Passport Health Plan, Evolent deal could mean hundreds of Louisville jobs
Passport Health Plan, the nonprofit that provides Medicaid services in the Louisville area, has struck a long-term deal with for-profit Evolent Health which involves moving most of Passport’s employees to Evolent in exchange for $15 million in stock in the Virginia company.
LOUISVILLE, Ky. (WDRB) -- Passport Health Plan, the nonprofit that provides Medicaid services in the Louisville area, has moved about 350 of its employees to a Virginia for-profit company called Evolent Health under a long-term partnership that executives say will benefit both organizations and bring jobs to Louisville.
Passport and Evolent announced Tuesday that they will establish a Medicaid Center of Excellence in Louisville, which will be the headquarters of Evolent’s business helping Medicaid plans around the country become more effective.
As part of the deal, about 350 of Passport’s 500 Louisville employees are, as of Monday, employed by Evolent Health at the same salary and similar benefits, Passport CEO Mark Carter said.
Those employees will be the “backbone” of the national Medicaid consulting business that Evolent hopes to build from Louisville, Carter said.
In exchange, Passport gets Evolent stock valued at $15 million.
The Medicaid center is now at Passport’s office in the Commerce Crossings business park in southern Jefferson County, though Passport is about out of space there and job growth could necessitate a new location, Carter said.
The Medicaid center has the potential to bring 647 additional, well-paying jobs to Louisville within five years, officials said.
Last week, Evolent got approval from the state for up to $10 million in economic development incentives over 10 years if the company follows through with the jobs.
But the timing and amount of new jobs depends on Evolent finding new Medicaid customers – such as provider-controlled cooperatives like Passport – around the country, Evolent CEO Frank Williams said.
“A lot of our growth will be when we launch new opportunities … The more national clients, that will really drive the growth,” Williams said. “…We’ve been really successful initially growing revenue and expanding into new markets.”
With roots at the University of Pittsburgh Medical Center, Evolent contracts with healthcare providers like hospital companies and physician systems.
Evolent helps the providers implement “value-based” payment models -- as opposed to traditional healthcare, in which doctors and hospitals are compensated based on the amount of services they perform, called “fee for service.”
The Passport employees who migrated to Evolent will now provide services to Passport under a long-term contract, Carter said. That includes Passport’s call centers for member services and for provider claims and coverage issues, and registered nurses who work as case managers for Medicaid patients, for example.
Passport, which was formed in 1997 by health care providers like University of Louisville Physicians, University Medical Center and Norton Healthcare, did not exchange any money with Evolent for Passport's stock in the company.
In addition to the 350 employees, Evolent is getting “access to a lot of intellectual capital, intellectual property” developed by Passport, Carter said.
“We have a lot of programs focused on say, heart disease, diabetes, those kind of things,” he said.
Carter said Passport ended up getting more shares of Evolent than it anticipated about eight months ago when the two organizations began talking. Evolent’s stock trades at about $10.50 per share, down from over $18 when the shares began trading in June 2015, according to Google Finance.
The stock jumped 6.5 percent Tuesday after Evolent reported the Passport partnership Monday evening.
Carter said the depressed stock price means that Passport’s stake in Evolent could turn out to be worth much more than $15 million.
Meanwhile, “If goes down, are we really out anything?” Carter said, noting that Evolent will still provide services to Passport under the contract.
Evolent raised $209 million in capital in its initial stock offering in June. As WDRB.com reported Monday, Evolent has not yet turned a profit.
It was expected to bring in $160 million in revenue in 2015 while losing about $35 million on operations. Evolent said in a regulatory filing in November that it will continue “to incur operating losses for the foreseeable future” as its business grows.
Williams said Evolent has bright prospects because of the “huge demand in the marketplace for what we are trying to do.”
“We’ve raised pretty significant capital to be able to continue to invest in the business and in a short period of time (we) have been pretty successful, and we believe we’re going to continue to be successful given this big transformation that’s going on in healthcare and the need for higher value care,” he said.
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