Ever since Centene Corp. finalized a deal in Lane County to take over its coordinated care organization and reward its executives and physicians with multi-million dollar payouts, there’s been speculation about where this Fortune 500 company might strike next.
Two CCOs have been mentioned as potential targets -- Architrave Health LLC which runs the Umpqua Health Alliance in Roseburg and AllCare Health in southern Oregon. Officials from both organizations deny they’re interested in a buyout.
“We’re unable and unwilling to discuss what another company may or may not be interested in,” Brent Eichman, vice president and CFO of Douglas County IPA, the physician side of the CCO, told The Lund Report.
Dr. Robert Dannenhoffer, who was the founder and CEO of Architrave, said he’d heard nothing from Centene. Now the executive director of the Douglas Public Health Network, Dannenhoffer had been fired as retaliation for informing the government about allegations of Medicaid fraud by doctors employed by Architrave. He recently settled a lawsuit against the CCO and Mercy Medical, saying it was on amicable terms to everyone, but was unwilling to disclose the settlement. According to Dannenhoffer, Medicare had been improperly billed for $10 million over four years, and the Medicare investigation remains ongoing.
Mercy Medical Center, which is the hospital arm of Architrave, also denied a takeover by Centene, according to Kathleen Nickel, communications director.
Mercy is part of the Catholic Health Initiative Alliance. Earlier this year, two major ratings agencies downgraded its debt ratings. Standard & Poor’s Rating Services lowered its long-term ratings for CHI's debt to A-, from A in April, saying the chain's outlook is negative, citing concerns about "persistent and large operating losses"
Then, Moody's Investor Service downgraded CHI's long-term debt to A3, from A2 in May, which affects about $7.3 billion of CHI's total $9 billion in debt. According to Moody’s, the downgrade reflected a weak operating performance across multiple markets, adding that its outlook was negative.
Since then, CHI has undergone a massive layoff of 1,500 people nationwide – about 1.5 percent of its workforce, and its selling medical offices in 10 states including Washington but not Oregon.
AllCare Not Interested
Doug Flow, CEO of AllCare, was very forthcoming about why his CCO would never be interested in affiliating with a Fortune 500 company such as Centene and has amended its articles of incorporation to become an Oregon Benefit Company.
“I can assure you that AllCare CCO is not for sale and there have been no discussions, at any level of our organization, regarding selling the company,” he told The Lund Report. “The purpose of a Benefit Company is to create a material positive impact on the communities we serve by dedicating a portion of our management efforts and income to social and environmental concerns. By moving in this direction, AllCare CCO aligned its corporate structure to reflect our emerging and expanding business strategy that resulted in significant funding for community based programs in 2015 alone.”
He continued, “This included more than 75 projects that are helping to relieve the impact of homelessness and food insecurity, and promote early childhood development; collectively these issues address many of the root causes of poor health. In April of this year, the AllCare CCO Board held an annual retreat that focused entirely on the social determinants of health. That resulted in a commitment by the CCO Board to embrace homelessness as a major health problem in Southern Oregon, engage our community partners to collaborate around social and environmental concerns, and to increase our advocacy at the local and state level around these critical issues.
“As a Benefit Company, AllCare CCO is now a social enterprise that requires that we publically demonstrate our commitment to the communities we serve. This requires that we adopt an external “third-party standard” against which we can measure the positive impact on the communities we serve. AllCare has selected “B-Lab”, a nationally recognized authority, to certify our social and environmental performance annually.
“In addition, we have expanded the number and type of owners of AllCare to include different types of providers, such as nurse practitioners, community clinics, and behavioral health organizations. We feel that the health of our communities will be materially improved as we work together within the same corporate structure with a common mission and vision to tackle
the inherent root causes of poor health in Southern Oregon. Since 1994 AllCare’s mission has not changed, and it will not change going forward: “Working together to provide quality, cost-effective healthcare to our communities.
“As you can see, AllCare’s business goals are very different from a company that is publically traded on the New York stock exchange. We are locally owned and operated, governed by local providers who live and work in the same communities they serve. We intend to keep it that way,” he concluded.
AllCare started as a for-profit physician owned-Medicaid plan in 1996, and was chosen in 2012 to operate as a CCO serving a number of communities in southern Oregon. Based in Grants Pass, it serves Jackson, Josephine and Curry counties, as well as southern Douglas County.
Although AllCare was profitable in 2015, with net income of $3.2 million, the full-year figure hides the big picture. The CCO’s profits were all made in the first half of the year. Its first quarter net income was $5.8 million, and second quarter was $6.5 million. But in the third quarter, AllCare reported a $3.1 million net loss, and in the fourth quarter its net loss was $6 million.
AllCare started as a for-profit physician owned-Medicaid plan in 1996, and was chosen in 2012 to operate as a CCO serving a number of communities in southern Oregon. Based in Grants Pass, it serves Jackson, Josephine and Curry counties, as well as southern Douglas County.
Diane can be reached at [email protected].
