Health costs worry Nashville-area entrepreneurs

Rising health care costs are a growing concern among Nashville-area entrepreneurs, who say they worry more about paying employees’ medical bills than about the U.S. economy or securing funding for their businesses.

The latest survey of Entrepreneurs’ Organization Nashville members is a strong indicator that health care reform legislation enacted in March did little to relieve local business owners’ anxieties over the cost of health care.

In fact, it may have made things worse.

Seventy-one percent of EO members responding to the survey said they are “concerned” or “very concerned” about the impact of rising health care costs on their businesses, up from 64 percent six months ago when the last survey was conducted and before health care reform became law.

In a new question to the survey, nearly 62 percent said they expect health care reform to have a negative impact on their business, while fewer than 10 percent said they expect it will have a positive effect.

At the same time, entrepreneurs’ attitudes about the overall economy are improving. Sixty-one percent of the group’s members said they are concerned about the current financial climate, compared to 82 percent in the first quarter.

And while access to capital remains a concern, it’s not as heavy on the minds of Nashville entrepreneurs as it was going into 2010. Less than a third of business owners said they are concerned about securing funding, down from half in March.

“As entrepreneurs, I think we tend to be inherently optimistic. But we certainly prefer an economy on the upswing, credit that’s available and health care costs that aren’t headed north,” said Clint Smith, president of the Nashville chapter of EO.

Despite such challenges, the majority of Nashville entrepreneurs say they plan to increase spending in such areas as staffing, employee compensation and technology. However, the optimism they expressed early in the year has since waned. In March, 75 percent of survey respondents said they planned to spend more on staffing in 2010. By September, that figure had dropped to 58 percent.

“We’ve gotten kind of stagnant,” Coco Kyriopolous, owner of children’s clothing line Coco Bonbons, said of the local entrepreneur community. “At this point, everybody’s anticipating the elections, and all those unknowns make people less optimistic.”

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