Centene Corporation Readies Itself for Oregon Marketplace
Oregon is about to have a major Fortune 500 company take over a Medicaid-run health plan in Lane County. The transaction, now underway, is expected to be completed by the end of September.
Centene Corporation, a multi-billion-dollar company is no stranger to government-run programs and has, under its belt, 22 similar Medicaid-run programs around the country.
Controversy hasn’t eluded Centene. Last year, its health plan in Texas found itself in the center of media attention after denying emergency surgery for a seven-month-old infant with a brain tumor.
Fox News got wind of what was going on, sharing the news with their viewers nationwide and, almost immediately, Superior Health Plan changed its mind, and agreed to pay for the surgery, having earlier told the parents that Texas Children’s Hospital was not in its network.
Terry Coplin is convinced nothing like this will happen in Oregon. As CEO of Agate Resources, which runs Trillium Community Health Plan, Coplin plans to remain at the helm for another year once the transaction goes through. And his management team will remain indefinitely.
“Centene is not bringing people in to run this organization; I have assurances from their management,” Coplin told The Lund Report. “Sure, they could do it if they really wanted to, but they’re not stupid. We have the local expertise; we know the market, they don’t, and we’ve been successful and they don’t fool with success.”
Agate decided to enter into the purchase agreement with Centene because of the increasing administrative and regulatory demands facing the coordinated care organization and the efficiency of bringing a national organization on board. Currently Trillium has about 90,000 Medicaid members.
“I’m proud of the fact we’re bringing the resources of a Fortune 500 company to Lane County,” Coplin said. “They have a very robust technology system and a whole suite of care management software. They really stressed our ability to keep up, and each year those regulatory requirements are pushing up our administrative costs. They have some support infra-structure that would take us five years to build, and we think we can get access to them now.”
At the end of 2014, Trillium earned a net profit of $8 million, the majority of which went into reserves, while its profits reached $3.9 million in 2013 and $1.2 million the previous year.
Last year, Coplin earned a salary of $492,342, including a bonus of $96,230 and stock awards of $46,000. His take-home pay increased significantly from the previous year when he earned $366,530.
Coplin wasn’t at liberty to disclose the purchase price of Agate Resources, and wouldn’t comment on whether he’ll receive stock options. But Coplin is among the 300 shareholders of the company, the majority of whom are physicians in private practice.
“I’m not at liberty about the terms of the partnership,” Coplin said. “It’s considered private and the Securities and Exchange Commission is not required to make these disclosures because the SEC doesn’t consider this a material transaction. This information may become public at some point but not from me.”
Coplin is also unaware of any other coordinated care organizations that may be purchased by Centene in the near future.
Before the sale was announced, there’s been speculation in the community that other companies were interested in purchasing Agate Resources, among them PacificSource Health Plan, however Coplin said he could not comment as to whether there had been any serious discussions in the past.
Once the transaction closes, a $2 million community fund will be established, with Centene and Agate each putting up $1 million. That fund is intended to pay for services not covered by Medicaid, with a local community group setting out the criteria.
Over the past 30 years, Centene has grown from a single health plan in Wisconsin to become a $10 billion Fortune 500 company trading on the New York Stock Exchange. With nearly 10,000 employees across the company, its health plans serve 2.9 million members.
Chief Executive Michael Neidorff earned $10.5 million last year, including $5.4 million worth of stock, while its revenue per employee with approximately $1.24 million.
1st quarter profits
Centene will release its 2015 first quarter financial results on April 28, with a conference call hosted by Neidorff and William N. Scheffel, executive vice president, chief financial officer and treasurer, of Centene.
Investors and other interested parties can listen to this conference call by dialing 1-866-739-7850 at 8:30 a.m. Eastern Time or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.
Diane can be reached at [email protected].