(Editor’s note: This post was updated at 8:15 a.m. on August 20. In a surprise move, Aetna announced on Monday it would buy Coventry Health Care for about $5.7 billion in cash and stock, in a move by Aetna to push further into government-backed programs such as Medicaid.)
Welcome to the August 20 top secret, always confidential Monday Business Briefing.
These are biz tips Insider Louisville staff and contributors have collected during the past few days, a few of which are NOT double-verified like Insider Louisville’s daily reporting.
But as always, this is information from insider sources with direct knowledge of events.
Where to start on this.
• Last Thursday, KentuckyOne Health – the new hospital system formed after the final merger of Denver-based Catholic Health Initiatives and Jewish Hospital & St. Mary’s HealthCare – terminated all contracts with Coventry Health Care, the Bethesda, Md. insurer. Coventry is one of four firms awarded Kentucky’s MCO contracts last November.
Losing money hand over fist, Coventry officials started dumping the most expensive Medicaid members by terminating contracts with Appalachian Regional Healthcare, the largest hospital network in Eastern Kentucky, and other providers. In the process, they earned the ire of a federal judge and just about everyone else while leaving thousands of the poorest Kentuckians scrambling to find in-network doctors and pharmacies. After Coventry tried to dump KentuckyOne’s Our Lady of Peace mental health hospital, KentuckyOne turned around and terminated all contracts with Coventry effective November 1.
Coventry dumping OLOP is worse than dumping ARH, say our sources. OLOP is the largest children’s hospital in Kentucky. Nearly two-thirds of its 250 or so inpatients are under 19 years old. They have the most difficult mental health problems, and it’s nearly impossible to make a profit serving that group of patients. And it means Coventry picking yet another fight with yet another more sympathetic organization.
Coventry bid for Region 3 under a request for proposal issued by Kentucky. Region Three includes Jefferson County and 16 surrounding counties, a contract that belongs now to Passport Health Plan. After state officials issued the RFP in May, our sources say Humana, Coventry, Centene (Kentucky Spirit) and WellCare all bid. And of course Passport.
Why would Coventry keep trying to get more Medicaid business after losing so much money here? Sources tell us they believe Coventry officials bid “high” in order to recover some of their losses by entering a region with far fewer chronically ill Medicaid members compared to Eastern Kentucky. Bids are based on per-member, per-month health care costs projections. Coventry bid $436 per member, per month last November. But due to the unique characteristics of Eastern Kentucky and state chicanery, the insurer ended up with Kentucky’s unhealthiest people, leading to millions in losses here. (Kentucky’s Cabinet for Health and Family Services made a risk adjustment payment to Coventry back in April.)
The smart money is on Passport and WellCare getting the Region 3 contracts, with 17o,000 Medicaid members and $800 million annually at stake.
Interestingly, insiders tell us Coventry apparently cleaned house in Kentucky last week, terminating its COO and vice-president of Network Development.
• Speaking of CHI, the purge of Jewish Hospital & St. Mary’s HealthCare employees continues eight months after CHI took full control of JHSMH. We understand the chief compliance officer and vice president, Ambulatory Care will be the only JHSMH executives to stay. This is after Morning Biz Briefing broke the story last March that CHI eliminated JHSMH’s legal department. Sources say all JHSMH employees now have to reapply for their jobs!
• Wonder why the banking crisis won’t go away? Because dozens of failed real estate projects and bankrupt developers continue to pump clusters of unfinished subdivisions and bankrupt apartments into the foreclosure process. Our sources at the Jefferson Circuit Court Foreclosure say the number of cases on their dockets are rising. That’s not to say foreclosures per se are up. Our sources say national banks had a foreclosure moratorium in place for months, trying to verify all the cases on their books. Satisfied they have, the banks are back trying to recover trillions in bad real estate loans across the United States.
We checked the Jefferson County docket, and we count more than a dozen bad real estate developers’ loans now through Tuesday, Oct. 16.
Those include yet another Renaissance LLC property, this one at 9900 Vista Hills Blvd., encompassing nine garden home condominium buildings at Bardstown Road and Thixton Lane near the Jefferson/Bullitt county line, with an amount to be recovered of $6.4 million. Greenbelt Properties’s industrial site at Greenbelt Highway and Dover Ave. will go on the block in October. Bardstown-based Town & Country Bank is the losing bank to the tune of $1.5 million. Longtime home builder Carl Cox has a condo project, Primrose Meadows, off South Watterson Trail on the docket. Long-troubled Citizens Union Bank of Shelbyville is trying to recover $4.4 million there.
That’s just a partial list of the bigger properties, but you get the idea. We added up somewhere in the vicinity of $17 million to be recovered by the banks just through October. Which in this day and age isn’t notable. But this has been going on for years. And to paraphrase Sen. Everett Dirksen, “A million here and a million there, and pretty soon you’re talking real money.”
• One of our top corporate spies sussed this one out.
Brown-Forman is looking for a National Account Manager – Walmart (SALES) TBD, Kentucky
This job reports to the Manager.
This is a Full-Time position.
Possible locations: Louisville, KY, TX-Dallas, IL- Chicago or downstate, MO, FL- Tampa, Miami, Orlando, MI- Detroit, AZ- Phoenix • Responsible for overall account direction (nationally and regional) by assuming leadership role for communication, collaboration and coordination of account channel resources • Ensure efforts are focused to improve account strategy, performance and relationships • Responsible for understanding, developing and implementing key customer initiatives…[more]
Why is this news? Because Walmart itself doesn’t sell booze, though its Sam’s Club discount warehouse operations do. But this suggests Walmart itself may be about to join Costco, Kroger, Trader Joe’s and other companies. This should get interesting in Kentucky, because the courts just struck down the law that forbids supermarkets from carrying wine and spirits.
Monday Biz Briefings quick hits:
• Our sources – multiple sources – are telling us Louisville businessman Steve Wilson’s appointment to the University of Louisville’s Board of Trustees is an effort by Gov. Steve Beshear to build a majority on the way to pushing U of L Pres. James Ramsey to retirement.
• Louisville’s advertising agencies are wondering what the end game is … will Humana pull creative back in-house as an internal operation? Most of the larger Louisville agencies have a piece of Humana’s business, such as marketing materials for Medicare Advantage Plans. Bringing those contracts in-house could be a blow.
• Look for a post later this week about the Azalea restaurant property at 3612 Brownsboro Road in one of Louisville’s wealthiest areas. Our sources say every player in town has looked at the property, but under restrictions related to Historic Preservation, no one can make the building work as a restaurant. Said one source, “Trust me … we looked long and hard at it, and we couldn’t make it work. Great location. Terrible building.”
• Two buildings just east of the Frazier History Museum in the 800 Block of West Main Street are under contract. We’re digging to see what’s planned there.
• Our deepest sources are telling us to use the Freedom of Information Act to get a roster of who has left KFC Yum! Center after Los Angeles-based AEG Facilities took over management from the Kentucky State Fair Board, and where they’ve gone. We understand some familiar names have found jobs at Kentucky International Convention Center. Also, ask sources, will KICC employees continue to fill in at the understaffed arena now that AEG is running the show?
• This was too funny not to share. When Papa John Schnatter bitched and moaned that Obamacare was going to add 14 cents to every pizza (to cover health insurance for 35,000 employees), every media in the country – pro-Obama and con – failed to feel Schnatter’s pain. The funniest bit was from one of our favorite sites, TopTenRealEstateDeals.com. Here’s their take:
After blurting out that Papa John’s will now have to raise the price of pizza 14 cents because of Obamacare, the company CEO and TV pitchman John Schnatter might have to cut back a bit on expenses. He may have to turn off a few lights at his 40,000 square foot Kentucky castle on 16 acres that has a private golf course, 6,000 square foot detached carriage house, a swimming pool randomly shaped like the home’s large pond, and a 22-car underground garage with limousine turntable, car wash and valet office.