Monday Business Briefing: What a rollback of Medicaid might mean for jobs, manufacturing boom on both sides of river, Shiraz expanding, and more

Welcome to the Nov. 9 Monday Business Briefing, your private business intelligence digest from Insider Louisville.

In the wake of Election Day 2015, much has been written about the governor-elect’s plans to reverse the state’s Medicaid expansion. Aside from the obvious implications of low-income Kentuckians losing their health insurance, IL decided to examine the potential effect on employment.

An overview of the local workforce associated with Medicaid expansion suggests a reversal could impact hundreds of jobs in Louisville and other communities.


Passport logoFirst, some background: Since the state expanded Medicaid eligibility in January 2014, more than 400,000 additional people have qualified to get covered under the government health insurance, said Jill Midkiff, spokeswoman for the Kentucky Cabinet for Health and Family Services.

However, Gov.-elect Matt Bevin has said the expansion should be repealed.

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.

Of the 400,000 people who qualified under the expansion, more than 40 percent are covered through Louisville-based Humana and Passport Health.


While the additional customers make up only a small fraction of Humana’s client base, it’s a different story for Passport. The nonprofit’s gain of about 100,000 members accounts for more than a third of its total.

Michael Rabkin, Passport’s communications director, told Insider Louisville that the organization’s employment has reached 500, up from 150 before the Medicaid expansion. About 80 percent of the employees work in Louisville.

Rabkin and a Humana spokeswoman said they do not want to speculate about the impact of any potential actions by Bevin and remain focused on helping Kentuckians. Both also said they look forward to working with the governor-elect.

Passport has operated in Louisville for 18 years under various administrations and will continue to improve the health of its members, Rabkin said.

And despite the worries about the future of the exchange and Medicaid expansion, Midkiff of Health and Family Services said Kentucky residents should continue to use Kynect to get health insurance.

People who buy health plans through the exchange will be covered through 2016 – so long as they pay their premiums, she said. Whatever happens with the exchange, the contracts people sign with the insurers will remain valid. —Boris Ladwig

Indiana Workforce Development Commissioner talks jobs in So. Indiana

Indiana Workforce Development Commissioner Steve Braun | Photo by Caitlin Bowling

Indiana Workforce Development Commissioner Steve Braun | Photo by Caitlin Bowling

On a recent visit to Southern Indiana, Workforce Development Commissioner Steve Braun detailed programs the state is implementing aimed at ensuring there are enough skilled workers to fill open jobs in Indiana for decades to come.

Braun spoke at a luncheon held at the Prosser Career Education Center in New Albany, which offers training in fields such as manufacturing, hospitality and business to public high school students, as well as adult education courses.

In Indiana as well as Kentucky, there’s been a boom in manufacturing jobs that require a high level of skill. However, both states have been experiencing a shortage of trained workers to fill those positions

Indiana is looking to combat that problem going forward, Braun told the crowd. The Indiana Network of Knowledge is pulling together data from around the state to get a snapshot of what the jobs market likely will look like five, 10 and 20 years down the road.

“It is going to be a tremendous investment for us,” he said.

Tangentially, the Indiana Career Council is gathering employers, community leaders, educators and state officials to identify job skills that employees will need to fill those future jobs and develop training opportunities to create a pipeline of skilled workers.

The pipeline will begin with career education programs at the grade-school level, Braun said.

“We are not trying to force people into career decisions that early on, but we do feel they need more knowledge,” he said, adding that the goal is to expose young children to a broader variety of jobs.

With manufacturing jobs on the rise, Braun also noted the state must help dispel the impression that working in manufacturing is a blue-collar job. Manufacturing jobs are highly technical nowadays, he said, and can be some of the best paying jobs even though they don’t necessarily require a four-year degree.

“I really believe it is just an awareness issue,” Braun said. “We have created a culture where we tell our kids you need to go to college.”

In addition to educating people about the skills needed for different jobs and what they pay, the state plans to collect information about roughly how many jobs are available in various fields.

Braun used the example of attorneys. Knowing how many attorneys there are, how many people are going to school to become lawyers and how many job slots are available for them can help students looking for a career path make a more informed decision.

“There’s many cases we are training twice as many lawyers as we need,” he said. —Caitlin Bowling

New Blak moves into a Frankfort Avenue storefront

Early sketches of the line.

Early sketches of the line.

In August, we told you about The New Blak, the “eco-chic” little black dress company making the iconic LBDs in an environmentally focused way. Back then they were peddling their wares on the Internet and at street fairs. Now they have a brick and mortar location where you can stop in, try on a dress and see if the LBD works for you.

Co-founder Kristin Truelove tells us, “We share a space with Art and Soul Beads. They have really beautiful handmade jewelry that complements our handmade dresses nicely!”

The location is at 2640 Frankfort Ave. They’re open 10 a.m. – 6 p.m. Tuesday through Saturday.

A launch party is planned for Saturday, Nov. 14, from 4-8 p.m., with food, wine, and “lots of surprises,” said Truelove.

The New Blak also is raising funds for a microloan of $10,000 on Kiva Zip. If they raise the funds, half of the money will go to materials for production and half will go to renovating a mobile boutique. —Melissa Chipman

Kindred earnings depressed by $30 million charge

Kindred Healthcare’s third-quarter net loss was due in part to a $30 million charge related to its RehabCare subsidiary, the operations of which have drawn scrutiny from the U.S. Department of Justice.


Before income taxes, the Louisville-based company reported income from continuing operations of $5.6 million. Without nearly $31.5 million in “litigation contingency expense,” that income figure would have been $37.1 million.

Kindred acquired RehabCare, which provides therapy services, in 2011. In its most recent annual report, Kindred said the DoJ alleges “that rehabilitation therapy services … were not delivered or billed in accordance with Medicare requirements.” In addition, the feds have flagged “questionable financial arrangements” between RehabCare, a vendor and nursing facility customers that may involve violations of the federal Anti-Kickback Statute.

The company said last week it “is engaged in active discussions with the (DoJ) … to find a mutually acceptable resolution.”

But Kindred also warned of uncertainties related to the discussions: “There can be no certainty about the timing or likelihood of a definitive resolution, the scope of any potential restrictions that may be agreed upon in connection with a settlement or the cost of a final settlement.”

Kindred already has paid $125 million related to the investigation.

The company previously, in January 2014, had paid $30 million to settle a case in which the DoJ alleged that RehabCare violated the Anti-Kickback Statute.

An interesting side note: The DoJ said the $30 million settlement case resolved allegations originally brought in a lawsuit filed by a whistleblower, who received $5.7 million.

Kindred said in its annual report that recent regulations, including the Affordable Care Act, have expanded the scope of whistleblower incentives and that lawsuits, therefore, “have become more frequent.”

Kindred also said third-quarter results were negatively affected by a decline in hospital admissions and lower revenues per patient in the hospital division.

While the company had made progress on its strategic plan, Kindred said it was lowering its earnings outlook for the year based on “industry headwinds impacting the hospital division.”

The company now expects to record adjusted core earnings of $1.55 to $1.70 per diluted share, down from its previous expectation of $1.70 to $1.90.

Shares of the company plunged nearly 19 percent Thursday, closing at $11.82. Shares recovered some of that loss Friday morning, rising nearly 6 percent. —Boris Ladwig

Shiraz Mediterranean Grill plans to expand in and beyond Louisville

Shiraz Mediterranean Grill is coming to downtown Louisville. | Courtesy of Shiraz

Shiraz Mediterranean Grill is adding three locations. | Courtesy of Shiraz

Within a year’s time, restaurant owners Ramin Akrami and Moe Maybody plan to double the number of Shiraz Mediterranean Grill locations in the region.

“We have a lot of followers,” said co-owner Moe Maybody. “Our food is very good, and people love it.”

Demand and a continually improving economy are driving the pair to open two new Louisville locations this year and another in Jeffersonville, Ind., next year, Maybody said. It currently operates three locations in Louisville.

“We decided to make our move now before chains come in and take over the market,” he said.

The restaurateurs also are looking to add locations in Lexington, Elizabethtown and Frankfort in the future, but there’s nothing definitive yet. Sales are up between 17 percent and 22 percent from last year, Maybody said, as the healthy-eating movement is driving people toward Mediterranean food.

“This is what the doctors are recommending to lots of people,” he said.

Insider Louisville reported in September that Shiraz was working on a 1,709-square-foot downtown location at 237 S. Fifth St. Maybody told IL the downtown store is expected to open during the second week in December.

And not only that. It also will be the first Shiraz to serve breakfast. The menu will include breakfast wraps, breakfast cakes, coffee and bagels.

“There is a market down there for it,” he said, adding that the store will operate for a couple months before adding breakfast hours. Its initial hours of operation will be 10 a.m. to 3:30 p.m.

The second new store, located at 4610 Chamberlain Lane near Brownsboro Road, will follow quickly after. It is set to open at the end of December, and it will keep traditional Shiraz hours from 11 a.m. to 9 p.m. Monday through Friday; 11 a.m. to 9:30 p.m. Friday and Saturday; and noon to 9 p.m. Sunday.

The store is 2,281 square feet and will undergo $150,000 in renovations, according to a city building permit for the project.

Maybody also revealed that Shiraz has signed a lease for a store on Veterans Parkway in Jeffersonville that will open next November if all goes as planned. It doesn’t have an address yet because the building hasn’t been constructed.

Shiraz will move into a $35 million retail center the Tennessee-based GBT Realty is developing. GBT Realty is the same company behind the shopping centers Middletown Commons and Jefferson Commons.

Maybody said the restaurant tried to get a spot in Middletown Commons but was too late. “All the kitchens were already taken,” he said.

Shiraz’s Frankfort Avenue store closed this summer. Maybody said there was not enough parking, and the city would not allow them to post “a decent sign” outside the business.

After that closure, Maybody said, customers shifted to one of Shiraz’s other three locations. “We didn’t lose the business.” —Caitlin Bowling

Heitzman Bakery moving out of Shepherdsville Road location

The arrival of a smoke shop next door has prompted Heitzman Bakery owners Charles Osting and Linda Osting to move out of its storefront at 3800 Shepherdsville Road.

“That is just not very wholesome for a bakery,” said Linda Osting. “I am just not comfortable being located next to a store that sells smoke pipes.”

So the bakery will pack up and move after the first of next year to a 2,673-square-foot store in a small retail center at 3333 Bardstown Road. It sits very near the site of the future Costco and was formerly Colonel Quick Formal Wear.

The location is larger than the Shepherdsville Road store, which will allow Heitzman Bakery to add a wedding gallery, a business meeting room where it will offer continental breakfast, and party room for baby showers and birthday parties, she said.

“We don’t currently have that anywhere else,” Osting said.

Heitzman Bakery also has a location at 4749 Dixie Hwy., near Rockford Lane. (There’s also a Heitzman on Shelbyville Road, though it’s operated by different owners.)

The Bardstown Road store will employ six people and stay open later, but Osting said specific hours of operation have not been set.

According to a city building permit, it will cost $12,000 to renovate the space. Osting said the landlord FRA Investments LLC is covering the cost of the build-out, and they will move their equipment from the Shepherdsville Road location. —Caitlin Bowling

Projected retirement boom prompts accounting firm expansion

A Louisville accounting firm that primarily serves restaurants has expanded – partially in response to an impending retirement boom.

Bob Patterson

Bob Patterson

Bob Patterson, founder and president of Patterson & Co., told Insider Louisville he acquired the assets of Louisville-based CPA firm Billy D. Morgan in part to expand his firm’s geographic reach into Mississippi and Arizona.

The accounting firm now has 12 employees, up from eight before the acquisition.

“I’m really excited about the growth that we’ve been able to accomplish,” Patterson said. “We needed the additional talent.”

And, Patterson said, the move serves as preparation for an impending retirement boom in the accounting industry.

In the next decade, 50 percent of certified public accountants in Kentucky are expected to retire, he said. Morgan, for example, will be among those 50 percent. Other states, especially those dominated by large firms with mandatory retirement ages, may see an even greater exodus.

Those dynamics present opportunities for firms that are going to be around for a while, Patterson said.

Patterson founded the business in 2012 after he sold his stake in the Consumers Choice Coffee company to Royal Cup Coffee. Patterson & Co. serves primarily independent and franchise restaurants and professional services companies such as law firms. —Boris Ladwig

Everything’s a dollar at Fabulous Finds

Come Tuesday, anything left at Frankfort Avenue consignment shop Fabulous Finds will be marked down to $1.

The store, located behind Nancy’s Bagel Grounds, is going out of business after 22 years, Insider Louisville previously reported.

Owner Brad Broecker is selling off everything before shutting his doors. All the money from the sales will go to benefit the Heuser Hearing and Language Academy, a not-for-profit center for people with hearing loss and ear-related disorders.

Hours of operation are Tuesday through Friday from 10 a.m. until 4 p.m. and Saturday 10 a.m. to 2 p.m. However, Fabulous Finds will only remain open as long as it takes to clear out its inventory. —Caitlin Bowling

PharMerica reports Q3 profit of $3 million

PharMerica Corp. posted third-quarter net income of $3 million, down 64 percent from the same period a year earlier. Revenues increased 6.1 percent, but costs went up 8.5 percent. Gross profit declined 5.3 percent.

The company, based in Louisville, provides pharmacy services.

Earnings per diluted share, at 10 cents, were down from 28 cents in the third quarter of 2014.

The company said, however, that in the most recent quarter it incurred charges of 17 cents per share related to mergers, acquisitions and integration and another 12 cents per share related to litigation and other items. Without those charges, EPS would have been 39 cents per diluted share, compared to 45 cents a year earlier.

The Associated Press reported that those results beat analysts’ expectations.

Shares on Friday closed at $33.66, up $3.11 or 10.18 percent. —Boris Ladwig