Business seemed like it couldn’t get much better for Debra Fox, president of Fox Learning Systems Inc.
A contract with a major insurance carrier promised to provide a steady stream of income for her four-year-old company and the capital to produce additional educational programs for nursing home personnel and worker safety presentations.
Fox, a former WTAE-TV news anchor who left the industry in the mid-1980s to raise her children, always missed her career. Her husband, a professor of psychiatry at the University of Pittsburgh who witnessed firsthand how a lack of training and employee turnover could negatively affect patient care in nursing homes, suggested a business in which Fox could put her skills to use again.
She could apply her expertise as a broadcast journalist to produce educational programs to provide training for nursing home personnel. Fox launched the business in 1997, producing a series of programs covering topics such as dealing with dementia, depression and prevention of bed sores, instruction that could be used as in-service training required for nursing personnel to retain their licensure.
The interactive programs, delivered on DVD, provide a documentary approach that can be accessed at any time of the day in a nursing home, and reduce or eliminate the need to conduct traditional in-service programs, often difficult to administer in a 24/7 operating environment.
The stakes for nursing homes are significant, Fox points out. Improper or inadequate training can be costly in terms of employee turnover and poor patient care.
“Pressure sores can cost an insurance company anywhere from $60,000 to $150,000,” says Fox. “If it’s a liability case, it can go into the millions.”
A study done by the American Medical Directors Association supports the notion that Fox’s programs increase satisfaction, compliance and learning retention among users over traditional training methods.
That kind of performance got the attention of Royal & SunAlliance, an international insurance company with $100 billion in assets that saw the potential to reduce client claims. Royal & SunAlliance and Fox struck a deal in April 2001 to use Fox’s series of instruction for the company’s nursing home and to develop a worker safety series for its workers’ compensation clients.
Royal & SunAlliance would underwrite production costs and sell the training modules to its clients through its agents. The insurance company would reduce its payouts, its clients would improve employee performance and reduce losses, and Fox would get a steady stream of revenue. By September 2001, Fox’s training was in 75 U.S. facilities.
Then came the Sept. 11, 2001, terrorist attacks.
Royal & SunAlliance was struck hard by the financial hit of Sept. 11, and scaled back or eliminated most of its general liability underwriting in the United States. Royal & SunAlliance had little incentive to continue producing and distributing Fox’s training, so it terminated the agreement with Fox, in effect toppling the lucrative arrangement that she had struck with the insurance company.
Fox doesn’t deny that the collapse of the Royal & SunAlliance deal was a tough blow, but she’s managed to keep her company going and her 14 employees on the payroll. And she wasn’t left empty-handed when the insurer backed out. A clause in the agreement with Royal & SunAlliance allowed Fox to retain the rights to the training modules.
“The good news, though, is that I have this product without any restrictions, so I can sell it to the insurance companies, I can sell it to whatever facilities I want,” says Fox.
And Fox isn’t standing still. Her company is working on a Web site that will provide residents of nursing homes, their families and caregivers with an interactive tool to improve care and communication.
Fox spoke with Smart Business about losing, winning and the value of optimism.
What was the one clause in your agreement with Royal & SunAlliance that really made a difference?
We’re writing up the contract, and I put in there if for some reason Royal & Sun stops writing U.S. insurance, that I could get the product, and vice versa — if I no longer was in business, that they would own the product.
Well, a number of people laughed at me and said, ‘If anybody is going to go out of business, it’s going to be you.’ I think it’s a funny story, and it’s very telling.
What did you learn from the experience with Royal & SunAlliance?
First of all, no matter how small you are, you need to protect yourself. You never know, you could make a hundred calls in one day, people can slam the receiver down on you 99 times, but it’s that one call that may be that Royal & SunAlliance.
Now, I look at this as not only a great challenge but a wonderful opportunity. I have a wonderful product, and it really falls on me to get it out there. So I’m not distressed, I’m really not. I look at it as an opportunity.
What’s important to know is that in business, you get these setbacks. It’s something that happens but you need to just move on and, thank God, it didn’t bankrupt us. If it had happened earlier in the company’s history, it could have been a disaster. But we had enough going on, we were pretty established, we could take the hit.
How did the termination of the agreement affect your business?
It was really a blow, because it was a fabulous contract that I had with the company. They not only underwrote the program, but they paid for every program that went out of this office.
I was constantly getting revenue, which was lovely, plus I didn’t have to sell it. They had their agents all over the country selling it, so I built a business model where I would just continue to grow through the partnership with them.
What does it mean for you going forward?
I really have to watch. The money isn’t coming in as freely as it was before. But I’m really confident that somebody is going to take this program.
We can rebrand this product. It wouldn’t take much to make it AIG’s, CNA’s or Liberty Insurance’s. It’s definitely changed our business model, but, thank goodness, we have other income, and we have other projects that we’re working on, so we’re still solvent.
I have wonderful friends and colleagues from Royal & Sun that are looking out for me, and they still believe in the product. They really have the connections with the insurance companies. I have quite a few who are at the table looking at this with a high degree of interest.
I’m very optimistic — to me, it’s kind of a no-brainer. If their business model is risk management, then here’s a program that’s already developed that has all of the risk management experts in it, and nobody has to foot the development costs. How to reach:Fox Learning Systems Inc., www.foxlearningsystems.com
