Iron clad your safety net
A city raises its S&P credit rating by decreasing its employee benefits costs.
In a three page report published in December of 2013, S&P applauded Marion, Indina’s drastic fiscal improvements and gave credit for the changes because of the, “city’s return to structural balance as a result of significant cost reduction, primarily in employee benefits.”
Marion, Indiana is a small community with just over 30,000 residents. Standard & Poor’s credit rating services recently raised the city’s long term credit rating from a BBB- to an A- for their 2005 park district bonds, largely because of the innovative strategies implemented by a referenced based pricing fiduciary protection team, who work exclusively in Utah with MBA Administrators.
S&P is a globally recognized creditworthiness indicator for governments, financial institutions and corporations, just as a FICO score is an indicator of creditworthiness of individuals.
The right partners swing the money tide from a risky turnaround to a bright surplus.
The previous years’ budget for Marion stayed afloat only through excessive loans. By decreasing costs, especially healthcare expenditures, the city paid off their debt of $1.3 million and in 2013 produced a net surplus of $1.28 million, including a $312,500 cash balance. The fiscal improvements moved their standing from a credit risk to financially stable. More impressively, these changes were wrought in just 12 months, beginning as a new client on January 1, 2013 and achieving the status upgrade in December of the same year.
The context behind this city’s dramatic fiscal improvement comes from a simple formula that cracks open the code for decreasing outrageous medial costs.
Rather than discounting the highly inflated retail price for medical care, MBA uses reference based pricing to reimburse medical providers for their services. MBA pays out the actual cost of the medical service plus an additional and reasonable percentage for profit. While many hospitals’ chargemaster assigns a hefty 300-2000% markup, MBA’s strategy ensures medical providers enjoy profitability while at the same time encouraging ethical fiscal pricing. Fiduciary protection is included in the service, which shields consumers.
The story of this small community showcases how innovative problem solving can transform a budget from egregiously thin to robustly prepared.