October 15, 2009

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Health Care

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Health Care

October 15, 2009

As health care continues to play a leading role on the national stage, Utah’s industry leaders gathered to discuss local solutions. The group tackled tough issues such as paying for uninsured patients, overutilization of the system and ways to keep top talent practicing in Utah. The leaders also discussed the Utah Health Exchange and how it helps employers provide more health care options to employees. Though costs and other health care issues are rising, Utah’s industry leaders see improvements and reform options ahead. We’d like to give a special thank you to Joe Krella, president of the Utah Hospitals and Health Systems Association, for moderating the discussion and to Holland and Hart for hosting the event. Participants: Norman Thurston, State of Utah; Jim Sheets, LDS Hospital; Matt Wirthlin, Holland and Hart; D. Scott Ideson, Regence BlueCross BlueShield of Utah; Greg Poulsen, Intermountain Healthcare; Kim Wirthlin, University of Utah Health Care; Mark Bennett, HealthInsight; Joe Krella, Utah Hospitals and Health Systems Association; Gordon Crabtree, University of Utah Hospital and Clinics; Ken Johnson, Dumke College of Health Professions, Weber State University; Steve Bateman, St. Mark’s Hospital; Joe Campbell, Educators Mutual; Scott Barlow, Central Utah Clinic; David Kennard, Utah Business; Brent Williams, Dental Select; Barry Johnson, HealthCare Insight; Wesley Smith, Salt Lake Chamber Why do you think there’s a growing fervor over health care reform at the state and federal level? POULSEN: I suspect most of us would agree that the current way that health care is provided in the United States is concerning. It’s expensive and the costs are going up much more rapidly than inflation in terms of total expenses for health care. And the fact that in spite of the large amount of money that we spend as a country on health care, there are significant portions of the population that don’t have access to health insurance. So while there are few people in the country who are satisfied with the health care system as it sits, there are many who are not satisfied. The question and the reason for so much controversy is it’s not at all clear to people whether the mechanism to improve health care cost and access is through increased market reform, that is more market competition, or whether there should be more government intervention and oversight. And at the moment, the country is pretty polarized between those two perspectives. I think in most people’s minds, it isn’t whether reform in general is an appropriate thing, it’s how do you approach reform. K. WIRTHLIN: I think the reason that health care reform has had so much momentum is that the country is not satisfied with the status quo. When you look back to the early 1990s, with President Clinton’s effort to reform health care, the urgency wasn’t as great which made it so the second choice, the status quo, was the preferable choice. I think now we are at a place where most people agree that reform needs to happen. But any time you start talking about health care reform, you push on one part of the system to change and that has a positive or negative effect on another part of the system. It is such a complex multi-faceted system that to figure out how to change it in a large way is challenging practically and politically. K. JOHNSON: I think we are confused as a public about what is out there and what is happening now. Unfortunately, people either don’t take the time or don’t know how to research what is really going on. There is so much confusion that people are scared about what might be happening to them. Where do physicians fit into the health care reform discussion? BARLOW: I think most physicians accept that the system needs reform. They are as frustrated with elements of the system that consumers generally are, and they recognize the cost drivers are untenable and unsustainable. I think the physicians have, for several years, expressed dissatisfaction with the system as it relates to what they perceive to be too much intervention and too many care hassles. I think that physicians are willing to look at reform, but they are concerned about the influences of reform and what is going to happen in the end. Is care going to become more difficult to provide to people than it already is today? It is difficult to look at the trend of physicians in terms of the support of the profession any longer. I know in our organization of 100 physicians, a little more than 75 percent of physicians are generational physicians—they are fathers and grandfathers. Today, less than 25 percent of them have children going into medicine. I think it’s a reflection of their perception of the profession and how difficult it is becoming. So while I think they’re supportive of the reform, they are busy and they don’t have a chance to be well informed themselves and that’s perceived as being resistant to change, but I don’t think that’s the case. I think most physicians want to ensure the change is done thoughtfully, methodically and well measured so that we end up with something better in the end than what we have right now. K. WIRTHLIN: In Utah, we’ve had a physician shortage in some specialty areas. At the University of Utah, we have a medical school where we educate 102 students, with the exception of this year, where we only accepted a class of 82. And the reason for that was because of a financial hit—we received a 30 percent cut of funds from the federal government and there were also state cuts. With these cuts, we had to make the difficult choice to reduce the class size, which is exactly the wrong direction that we need to be going in terms of having a supply of physicians. Luckily, Utah will always be a net importer of physicians. But as the rest of the country experiences a shortage, we are having a more difficult time recruiting physicians. So what we need to do is expand the class size at the university. We also need to expand the number of residency positions that we are training in the state. Overall, physician supply is a critical challenge for our state, and I think a key component we don’t talk about enough with health care reform. B. JOHNSON: I read an article that talked about the transition from the baby boomer generation to Generation X. The premise of the article was that that is going to have a further adverse effect on the physician supply because there’s a different kind of attitude about the work ethic—that they don’t want to work 100 hours a week. That is going to have serious impact on staffing at hospitals and also the supply of physicians in general. K. WIRTHLIN: It’s something that we are seeing right now in terms of the new people who are moving in to medicine now. They are prioritizing family in a way that the generations prior to them had not. We are having more and more women who are coming into medicine, which is terrific, but they want to be able to balance family life and work life, so they are working less. That is a critical component of health care reform—that we structure the payment system so that using mid-levels appropriately is financially viable. WILLIAMS: We are having similar problems in the dental care industry as far as physicians and dentists. The number of graduates coming out of school every year is falling, yet the population is increasing and it’s a real problem. What kind of difficulties are you having recruiting nurses and ancillary staff? BATEMAN: In the hospital environment, we’ve had a chronic shortage for years of pharmacists and technical people in radiology and the laboratory. Certainly nursing also has a cycle that seems to come and go over the years. The last year or so has been a little bit easier for hospitals to hire people in these scarce positions because of the economic downturn. But in the long term, the planning includes continued shortages in the areas of pharmacy, radiology and the laboratory. So I don’t see a bright future yet in terms of our ability to meet the demands of those professions and find adequate people in these areas. SHEETS: Utah is a little different market than much of the West. I spent most of my career in Arizona and California where it’s a lot more competitive. In those states, we had a real difficult time finding nurses. I’ve found that it is a little easier to recruit in Utah because there are a lot of people who want to live here. For every opening we have, we usually have 10 to 20 applicants. The challenge is in some of those ancillary areas, specifically pharmacy and some of the technical positions such as radiation technologists. BATEMAN: The providers in Utah have done some pretty creative things in working with higher educational institutions in funding the education of new nurses and other technical and professional people, and I think that it shouldn’t go unnoticed. The public and private partnership has been a really good thing the last couple of years. Most every one of the providers and most every one of the higher educational institutions have partnered in some fashion to make that happen. The other thing I’d like to say is that I’m not as worried about the numbers of incoming younger people that will enter these fields as I am the number of people who are getting ready to retire. There’s an increasing number of people who want to retire earlier than we would have anticipated. People don’t want to work as long as they used to. I’m pretty concerned about those people who are in their mid- to late-50s who are going to face retirement. That will be a significant challenge for us, as providers, to meet. Much of the debate has circled around health insurance reform. Where is the insurance industry in the discussion? IDESON: Last year the Association of Health Insurance Plans (AHIP) made a proposal to fundamentally reform the individual market, which is where most of the uninsured play. You are either with an employer that doesn’t provide coverage or you are an individual working on your own and you can’t get coverage because of the underwriting guidelines. AHIP proposed a guarantee issue that included no medical underwriting as long as there’s an individual mandate, which means that all individuals, like auto insurance, will be required to have coverage with subsidies for those that have insufficient income to afford coverage. But in exchange for that, if you apply for an insurance policy and you pay your premiums, you cannot be denied and pre-existing conditions would not be considered in terms of issuing a policy. I think that’s a significantly broken part of the system. But there are a couple other parts that are equally as broken. I think we have terribly misaligned incentives. We do a wonderful job at rescue care in this country, but a horrible job at prevention, with no incentives to stay healthy. You don’t get a good discount on your policy if you stay healthy, exercise and eat well. The ability of the provider community to really focus on nutrition is hampered by the fact that most physicians get about a two-hour lecture on nutrition during medical school. So the ability to influence the biggest driver of health care costs, which is chronic disease and obesity, is limited. So while the insurance industry has come forward with a program that would help with the access issue and the coverage issue, in the absence of fundamental changes in the drivers of cost, we are going to find ourselves in the same situation in two years. Discuss utilization and its role as a driver of health care costs. POULSEN: Utilization is really driven by two different things. One is our underlying health status. There are things that we either do or don’t do which contribute to significantly higher health problems. And it’s interesting because two decades ago, the biggest worry about health care costs was end-of-life care. But if you look at the data, the percentage of money spent on end-of-life care is substantially down and the amount spent for chronic disease is substantially up. And the biggest reason for the change in chronic disease expense is related to the things that each of us do individually to either keep ourselves healthy or not. The consequences of heart failure, diabetes, asthma, any number of other things all contribute significantly to overall health care expenses. And it’s not something that the health care system can really fix. It’s something that we individually and the folks who advise us need to prevent. K.WIRTHLIN: While I agree that there’s individual responsibility, one of the things where the health care system could begin to address some of these conditions goes to aligning the incentives in terms of payment reform. So the other big piece of insurance reform is payment reform, and change in the payment structure so that we are not paying for episodic care to the degree that we are today. POULSEN: The way the health care system pays today, if you compare it to a taxi ride, then we are going from Salt Lake to Ogden via Wendover, and we are paying by the mile. There’s evidence of serious over-utilization. But the potential for reductions across the country is even greater than it is here because the over-utilization is substantially greater—in some communities it’s three times as great as it is in Utah. And across the country it’s 40 percent higher. IDESON: I think transparency is a huge component. You walk through a grocery store and you can compare every product including store aspirin and Bayer aspirin, until you step to the pharmacy counter. Then all bets are off. You get whatever is paid for and you know what your co-pay is and that’s it. BENNETT: If we can find a way to pilot some approaches that are changes in how we pay for health care, then we can begin to demonstrate how much more efficient we can get, and we can learn something about the unintended consequences of those pilots introduced. Every payment system has its effects, and some of those are going to be positive and some are going to be negative. The State of Utah has contracted with HealthInsight to coordinate the development of a couple of pilot programs, and we have representatives from the providers and payers meeting around our table to try to see what kind of experiments for changing the payment system we might try. There’s a lot of different approaches one could take along that continuum from paying for a full episode or experience of care over a period of time. An example of that would be payment from pregnancy through the birth of a healthy baby, maybe up through the first baby checkup as a single payment that the hospital and the physician and all of the ancillary services would be bundled together. And that kind of bundling of payment would encourage providers to work together about better managing the care of the patient and making sure that the patients were getting everything they needed to have that healthy outcome, but nothing they didn’t need. And there would be a lot more intelligent dialogue about that than there is in the current system. SHEETS: We can compare our health care payment system to buying a car. Right now when you buy a car, you know what you’re buying. There might be some negotiation, but you know the price you are going to take the car home at. If you compare health care to buying a car, it’s like you purchase it and drive away and then get an invoice for the steering wheel, then one for the tires and then an invoice for the bumpers, and then not knowing the relationship or if there was any synergies between the development of all those pieces of the car. Health care consumers don’t understand what they are paying for. Without that understanding on the consumer end of what they are exactly paying for and how those costs are determined, you are going to have a hard time, without that rigor around cost management. Discuss the State of Utah’s recently launched Utah Health Exchange. BENNETT: I think there are other things in our market that have the potential to change how consumers engage and own the responsibility about their own health care. One of those is the Exchange Website that the state has introduced. That begins to introduce into the system some ability for me, as the consumer, eventually to be able to choose what health plan I’m in rather than my employer choosing it and choosing the terms of it. I think in a few years I will have a lot more options and I’ll be able to choose a plan that I think has the providers and the structure that is going to serve my needs, and I’m going to be much more interested as a consumer in that than I was when my employer just decided my health plan. SMITH: The Salt Lake Chamber is solidly for the Exchange. We are one of the first groups to sign up and there’s actually talk at the office right now among employees saying, “What plan are you going to choose? What kind of a plan are you going to go with? How are you going to spend your defined contribution money in the Exchange?” So I can already see, anecdotally, changes in the consumerism of the employees at the chamber. My understanding is that there are more than 1,000 employees of different small businesses in Utah enrolled in the Exchange. And people are starting to ask themselves, “Do I want catastrophic care and make it up with some other form of insurance or do I want to go with a low dollar deductible plan?” These are conversations that are being had. So I think that it was the first step in getting consumers back into the game. THURSTON: We have taken 40 or 50 years and very slowly increased what patients expect in terms of the level of service. So patients have a dramatically higher expectation of level of service now than they would have had in 1960 or 1970. And at the exact same time we are increasing the expectation about service level, we have dramatically decreased in every possible way the interface of that patient with the responsibility in the system. I think the Exchange is just one example of the small steps that are going to have to be taken over time to address that imbalance, where people are expecting a lot in terms of what they are going to get and expecting to contribute very little. SMITH: I think the Exchange will help employers. I think that giving employers an option to give a defined contribution, regardless of the amount, will get actually more employers in the game. It’s all contingent upon the success of the Exchange, which we have all recognized and we want to do our best to make it a very successful Exchange, especially in the early stages. I think more employers will be insuring folks, or at least making contributions toward it. THURSTON: We started allowing businesses to sign up for the Exchange last month. Within the first week, we had 58 employers sign up. We have the goal that employers will be signed up by November 1 and employees will start selecting health plans November 1. One of the things that’s critical to understand is that the status quo model—that the employer is making a decision with the employees’ money—is not true. There’s this myth that it’s the employer’s money, but all compensation belongs to the employees, whether it’s in the form of a commodity or salary or check or whatever, it belongs to the employee. What the Exchange does is allows the employer to say, “I’m still going to give you the same compensation, but I don’t want to be involved in your health insurance decision. I want you to be fully invested in your own decision making.” Now, some employees are going to really like the Utah Health Exchange and feel empowered. Others, because we have encouraged people to not be involved in the system, are going to be a little scared about it in the beginning. But we believe consumers will get comfortable with it really quick. Where do individuals who have no access to health insurance fit into the health care discussion? CRABTREE: When we talk about the individual having minimal responsibility whether it’s through insurance or whatever, what about the individual who has no care in the current system? We can talk about changing all the structures of insurance and what drives an individual like myself, who has insurance coverage, to make a better economic decision when soliciting health care, but what about the individual who has no insurance? And that’s a growing population. How do you deal with that group? It’s not just providing coverage for all, but it’s about identifying what is out there that’s broken in the system. Just in the last year, our charity care applications have tripled. We get 600 a month for charity care. We were getting 170 a month a year ago. How does the system adapt to that? That’s the broken part that I see. We can put all the great things in place at the state, and they can cut Medicaid payments to us. We can’t quit seeing Medicaid patients, so we quit seeing the uninsured. KRELLA: So charity care equates to free care? CRABTREE: Yes. Somewhere in the system there are places that take up the slack. In our system, 50 percent of our business is with government-type patients—Medicaid and Medicare. And they pay less than cost. About 45 percent of the system is tied to commercial insurance and fortunately they help us get over the bubble. Where’s the shortfall and how does it get paid? At some point, if the government continues to step back and not deal with the uninsured issue, the commercial insurance and the premiums that are being paid by businesses can’t continue to go up forever. What should employers consider when making health care decisions for their employees? THURSTON: Employers need to keep offering coverage to their employees in one form or another. If employers think they can tell their employees, “I’m going to cut your total compensation by 6 percent this year,” and not have some backlash from the labor market, I think they would be misguided even in today’s soft market. Employees would respond to a 6 percent cut in compensation in a pretty significant manner. If an employer said, “We are going to get rid of the health benefit,” employees will leave and go to a different business. Employers already understand that they have to be competitive. If you are going to reduce one form of compensation, you have to increase it somewhere else to keep people from walking on you. And the great thing about the Exchange is that if the employers take all the money and give it to the employee in the form of a salary, the employee can undo that and put that back into their health benefit tax-free. But they have control over it. And that’s the critical thing, that there is employee control. CAMPBELL: I think that there is a component there that if employees are given money instead of the employer purchasing health insurance for them, they will learn value of the health insurance compared to the cost of the money. THURSTON: One of the great things is this system is designed to get us to that point. For example, if a consumer chooses a plan that will cost $50 less than another plan, the consumer can now see the differential side-by-side and know what that difference is. Getting the costs in a common terminology that everybody understands, a dollar, will really help get consumers’ attention. Do you think the Utah Health Exchange will make insurers’ roles easier or more difficult? WILLIAMS: As a dental insurer, we are a little concerned about if we get put into the Exchange program. When you have a defined contribution, the more important coverage is the health care. That’s the bottom line. And we are concerned that the employees would put their dollars 100 percent toward health care because it won’t even cover all the health care costs in a normal circumstance, so they would end up dropping the dental care side. It is a concern of ours as far as how dental insurance would be addressed. IDESON: [Regence BlueCross Blue-Shield of Utah] is one of the three insurers participating in the Utah Health Exchange at this point. We are participating because we fundamentally believe that we need to be a part of whatever reform activities the state can do. And there’s no question we need reform. The Exchange is one vehicle. I think there are a number of hurdles that we are going to have to overcome in the next several months to find out to make the Exchange less confusing and more transparent to the individual purchaser of coverage. I think one of the issues is that while people will know their coverage costs, they might not spend time reading through their certificate to find out what they bought. So when it comes to the major event in the hospital or in the clinic or the emergency room, and they end up with a different benefit array than they envisioned when they purchased their coverage, that is going to create some angst. Another common misunderstanding about the Exchange is that insurance is portable, but it’s not. It is still an employer plan. If you leave a defined contribution employer and you don’t work for another defined contribution employer, you are not going to be able to keep your coverage. What about individuals who are uninsured? What can we do about this mounting problem? THURSTON: There’s a significant number of the uninsured who are eligible for public health programs, but who haven’t applied for them. What happens is people who are eligible for public programs get caught too late—after an urgent episode happens. We should encourage people who are eligible for public programs to enroll and to use those dollars in a more effective way to get care at an appropriate time and place. If people use public programs wisely, it will benefit the community. CRABTREE: There is an assumption that as you cover the uninsured, you are covering them at the cost that occurs to provide the care, but most government programs don’t quite come to the cost level. The second thing is that as the uninsured are covered, they’re out there buying pharmaceuticals, they’re getting rehab services, they’re getting primary care services throughout the health care system. So, if the hospitals are the way that they provide that universal coverage through a hospital tax or something, then the hospitals don’t recover what they put out in some form of a tax for sure. But if they are not covering the full costs, then somebody else is still subsidizing. It’s a step in the right direction, but it doesn’t create a windfall for us. BATEMAN: I’d echo that, too. It doesn’t create a windfall. It does, however, allow for less pressure for us to cross-subsidize. BARLOW: I think the whole system benefits with that coverage. Someone who is uninsured is likely to defer care until it’s in a more progressive stage and then is likely to access care in an inefficient manner. So one of the things we have to realize is if we can get coverage in place, hopefully it will create more rational care delivery for those not now getting it, and at a cheaper price. IDESON: I agree with those statements. I’m concerned, though, that we don’t fully appreciate the impact on utilization which we talked about earlier, unless we couple the broader coverage with looking at ways to move toward more appropriate utilization and incentives or ways to bend the cost curve. The other dilemma is who is going to take care of these folks? If the system is already stressed and there are not enough primary care physicians at points of intake, and you have more people with coverage, we are going to find an access barrier simply because we don’t have the resources to take care of these folks. POULSEN: As we talk about the uninsured, there are dramatically different components of that group and they don’t all behave homogenously. There are people who get a lot of health care through emergency rooms. And there are people who are uninsured who don’t get any health care at all, even though they are very sick. Those are very different groups. Both are using the system inappropriately and ineffectively, but in opposite ways. So the cures for those two groups are probably different. I think it’s the fact that we are paying by the mile rather than by the destination that causes part of the utilization problem. The other part is simply the fact that there are new capabilities because of technology and research, which do actually enhance value. But figuring out how to pay for those technologies is difficult. For example, which of technologies are appropriate, which new medications do we want to encourage, which ones do we want to discourage, etc. CRABTREE: Is that extending life? POULSEN: Yes. It extends life or improves life. It either keeps people alive or it allows people to be more functional or in less pain. Sometimes it seems abstract, but in a lot of venues I have been, we have asked the question, “How many of you in this room wouldn’t be alive if it weren’t for medical technologies that have been created in the last two or three decades?” And invariably it’s between 25 and 30 percent of the folks in the room wouldn’t be here. If you extend it to their families, suddenly it’s the majority of the folks in the room. And then you ask, “Well, would it have been a nice thing not to have developed those capacities?” As long as it is impersonal and some person somewhere wouldn’t have survived if we didn’t have this technology, but it’s different than when it is, “my daughter wouldn’t have survived if we didn’t have that technology.” And so we have a series of very perplexing and difficult questions on that part. To me, though, the positive part is we know, or the data suggests that by doing what we know to be best practice, there’s dramatic savings to be had. Let’s deal with the ethical questions and issues after we have dealt with the simple and ethics-free issues of providing care in the most effective way that science can allow us to do it. BENNETT: That’s the key. If we get hung up on the examples of where we are talking about the concept of rationing some really valuable care to some individual for whom it might be life saving, I think we miss the point. There’s tremendous waste in our system that isn’t about taking anything valuable away from somebody that adds value. It is taking things that some of us perceive as valuable and there is no data to support the value, and there is data to indicate it adds no value. We have to focus on those first. There will be tough questions to handle as a society at some point, but we are not even near that. B. JOHNSON: How far is the data behind the effectiveness of the new modality? That’s an issue. Sometimes physicians know that something is working, and there’s not enough data to validate that it should be part of best practices. How do you solve that deficiency if you are looking at episodes of care? BENNETT: It is true that there are times when best practice can hamper innovation; that is, it can hold people stable into a certain way of doing things when there’s a new way to do it that is harder to introduce into the system. And that slows us down. But there’s also a feature in our health care system which I think is much more prominent where anecdotally individual physicians believe a best practice is not the right one, maybe because they had a bad experience with it. I think what we need to understand about the physician practice is generally it’s done in an anecdotal way, not a data-based way. Doctors aren’t making decisions about what is best for their patient based on a series of data. They look at the literature, but the literature is broad and it’s confounding at times. Instead, they focus on, “My patient is best served by my experience or what I was trained with in medical school, or a new idea I have introduced that I think works.” But I don’t think we have a lot of this going on where there’s this lag between best practice and evidence. The evidence goes on, the best practices are advanced. There is clear data that following the best practice produces a much more consistent and improved outcome for the patient. BARLOW: I agree—you need to remember that physicians are masters at taking diverse pieces of data and making life and death decisions. That’s what they are trained to do and they do it quite well in a lot of respects. But the system does lack good feedback loops. We do have opportunities, with new electronic health records and tools that have been developed in the last several years, to improve that. POULSEN: There are a lot of new technologies that aren’t better. And we need to be able to separate those. As we have all been looking at ways to save costs, the first thing to look at is if anybody else is doing it better than we are. The inclination has been to look overseas. So over the years we have asked, ”Should we be more like Sweden, more like Switzerland, more like the Netherlands?” The interesting thing is that a number who have looked at it have found shortcomings in every one of those systems. They may not be apparent to us, but they are apparent to the people who live there. As Dr. Cortese, CEO of the Mayo Clinic, said, “Maybe it’s time to stop looking at the French system and the German system and the Netherlands system and start looking at the Utah system.” Now, we don’t really have a different system, but the results that we get actually have costs that are competitive or lower than many of the other countries. We all know it’s more than people here want to pay and we could make it better. But it’s better than most of the other countries. We don’t have the long waiting lines. We don’t have some entity making a decision about what is covered and what isn’t covered. And as a result, I think that we are in the position to move forward. We need to move forward because nobody is satisfied with where we are. I don’t know of anybody who thinks that life or the health care is perfect here. But we are better positioned than virtually anybody to do forward-thinking things that will make real change.
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