Lucas Group's New Survey Reveals Health Care Remains Top Concern for Businesses

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Small and mid-sized business leaders differ on how to address health care costs.

Lucas Group

While rising health care costs continue to appear unabated, SMBs across the country are struggling to find solutions that work for their companies, their employees and their bottom lines.

Health care costs continue to be top of mind for leaders of America’s small and mid-sized businesses (SMBs). Exactly how companies are addressing that concern, however, varies widely across SMBs, according to the latest survey from Lucas Group, a national recruitment firm specializing in search and placement services for strategic business functions.

Each quarter, the SMB Job Generation Outlook surveys executive leaders on their economic opinions and hiring plans. The survey also gathers insights on how federal policy affects small and mid-sized businesses. In the third quarter, respondents weighed in on the Affordable Care Act (ACA) as they prepare for the employer mandate, which is set to begin in 2015 and requires businesses with more than 50 employees to provide health care coverage or pay fines.

Responding business leaders ranked health care costs the No. 1 challenge affecting their company, over talent availability, uncertainty in tax policy, domestic and international competition and environmental regulations. This chief concern is consistent with previous survey findings. Despite its persistency, only 45 percent reported they were ready for ACA implementation, a slight improvement over the 39 percent that responded similarly a year ago.

To address rising health care costs, SMBs are employing a variety of strategies (respondents were permitted more than one response):

  • 29 percent said they will review plans periodically and may change their health care provider or plan.
  • 25 percent will increase employee contributions.
  • 10 percent will enact higher deductibles/copays.
  • 10 percent will engage an employee health education/wellness program.
  • 9 percent will cut back on full-time employees or cut hours to part-time.
  • 6 percent will cut benefits.
  • 14 percent will do nothing and absorb the costs.
  • 22 percent cited other strategies. Some responses included:

     o “We expect a congressional exemption from ACA.”
     o “Will no longer hire smokers.”
     o “Charging more to customers.”

“We often hear politicians cite small and mid-sized businesses as those that may be affected most by the Affordable Care Act,” said Scott Smith, Chief Marketing Officer at Lucas Group. “Our quarterly survey goes to the source, and while rising health care costs continue to appear unabated, SMBs across the country are struggling to find solutions that work for their companies, their employees and their bottom lines.”

Over the survey’s history, respondents have consistently agreed that small and mid-sized businesses are the job generators of the U.S. economy. Although health care costs remain a challenge, 44 percent of respondents said they plan to hire additional employees in the next quarter, on par with the same time last year. Sixty-eight percent said they were somewhat or very optimistic about their company’s economic prospects for the coming quarter and nearly 90 percent report their businesses to be either stable or growing.

Other key findings from Lucas Group’s Q3 survey include:

  • 78 percent said they were somewhat or very pessimistic about bipartisanship in the federal government, an all-time high for the survey and significantly higher than the 67 percent who responded similarly in the second quarter.
  • 59 percent said increasing the federal minimum wage to $10.10 per hour would have no impact on their business, marking another all-time high for the survey.
  • 61 percent said it is difficult or extremely difficult to find qualified candidates for open positions.

The SMB Job Generation Outlook is conducted by Lucas Group in coordination with Polaris Marketing Research and Dr. Goutam Challagalla, Associate Professor at the Georgia Institute of Technology Scheller College of Business. For the full Q3 SMB Job Generation Outlook, click here.

About the Survey
Conducted quarterly, the SMB Job Generation Outlook is a national survey of SMB top business leaders. The Q3 survey was conducted by Polaris Market Research on behalf of Lucas Group from September 1, 2014. Each of the 400 respondents was a CEO, CFO, COO, chairman, president, executive vice president and/or owner of their company. The survey covered a wide variety of industries with manufacturing, finance/insurance/real estate, business services and health care having the strongest presence. Seventy-three percent of the respondents were from small businesses with fewer than 500 employees.

About Lucas Group
Lucas Group is North America’s premier executive search firm. Since 1970, our culture and methodologies have driven superior results. We assist clients ranging in size from small to medium-sized businesses to Fortune 500 companies find transcendent, executive talent; candidates fully realize their ambitions; and associates find professional success. To learn more, please visit Lucas Group at and connect with us on LinkedIn, Facebook, and Twitter.

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Kate Wilson
Lucas Group
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