For the fourth time in two years, Moody’s Investor Service downgraded the Corporate Family Rating (CFR) for Valitas Health Services, a Missouri-based company which owns Corizon Health Services, the largest inmate medical provider in the United States. A CFR is assigned to a “corporate family,” rating a parent company and its subsidiaries as though it were one entity. In determining the ratings action, Moody’s cited volatility among Corizon’s contracts and confusion regarding the status of company’s agreement with Florida, where state prison officials claimed they would rebid around $1 billion in inmate medical contracts, but have yet to do so. Moody’s called for “greater clarity around the status of the company’s Florida contract” as one condition that would need to be fulfilled before the rating could be upgraded. … In April 2013, a Moody’s Ratings Action stated “near-term earnings pressure following the recent losses of the Maine, Maryland, and Pennsylvania DOC contracts” influenced a ratings downgrade. … Five months later, in September 2013, Moody’s downgraded Valitas again and changed their ratings outlook from stable to negative, where it has remained ever since. Moody’s downgraded Valitas a third time in August 2014, writing, “we expect the company to continue to face near-term earnings pressure following recent contract losses and certain underperforming state Department of Corrections contracts.”
It’s expensive to get sick in America. For some, the good news flip side of that is that there’s a lot of money to be made in healthcare. For our prison population, that healthcare might be provided by the government, but increasingly towns and states are finding medical costs and care too burdensome, and the task is being outsourced. More often than not, it’s being outsourced to Corizon. Corizon Health is currently the nation’s top provider of correctional medical care, proudly serving nearly 350,000 individuals in over 500 facilities in 27 states. These are some great numbers for them. But, since the company formed in 2011 through a merger of Prison Health Services and Correctional Medical Services, the company has been involved in hundreds of lawsuits, has lost contracts from Maine to Minnesota, and has faced scrutiny in Washington, D.C. (where it failed to win a contract this year) and Florida, where it still holds sway. … So, while Corizon is on the hook for certain violations, there is something to the fact that the government agencies that hired the company weren’t keeping a close eye on it. One can’t expect that the company itself is going to draw attention to breaches of contract – the agency outsourcing the work is responsible for ensuring that there is a useful infrastructure in place for calling problems out.
The town of Richmond plans to rejoin neighboring Gardiner’s emergency service after the ambulance service company it had used since 2009 didn’t submit a bid for a new contract. Richmond was a member community of the city of Gardiner’s ambulance services for decades before it switched to North East Mobile Health Services seven years ago to save money….Gardiner’s ambulance service would cost Richmond around $14,000 for the first year, but bills for the eight other communities in the service would decrease because of new revenue from serving patients in Richmond and the service fee charged to the town….“The sentiment of the select board last night was that even though we liked and received good service from North East, we did not end up with a very good business relationship with North East,” board Chairman Peter Warner said.
“The merging of departments will really allow us to boost our manpower,” Meehan said. “We will continue to serve the town of Lebanon to the best of our ability.” Consolidation comes after voters passed a ballot to consolidate the two agencies by a vote of 548 to 214 on June 9. Meehan has been running both departments separately since he came on board in January. As a result of the merger, the department will now staff two paid per-diem EMS positions to be in the fire station 16 hours a day. Volunteers will still make up the fire responders. Weekday shifts will run from 6 a.m. to 2 p.m. and 2 p.m. to 10 p.m. at the station, with responders covering from home after 10 p.m. Weekend shifts will cover from 6 a.m. to 6 p.m. at the station, and responders will work from home after that. Consolidation will allow the departments to pay EMS workers a decent wage, according to Meehan. “Before the merger, volunteers got paid $4.35 per call. It didn’t matter whether the call was 20 minutes or two hours, or what level of certification you had,” Meehan said. Now how much an EMS worker gets paid will depend on their level of certification. Drivers will be paid $8 per hour; EMS-certified workers will get $9 per hour; EMTA’s will get $9.50 per hour, and paramedics will get $11 per hour.
…Corizon, the licensed vocational nurse’s employer, is the nation’s largest for-profit provider of correctional health services. In February, Corizon and Alameda County together paid an $8.3 million settlement to Harrison’s family. It was the largest civil-rights wrongful-death settlement in California history. That was only the latest high-profile setback for Brentwood, Tenn.-based Corizon, which has lost five contracts with state prison systems over the past three years and is fighting to hold on to others. In New York City, some officials want to end Corizon’s contract in city jails because of quality-of-care concerns. The firm also is under pressure in Florida, where the head of the state prison system said she plans to rebid its healthcare contracts, including one with Corizon. In Washington, D.C., members of the District Council, citing litigation and complaints about Corizon services elsewhere, oppose the mayor’s push to approve a Corizon contract to serve the city’s inmates. There have been numerous allegations of quality problems with Corizon’s care raised in lawsuits and news reports around the country, including charges of long waits for care and prisoners dying after not being properly diagnosed with cancer and other diseases. Corizon staff reportedly gave a 19-year-old Florida inmate Tylenol for severe pain for months before outside doctors found bone cancer that later killed him. In New York City, an inmate allegedly was told to throw his severed finger away because it couldn’t be reattached, though it later was. Last August, Moody’s Investors Service downgraded Corizon’s parent company Valitas. In issuing its negative outlook, Moody’s cited, in part, “operating headwinds due to recent contract losses.” ….
….According to a 2014 report by the Reason Foundation, only 14 states operate their own prison healthcare, while 36 contract for at least part of it and 24 have contracted out all prison healthcare services. There are no data on how many local jails use private medical vendors. Privately held Corizon became the largest correctional healthcare provider in 2011 when Valitas Health Services, parent of the former Correctional Medical Services, acquired America Service Group, creating a company serving more than 400 facilities. Valitas is majority-owned by Chicago-based private-equity management firm Beecken Petty O’Keefe and Co. Corizon had $1.4 billion in revenue for the fiscal year ended June 2014 and now cares for 345,000 inmates in 27 states. Competitors include Nashville-based Correct Care, which cares for about 250,000 people in 37 states, and Pittsburgh-based Wexford Health, which cares for 112,000 inmates in 13 states. Other providers include St. Louis-based Centurion Managed Care, a joint venture between Centene Corp. and MHM Services, and several other smaller for-profit and not-for-profit providers. Many of Corizon’s contracts are holdovers from its predecessor companies. Since the merger, it has won new contracts, including taking over Arizona’s state prison contract from Wexford and winning part of Florida’s business after a long court fight there over whether prison healthcare could be privatized. States spend $8 billion a year on prison healthcare, the Pew Charitable Trusts says. States spend $8 billion a year on prison healthcare, the Pew Charitable Trusts says. But since 2012, Corizon has lost statewide contracts covering 84,000 inmates in Maine, Maryland, Minnesota and Pennsylvania. ….
A competitor for Alabama’s $224 million inmate health care contract claimed in a letter critical of the process that a costly stipulation helped push the firm out of the bidding race. The Alabama Department of Corrections required that the winning vendor had to buy a $5 million performance bond in order to get the contract. But when the deal was signed two years ago, the Alabama Department of Corrections scrapped the requirement altogether. Private prison health care firm Corizon was then awarded the 34-month contract after it submitted the only bid for the work. AL.com is examining the health contract in light of a lawsuit the Southern Poverty Law Center filed against the state. The suit, which is pending before a federal judge, alleges that inadequate healthcare was provided to the state’s 25,000 inmates. Corizon has hired powerful lobbying firm Maynard Cooper & Gale to fight the lawsuit on behalf of Alabama. Two lobbyists at the firm, a fundraiser for Gov. Robert Bentley and Bentley’s former special counsel, have represented Corizon in 2012, and 2013 and 2014, respectively
Parent company of Alabama prisons’ health care provider ‘speculative’ investment, investor service says
Source: Casey Toner, AL.com, July 30, 2014
The firm that owns the company the Alabama Department of Corrections hired to supply health care to its 25,000 inmates was labeled “speculative” and given a negative rating outlook last year by Moody’s Investor Service. A Moody’s report from September 2013 says that Valitas Health Services, the owner of ADOC health care supplier Corizon, faces “earnings pressure” following prison contract losses in Maine, Maryland, Tennessee (excluding mental health), and Pennsylvania. It says Valitas’ financial obligations are “subject to high credit risk.” The report calls Valitas the largest provider of prison health care and offers some hope for the firm’s future. “Recent business wins” are expected to inject money into the company in 2014, according to the report. However, Moody’s estimates that Valitas’ “competitive environment will remain challenging,” and the company’s “liquidity profile will remain weak.”…
….Previously, AL.com reported that two firms hiring the husband of the ADOC’s top healthcare official were hired by Corizon to X-ray Alabama’s inmates. State Sen. Arthur Orr, R-Decatur, said he planned to meet with ADOC officials amid questions he had about the relationship and a lawsuit the Southern Poverty Law Center filed against the ADOC and others alleging inadequate health care for inmates…. Beecken Petty O’Keefe & Company, a Chicago based private equity management firm, owns a majority of Valitas, a private company. Valitas reported revenue of about $1.2 billion for the year ending on June 30, 2013…..
Every commissioner has now recused themselves from the case, which involves a conglomerate that pumps and bottles water in Maine under the Poland Spring brand. Maine Public Utilities Commissioner David Littell has recused himself from a controversial case involving Nestle Waters North America and the privately held public water utility in Fryeburg. The move, announced in a letter to legislators this week, follows passage of a new law allowing for the appointment of alternate PUC commissioners when one or more of the three regular members have conflicts of interest. All three PUC commissioners have now recused themselves from the Nestle Waters case over past associations with the conglomerate, a subsidiary of Swiss foods giant Nestle SA, which pumps and bottles water in Maine under the Poland Spring brand. The case involves approval of a long-term contract between Nestle Waters and the Fryeburg Water Co., a family-controlled water utility, at rates critics say are too low. All three commissioners as well as the state’s public advocate, who is charged with representing ratepayers, had ties to Nestle Waters….
Conflict of interest claims persist in Maine’s Nestle water case
Source: Julio Ricardo Varela, Al Jazeera America, The Stream, September 27, 2013
As Maine’s Public Utilities Commission (PUC) considers a final decision on a 25-year water contract between the Fryeburg Water Co. and Nestle (owners of Poland Spring), critics and proponents of the controversial project are questioning the approval process, citing concerns that PUC members have ties to Nestle. The current case surrounding Nestle and Fryeburg has led to divisions within the town and in Maine. This past summer, water justice advocates delivered 136,000 signatures to Gov. Paul LePage’s office protesting the contract. The proposed contract would allow Nestle to “continue to draw water at a low ‘tariff’ rate and pay lease fees to the water company, but would make a guaranteed minimum payment of about $144,000 every year, ensuring a more predictable cash flow,” according to an article by Portland Press Herald reporter Colin Woodard. … The calls for more transparency come after Woodard revealed that the PUC’s three commissioners and the state’s public advocate have all done work for Nestle at some point in their professional careers….Taylor, who became interested in the case since he felt the proposed contract would affect his own private water well, believes that Nestle is just exploiting one of Maine’s most valuable commodities—water. “They’re buying a commodity at a cheap regulated rate from a monopoly they own and are reselling it for a high profit in the form of bottled water you find in your local 7-11,” Taylor said….
The final portion of a controversial five-part study of the state’s welfare system that’s costing Maine taxpayers $925,200 is due Thursday but, according to state officials, only the first part of the study — due Dec. 1 — has been turned in. Maine has paid the Rhode Island-based Alexander Group more than half of the contract’s value, or $501,760. Republican Gov. Paul LePage and top officials within the Department of Health and Human Services have come under fire for authorizing the no-bid contract with the consulting firm, headed by Gary Alexander, a former public welfare commissioner in Pennsylvania and Rhode Island. An effort by the Democratic-led Legislature to revoke the contract failed last month…..
MaineCare expansion study misses first deadline
Source: Scott Thistle, Sun Journal, December 2, 2013
The first part of a five-part study on Maine’s welfare system that had a target due date of Dec. 1 has not been submitted to the state’s Department of Health and Human Services, a department spokesman said Monday. The Alexander Group, the consulting company awarded a nearly $1 million no-bid contract for the study, did not meet the first target date on a part of the study meant to examine the feasibility of expanding Medicaid in Maine, according to John Martins, a spokesman for DHHS. He would not say when the department expected the report. …
Editorial: Governor adds pricey consultant to political staff
Source: Sun Journal Editorial Board, November 21, 2013
…Failing to seek bids invariably means paying top dollar for the work to be done. And that’s the first in a series of problems with Gov. Paul LePage’s surprise announcement this week that he has hired a controversial Rhode Island Republican consultant to study our MaineCare system. Garry Alexander of Alexander Associates landed that $925,000 no-bid contract, about half of which must be completed within the next month. And that’s another red flag — how can such a small firm, with only one similar study under its belt, complete such an analysis in four weeks? … Finally, Democrats, including state Sen. Margaret Craven and state Rep. Peggy Rotundo, both of Lewiston, have wondered where LePage is finding nearly $1 million to pay Alexander. … A Sun Journal review of the new contract shows about half the money will come from the state’s General Fund, meaning it will be unavailable for other state priorities. …
Maine hires conservative firm to study Medicaid expansion, bolster welfare efficiency
Source: Mario Moretto, Bangor Daily News, November 19, 2013
The state has contracted a conservative former welfare administrator with a history of slashing benefits to review Maine’s Medicaid system and other welfare programs. The Alexander Group, based in Rhode Island and spearheaded by former Pennsylvania and Rhode Island welfare chief Gary Alexander, will be paid nearly $1 million over eight months for its services, which will include a report on potential costs of expanding Medicaid under terms of the Affordable Care Act. … In addition to studying the long- and short-term costs of Medicaid expansion, the Alexander Group also will work with the Department of Health and Human Services to assess every state welfare program, with an eye toward adding flexibility and efficiency and integrating disparate programs that often benefit the same people. …
…The consulting firm recently completed a similar four-month study in Arkansas, where it recommended across-the-board reductions in spending on welfare and a plan to push state-sponsored health insurance recipients into the private marketplace. Arkansas paid $220,000 for the Alexander Group’s services. When asked why Maine was paying so much more, Health and Human Services Commissioner Mary Mayhew said she couldn’t comment on another state’s dealings but stressed that the work to be undertaken is substantial….
… Meanwhile, Democrats are criticizing Alexander for his controversial record in Rhode Island and Pennsylvania, where he most recently served as that state’s welfare chief. There, he hit the same rhetorical notes often struck by LePage and House Republicans, focusing his attention on trimming the welfare rolls and fighting fraud and abuse. They are also lambasting LePage for contracting the company without a public process. Mayhew said in an interview that there was no request for proposals, and that DHHS had gone directly to the Alexander Group to seek out what she said was its unique expertise….
…In January 2012, the Philadelphia Inquirer reported that about 88,000 children were cut from Medicaid in the last five months of 2011, which some advocates for the poor claimed should never have happened. Alexander himself was also fodder for the state’s political reporters. He faced criticism for a strict dress code that seemingly mandated women wear skirts or dresses, spending $20,000 for a flagpole while the department cut spending on services, and for taking on a second job while he ran Pennsylvania’s largest department….
A standing ovation from the Camden-Rockport audience followed the School Administrative District 28 School Board’s unanimous decision Wednesday night not to outsource the school’s custodial services for the coming year….Dailey said, to his surprise, that outsourcing custodial services to a private company would result in a $370,000 savings to the school system. SAD 28 and Five-Town Community School District last year sought bids from private cleaning companies. He also noted that after unemployment was paid and the cost of buying out existing contracts was factored in, the school system would only realize a savings of $150,000….
….Dailey said that the board has tried to respect everyone’s opinion, but that the board has to be considerate in what they are doing. “Even though we seem foolish in what we are doing, we are really trying hard to do the right thing. The bidders are providing the same amount of jobs and the same amount of manpower. They’re not going to be doing anything different than what we are doing right now. The difference is all in wages. The board is paying what we negotiated and the public okayed, and I don’t think it’s honorable, or the right thing to do, to basically say let’s subcontract and all these other people who negotiated in good faith are basically going to take it in the end. I would say at this time I’m not in favor of this subcontracting.”….
Source: Associated Press, March 16, 2014
With the approval of a virtual charter school, some Maine educators worry the state will be outsourcing education to a multinational corporation. But supporters argue that large private companies can create better and less expensive virtual schools because costs are spread out over a large number of users. Starting next fall, the Maine Connections Academy will get its curriculum, online platform and some of its teachers from an American subsidiary of London-based Pearson LLC.
Multinational giant set to run first virtual school in Maine
Source: Tom Bell, Portland Press Herald, March 16, 2014
Some educators worry about outsourcing control, but supporters say a global company can reduce costs by serving so many users…. The company that would become Connections Education began in 2001 as a spinoff business unit of a company called Sylvan Ventures, which saw potential in new online technology and the growing interest among parents for charter schools and homeschooling, Ochs said. In 2004, that unit was sold to an investor group led by Apollo Management L.P., which in early 2011 created a new corporate entity called Connections Education to focus solely on online learning. In the fall of 2011, Pearson acquired the company, paying $400 million in cash. Connections Education at the time had been posting consistent 30 percent year-over-year revenue growth and annual revenues approaching $190 million….
Special Report: The profit motive behind virtual schools in Maine
Source: Colin Woodard pressherald.com, September 3, 2012
Documents expose the flow of money and influence from corporations that stand to profit from state leaders’ efforts to expand and deregulate digital education….. A Maine Sunday Telegram investigation found large portions of Maine’s digital education agenda are being guided behind the scenes by out-of-state companies that stand to capitalize on the changes, especially the nation’s two largest online education providers. K12 Inc. of Herndon, Va., and Connections Education, the Baltimore-based subsidiary of education publishing giant Pearson, are both seeking to expand online offerings and to open full-time virtual charter schools in Maine, with taxpayers paying the tuition for the students who use the services….