AHA Solutions Press Release

Landmark study focuses specifically on retirement plans in healthcare market

Washington, DC and Purchase, NY (Wednesday, August 13, 2003) -

U.S. healthcare organizations facing a workforce shortage see retirement benefits as a key factor in employee recruitment and retention, suggests a new survey from the American Hospital Association (AHA) and Diversified Investment Advisors.

“The survey results highlight several key market trends,” noted Chris Cumming, senior vice president and Defined Contribution plans business leader of Diversified Investment Advisors. “First, retirement benefits are frequently used as a recruitment and retention tool. Second, plan sponsors are providing more in-depth investment advice, education and ancillary services, as well as new and more precisely focused investment options.”

Based on responses from more than 300 hospital and health system plan sponsors nationwide, Retirement Plan Trends in Today’s Healthcare Market - 2003 focuses specifically on the defined contribution plan characteristics and challenges unique to the healthcare market.

“Healthcare is one of America’s largest employers and this survey takes an important step in providing key information to the field,” said Anthony J. Burke, president and CEO of AHA Financial Solutions, Inc. (AHA-FSI). “Allowing a greater understanding of benefit trends, hospitals can better equip themselves to recruit and retain workers.”

Key findings from the survey include:

- Participation rate: The average participation rate in 403(b) plans (60%) is nearing that of 401(k) plans (70%). While the 403(b) plan typically has the greatest number of eligible healthcare employees, historically participation in those plans significantly lags behind that of 401(k) plans offered in the corporate marketplace.

- Expanded eligibility: To attract and retain employees, requirements such as age and service in most plans, particularly in large plans have been liberalized. In addition, to increase the value of retirement benefits available to employees a majority of healthcare plan sponsors vest employees immediately in employer contributions. Immediate vesting is more prevalent in 403(b) plans than among 401(k) or 401(a) plans.

- Ancillary services: Healthcare plan sponsors are also catering to increasing employee demands by supplying them with outsourced, cost-effective ancillary services. Of the ancillary services offered, nearly 60% of plan sponsors rely on their retirement plan provider to make investment advice available to employees. Forty-six percent of respondents receive flexible spending account services, and 32% may access 529 college savings plans through their provider.

The survey indicates that new products and services are only possible with the implementation of cost-cutting efficiencies. By reducing a distracting number of extraneous investment choices for participants, consolidating retirement programs under one provider umbrella and outsourcing ancillary services, organizations have eased administrative costs.

The proliferation of asset allocation or lifestyle funds appears to be part of a larger product-customization trend within the market, according to the survey. Comprised of different risk-level investments, lifestyle funds are specifically tailored to suit the needs of participants at different stages of life and with varying needs. Nearly 60% of respondents offer lifestyle funds compared with only 30% of non-healthcare companies.

The survey also suggests that because of recent equity market volatility, the mix of investment options has changed to include a greater number of bond, real estate and other emerging product category funds. Seventy-five percent of respondents offer conservative bond funds, while 45% offer aggressive bond funds. Nearly 42% maintain a “socially responsible” fund, and approximately 25% of respondents offer real estate funds. Compared to other investments, self-directed brokerage accounts and mutual fund windows are not as popular. Only 15% of respondents make self-directed brokerage accounts available to participants.

Increased volatility and concern about investment risk has significantly impacted the demand for participant investment education and communication. More than 60% of respondents identified improved employee education as a major goal for 2003. Offering financial planning services (30%) and changing or adding investment options (25%) are also revisions that plan sponsors are likely to make in the upcoming months.

“We’re seeing a reaction to the disproportionate challenges faced by the healthcare market: challenges such as employee turnover, workforce shortages, and mergers and acquisitions,” said Cumming. “Organizations see customized retirement planning as a way of increasing job satisfaction and ultimately employee retention.”

To request a copy of Retirement Plan Trends in Today’s Healthcare Market – 2003, please visit www.ahaonlinestore.com or call 800-242-4677.

Editor’s Note: The AHA awarded its exclusive endorsement to Diversified’s defined contribution and deferred compensation products in October, 2002, following a market assessment by AHA-FSI . The AHA and Diversified are committed to providing tools and resources to help hospitals provide quality retirement plan benefits that aid in employee recruitment and retention.

About AHA
The American Hospital Association (AHA) is a not-for-profit association of healthcare provider organizations and individuals that are committed to the health improvement of their communities. The AHA is the national advocate for its members, which includes nearly 5,000 hospitals, healthcare systems, networks, and other providers of care, and 27,000 individuals. Founded in 1898, the AHA provides education for healthcare leaders and is a source of information on healthcare issues and trends. For more information, visit the AHA Web site at www.aha.org.

About AHA Financial Solutions, Inc.
AHA Financial Solutions, Inc. (AHA-FSI) is the subsidiary of the American Hospital Association that collaborates with companies to create strategic financial, technology, regulatory and insurance products and services for healthcare professionals. It functions as an information resource to AHA-member hospitals and other healthcare organizations. For more information, contact AHA-FSI at (800) 242-4677 or visit www.ahafinancialsolutions.com.

About Diversified Investment Advisors
Diversified Investment Advisors is a national investment advisory firm specializing in retirement plans. The company's expertise covers the entire spectrum of defined benefit and defined contribution plans, including: 401(k); 403(b); 457; non qualified deferred compensation; profit sharing; money purchase, cash balance; Taft-Hartley; and, rollover and Roth IRA.

Diversified services over $50 billion in retirement plan assets, helping more than one million participants save and invest wisely for retirement. Headquartered in Purchase, NY, the company's regional offices are located in California, Georgia, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas and Wisconsin. For more information contact Diversified at 800-770-6797 or visit www.divinvest.com.