Zirtual – A Startup Story Gone Wrong


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Unless you learn to get comfortable with failure, you cannot aspire and look forward to success.

By now, most of you have heard of Zirtual, an on-demand personal assistant company founded in 2011 that went out of business last week and laid off more than 400 employees. The employees received an email on Friday, 08/14 notifying them that the company was shutting down due to financial issues. And the clients received their notifications too.

According to Zirtual’s now, ex-CEO, Maren Kate Donovan, the business was on an $11 million run rate, and was burning $400,000 a month.

There were various causes that frothed up for what happened.

Maren Kate Donovan blamed it on “burn” which is more money being spent than what came in. She also regretted not having a full-blown board in place. Another reason given was the conversion of 1099 contractors into full-time employees without considering the implications of the 20-30% employment expense increase. The lack of a full-time CFO although the size of the organization demanded one, was another factor that came up as well.

The irony is that Zirtual raised about $3.2 million in just this past June and July. Although it might look surprising that a company that just weeks ago, raised funding went under, there is more to the truth than that. Zirtual’s SEC Form D filings show that they tried to raise $5.75 million in June and July – but got only $3.2 million in total. And mind you, this is debt with its own contractual obligations.

Startups.co, depending on how you see it, came to Zirtual’s rescue or gobbled it up post the disaster and acquired it. Startups.co CEO Wil Schroter, negotiated a cash-and-stock deal and added Zirtual to his company’s portfolio of online services for entrepreneurs. In fact, Zirtual, apparently resumed services this past Monday and Startups.co re-hired 60 former employees on a contract basis and looks forward to re-hire more. Startups.co has also initiated efforts on bringing back some of Zirtual’s clients, while the competition is also pursuing them.

Meanwhile, Zirtual has its own set of issues post going out of business. A few former employees filed a class-action lawsuit against Zirtual Inc. in U.S. District Court in the state of Delaware, questioning the company’s violation of labor laws by not giving effective notice of termination. The transfer of that liability to the new owner is still in question. On the other end, there are clients who are hurt by the breach of trust and are hesitant to go back or for that matter, doubt the industry as well.

Lots of lessons here for entrepreneurs. Here are a few:

  • Make sure you raise money way before you need it and raise enough so you and your team are not eclipsed with that worry while you pursue your vision.
  • Debt Financing is great with predictable cash flows; else it can very soon become a nightmare!
  • Do not penny pinch when it comes to finding the right talent and bringing it in when you need it. Find your savings somewhere else.
  • Check, double check and triple check everything. You can never go wrong with overanalyzing operational finances.
  • Proactive and quick decision-making is important, but be wise about your decisions.
  • Your customers and employees come first, everything else comes after them for without them, there is no business.

Learn from them and go find your success!

Image Courtesy of FreeDigitalPhotos.net

Taking the first step….


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I believe ambition drives the world and what keeps it going is the hope to see it realized. There is no end to it. You achieve one goal and you aspire for the next. After all, you have to live and that is what is called living.

However, many a time, a lot of people spend tremendous amounts of time and energy on dreaming and preparing to start, waiting for the opportune time.

What they do not understand is that time is always NOW!

You can dream all you want, prepare all you want and keep waiting forever for the opportune time; time will pass, but nothing gets realized until started. What better time to get started on your ambition than now.

Hope is the elixir that keeps you going. However, there is no going anywhere if you keep planning, dreaming and preparing.

Take a stand and get started. Half the battle is won right there! You are moving on the path of achievement. You will face trials and tribulations, you will fall to rise again, and perhaps fall again to rise once more. Your will shall be tested, your patience, self respect and talents will be bruised and battered, however, you will still be inching closer toward the realization of your goals. Never give up no matter how bad the situation seems. You are one of the lucky few that actually started down the path of working for your goals; being resilient and holding steady will eventually see you realize them.

That is success. Not the realization of your dreams, goals and ambitions, those are the fruits of your getting started and holding steady. But the actual journey of making it there is what defines your success.

To achieve your dreams and realize your ambitions, start now for there is no better time than NOW!

Image Courtesy of FreeDigitalPhotos.net

The conventional world of health insurance brokers – redefined by ACA


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“Commissions are either low or gone!”

“Healthcare.gov – Like it or not, you have to deal with it.”

“Plan choices, Private Exchanges, Benefits Administration, don’t know what else we will have to learn and do.”

These are some of the statements that you get to hear from health insurance brokers now days. The Affordable Care Act, by bringing in Federal and State governments to the center of the healthcare debate, has totally changed the landscape of health insurance distribution. And with it, come myriad changes as to how employers, individuals and brokers deal with it.

Let’s focus on brokers today.

Right from the CEO of Healthcare.gov, it has been reiterated time and again that brokers are an integral part of the post ACA world.

But, how do brokers need to mold and change in order to take advantage of the opportunities at hand in this new world?

  1. Move from being a sales agent to a benefits advisor – Healthcare has always held a top slot among government, politics and economy. Healthcare consumption is inevitable. In these new times of higher transparency, newer technology, better consolidation and decision making choices moving more into the hands of end consumers, brokers do not necessarily have to play the role of selling more, but of being a confidant, of being someone who can help a consumer move through choices, compliance and legislative requirements, the myriad intricacies, the new healthcare landscape has to offer. Sales are there to happen, and will happen more. But, are you prepared to service your consumers before you expect to sell?
  2. Expand into new product lines – Besides medical insurance, there are other products individuals and employers seek in order to provide a wholesome benefits experience. Voluntary products are popular choices and with them, come opportunities to expand and grow your business. Private Exchanges are stocking these on their shelves to sell alongside medical insurance products. And, especially with choice moving into consumers’ hands, these help round out and provide a better benefits experience. 
  3. Expand into third party exchanges – Talking about private exchanges, there are numerous avenues of product distribution available now. The public exchanges, several private exchanges, each with its own niche. Similar to health plans, brokers need to evaluate the choices available to their target markets and adhere with some that they expect to make the best impact for their customers with. Again, all this is overwhelming for individuals or employers and hence, they seek broker expertise to guide them to the right choices that aligns with their needs. With these exchanges also comes the need to understand benefits administration. The role of a broker no longer ends with completing a sale. It further continues with being there to guide their clients through the use of technology, being there to help answer their compliance and administrative questions and ensuring that they have a rewarding benefits experience throughout the year until next time.
  4. Embrace Technology – The new age healthcare world is technology driven. Its time brokers get comfortable with it, learn how to leverage it and use it to their advantage. Digital storefronts are a reality of the post ACA world. With exchanges coming out, consumers have learnt to expect to see their brokers on the web. Though in person interactions and telephonic conversations are important, providing self-service mechanisms to their clients who are very savvy now days, becomes as important. Consumers are connected and expect to reach their brokers any time, any day, however they wish. Additionally, it provides brokers the opportunity to grow bigger, faster.

Image Courtesy of FreeDigitalPhotos.net

The new kid on the block – The Anthem-Cigna combined company


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Move over, Aetna-Humana.

On July 25th, 2015, Anthem & Cigna, the nation’s second and fourth largest insurers by enrollment and the second and fifth largest by revenue, have announced a $54.2 billion merger, now the largest in the history of Health Insurance. Again, a part cash and part stock deal, Anthem is to pay $188 per Cigna share, a 38.4% premium over Cigna’s share price as on May 28th, 2015. $103.40 is to be paid in cash and 0.5152 shares of Anthem stock are to be exchanged per Cigna share.

Similar to the Aetna-Humana merger announced about 3 weeks ago, this deal is targeted to close in the second half of 2016.

Anthem will own 76% of the combined company while Cigna will own 33%. Anthem CEO, Joseph Swedish will be the new Chairman and CEO of the combined company while Cigna CEO, David Cordani will be its President and COO.

The combined company is expected to have 53 million medical members – nearly 1 in every 5 insured Americans with annual revenue of $115 billion. This would make it the largest U.S. health insurer by membership, closely trailed by UnitedHealth Group, with 46 million members.

With Aetna-Humana’s combined company poised to serve 33 million members, health insurers have consolidated from being the top 5 to top 3.

Historically, Anthem has been a company created through acquisitions, which grew mostly by buying Blue Cross-Blue Shield plans in various states. One of the prized acquisitions of Anthem came in the form of Wellpoint Health Networks of California in 2004. Amerigroup, a Medicaid plan in 19 states was its most recent acquisition in 2012. Anthem is the biggest member of the Blue Cross and Blue Shield Association, which has about 36 independent insurers that collectively insure 106 million members. Anthem serves members in 26 states.

Anthem dominates the employer based insurance markets in 10 of the 14 Blue states. Anthem has about 39 million medical members of which 61% are in the self insured market and 15% in Medicaid. Group business is about 12% and Medicare Advantage, just about 1%.

Blue Cross member companies do not compete with one another, but Cigna does. However, Anthem has confirmed that the combined company will remain Blue.

Cigna operates in U.S. health, life and disability markets and has an international presence in 29 countries, primarily through expat employer benefits. Cigna has 15 million medical members. About 80% of its business is in the self-insured market. Besides employers, Cigna serves individuals and Medicare Advantage customers. Cigna also has 24 million behavioral health consumers, 14 million dental care members, 8 million pharmacy benefit plan members and 1.5 million Medicare Part D pharmacy customers.

Anthem has a major presence in the public insurance marketplaces while Cigna does not.

While Aetna-Humana deal expanded Aetna’s presence in the Medicare Advantage space, the Anthem-Cigna deal is expected to radically affect the commercial insurance market, where both the companies have dominant presence in various geographies.

Similar to the Aetna-Humana deal, this deal is also being touted as formed to consolidate operations, take advantage of technology integration, streamline costs and expenses, leverage complementary offerings and markets and finally, to leverage better costs for end consumers through the negotiation of lower prices with hospitals and providers. Initial cost savings of $2 billion were announced for the combined company.

On the other hand, lower competition with a few major players could mean more power in fewer hands, premium increases and perusal of policies in favor of their shareholders than consumers.

If history is any indication, according to a 2012 study of the 1999 merger between Aetna and Prudential, premiums increased by seven percentage points.

Now, it’s for the federal and state regulators to watch out for consumers.

Image Courtesy of FreeDigitalPhotos.net

Connected, yet drained!


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In the current digital era, the highly networked age, everyone you know or do not know has a connected device at hand. Mobile phones, tablets, laptops and personal computers are everywhere around us. You have them at home, at work and everywhere in between. You can reach anyone across the world at the speed of thought! You can call, leave a message, email, text, and chat or get on social networking sites and apps and share. Boy, are you connected! You have the reach at your fingertips that, a couple of decades ago was only dreamt of.

But, do you really connect? The human mind is so flirtatious that it cannot afford to stay put on one interaction for longer than a few seconds to perhaps, a couple of minutes. It has to keep moving, has to find new interests and fleet to the next as the previous one starts to wane away. That is what the rapid and overwhelming influx of information and our highly networked times has done to us. How many times have you glanced at your mobile phone today? Checked that Facebook app, that LinkedIn page, those Twitter tweets for the nth time yet?

There is no denying the fact that what technology has enabled is highly valuable. To reach someone on the other side of the planet in real time is immense. It has brought us all together in various aspects of life, personal and professional, and made the world smaller. It has made us one people and erased boundaries and other demarcations that once divided us. And, in every sense of what it set out to do, it has enabled us to make progress as better educated, aware, enlightened and open-minded humans that care about, not just what’s around us, but across the world.

And, this ability, in the larger scheme of things is highly efficient and valuable. However, what it has also done is, robbed us of what we once cherished and valued. True social interactions, in person meetings where we greeted each other and shared bonhomie, family and friends get-togethers where we cherished knowing each other and encouraged finer aspects of our personalities, social events where we met, talked, shared opinions and thoughts, all those are not as frequent or as rich as they once were. Perhaps, it is now that we reminisce the value of what we are continuing to lose. Think about it, you live in the same home, but communicate with your spouse and kids via devices. The family room conversations, the dinner table chitchat, the long ride interactions and coming together to participate in events that enriched us and strengthened our bonds are becoming rare; perhaps only on special occasions do these occur, if at all. Its in our best interest to save these and cultivate them, not just in ourselves but in future generations for they enriched us and defined our very existence, as people, as those who loved each other for what we were and strived to excel.

Technology has to be leveraged and used to enrich our lives, but we shouldn’t become a slave to it. It takes a conscious effort to do that and it’s in the best interest of us, humans to let it not rule our lives. And who better to begin this reversal than you. Take up the challenge and bring life back to you and those around you.

Image Courtesy of FreeDigitalPhotos.net

Going on and on – The “not so” secret of success


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A prospective partner that I had been pursing said to me, the other day, “You have the patience of a saint. I am sorry it is taking so long to finalize the deal.”

I had been pursuing this for a while and after maneuvering through several obstacles, we were getting closer to finalizing an agreement. I sat back to reflect, “But, this is what I do. I don’t give up. I just continue till I find closure.”

You have a vision, a game plan, goals and milestones tracked to realize your vision. At a point in time, what you can control is the action you take to get closer to realizing your vision. Act in anticipation of finding success. You may or may not find it instantly or as expected. There are bound to be hindrances, obstacles that need to be surmounted on your journey. Make plans early on for deviations, strategize, effect changes and continue to execute to get closer to your goal.

You have to be continuously on the move. You cannot afford to stop, stare and take no action. You have to act to see results. And, you have to act differently to expect different results from the one you have come across. Have a keen eye on your end goal; however focus on the action at hand. You get closer to your goal, one step at a time. The current action is what you can control. Do your best in what you do now, and then, contemplate on the next step before you take it.

Keep moving, keep going on. Your end goal, has no option but to succumb to your advances.

It is not about being the best, having the most or getting there before everyone else. It is about not giving up, trying again and again, having the patience to reach a goal, fulfill a vision and having the tenacity to see it through.

Being calm and composed, patient, never giving up and always being ready to act will ensure the success you desire.

Image Courtesy of FreeDigitalPhotos.net

What are you afraid of?


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One of the most popular and principal characters of the renowned Indian epic of “Ramayana” is the monkey god, Hanuman. The story goes that Hanuman was bestowed with remarkable powers by the gods, but he was also cursed to be unaware of them. He had to be reminded in the time of need to use them and conquer the seemingly impossible.

The reason I am reminded of that is when I look around, there is so much potential, yet blissfully unaware of what they could do or be.

We turn out to be what our circumstances make of us. Yet, there are those that have battled the odds and their lives have turned into inspiration for others. How so?

Some are driven by purpose, others by fear and yet others, something else. We all have a motivating factor in life, to do better, to excel. Some of us pursue and conquer, others embrace what they confront.

But, each of us has the potential to be much more than we credit ourselves with.

You do not have to pursue just one thing in order to lead a happy life. Focus on not one, two but more things. There are so many flavors life has to offer. Try them out. What you do for 8 hours a day to make a living is fine, if that’s your passion too, better. Pursue other things; you like to sing, sing, you like to write, write. Spend time with your family and friends.

Its human nature to avoid things that you are not sure of, that you are afraid of. Conquer the anxiety and just venture out to do it. Rest assured, you will come out just fine.

How are you ever going to know what you are capable of? If your heart is prodding you to go ahead and do something, do not analyze using your head all the time. Listen to your heart and just do it so you do not regret a missed opportunity at a later time.

I agree that we live in a complex world where sometimes, you have to make situational compromises. But if that dictates what you seek and aspire to do, you will never be done. Take a leap of faith and just go for it. I assure you, life has a way of making sure that things work out. When you look back, you will be glad you did what you had to.

Never question what you are capable of. Why don’t you discover for yourself. You will be amazed at what you find.

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In Pursuit of “You”


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It is said that as you hit middle age, you start to come to terms with yourself. Well, in some cases, I believe you struggle to do that. However, I have seen that most people start looking back and introspect to find themselves, their purpose, start to analyze if they are on the path to what they have always wanted to do. If not, they make plans to adopt the path they are on. Overall, everyone looks to make peace with his or her existence.

There are a lucky few, who get to do this much earlier in life. They are blessed. Blessed, because, this sets them on the path early on where they set out to do what they really wanted to. For most, the realization itself takes time.

The first ten years of life pass in playful abandon, blissfully ignorant of a higher purpose in life. The second decade brings along with it, the pressure of growing up. We set out on a path that we have grown to recognize during the first decade of our life; a path traversed by our parents, relations and other elders we see growing up. We are unsure; if this is our calling, yet trudge along on what is in front of us. The third decade brings with it the responsibilities of life: work, relationships, marriage, kids and all that raising a family entails. There is hardly time for anything else. Toward the fag end of this part comes the retrospection and introspection I talked about initially.

Better late than never, you correct course and proceed.

Life is actually very simple, yet we make it so complex for ourselves as we pass through it. Part of it is due to the continuous influx of all that life has to offer and the rapid pace at which we pass through it, that we never get a chance to catch a breath and look at it from an external vantage point. And, part of it is due to the fact that we have never known it any other way. Of course, there are those lucky few who catch a break early on and are thrown on the right track to begin with.

Life’s simplicity lies in not taking it seriously and just knowing that, you need to take it one step at a time, living in the present. Its like when you learn to walk, take one step at a time. Put your first foot forward firmly, and then lift your second foot to put it in front of your first. Once you do that, repeat the process.

At whatever juncture of your life you are at now, just remember this and follow through. You will be happy and fulfilled. Do not overthink or over do, just focus on what is in front of you and do it with utmost sincerity. Although the future may seem uncertain, as long as you are in control of your steps, the path you seek will reveal itself, guaranteed.

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Aetna-Humana merger – What does this mean to Healthcare Consumers?


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On Friday, July 3rd, 2015, Aetna and Humana announced a $37 billion merger, the largest in the history of Health Insurance, in part cash and part Aetna stock for Humana stock at a modest 29% premium over Humana stock price as in May 2015. This merger values Humana at about $230 a share. Humana shareholders will receive $125 in cash and 0.8375 Aetna common shares for each Humana share. Aetna’s shareholders would own approximately 74 percent of the combined company and Humana’s shareholders would own approximately 26 percent. Upon approval from regulators, the merger is to be closed in the second half of 2016.

Over the past few years, Humana has set itself up as a leader in the Medicare Advantage space.

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According to a study conducted by Kaiser Family Foundation, Humana holds about 19% of the Medicare Advantage market as compared to Aetna, which holds only about 7% of the market. This merger allows Aetna to triple its Medicare Advantage business taking it to the #1 single carrier spot in the business trailed by United Health.

Nearly 7.5 million of Humana’s 14.2 million members were enrolled in individual or group-related Medicare plans as on March 31st, 2015; that’s more than double the combined number of Medicare enrollees at Aetna, Cigna and Anthem. This made up nearly 72 percent of Humana’s total revenue in 2014, compared to 25 percent for non-Medicare plans.

By contrast, Aetna is a leader in the diverse commercial insurance space.

With the employer sponsored insurance landscape changing and potentially slowing down, Aetna saw government business as the avenue for its future growth. The Affordable Care Act (ACA) is helping expand Medicaid coverage in several states as it attempts to provide health coverage for millions of uninsured people. Meanwhile, Medicare Advantage has seen its total enrollment triple over the last decade to 16.8 million people.

This merger has been connoted as being inevitable in a changing healthcare landscape post ACA. Both companies have announced that this merger will help consumers in terms of better products and services due to the merger making way for better technology, products and relationships with healthcare providers. Further, they announced this as a merger of complementary strengths in markets served and technologies used.

About 2 years ago, in May 2013, Aetna acquired Coventry Health Care for $6.9 billion as the first step in consolidating its government business. With that acquisition, Aetna had added approximately 3.7 million medical members and 1.5 million Medicare Part D members. In addition, Aetna’s Medicaid business had grown from 1.1 million members to more than 2 million members, and its Medicaid footprint had expanded from 12 to 16 states.

With the current merger, the combined Aetna-Humana company’s government business — Medicare, Medicaid and Tricare — will be based in Louisville, KY where current Humana corporate headquarters are located, and will be the biggest part of the company, totaling about 56% of the combined companies’ projected 2015 operating revenue of about $115 billion.

The combined company will cover more than 33 million people, only led by UnitedHealth Group and Anthem. The combined company would be the second-largest insurer by revenue, just behind United Health.

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Aetna and Humana are in nine of the same states in Medicare Advantage. Combined, they would have market share of 88 percent in Kansas, 80 percent in West Virginia, 58 percent in Iowa and 51 percent in Missouri. Regulator dynamics will soon be in play in these markets to ensure that monopolization is kept at bay and true consumer interest is in action by encouraging competition. How, is yet to be seen. However, such major consolidations potentially increase insurer’s influence with federal regulators.

Although insurers and investors apparently see a benefit in these mergers, it’s yet to be seen how the economies of scale play out for end consumers. With the size of the companies coming together in a yet larger consolidation, is more of scale economics still possible? Or are such mergers only going to lead to consolidation with one or two behemoths taking over an entire market, thus narrowing down any competition or innovation that comes with competition?

From a consumer benefit standpoint, its still unclear what is to come? With the power exercised by such a merger, the combined company could push providers to provide better outcomes at lower prices. You could also argue that there would be more streamlined and limited number of choices available for consumers to choose from. However, less competition could also lead to higher premiums, higher out of pocket costs and narrower networks.

While announcing the merger, Mark Bertolini, CEO of Aetna said, “You need to have enough power and enough presence at the local market level to be able to create relationships and efficiencies that are to consumers’ advantages. That requires “larger organizations, more capital, more technology and more intellectual property. That’s what’s driving the consolidation.”

One signal, if it means anything would be what Mr. Bertolini did in the recent past. He raised the minimum wage for Aetna employees to $16 an hour and lowered workers’ out of pocket insurance costs. He announced that he has incorporated those benefits into financial projections for current Humana employees post merger. He was also in the news recently for encouraging all his employees to take up free meditation and yoga classes at various Aetna locations to combat stress and get on the path of wellness. This speaks to where his true heart lies in terms of setting an example and signals a ray of hope on things to come from this merger.

Image Courtesy of FreeDigitalPhotos.net, Wall Street Journal & Kaiser Family Foundation

SCOTUS rules “For the People” on Affordable Care Act


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On Thursday, 06/25, in a historic 6-3 decision, the US Supreme Court reinforced the highly debated and controversial Affordable Care Act.

As you may know, under the Act, Health Insurance Exchanges were established as marketplaces to help individuals buy health insurance. The Federally Facilitated Marketplace serves individuals and small groups across the country, specifically in 34 states that did not build their own an exchange.

Based on annual income, individuals validate their eligibility for tax credits. Over 10-13 million individuals enrolled during last open enrollment. Around 7.8 million availed the credits during their health insurance purchases. These credits were provided both on the Federally Facilitated Marketplace as well as state marketplaces.

There was a lawsuit, the now infamous King vs. Burwell questioning the structure of the law that stated these credits be made available on exchanges of states. Since there was no mention of FFM or Federal Marketplace, it was implied that the credits did not apply to the states that depended on the FFM and as a result, the subsidies given out to date were deemed illegal.

If the Supreme Court hailed the lawsuit, it meant that about 6 million healthy people who already availed these credits would lose them for the upcoming open enrollment. There was a possibility that healthy people may not purchase insurance in the absence of credits and the carriers faced a skewed unhealthy insurance clientele, resulting in disastrous results on overall healthcare in US. The founding premise of the law, to ensure as many citizens are covered would have been at jeopardy.

Chief Justice John Roberts stated while reading out the majority opinion on Thursday, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”

With SCOTUS acting on behalf of the benefit of US citizens, everyone can look forward to next steps in improving US healthcare distribution and delivery.

Image Courtesy of Wikimedia Commons