Feature Stories - March 2006

1986-2006 Twenty Years of Covering Nevada Business News

by Kathleen Foley

Remember 1986? Most offices had an IBM Selectric typewriter, but not every office had a computer. Fax machines were brand-new, expensive technology. For junior executives and middle managers, beepers were a “must-have” accessory, but if you were a real mover-and-shaker in the business world (or wanted to be) you had a brick phone installed in your car. The Internet was confined to a few research institutions and “Googling” had not yet been invented. Secretaries put carbon paper between pages to make multiple copies of documents and used correction fluid to fix mistakes.

In 1986, Nevada Business Journal was born in Las Vegas. In those days, magazines were produced by printing up galleys of text that were then pasted onto boards. The boards were sent to a printer, who photographed them and turned them into film. Ads were also submitted on film, and at some point the film for the ads was combined with the film for the text and the finished product was burned into plates which were loaded onto printing presses. No Word documents or PDFs, no digital photographs or computer graphics. Somehow, we managed to produce a magazine this way, just as business people all over Nevada ran their offices, stores and factories and kept Nevada’s business machine humming.

Twenty years later, as we reflect on changes in the way Nevada does business, we spoke with leaders who have been involved in their field or profession for 20 years or more and asked for their insights about the changes they have experienced and lessons they have learned.

Healthcare: High Cost, High Tech

Although the technology of healthcare has changed quite a bit in the last 20 years, many problems we discussed in the 1980s are still with us today. In May 1989, we ran an article entitled, “Nursing: Why the Crisis?” which noted that fewer women were choosing nursing as a profession, and warned about a gradually-worsening ratio of nurses to patients. In the same issue we reported on a study in late 1988 in which 55 percent of senior executives polled “agreed strongly” that “despite the cost containment movement, employer healthcare costs are still out of control.” Unfortunately, both these problems are still with us.

Sierra Health Services, a Las Vegas-based provider of managed-care benefit plans, celebrated its 20th anniversary as a public company last year. Its CEO, Dr. Anthony Marlon, said holding down the cost of healthcare has been a concern for the last 30 years. “During the ’80s, healthcare costs were rising at a rate of 10 to 15 percent per year,” he said. “They slowed in a little in the early ’90s, but were back at that level in the late ’90s. Around 2000, the annual rate of increase leveled off and has been between 6 and 8 percent since then.” Marlon predicted healthcare costs will continue to rise faster than the inflation rate for the next three to four years, and the nation will probably see annual increases in the range of 5 to 8 percent.

“Some of the increased costs of healthcare have been passed on to the consumer,” Marlon explained. “In the early ’80s, the co-pay for an office visit was around $3. Today it ranges between $10 and $20. But patients are not paying more as a percentage of the actual expense. Typically, the consumer pays 20 percent of the costs of basic services such as doctor visits and routine care, and insurance companies pay the other 80 percent. For major surgery or catastrophic illnesses, insurance companies pick up almost the entire bill. These numbers haven’t changed since the ’80s.”

There are three basic reasons for rising costs, Marlon explained. “New technologies are being developed and people are demanding access to them, even though they are very expensive. In addition, the healthcare community is committed to better care to achieve the best quality of life for everyone. Lastly, people are living longer and the average age of patients is increasing. Keeping older patients healthy requires more medical care.”

One major concern for Nevada’s healthcare community has been the number of uninsured people, which leads to higher costs for hospitals in unreimbursed expenses, and has caused a crisis in emergency-room care when uninsured patients use emergency rooms as their primary source of medical care. Marlon said about 20 percent of Nevada’s population in the 1980s was uninsured, and today’s numbers are about the same.

According to Marlon, the major paradigm shift for managed-care companies between the 1980s and today is the move toward covering preventive care. In the 1970s and early ’80s, preventive measures such as well-child visits, physical examinations and routine mammograms were not covered by health insurance policies. Today, insurance companies have seen the value of preventive care in keeping costs down, and these kinds of expenses are covered in almost every case.

Professionals at Desert Radiologists, which recently celebrated its 40th anniversary, have seen many changes in their field over the last 20 years. Robert Poliner, M.D. reflected on some of the advances in his profession. “In 1986, few MRI machines were available to the public. We were one of the first companies to bring the technology into Nevada in the late 1980s. It was a groundbreaking technology at the time.”

CT (computerized tomography) scans could be done in 1986, but the few machines available weren’t very fast. Today, “multi-slice” machines can take multiple images at once and are fast enough to produce images of the heart between heartbeats. Ultrasound, which was introduced in the mid-1960s, and DEXA scanning to test for bone density were available in 1986, but today’s versions are much faster and more accurate. Completely new technologies in radiology include PET scans and PET/CT combinations.

Poliner said one major difference in his profession between 1986 and today is that radiologists used to be limited to providing images for other physicians. In 2006, they are much more likely to use “interventional radiology” to actually treat the problems they find. Examples of this practice include dilating a blood vessel to relieve a blockage and treating a brain aneurism non-surgically by injecting a substance into it.

Another far-reaching change has been the transition from film to digital imaging, paralleling the changes in photography in general. Digital imaging has many advantages over film, including the ability to see images more quickly, transmit them to doctors in other locations – either across town or across the country – and store them easily for future reference.

“Imaging is a vital component in any medical workup today,” noted Poliner. “That was not the case 20 years ago. Clinicians have come to rely on the diagnostic tools radiogists can provide.”

Paul Cohen, executive director of Comprehensive Cancer Centers of Nevada, said the first cancer specialist (oncologist) came to Southern Nevada 32 years ago from Utah. Now, many local physicians specialize in cancer treatment, including medical oncologists, pediatric oncologists and radiology oncologists. Cohen’s group includes 22 specialists at six locations throughout Southern Nevada.

In addition to the number of doctors practicing in this field, Cohen noted that improved technology has made a big difference, not only in medical practices, but also in outcomes. Injectable medicines, oral treatments and less invasive procedures have replaced earlier treatments based chiefly on surgically removing cancers.

“We are now committed to educating consumers about prevention,” said Cohen, whose group works with employers, especially large self-insured companies, to organize health fairs and promote preventive measures such as mammograms and prostate exams.

“Quality of life has really come to the forefront in recent years,” Cohen said. “We now have implanted pumps that deliver pain relief so cancer patients needn’t suffer. We have social workers on staff to offer advice to families and to help them deal with end-of-life issues when they become necessary. Support groups, meetings for caregivers and access to hospice care enable us to take care of the entire patient, not just the cancer.”

Commercial Real Estate:

Southern Nevada

Brad Peterson, senior vice president for the Las Vegas office of CB Richard Ellis, said the biggest change in the Southern Nevada office market in the last 20 years has been increased rental rates, which remained stable for many years, but rose dramatically in the last few years. Tenant improvements are also more costly. “We used to build out offices for tenants at about $15 per square foot,” Peterson recalled. “Now, despite the fact that offices are designed with more open spaces and fewer interior walls and doors, they cost considerably more – as much as $35 to $40 per square foot.”

Another change in the market, according to Peterson, is that owners of small businesses now have an opportunity to purchase their own building or office condo, whereas in the 1980s, the great majority of them would have been forced to lease. Shea Commercial and other developers have created projects in the last five years that are specifically designed for sale to businesses needing small offices.

In the late 1980s, the East Flamingo corridor was the hot spot for office space, and in 1986 the first building in the Hughes Center (now the Wells Fargo Tower) was completed. Today, Peterson said growth in the office market is following freeways, especially the new I-215 Beltway, as people seek to work closer to home and to avoid ever-increasing traffic congestion.

In 1986, industrial users were either located in North Las Vegas, along Industrial Road next to the I-15 freeway, or in the airport submarket. “The big news in industrial is that you can’t buy land anywhere close to town that makes sense for an industrial project,” said Peterson. He noted that in older industrial areas, especially those along Industrial Road, the land has become so valuable that it is being snapped up by developers for high-rise projects, leaving industrial tenants with fewer and fewer places to go. He predicts future growth will be confined to outlying areas, with close-in projects selling or leasing at a premium.

The retail market has seen an amazing amount of growth, with most of the large Strip resorts now boasting their own shopping malls, such as The Forum Shops at Caesars, Desert Passage at the Aladdin and Mandalay Place at Mandalay Bay. The first of these ventures, The Forum Shops, didn’t open until 1992. Grocery-anchored shopping centers in the 1980s, which usually contained a drug store, have been replaced by centers anchored by chain stores or big-box retailers, and drug stores have moved out onto prime corners.

Commercial Real Estate:

Northern Nevada

Bruce Story, executive vice president and CFO for DP Partners, recalled what the Reno market was like in 1986 for his company, which specializes in developing industrial projects. “In 1986, we bought 200 acres on Longley Street for the Dermody Air Center, and we paid about $1 per square foot,” he said. “In Reno’s core area you can’t find a 200-acre parcel today. When we applied for water rights for the project, it wasn’t a problem. Now, we have a real shortage of available water rights, so that’s a big difference.”

Story said the competition for developers is different now than it was 20 years ago. “It used to be that real estate projects in most areas were developed by local people,” he explained. “In the early ’90s, real estate investment trusts (REITs) became popular, and today huge REITs are developing projects all over the country. One of the largest, ProLogis, recently announced it’s putting together a $4 billion fund. Pension funds are also a big factor involved in real estate investment now, as people move their money from the volatile stock market into real estate projects.”

The size of industrial projects has also increased, said Story. “In 1987, we developed a 300,000-square-foot project and I truly thought it would be the largest we’d ever do. Today we have several properties in our portfolio that measure more than 800,000 square feet.” He mentioned the new Wal-Mart distribution center in the Reno Tahoe Industrial Park contains more than 1 million square feet under roof. Individual buildings are also larger, with many distribution clients requesting 40-foot-clear ceiling heights instead of the 22- to 24-foot ceilings of the 1980s.

Paul Perkins, senior vice president with Alliance Commercial, a Reno real estate firm, has been involved in selling and leasing commercial real estate in Northern Nevada since 1984. “In 1986, the first national real estate firm came into Reno,” he recalled. “Coldwell Banker Commercial, which was owned by Sears, opened an office here with two brokers and one office person. One guy handled retail and I took care of both industrial and office, because neither market was deep enough to warrant hiring another person.” Now, several national firms, including Colliers, CB Richard Ellis, Grubb & Ellis and Trammell Crow, have offices in Northern Nevada.

In 1986, the office market in Reno was contained within a few square blocks in the downtown area. The office market has since matured and has now spread in all directions.

Industrial, which was also centrally located, has spread out to Stead, Dayton, Fernley and other locations along I-80. Perkins estimated the industrial market in the late ’80s contained about 24 million square feet, versus 60 million square feet today, with about 80 percent of that figure big-box retail projects. “J.C. Penney and K-Mart were the only distribution centers here in the ’80s,” recalled Perkins. “Now Northern Nevada has become credible as a distribution site because of its location as well as its quality of life.”

Retail was mostly locally owned, whereas today large chains and franchise operations are the norm. “We thought we’d really arrived when K-Mart and Home Depot came in,” remarked Perkins. “Today, shopping is a lot more cosmopolitan.”

The pace of business for commercial brokers has increased over the years. Property information used to be written on yellow legal pads, and deals were worked out using a calculator. Today, computerization, faxes and email have led clients to expect instant answers to their inquiries. “Clients used to say, ‘Send me a proposal,’” said Perkins. “Then we’d have a few days to get it together and put it in the mail. Now, people expect it instantly.”

Construction:

New Materials and Methods

In 1986, Frank Martin had already been in the construction business in Southern Nevada for 10 years, having founded Martin-Harris Construction in 1976. In 1982, his company built Jerry’s Nugget casino in North Las Vegas for $3.2 million, which was the single largest project in Southern Nevada that year. “A million-dollar project would have been a major coup in the 1980s,” he said. “We were very busy then, and our company grew exponentially.” In 1987, Martin-Harris built the Green Valley Athletic Club in the new master-planned community of Green Valley.

Martin noted several changes in building materials since the 1980s. Until then, most buildings were made of wood, but tilt-up concrete walls began to be used in the early ’80s. Today, wood is integrated with steel, concrete and concrete block, and a new product called LVL – a micro-laminated wood product – is increasingly used for studs and joists in place of regular lumber because it has more structural strength. New building codes, including more stringent seismic codes, have made contractors switch to stronger materials.

The business of building has also changed. “We got our first computer in 1984,” Martin recalled. “It was a mainframe with terminals that were used only to input information. If we wanted to analyze data, we would have to print it out, look at it and re-input any changes because we couldn’t view anything on the computer screen.” He remembered getting a car phone in the 1980s so he could be reached at the job site, but since there were only six channels available in Southern Nevada, if six people in town were already using their car phones, he’d have to keep trying for a free line.

Norm Dianda founded Q&D Construction in Reno in 1964. Dianda said in the late 1980s, his company tripled its annual volume by building the 10-story Washoe Professional Center and key projects at Lake Tahoe, including the $6.8 million renovation of Harvey’s Casino and the 27,000-square-foot Al Tarina estate complex.

“The most significant change at Q&D in the late ’80s was our commitment to design-build delivery,” noted Dianda. “We became convinced design-build would save clients money and increase construction efficiency, so we began promoting the philosophy of providing construction input during design. That has been the greatest improvement we’ve seen in our industry.”

Dianda also noted what he called “a radical evolution in concrete technology” in the last 20 years. “Tilt-up concrete buildings continue to increase in popularity and the panel designs continue to evolve with new, handsome finishes. Pre-cast concrete has grown in its ability to deliver a premium structural material on an accelerated schedule,” he said.

“For our general engineering crews, the biggest advancement has been computer-aided design from civil engineers, which is easily converted by estimating technology to arrive quickly and accurately at quantities and pricing, and then easily converted by GPS technology for setting grades in the field. The entire process is much faster and more accurate,” he added.

When asked to compare the 1986 market to today, he replied, “I never cease to be amazed at how steady the economy stays in Northern Nevada. We’ve had constant, gradual growth, which has allowed us to manage evolution and maintain the great quality of life we have here.”

Financial Services:

Bigger and Better

The early 1980s were turbulent years for financial institutions. Historically high interest rates (see chart), combined with imprudent loan policies, caused a crisis in the savings-and-loan industry across the United States. During the first three years of the decade, 118 S&Ls with $43 billion in assets failed. According to an FDIC report, by year-end 1982, “tangible net worth for the entire S&L industry was virtually zero.” The FDIC places the ultimate cost of the savings-and-loan crisis at approximately $160 billion.

Nevertheless, some S&Ls in Nevada survived the bloodbath and were still operating into the late ’80s. In May 1986 an NBJ article noted that because of deregulation, the gap between savings and loan institutions and commercial banks was closing. Kenny Guinn, then president of Nevada Savings and Loan Association, was quoted as saying savings and loans, which were founded chiefly to finance home loans, had decided to diversify into personal loans, insurance, real estate loans, checking accounts and credit cards.

New interstate banking laws passed in the 1980s allowed financial institutions to cross state lines to acquire banks or start up new operations. This raised fears that local banks in Nevada would be gobbled up by larger companies.

In 1984, the Nevada Legislature held a special session in which lawmakers revised the state’s statutes to allow Citibank to come into the state and build a credit-card processing facility in Las Vegas – a move that was seen as a major coup for economic diversification efforts. However, the fact that Citibank now “had its nose in the tent” was viewed with some trepidation by other banks. An article in NBJ’s first issue (March 1986) noted, “It now seems entirely possible that the still sparsely settled state of Nevada could become the early battleground in this nation-wide competition by financial giants.”

In 1986, Bill Martin, now president of Nevada State Bank, was president and CEO of Nevada National Bank. He recalled, “We don’t think the same way about competition today as we did then. I remember being so paranoid that I stood up at a meeting in the Valley Bank boardroom and asked for legislation to protect local banks.” The Legislature responded to bankers’ concerns by passing a law in the early ’90s that prevented out-of-state banks from opening branches in Clark or Washoe counties to accept deposits (they were still allowed to make loans). In order to accept deposits, institutions had to purchase an existing bank that was at least five years old. Martin said this law, which is still part of the Nevada Revised Statues, is unique in the nation.

Because of concerns about people moving into the state and writing bad checks, banks made customers wait for six months after they moved into Nevada before they were allowed to open a checking account. Until then, they had to keep their money in savings, unless they got a bank officer to waive the requirement. All checking accounts had to start with checks numbered “101” so merchants could tell whether the account was new. A number in the 100s was a red flag and might cause the check to be refused.

“In the 1980s, every bank issued a check guarantee card,” Martin said. “Most merchants wouldn’t take a check without a guarantee card, and we had to honor the check if the merchant had written the card number on it. Our debit cards still have check guarantee numbers on them, but I’ll bet fewer than 1 in 500 checks come in with numbers on them today.”

Banks were adopting new technology in the ’80s to try to streamline operations, reduce costs and attract more business. An NBJ article in October 1986 reported that consumers had been slow to accept changes, but automatic teller machines (ATMs) had been winning cautious approval. The article noted, “While many banks are still reserving judgment on the practicality and feasibility of debit cards, tele-loans and banking by personal computer, many have turned gratefully to the ATM as a godsend.” Several banking-by-phone options were being tested at larger banks, but none had yet enabled banking by personal computer.

Under Martin, Nevada National Bank was the first bank in Nevada to have ATMs. “In 1983, ATMs were revolutionary,” he said, “and banking by phone was a big deal.” Now, 43 percent of the accounts in his bank are set up for online banking, and Nevada State Bank recently introduced Remote Deposit, a program that allows merchants to send digital images of checks to the bank instead of depositing paper checks.

Martin recalled that his bank purchased a fax machine in 1983 for $5,000. “It was really slow and cumbersome, but we were excited about it,” he said. “Unfortunately, almost nobody else had a fax machine, so we couldn’t actually send anyone a message, and there was nobody to send one to us, so we sat around like the Maytag repairman, waiting for the fax line to ring.”

Banks were early adopters of computer technology, and Martin said his bank had a mainframe computer in the early ’80s that printed out customer statements efficiently. “Even then,” he said, “people were complaining that they were ‘just a number’ to their bank, so nothing has changed in that regard.”

Mining: Size and Safety

New technologies and economies of scale have driven change in the mining industry over the last 20 years, according to Russ Fields, president of the Nevada Mining Association. In the 1980s, a truck with a payload capacity of 120 tons was considered large, but the behemoths now being used in Nevada pit mines routinely carry 250 tons or more, and the largest have a capacity of 400 tons. Fields said the limiting factor in the quest for ever-larger trucks is tire technology – tires cannot presently be made strong enough to carry more weight.

Processing techniques have changed as well, especially for gold mining. “Within the last 15 years, we’ve gone to sophisticated equipment like autoclaves and roasters that allow us to extract more gold from ore than the old heap-leach methods,” noted Fields.

Safety equipment and techniques have advanced considerably in the last two decades, he said. Mines are now equipped with emergency refuge chambers, which not only provide shelter, but are also stocked with food, water, air and communications equipment. More attention is paid to safety than in the past, and nearly all mining operations have safety meetings and equipment checks before each shift.

Technology has affected day-to-day operations for geologists and mine operators. Global positioning systems (GPS) units track vehicles on the jobsite or the roadways and allow geologists searching for valuable new deposits to pinpoint their location. Field workers carry laptops with wireless communications devices that allow them to receive real-time data from satellites that may help them find ore bodies.

“For several years, Nevada has produced about 7 million ounces of gold annually, but we are now able to do it with fewer people because of technology,” said Fields.

The More Things Change…

Technology has changed, old buildings have been torn down and replaced with new ones, executives have moved up the corporate ladder, and Nevadans are dealing with more of everything: more people, more traffic and, in many cases, more pressure. Yet, some basics remain the same. Integrity, hard work and persistence still lead to long-term success. Relationships forged over the past 20 years are valued more than ever. Our next retrospective will no doubt note how things have changed since “the good old days” of 2006. In the meanwhile, may your future be healthy and prosperous.

Kathleen Foley
Kathleen Foley is a freelance writer based in Southern Nevada.