Florida Governor Rick Scott ordered drug tests for state employees and citizens on state assistance. Rick Scott, the ethically challenged ex-CEO of Columbia/HCA, started Solantic, a chain of urgent care centers, which happen to perform drug tests. The Palm Beach Post reported on the possible conflict of interest:
Scott divested his interest in Solantic in January, the controlling shares went to a trust in his wife's nameControlling shares means more than 50% of the company. The investment remains in Scott's immediate family.
Welsh, Carson, Anderson & Stowe (WCAS) owns part of Mrs. Scott's Solantic. WCAS purchased their stake in 2007.
WCAS, like other private equity underwriters (PEU's), conducted deals for health insurers. They and The Carlyle Group sold MultiPlan for $3.1 billion. WCAS is selling Universal American, a Medicare Part D insurer to CVS Caremark. After health reform passed, PEU's expressed interest in buying health insurors. WCAS clearly states their focus on health care:
WCAS believes that demographic changes, adoption of new technologies, and ongoing regulatory changes, which create near-term uncertainty and value dislocations, will generate attractive areas for investment opportunities in the years ahead.Politicians can create disruptions, near term uncertainty and value dislocations, the very thing WCAS desires.
Some examples of healthcare sectors in which WCAS invests include payors, facilities, providers, pharmaceutical outsourcing and medical technology
Governor Rick Scott wants Florida to spend state Medicaid money differently:
Raising a groundswell of concern and questions about his health policy initiatives, especially his push to move Medicaid into private HMOs.As for Solantic's sister WCAS company, Universal American, their recent conference call revealed::
It's not surprising the ethical race to bottom should be led by Rick Scott.One month after being sanction by CMS, Universal American announced a deal with CVS Caremark. It effectively monetizes UA for current shareholders, while giving investors a stake in New UAM, the combined entity. Adding to the bounty, the old UAM paid $2 a share special dividend in 2010.On November 19th 2010, CMS (Center for Medicare/Medicaid Services) notified the Company of the imposition of intermediate sanctions
–– Effective December 5th 2010, marketing and enrollment of new members was suspended in Medicare Advantage plansThe suspension relates primarily to agent oversight and market conduct issues
As for Rick Scott's Solantic defense:
Any perception that the governor's business interests pose a conflict of interest with his health policies are "baseless and incorrect," said Scott's deputy communications director, Brian Hughes.
Scott is setting up sending state money to his former company, longtime friends and associates, all with an insatiable need for profit growth. On that, Rick Scott and friends are remarkably consistent.
Take Tom Scully, ex. CMS Chief under President George W. Bush, and designer of Medicare Part D coverage. Scully served on Solantic's Board of Directors. He is also on the board of Universal American and Select Medical Corporation. Scully stands to make $2.1 million, $15.20 per share for 138,680 shares held in his name. The $15.20 comes from $13.20 in sale proceeds and the $2 special dividend. It's not clear Tom's proceeds from indirectly beneficially owned 2,083,500 shares of Common Stock held by WCAS. of which Scully is a General Partner. What's Tom's take of $31.6 million?
That indicates the kind of money PEU's can make on a deal. I expect Governor Scott told close friends and associates, how he plans to steer state money. At some point Scott has to tell the public, like he did on drug testing.
Signal, privatize, profit. That's the cycle for PEU's and purchased politicians. It's easier to do when the PEU is in the politician, like Rick Scott.
Update 9-11-12: PEU Mitt Romney avoided PEU Rick Scott on the Presidential campaign trail.