Posted by: Creede Bighorns
In reply to: Creede Bighorns who wrote msg# 65 Date:3/27/2006 12:13:47 AM
Post #of 5880
All of a sudden, Dexter found his niche, and DISA inc. was the vehicle.
DISA Inc. became the worlds first TPA (Third Party Administrator) for drug testing. Wonder what the heck that is? Here's the legal definition:
According to the According to the Third Party Administrator Act, MCL 550.902(2)(k), , a Third Party Administrator (TPA) is defined as:
a person who processes claims pursuant to a service contract
and who may also provide 1 or more administrative services
pursuant to a service contract, other than under a worker’s
compensation self-insurance program pursuant to Section 611
of the worker’s disability compensation act of 1969,
Act. No. 317 of the Public Acts of 1969, being Section 418.611
of the Michigan Compiled Laws. Third party administrator does
not include a carrier or employer sponsoring a plan.
TPA's are commonly used to replace the human resources department. Often a company will elect to use a payroll TPA instead of doing the work internally. Why? Because often it's a far easier, and more economical approach. Here's an example of services rendered by a typical payroll TPA.
Businesses of all types and sizes turn to us for payroll and tax filing services as well as commercial insurance coverage such as workers' compensation, general liability and health insurance. Absolute Pay Trust even offers the convenience of pay as you go billing for many types of insurance. All of our products can be utilized together or separately. That means you choose only the services that your business needs.
Payroll service features:
Payroll checks and FREE direct deposit
Delivery of checks and reports
Quarterly and annual tax filings (941, UTC-6 and 940 forms)
Federal tax deposits
Vacation and sick leave tracking
Child support payments
Workers' Compensation audit reports
Other customizable payroll and tax reports
Easy to understand invoicing
How does your business currently process payroll?
In-House
Time is money. Absolute Pay Trust can help give you more of both. Calculating and processing payroll checks, making tax deposits, filing quarterly and annual tax reports, generating W-2's, etc...are all non revenue producing tasks. Time spent on these duties is time that could have been spent on activities that bring money back into your business. Absolute Pay Trust can handle all of your payroll responsibilities for less than it costs you to do it yourself.
Payroll Service
Not all payroll services are created equal. Absolute Pay Trust is a local payroll company that specializes in hands-on, personalized customer service. We also guarantee to beat the rates of the company you are currently using.
Employee Leasing/ PEO
Leasing arrangements are typically not the most cost effective method of processing payroll and obtaining workers' compensation insurance over the long run. Let us show you in black and white how Absolute Pay Trust can save your business money compared to employee leasing.
So, having a service that allows you not to have to deal with payroll, taxes, banking, and insurance sounds like a good idea. Sounds like much less man power, time, and frustration....not to mention one less department...the human resources department.
And what exactly is the point in digging all that this up now? Well, besides the fact that Labwire uses a payroll TPA, their business model is just the same as a TPA. The genius about Dexter's change of course with DISA inc. is in that he recognized that the Federal Drug Testing Standard just created a nightmare for American Corporations.
Can't you just see it? You have a huge company that's in the transportation industry like say........Greyhound, and you have 8,700 employees and they need to be tested NOW, and then randomly forever thereafter. If you were the CEO of Greyhound, what would you have done? Created a drug testing department, with staff with absolutely ZERO experience? At this time, no one knew squat about drug testing. The Standard was brand new, and so was the concept. These CEO's knew that they were going to be putting their neck on the line big time if they went into the drug testing field. How much would it cost? How many employees to hire? That's where DISA inc. stepped in...under Dexter's guidance...and right at the nick of time.
DISA Inc. was the solution so desperately needed. Dexter's years of experience meant that he knew what needed to be done in order to comply with the new Standard...but best of all, Dexter could give the leaders a fixed cost, and take the responsibility off their backs. They could go to their boards on the front end and say that DISA Inc. was going to handle it, and here's how much it's going to cost. Needless to say, finding business was not hard to do.
So, once again, why be the drug testing TPA? Bottom line....because DISA Inc. could be the first to define the industry....they set the rules, and the pay scale....and most importantly, it's a business with high margins....well, at least DISA started that way. You see, what a drug testing TPA really does, is fill gaps. The gap that is between the drug testing labs, and the corporation (or government). So really, they provide a business to help businesses. They take care of all the things that are tied into drug testing....sounds pretty simple, huh? Well, so does the human resource department.
Here's a quick idea how many things a drug tesing TPA does. This is a diagram from Labwire's website labwire.com (BTW - the way that platform works, is patented, and one of a kind....it's one of the key things that makes LBWR so much better than DISA...but more on that later). So, in 1989, the CEO's of America said thank goodness for drug testing TPA's....and they still are!
So now Dexter had a captive industry, and now he needed a way to best bridge the proverbial gap. The first order of business would be to build a computer "platform" to help securely organize all the data that would be coming, and going. But, since it had never been done, how could a platform be built that provide everything that is needed? How could needs even be anticipated when this service had never been done before? Well, they couldn't really. All they could do is build a basic database, and then make it work. And they did. And it worked just fine...for a time.
The 90's were a very busy time for DISA inc. They were the first and the best drug testing TPA in the world. They were beginning to get more and more clients. Their approach to new clients was quite indifferent...they took em all...no matter how big or small. Matter of fact, they even took on the behemoth Walmart. Of course, it didn't last. Walmart just wanted to learn the business, and then they actually did opt to open their own drug testing department....more power to Walmart.
So DISA's client base grew and grew. And how did DISA respond to all these new clients? Well, hired a whole bunch of staff, of course. And what about that computer platform? Could it be all things for all clients big and small? Well....they tried to make it that way. Every time a client asked for a new task to be done, they just called the programmer, and added another module to the platform. And they just kept adding, and adding. The platform was getting more and more complex, and also slower and slower. The platform was becoming more difficult to operate or understand...which, of course, meant more personnel were needed....so they just kept on hiring.
By 2001, DISA's had accumulated quite a staff, and also some debt. At that point, Dexter made the decision to take out a loan in order to pay-off the debt, and make some vital improvements on the platform. You see, Dexter knew the platform was the real heart of the business, and it was one complex mess. He wasn't sure what needed to be done with the platform...just that something had to give. So, he secured $15 million in venture capital funding from the Texas Growth Fund in Austin and Soros Private Equity Partners in New York. In this deal, there was a "ratchet clause" that would enable Soros Private Equity Partners to take over DISA Inc. if the performance of the company dropped below a certain revenue amount. The amount seemed extremely low, and Dexter signed the contract with the ratchet clause in place. He had no doubts that he could make the revenue allotment. Matter of fact, seemed almost impossible that the revenues could drop that far....I mean, what could go that wrong?
To be continued...
GB-ND
creede
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