Sale of D.C. health-care firm in works

D.C. Chartered Health Plan is weighing offers from buyers in an effort to keep $350 million in District government business that officials have said it could lose if the company remains in the hands of owner Jeffrey E. Thompson.

Chartered’s efforts to reorganize with such a sale could be finalized as early as this week, said people familiar with the matter who were not authorized to speak publicly about the negotiations. The transaction would separate the managed-care firm from Thompson, who recently resigned as board chairman after a March raid on his home and offices in a federal probe into alleged campaign-finance violations.

The company’s contract to manage the health care of low-income city residents expires in May 2013, and bids for a new contract must be in by July 31, said Wayne Turnage, director of the District’s Department of Health Care Finance. Should Thompson pursue a sale, the transaction would also have to be approved by city insurance regulators, a process that would take at least a month.

D.C. Council member Yvette M. Alexander (D-Ward 7) said she was impressed by a potential new ownership scenario that would make Chartered a subsidiary of Philadelphia-based AmeriHealth Mercy, which touts itself on its Web site as “the leading group of Medicaid managed care plans and related businesses in the United States.”

Alexander said Maynard G. McAlpin, Chartered’s chief executive, could be the new owner of Chartered. The Washington Post previously confirmed with Chartered that McAlpin was moving to take over as the new owner.

Karen Dale, a spokeswoman for Chartered, said it “would be premature, at this time, to discuss any potential transaction” involving the company.

Michelle Davidson, AmeriHealth Mercy’s communications director, declined to confirm any negotiations. “While AmeriHealth Mercy Family of Companies always monitors the market and regularly evaluates opportunities to prudently expand our business, we do not comment on rumors or speculation,” she said. “We cannot comment further at this time.”

Chartered is still looking at other firms, said one of the people with knowledge of a potential sale.

Thompson will have to move quickly to seal a deal before the bidding deadline. The D.C. Department of Insurance, Securities and Banking must review any sale to determine “whether the acquiring entity has the financial wherewithal and expertise” to operate as a health insurer, said agency spokeswoman Michelle Phipps-Evans.

That process, she said, can happen in as little as 30 days, “but typically there is additional information required . . . and the process takes longer.”

Alexander said she met with McAlpin and Anne Morrissey, AmeriHealth’s executive vice president and chief operating officer, about two weeks ago and they unveiled the potential partnership.

Morrissey is a District native who received her nursing degree from Washington Hospital Center School of Nursing.

Chartered has been a major employer of District residents, and Morrissey emphasized that “it was important to also keep the operation local,” said Alexander, who oversees insurance issues as chairman of the Committee on Public Services and Consumer Affairs.

“She grew up in Southeast. She went to school in the area. She is local,” Alexander added. “She is familiar with this area. [AmeriHealth Mercy] is in a lot of different areas of Medicaid.”

A bidder for the new contract, among the city’s largest, would have to be able to manage the health care of Chartered’s 110,000 members. The city has aimed to have several strong companies under contract competing to serve residents enrolled in the Medicaid and D.C. Healthcare Alliance plans, but Chartered has developed a near monopoly. Now, with Thompson’s legal troubles and the firm’s recent operating losses, Chartered’s hold on the D.C. contract — its sole source of business — is threatened. Turnage told a D.C. Council committee last month that it was unlikely Chartered would keep the contract if Thompson remained in charge.

Council member David A. Catania (I-At Large), chairman of the Health Committee, said AmeriHealth Mercy “has a stellar reputation, from what I know.” But he said he has purposely not met with any potential buyers for Chartered, saying he did not want to be seen as interfering in the impending contract solicitation.

Catania, who previously acknowledged that it would be difficult for Chartered to keep its city contract with Thompson as owner, said a sale could represent a fresh start for the company.

“If the company’s owned by a reputable health insurance company that can actually build a network of high-quality physicians and actually manage the care of our residents, that’s all that’s of concern to me,” he said, adding, “I want to get away from the notion there’s anything personal.”

 
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