These are biz tips Insider Louisville staff and contributors have collected during the past few days, a few of which are NOT double-verified as with our daily reporting. But this is the news you’ll be reading about next month in the conventional media.
As always, we’ve made multiple calls/text message inquiries on these tips, which come from sources who are not merely insiders, but who have direct knowledge of the deals.
Another week with more business going on than we can accommodate.
• Okay, we doubted Vickie Yates Brown’s claims of multiple tenants at the new Nucleus Innovation Park. It turns out there is at least one major tenant taking 10,000 square feet of space at the nearly completed spec building at Market and Floyd streets. University of Louisville officials confirmed Friday that Innovate Long Term Care is in negotiations to take the space. But just what Innovate LTC is or does is not exactly clear. Our sources tell us it’s part of Signature Health Care, and the entity (company? business incubator?) will have innovative (hence the name) exhibit space in the Nucleus building. But we gave up long ago trying to reach Signature CEO Joe Steier. Some sources say Innovate LTC is a Signature spin-off. Others assure us it’s a collaboration between U of L and Signature.
From the website:
We are in the process of building an online mall, ShopLTC, and we (are) building (June 2013) a brick-and-mortar showroom to display and innovative products, services and technologies geared toward the aging and wellness sector. The showroom will be located in our hometown of Louisville, Kentucky – which, if you didn’t know, is kind of a national hub for aging care. InnovateLTC is also deeply entrenched in academic research and has connections to several of the nation’s top universities. We are building an international knowledge repository, providing access to cutting-edge research articles and white papers focused on understanding and improving the quality of life and quality of care for the global aging population.
John Reinhart is listed on the website as CEO.
From his bio:
John is a founding partner and creator of Commonwealth Leverage Group, a partnership of accomplished entrepreneurial executives focused on providing services to high-growth entities in healthcare and technology sectors.
The mystery is whether this is a for-profit business with serious investment, or just an appendage of U of L. Is this a final iteration of the International Center for Long Term Care Innovation, which was supposed to occupy 20,000 square feet at Nucleus?
• Occasionally, we blunder into a story that amazes and delights us. Next year, a mega-celebration – and mega potential tourism windfall for the city – is coming for the 100th birthday of the Belle of Louisville. The event is scheduled for five full days – October 15 through October 19. We heard hints about this through the NuLu Business Association. Sure enough, we checked out the website, and it’s huge, with Gov. Steve Beshear and Metro Mayor Greg Fischer on board, so to speak. Nine riverboats are scheduled to come for the event, which we hear could draw 300,000 visitors and fill every hotel in town on the scale of the Kentucky Derby. Each of the riverboats will offer dinner cruises, bourbon cruises and other festivities. There is a catch – there’s always a catch. Seems that some money is raised for this, but not all the money, with organizers still chasing a corporate sponsor or sponsors. That said, we hear several see this as a “duh” moment with sufficient crowds and national coverage to make it worth their while.
• Our sources – multiple sources – tell us to expect multiple resignations from the Louisville Arena Authority before the end of February. Apparently, Gov. Steve Beshear is in the process of using his political clout to put his people on the board in an effort to stabilize the KFC Yum! Center financial situation. Interestingly, Jim Host, former Arena Authority chairman, told Mandy Connell last week there’s no way the arena can go into bankruptcy. “The insurer has to pick up at that point and pay the debt holders and sell the arena.” Which a very fine semantical nuance. Okay, Master Commissioner Edith Halbleib wouldn’t sell the arena down at the Jefferson Circuit Court bankruptcy auctions. But the arena authority – and by extension, the city – can certainly default on the $525 million debt if the taxing district and the arena don’t generate sufficient revenue. We’re guessing if this worst-case scenario hits, the insurance company will have all kinds of legal questions and just as with your car, there will be years of wrangling with the bond committee over deductibles and book values. Apparently, the governor, being a good lawyer, knows this. And of course there’s a clause – Section 47 – in the arena lease with U of L that gives the university the right of refusal to buy the arena in the event of a default. So we’re not the only ones who anticipated this. We say this each and every time … we love KFC Yum! Center. But that doesn’t change the fact it’s way expensive for a city this size … or the fact that people such as Host made a conscious effort to mislead the public since Day One.
• We got an interesting tip that the federal government, through the Small Business Administration, has created RFP-EZ. The idea is to make it easier for small companies/startups to respond to requests for proposals.
From the RFP-EZ site:
The projects inside of RFP-EZ are only “simplified acquisition threshold” projects. This means that they qualify for simpler procurement procedures because the value of the contract is in a certain range – in this case between $3,000 and $150,000. They’re geared towards web-based digital professional services – services like web design and development, social media, digital video, and the like. So if you or your firm tends to be good at these things, submit your bid. If not, then hold on. As we learn more from this experiment, we may grow the platform to other categories. Finally, remember that this is an experiment. It’s a way for us to see whether or not there’s untapped potential out there to give government better access to technology. RFP-EZ will be open for a limited time as we measure its impact and determine how we move forward. Hope you like it! If you need help, just contact us on Twitter at @ProjectRFPEZ or at [email protected]
• Something is going on again with New Directions Health Systems, a Louisville-based hospital management company we’ve been reporting on for years. Calls are coming in daily about the Cleveland Regional Medical Center, New Direction’s hospital in Cleveland, Texas, outside of Houston. Bills going unpaid. Medical supplies not being replenished. CRMC is the second hospital New Directions “bought.” The first was in Murfreesboro, Ark. But that hospital never opened under New Directions. We’ve interviewed dozens of sources about New Directions, but we’ve never found one who could explain exactly why the company, based at 1918 Sils Ave. in the Highlands, buys – or tries to buy – hospitals in rural areas where no other companies are able to make a go of it.
• Want to know why Kentucky has a mammoth budget problem? Unnoticed and unreported, state officials gave back to the Medicaid managed care organizations those $700 million in savings the Beshear Administration promised before the Kentucky Medicaid meltdown. But a reliable source spotted the move in Securities and Exchange Commission filings by two of the publicly traded firms.
Basically, the story goes like this:
During Beshear’s 2011 gubernatorial campaign, in an effort to take away one campaign issue from David Williams, state officials announced managed care contracts with a gazillion dollars in savings . (No one questioned the overall program or the validity of the numbers). There were zero policy goals articulated. Only, “we’ve saved the budget!” (When Insiders knew they were kicking this problem down the road along with other accounting tricks like refinancing, extending debt terms and foregoing public pension funding.)
Then, as expected, based on extensive history in other states, the Medicaid managed care implementation is an unmitigated disaster leading to interrupted patient care and provider payments, lawsuits and other predictable behavior, all of which happened conveniently after the election.
Coventry, Centene and WellCare, bleeding cash, worked on the new Health and Family Services Cabinet secretary (who had never heard of Medicaid before she became H&FS secretary – check her bio) and her MCO-friendly commissioner (who is still receiving severance payments from the plan from his last job) for months to get rate increases to no avail.
Until Centene Corp. (which of course submitted ridiculously low rates during the negotiation with the state) loses its cool and terminates its contract with the state.
Now, after the state has lost any real leverage with the remaining plans, Coventry lets loose with the inevitable threat – either increase our rates, or we are leaving too. Then WellCare terminates a dozen hospital contracts and asks for materially lower rates from those hospitals. Centene holds firm to its decision to leave. The hospitals start pressuring the cabinet to fix the mess it created when and then ….
Without so much as a peep, the Cabinet rewards both MCOs with a 7 percent increase in rates. Both Coventry and WellCare have $1 billion plus contracts, which equates to about $140 million annually with the 7-percent increase. Additionally, they get the October 2013 scheduled rate increases accelerated to July (another $15 million). Based on a reading of Coventry’s 8-K, they also get a promise to contract at those rates in the event of an extension of the current agreements effective July 1, 2014!
Why does it matter?
Well, Mary Lassiter and Jerry Abramson here in Frankfort talking about the budget issues, lobbying for more revenues, etc. as this legislative session kicked off, conveniently forgetting to mention this small change to the current budget. The legislature is asleep at the wheel with no ability to provide a check and balance to the administration’s mendacity. And all this with no improvement to patient care, or to make sure doctors and care providers are adequately paid. But the shareholders of the companies are very pleased.
• Last night, Maker’s Mark execs finally came to their senses. We got dozens of emails alerting us that execs at Chicago-based parent company Beam used their Social Media sites to withdraw their threat to water down the famous bourbon. The Washington Post has the best story we’ve read on the issue, which injects a bit of reality into the controversy. The reality being that Beam uses Maker’s as a “power brand” that gives it leverage to sell secondary brands to distributors. Unfortunately, the price is so low that demand rose to the point Beam can’t make enough.
From the WaPo post:
So what now? The underlying problem is still there. And now it’s decision time for Maker’s Mark and Beam Inc. Are they really going to allow there to be shortages of Maker’s at times, meaning that they would be essentially charging a below-market price? Are they going to hike price and risk Maker’s status as a go-to mass market bourbon brand? Or are they going to find other, sneakier ways to get more supply of whiskey that is less blatant than diluting it, such as introducing even younger whiskey into the blend?
Bourbon is a cult, these days. But it has always been – and always will be – a business.