Monday Business Briefing: Report says ACA repeal would hit KY hard; Norton Commons restaurant week; Village 8 update; job seekers like Louisville; and more
Welcome to the Jan. 9 Monday Business Briefing, your private business intelligence digest from Insider Louisville.
Analysis: ACA repeal would cost KY 45,000 jobs, billions in business activity
If two key provisions of the Affordable Care Act were repealed without a replacement, Kentucky would lose 45,000 jobs, a greater share than any of its seven neighbors, according to an analysis by George Washington University.
Researchers at the university’s Milken Institute School of Public Health looked at what would happen to the U.S. economy if President-elect Donald J. Trump and the Republican-controlled U.S. Congress repealed:
- the tax credits that help low- and moderate-income Americans buy insurance on the health insurance exchanges
- federal support for Medicaid expansion.
Republicans have tried for years to repeal the Affordable Care Act, also known as Obamacare, and ditching those two provisions would be easier because Republicans would not have to overcome a Democratic filibuster in the U.S. Senate.
Without those provisions in place, Kentucky would lose 45,000 jobs, or about 2.4 percent of all the jobs in the state, a greater share than each of its neighbors, according to U.S. Bureau of Labor Statistics data. Job losses in Ohio, West Virginia, Tennessee, Illinois, Indiana, Missouri and Virginia would range from 2.3 percent in Ohio to 1.3 percent in Virginia.
Both the premium tax credits and Medicaid expansion have a big impact in Kentucky, Leighton Ku, the study’s lead author told IL via email.
Since the state expanded Medicaid eligibility in January 2014, about 450,000 additional people have qualified to get covered under the government health insurance. The expansion, paid mostly by federal tax dollars, allowed people to get covered if they earn 138 percent of the federal poverty level or less. That works out to be about $16,000 in annual earnings for an individual or about $32,000 for a family of four.
Louisville-based nonprofit Passport Health administers benefits for 107,000 of the newly eligible Medicaid beneficiaries. The organization’s employment has spiked from 150 before the expansion to about 500, with about 80 percent working in Louisville.
Michael Rabkin, Passport’s communications director, told IL that the organization has fielded questions from Medicaid beneficiaries around the state who are worried about losing their coverage.
“They don’t know what to expect,” Rabkin said.
At this point, Passport is urging the beneficiaries, many of whom had not had insurance coverage for years before the expansion, to take advantage of their benefits, to get a physical, to see a dentist, to get their weight under control, to obtain and take their needed medications.
Rabkin said that regardless of any changes to the ACA or the Medicaid expansion, Passport hopes to expand its model to other states this year to help more people improve their health and quality of life.
Ku said that the institute’s analysis excluded any potential ACA replacement.
“We don’t yet have any idea of what replacement strategies might be like; there doesn’t appear to be any consensus even among Republicans or the incoming administration,” said Ku, a professor in the department of Health Policy and Management and director of the institute’s Center for Health Policy Research.
Researchers said that Kentucky would lose 17,000 jobs in the health care sector, 6,000 in retail, 4,600 in construction/real estate, 2,000 in insurance, 1,400 in government and 13,500 in other sectors.
The analysis also indicated that Kentucky’s gross state product would lose an average annual $4.6 billion between 2019 and 2023, while business output during that span would decline by nearly $41 billion. The state, cities and towns also would lose out on $718 million in taxes during that time.
Nationally, the repeal of the two provisions “would lead to 2.6 million jobs lost in 2019,” the researcher said. “Gross state products would fall by $1.5 trillion between 2019 and 2023, while business output would drop $2.6 trillion. As a result, state and local tax revenues would also decline by $48 billion over five years.”
The research was funded by the New York City-based private nonprofit Commonwealth Institute, which advocates for a high-performing health care system.
“While health reform repeal would dramatically increase the number of uninsured and harm access to health care, particularly for low- and moderate-income Americans, this analysis demonstrates that the consequences could be broader and extend well beyond the health care system,” the Commonwealth Fund wrote on its website. “Repeal could trigger major reductions in employment and substantial losses in state economic activity and state and local revenues.” —Boris Ladwig
Local restaurant chain makes analyst’s top picks in 2017
Despite many national restaurant chains facing poor sales and traffic in 2016 — causing some to fear a restaurant recession — several restaurant companies continued to perform well, including a Louisville-based chain.
Steakhouse Texas Roadhouse benefitted from increased customer traffic and lower meat costs in 2016, and the company is hoping to continue those trends into this year.
While other sit-down restaurants struggle to compete with quicker, and in some cases cheaper, fast-casual chains, Texas Roadhouse has reported strong sales growth quarter after quarter. That’s why Stephen Anderson, an analyst with Maxim Group, included the company among his top restaurant stock picks for 2017.
Texas Roadhouse “remains one of the higher quality names in this sector,” Anderson told industry publication Nation’s Restaurant News. Beef costs are expected to decline further, he said, and the company is able to keep its labor costs lower than its peers.
Still, labor continues to be a concern for Texas Roadhouse as it takes on more health care-related costs as a result of changes to federal guidelines. Rising labor costs led it to raise its menu prices by 1 percent at the end of last year.
Andy Barish, an analyst with Jefferies, noted in a recent report that even well-positioned casual dining brands like Texas Roadhouse will face industry pressures that could lead to disappointing earnings per share numbers in 2017.
Norton Healthcare buys Village 8 property
Norton Healthcare has bought the Village 8 property but said lease terms with current tenants will remain for now.
Norton told IL via email that it plans to use the property, which is near the Norton Women’s & Children’s Hospital, to address community health care needs “at some time in the future.”
Village 8 Theatres is the primary tenant of Dupont Village Center.
The 5.3-acre shopping center, at 4004 Dutchmans Lane, last year was to be sold to KentuckyOne Health, which had secured an option on the property in 2013. However, the health system said in December that it shifted away from acquiring the property because of changes in the health care industry.
Norton bought the property from the Sotsky Family Limited Partnership. The health system did not disclose the purchase prices, but the center was valued at $5.4 million.
“In mid-October, Norton Healthcare was contacted by the owner of the Village 8 property and advised that the previously announced sale of the property to KentuckyOne Health had not proceeded as planned,” Michael Gough, Norton’s executive vice president, told IL in an emailed statement. “We then entered into a contract with Metts Company Realtors to purchase the Village 8 property.” —Boris Ladwig
Foundation awards more than $1 million to improve Kentuckians’ health
The Foundation for a Health Kentucky awarded more than $1 million in grants last year to help improve Kentuckians’ health.
Since 2001, the foundation, which is funded by an endowment, has awarded 745 grants, totaling nearly $26.7 million, to organizations including the Kentucky Population Health Institute, Kentucky Equal Justice Center and the Kentucky Center for Smoke-free Policy.
“Even when earnings on our endowment have been down, we have been able to invest in demonstration programs, advocacy efforts and research to help make Kentucky healthier,” President and CEO Ben Chandler said in a press release. “We’ve built a substantial foundation of information about what works. Moving forward, we will be advocating more actively for policy changes such as smoke-free laws that can really move the needle in Kentucky by improving and extending Kentuckians’ lives while reducing health care costs.”
The foundation provided funds to nonprofit and community health organizations to address unmet health care needs, to research organizations to help identify effective public policies and to nonprofit news organizations “to increase the number of health and health-policy related stories in the media.” —Boris Ladwig
Endeavor Louisville companies post impressive metrics
Managing director of Endeavor Louisville, Jackson Andrews, gave the keynote at the monthly Venture Connectors Luncheon last week. He introduced members to the global high-impact entrepreneurship network and the companies in Louisville that are part of the network.
Globally, the Endeavor network includes more than 380 companies from more than 25 countries, according to its annual report. Louisville was only the third U.S. city to become an Endeavor city, after Miami and Detroit. Atlanta will join the fold this year.
Endeavor Entrepreneurs become part of this global network and gain access to mentorship and networking leads with potential clients, suppliers and investors. They are also expected to help support their own local entrepreneurship community. Andrews used the motto, “Scale up. Go big. Give Back.” to describe the mission.
Andrews had some interesting metrics for 2016 for the five Louisville Endeavor Entrepreneur-ed companies.
Together they reported:
- 67 percent revenue growth
- 53 percent job growth
- 365+ hours of direct mentorship through the Endeavor network
- 324 new jobs created by the companies
Norton Commons hosting first Restaurant Week this month
The picturesque enclave Norton Commons has gradually added restaurants to serve its growing resident community and visitors, and now the neighborhood is planning an event to celebrate them.
Norton Commons will host its own restaurant week Jan. 23-30.
“The dining scene keeps picking up steam,” Marilyn Osborn Patterson, marketing director and general counsel for Norton Commons, said in a statement. “The community is now a culinary destination, with nationally recognized chefs serving up everything from South American street food fusion, to casual Italian trattoria, and beyond.”
Similar to 502 Restaurant Week, participating Norton Commons restaurants will offer a three-course dinner — an appetizer, entrée and dessert. Diners will be able to choose from a $15, $20 and $25 menu, which will each feature different course offerings.
Participating establishments include: Mercato Italiano, Citizen 7, The 502 Bar & Bistro, Tea Station Asian Bistro, Karem’s Grill & Pub, and Johnny Brusco’s. Also, Commonwealth Tap will host tastings in conjunction with the event. —Caitlin Bowling
Cheddar’s Scratch Kitchen acquires 44 restaurants, including some in Kentucky
Full-service restaurant company Cheddar’s Scratch Kitchen recently acquired 44 Cheddar’s locations from its largest franchisee, Greer Companies. The price was not disclosed.
Cheddar’s now owns 139 out of the 164 locations nationwide, including two in Louisville and one in Southern Indiana. The repurchase is part of the company’s plan for growth, a news release states.
“We look forward to continuing to provide the great hospitality that the Greer Companies offered for so long,” Ian Baines, president and CEO of Cheddar’s, said in the release.
Greer Companies is a Lexington, Ky-based commercial real estate development and hospitality company that owns hotels, independent restaurant concepts and escape room business Breakout Games. It was a Cheddar’s franchisee for more than 20 years. —Caitlin Bowling
Taco Bell resolves to make changes this year
Here’s the laundry list of changes Taco Bell said it will make, or at least start on, in 2017:
- Eliminate XL cups from its restaurant
- Remove “all antibiotics important to human medicine” from its chicken by early 2017
- Where possible, cut out preservatives and additives from its food by 2018
- Use 100 percent cage-free whole eggs to make its breakfast items
- Reduce the amount of sodium across its menu by another 10 percent by 2025. (The chain already cut its salt use by 15 percent in 2008.)
- Create 100,000 U.S. jobs by 2022
- Hire 1.5 million young adults during the next decade
- Expand its Live Más Scholarship program with $1.3 million in support
- Reduce its restaurants’ energy consumption
- Use more reclaimed materials and more sustainable landscape features
Jobs portal: Louisville among best cities for job seekers
Louisville has been named the ninth-best city for job seekers for 2017 by an online jobs portal.
“Louisville’s central location and low unemployment rate make it an attractive city for a variety of industries,” according to ZipRecruiter.com.
The portal, which compared cities by the number of job seekers to the number of available jobs, said industries with the best opportunities for job seekers in Louisville this year will be health care, retail and automotive.
Minneapolis ranked first, Cincinnati placed fifth. Given the nation’s low unemployment rate and its strengthening economy, ZipRecruiter is calling 2017 the “Year of the Job Seeker.”
Louisville businesses and leaders already have said that the number of local jobs is outpacing, by far, the number of available workers and that the issue is hampering economic growth. Employers and employment agencies have pointed to rapid growth in new industries and to retiring baby boomers as contributors to the challenge. The local chamber of commerce has identified talent recruitment as a major economic development goal. —Boris Ladwig
Mixed week for local stocks
Five of 12 publicly traded companies tracked by IL outperformed the Standard & Poor’s 500 last week, the first trading week of the year. Three others posted slight gains, and four suffered declines.
Sypris Solutions gained 9 percent for the week, closing at 96 cents on Friday. Shares of the local manufacturing/engineering company spiked 5 percent on Wednesday on quadruple its normal trading volume. The S.&P. rose 1.7 percent last week.
PharMerica (+5.1 percent), CafePress (+2.4), Kindred Healthcare (+2.2) and Yum Brands (+1.7) all outperformed the index last week. Papa John’s, Brown-Forman and Stock Yards Bancorp posted gains of no more than 0.5 percent.
Shares of insurance giant Humana fell 1.8 percent last week — unlike its would-be merger partner, Aetna, which posted a slight gain, of 0.2 percent.
Republic Bancorp shares fell 1.8 percent, Churchill Downs suffered a 2.5 percent decline, and Porter Bancorp fared worst among local stocks, falling nearly 6 percent.
Shares of Louisville’s largest employer, Atlanta-based UPS, delivered a 0.66 percent gain last week, while Dearborn, Mich.-based Ford Motor Co., another large Louisville employer, revved up 5.2 percent. Ford’s stock price jumped 4.6 percent on Wednesday, when the automaker said its December retail sales improved 5 percent from a year earlier, buoyed by strong demand for the F-Series pickup. —Boris Ladwig