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Bark’s Bytes #13 | Why The Change-Newtrax Transforms Transportation


WHY THE CHANGE-Newtrax Transforms Transportation

On November 7, 2011, Newtrax, Inc., will begin to transport over 500 clients of both Merrick, Inc., and Phoenix Alternatives, Inc., (PAI) between their homes and five program sites. This is a major change for Merrick in that an external, although related, company will be transporting clients and that a two-route system will replace the current single route model. This new system also means the current program hours of approximately 8:15 a.m.-1:45 p.m. will expand to approximately 8 a.m. – 3 p.m., requiring our staffing schedule to change from 7 a.m.-3 p.m. to 6:30 a.m.- 4:30 p.m.

We acknowledge that change is often difficult and, in this case, cannot be avoided because of the rate cuts. The majority of drivers for Newtrax will be our existing drivers who already have a relationship with clients of Merrick and PAI. We realize clients value the time they spend in transit between home and their program site, and will continue to strive to make it a positive experience. Ultimately we believe that clients and our employees will benefit from this change through new relationships, quality program services, and stable company finances.

In addition to the route changes, the schedule changes mean that the same number of clients will need the same support from the same number of staff over a longer period of time. This poses some significant challenges for our Program Division and is worth telling the story behind the change.

In January 2010, the Merrick, Inc., Board of Trustees held their annual strategic planning session, in part, to assess and establish the company’s three – five year goals and related key strategies. The Board had recognized for some time that the company could no longer depend on the current percentage of revenue from government sources and had to offset expected rate cuts by generating more revenue from the non-government sector. With that in mind, as Executive Director, one of my strategic initiatives became to acquire a related day service program. On July 15, 2010, Susan M. Warweg announced her retirement as the Executive Director of PAI at a quarterly Ramsey County provider meeting. Anticipating at least a three percent rate cut on July 1, 2011, and with the strategic initiative to acquire a related day service program, I approached Susan about the possibility of a merger as an alternative to hiring another Executive Director for PAI. After considering this option, PAI declined the offer, but stated their interest in working collaboratively with us in some manner. After some time to reflect, I offered another option that would preserve the unique mission, culture, and services of each non-profit (its “color”) by establishing a third non-profit that would exist to deliver “non-mission” services to Merrick and PAI. Susan and her Board were intrigued by this idea. Mike Greenbaum, Merrick’s Finance and Development Director, and Terry Higgs of PAI joined with Susan and I in exploring this third non-profit concept. After several months of discussion and planning, on January 7, 2011, Newtrax, Inc., was incorporated in the State of Minnesota with the objectives to:

(i) Ensure safe, accessible, and reliable transportation for clients of Merrick and PAI;

(ii) Maximize operational efficiencies to reduce expenses and stabilize services in anticipation of less government reimbursement;

(iii) Develop strategic collaborations that increase the potential of each organization to deliver services to their respective clients; and

(iv) Contribute to the overall health and well being of our communities by reducing the number of vehicles congesting roads and vehicle emissions.

Newtrax was incorporated with the ability to provide other services to its members and/or to add additional non-profits to its membership with the mission – To increase the potential of each member organization to advance their charitable mission more effectively and with greater efficiency.

Ultimately the State of Minnesota reduced our rates by 1% effective September 1, 2011, and it is nearly certain that another 1.67% reduction will be applied on July 1, 2012. The collective impact of those reductions on Merrick is approximately $160,000 annually in revenue that cannot be fully replaced from other sources and would seriously compromise our ability to provide the quality of services expected by clients, their families, regulatory agencies, and the community at large. Our three largest expenses, in rank order, are:

· Wages;

· Transportation; and

· Facility costs (i.e., mortgage/lease, operating, & maintenance).

Our services must comply with a host of licensing regulations, the most relevant of which is staff to client ratios, which limits our ability to reduce wage expenses. Because we own an energy-efficient building there is little savings to be found in the facility cost center. As a result, reducing transportation expenses through Newtrax offered the greatest opportunity for cost savings because each organization operates in that same service area, under the same regulations, with an extensive fleet of similar vehicles. In the first year of operations, it is projected that Newtrax will be able to provide transportation services to all 534 clients at an anticipated cost savings of $150,000 annually to both Merrick and PAI permitting each to maintain its services and supports despite the rate reductions. For more detail on the transition to Newtrax, visit and click on “Transportation Updates”.

The consolidation of transportation routes among member organizations by Newtrax offers not only the potential for significant cost savings to the programs and clients served, but also a meaningful reduction in congestion, air pollution and carbon emissions contributing to the overall health of the local communities in which we operate. Using an estimate from the book “Cradle to the Grave”, (Umwetlund Prognose-Institut Heidelberg, 1993), the environmental cost of one car is as follows:

· 26.5 tons of waste and 32,560 cubic feet of polluted air to extract the raw materials to manufacture a car;

· 1.5 tons of waste and 2,613,285,326 cubic feet of polluted air to manufacture the car;

· 40 pounds of abrasive waste and 35,879,701 cubic feet of polluted air in driving the car; and

· 3,602,095,990 million cubic feet of polluted air to dispose of the car.

Newtrax will be able to transport all Merrick and PAI clients with 15 fewer vehicles than was required by Merrick and PAI separately. Not only will this reduce road congestion in our local communities, more importantly it will eliminate an estimated 420 tons of waste, 600 pounds of abrasive waste, and 93,769,463,655 cubic feet of polluted air which is the equivalent waste produced by 49,500 residential homes. Further, from the report “Benefits of Community Trees” (David J. Nowak, Brooklyn Trees, USDA Forest Service General Technical Report), a healthy tree stores about 13 pounds of carbon annually – or 2.6 tons per acre each year. An acre of trees absorbs enough carbon dioxide over one year to equal the amount produced by driving a car 26,000 miles. Based on our preliminary routing schedules, we expect to reduce the miles driven to transport all 534 clients by 300,000 miles per year, the equivalent of planting 11.5 acres of trees a year in our local communities.

We know this change might cause some issues for both clients and staff as they adjust to the new ride and schedule times. Still, it is our best option given current and projected rate cuts at the state level and continued funding uncertainties at the federal level. We believe that the development of Newtrax supports each non-profit’s mission and protects the quality of our core services in these economically uncertain times. Our dedicated staff will do all we can to ease this transition for our clients. If you have further questions on the transition, please contact me at either 651-789-6209 or

In future issues of Bark’s Bytes I will share some of the social enterprise ideas and other strategies we plan to implent to further reduce our dependence on state and federal funding.



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