through LEED (Leadership in Energy and Environmental Design) certifications will continue to be a priority.

As I consider the current market and related economy, the only thing that remains certain is uncertainty. While the economy and most markets have definitely rebounded and continue to grow, more than ever there is a cloud of uncertainty around the depth of growth in any given market segment. The magnitude of that growth tends to be a bit sporadic, making the process of market evaluation challenging at the least.

However, with the stabilization of some markets, there does appear to be a fundamental shift in the buying patterns of developers and project owners. Specifically, the length and depth of the shrinking economy drove the construction industry into a commodity based business model. This movement almost overnight diminished the value placed on the actual business relationship as well as unique differentiators which translate to value for the customer.

Under the commodity model, the primary determining factor to being awarded a contract was to be the lowest bidder. With a shift back toward "value-based" contracting, we are continuing to develop new and enhanced value added propositions that provide real and tangible benefits to our clients. Communication in "real time" and transparency throughout the entire project life are two ways to solidify these relationships.

Mowery has a long history in construction and a number of market segments, including senior care, higher education, medical, warehousing and distribution and auto dealerships. We have the experience and management systems to perform on projects regardless of size, scope and complexity - whether a $50 million distribution center of 1.5 million square feet or a minor 500 square foot renovation of a senior independent living cottage. Growth in the last few years has been significant with our projected revenue to approximate $150 million this year. We will continue to focus on delivering superior products and services and solidifying our relationships by delivering an experience built on trust and integrity that will stand the test of time.

ABOUT R. S. MOWERY & SONS

An unwavering dedication to excellence has allowed R. S. Mowery & Sons to become and remain one of the state's premier construction companies. Our extensive experience, financial stability, integrity and values contribute each day to our continuing success.

R. S. Mowery & Sons generally contracts for work within a 150 mile radius of the greater Harrisburg area providing general construction, construction management and design/build services.

Having won innumerable craftsmanship awards and project recognition, we are proud that the Central Penn Business Journal and Harrisburg Regional Chamber/ CREDC have each previously named R. S. Mowery & Sons as a Business of the Year.

Laurie Brubaker

President, PA, DE and WV Markets

Aetna

wNvw.aetna.com

It's an exciting time to be working in the health insurance industry. This has never been a business that stood still for very long, but the changes we're seeing as we find health benefits solutions for individuals and businesses, and as we forge new relationships with hospitals and physicians, are among the most dramatic I've seen.

More than ever, the focus has shifted from the group to the consumer. At Aetna, we're committed to building a healthier world, and that begins with helping individuals enjoy as many healthy days as they can. Since the implementation of the Affordable Care Act and the health care exchange, more and more people are shopping for health insurance as individual consumers.

Less than half of the insured people in this country receive coverage as part of an employer group, with the rest covered by individual Medicare or Medicaid plans, or commercial plans offered on and off the health care exchange. Aetna is a big player in all of these markets in Central Pennsylvania.

Aetna purchased HealthAmerica (Coventry) in 2013, and continues to service HealthAmcrica clients as we complete the transition to Aetna.

We're listening more than ever to individual consumers and designing plans to meet their specific needs. Chief among these is affordability and high quality. Our most popular individual plans are those with the lowest premiums, and while consumers still want access to hospitals and physicians, they're understandably most interested in cost.

That's why we're focused on plans tied to value-based contracts. In Central Pennsylvania, we're particularly excited about the brand-new Aetna individual plans built around our accountable care arrangements with PinnacleHealth System and Valley Preferred, a preferred provider organization affiliated with Lehigh Valley Health Network.

These plans, available on and off the exchange, use PinnacleHealth's and Valley Preferred's integrated systems of physicians and hospitals to create a more coordinated patient experience. Members see improved health care outcomes, receive enhanced benefits and save money when they use providers affiliated with one of the two health systems.

Aetna already offers plans linked to the two accountable care arrangements to employer groups in the area. They feature a new payment model that rewards physicians for meeting certain measures designed to lower costs by decreasing waste, improve quality and deliver more patient satisfaction.

Aetna is working with hospital systems in ways that were unthinkable just a few years ago. Historically, insurers and hospitals often found themselves entrenched in adversarial roles. In recent years, however, we've found new ways to work together for the good of the people we serve.

Payment models are evolving from a traditional system that rewarded providers for doing more - more treatments, more tests, more procedures - into one that rewards them for doing better by their patients. Individual consumers who buy our health plans and receive care from these health systems, will be the ultimate winners. I'm looking forward to helping people have as many healthy days as possible in 2016.

William Parker

Chief Executive Officer

Grandview Asset Management

www.grandviewassetmanagement.com

2016 will be an exciting year at Grandview Asset Management as we embark on an initiative that has been a long time in planning. This year we kick off our new NVomen and Investments program, focused on educating and building women's confidence in personal financial management and planning. This program will be focused on matters distinctly important to women at any juncture in life. Some woman find themselves by middle age starting over in one manner or another. This new beginning, often daunting and unexpected, comes with many questions and decisions. We will discuss how divorce or the death of a spouse changes the complexity of managing not only day to day life but long term finances as well. Other women have chosen to remain single, which presents its own concerns and decision making strategies. We feel it is critical that women understand all of their options before making these decisions. Our goal is to provide women with a forum to discuss their unique concerns while providing advice and support and instilling confidence. We will launch our weekly live "Women and Investments" radio show on Saturday afternoons from 3-4pm, with Renee Moro and Rebekah Godlewski, on January 16th, 2016 which will spotlight women and women's issues. We look to involve female community and business leaders, discuss common concerns, highlight local charities and opportunities for service, as well as discuss investment and world news. The program will be supported by our websites, www.womanandinvestments.com and www.grandviewassetmanagement. com. In addition, we plan to offer female centered programs that will include, Women's Gun Safety, Self Defense and Social Security workshops. We believe that women, in particular, are underserved throughout the financial framework of banking, investing and business. It is our passion to educate and empower woman to take control of their lives personally, professionally and financially.

Ross Kramer

Co-Founder & CEO

Listrak

www.listrak.com

Since launching in a small office in Lititz in 1999, Listrak has been diligently working on transforming retail. Fast forward to 2016, and we have a larger Lititz headquarters, several additional Lancaster offices, an office in Newport Beach, CA and remote employees nationwide, as well as nearly a thousand retail clients who sell online only or both online and in physical stores.

What makes Listrak unique is that we are solely focused on the retail industry. In addition, while all of our competitors who were once independently-owned have been purchased by large corporations like Salesforce, IBM and Oracle, Listrak is extremely proud to remain the only player in our sector who is independently owned and who has operated with zero venture capital funding.

So what exactly do we do?

Listrak offers a digital marketing platform that allows retailers to collect data on individual customers' and prospective customers' shopping and purchase behaviors from a variety of touchpoints and use it to create and send personalized marketing campaigns that drive incremental revenue. In short, we help retailers optimize digital marketing campaigns by engaging customers with timely, relevant, personalized messages across channels.

As we enter 2016, Listrak's vision is to continue to blur the line between the in-store and online experience that shoppers have come to expect, but that is often challenging for retailers to achieve. Our goal is to help retailers gain a better understanding of their customers and to continue to develop tools and strategies they can use to build and maintain long-term relationships with their brands.

Simply put, we want to enable retailers to deliver the right message at the right time to the right customer in the right place and with the right effect.

The right message means the words and images retailers can deliver to shoppers through highly personalized content and product recommendations based on individual shopping habits and purchase histories.

The right time means using Listraks' event-triggered and open-time optimization capabilities. With Listrak, retailers can send relevant communications to shoppers when they purchase, don't purchase again within a set period of time, put an item in an online shopping cart but leave without purchasing it, browse a product on a website but do not put it in a shopping cart, and more. In addition, with Listrak retailers' emails feature up-to-the-moment personalized content based on when each recipient opens the email, rather than at the moment the email was sent.

Reaching the right person is all about targeting. Listrak clients can segment subscribers based on everything from gender and location to categories and brands purchased, time since last purchase, frequency of purchases, purchase totals, and more.

Although Listrak began as an Email Service Provider, today we must enable retailers to reach customers in every channel - from email to mobile to social, on retailers' websites, on other websites through digital ads and in-store. And, because retailers need measurable results, Listrak also provides reporting, attribution modeling, customer insights and predictive analytics to demonstrate the impact of their digital marketing efforts.

Robin Zellers, SIOR

Broker of Record, President

NAI CIR

www.naicir.com

CENTRAL PA COMMERCIAL REAL ESTATE, INTEREST RATES AND CAP RATES: STEADY ON THE RISE

"The biggest challenge facing the U.S. and global economy over the next 2-3 years will be coping with the double edged uncertainty of when rates will rise and what happens when they do." - Dr. Peter Linneman, NAI Global Chief Economist

Interest rates are slightly rising and forecasted to continue upward. Our uncertainty is when they will rise, how much they will rise and what happens when they do. On the surface, cap rates, the historical metric for commercial real estate investment, are expected to rise (lowering values) as the cost of debt increases in sync with an interest rate rise. We, however, believe that cap rates will basically hold as interest rates begin to climb. Our banks and capital sources have money to lend...and rising interest rates raise incentives to lend. Accordingly, expect to see more money chasing a limited supply of properties as debt coverage ratios, higher loan to values (LTVs) and slower amortizations are offered. At a minimum, property values will hold, if not increase with the limited supply of available commercial real estate.

Activity in the Central Pennsylvania commercial real estate market consistently follows national trends albeit trailing in some market sectors (office and retail) while paralleling others (industrial and multifamily). Good news nationally directly translates to good news in our region. Economists tell us that national economic policy is beginning to stabilize toward normal; Obama Care and Dodd Frank seem to be in our review mirror. Job growth is expected to continue with a 2% annual increase forecast for the next 2 years. Despite our new regional low of less than 4% unemployment potentially limiting some opportunities, job growth will continue to boost our local economy.

The fundamentals of the regional commercial real estate market remain strong. We see the clearing of distressed former commercial mortgage backed securities (CMBS) backed properties underway at value- add based pricing. At the same time we are seeing record sale prices of leased, performing assets. While interest rates will absolutely rise, Central PA markets will remain very active and vibrant with continued growth in commercial real estate values.

Anticipating continued market strength in the next few years, we believe the time is particularly ripe for sellers to bring product to market and investors to take advantage of continued strong regional fundamentals. According to Real Capital Analytics, the national real estate investment sales database, NAI CIR is the leading Central PA based real estate brokerage firm both in number and dollar volume of commercial real estate investment sales. We remain the constant leader through 40 years of Central PA commercial real estate growth. Locally owned and based, NAI CIR is the trusted source of information, advice and representation for commercial real estate users and investors. We look forward to the continued success of our current and future clients.