Florida may be home to the biggest group of successful Medicare Advantage entrepreneurs in the nation. And three of them were at the forefront of an unusual tale of reversal of fortune and on-and-off acquisitions that unfolded, aided by some nudges from the Florida Office of Insurance Regulation (FOIR), late last month and early this month.
At the center of the developments was A.K. Desai, M.D., who launched what is now Universal Health Care Group, Inc. in 2002 and rapidly built it into a St. Petersburg, Fla.-based MA insurer serving 18 states plus the District of Columbia. But Universal’s fortunes turned south in the past couple of years, and the resulting financial woes led to the involvement of the other two MA entrepreneurs, Kiran Patel, M.D., and Miguel (Mike) Fernandez.
Patel, a friend of Desai and the founder and CEO of Tampa-based MA plan owner America’s 1st Choice Holdings (which turned around Freedom Health and Optimum Health Care since 2007), tells AIS that he and Desai had discussed for years the possible combination of their firms. But when no agreement was reached and as Universal’s losses grew larger and its reserves smaller, Fernandez’s MBF Healthcare Partners, L.P. investment company on Jan. 25 unveiled an agreement to buy assets of Universal. Five days later, the firm of Fernandez — who had built up and sold at a big profit CarePlus Health Plan and now is back in MA with Simply Healthcare Plans, L.P. — and Universal said the agreement had been terminated and wouldn’t elaborate. Two days after that, Desai said his firm had reached an agreement to buy the assets of Universal.
In the meantime, FOIR, on the same date as the Patel deal was unveiled, referred two Universal insurance units to the state division that handles rehab and liquidation of health plans, saying they were “impaired or insolvent.” And on Feb. 6, the parent of those insurers, Universal Health Care Group, filed for reorganization under Chapter 11 of the Bankruptcy Code, a fact the company did not announce until Feb. 14. On Feb. 9, Desai told AIS that his deal is still on.
What do you think is the likely end game here? Can Patel, a widely admired MA executive who previously built up and sold what is now WellCare Health Plans, Inc., save Universal, whose liquidation even he says is “inevitable without intervention”? Will Fernandez, who apparently won’t get this MA deal, go looking for another? Will Desai, a former chief of staff of St. Petersburg General Hospital, stay active in MA? What do we know other than to “tune in next week”?
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