Fast Lane — Nov. 2012

By Karen Baird

LEXINGTON: UK approves $134M on-campus housing expansion, will add 2,900 beds within next two years

Five new University of Kentucky residence halls recently were approved by the UK Board of Trustees. The facility shown here in this artist’s rendering will be built on the site of Wildcat Lodge, which will be demolished.

The University of Kentucky Board of Trustees has approved a proposal to dramatically transform the UK campus by authorizing the next phase of a public-private partnership to construct more than 2,300 modern residence hall beds – five new residence halls – over the next two years.

The plan calls for more than 2,900 beds to be under construction at one time, the largest and quickest housing expansion in the university’s history.

UK plans to begin construction on the newly approved projects this month and hopes to have the residence halls open by fall 2014. Construction of a 601-bed residence hall, New Central, already is under way and expected to be open in August 2013.

The board has authorized UK President Dr. Eli Capilouto to negotiate and execute a lease with Education Realty Trust (EDR), a private real estate company that specializes in university housing. The five new residence halls represent an additional $133.7 million in investment by EDR. The New Central residence hall – also built and managed by EDR – is expected to cost about $25.2 million.

UK is considering a public-private partnership with EDR over the next five to seven years in which the company would invest about $500 million to replace much of the university’s current housing stock of about 5,200 beds, which average nearly 50 years in age. The university’s goal is to accommodate up to 9,000 undergraduate students on campus.

Angela Martin, UK’s vice president for financial operations and treasurer, said utilizing a third-party to provide equity financing will result in more modern beds being built in a more cost-effective way – a result that would not occur if the university used its traditional financing and approach to build one residence hall every couple of years. It also minimizes impact on UK’s debt capacity – a critical element in the university’s ability to debt-finance other necessary construction such as classroom buildings and research facilities over the next several years.

STATE: Kentucky Spirit Health files to terminate Medicaid contract; move will eliminate 200 jobs

The Kentucky Spirit Health Plan has notified the Kentucky Cabinet for Health and Family Services of its plans to exercise a contractual right to terminate its Medicaid managed-care contract with the state as of July 2013. The decision will eliminate 200 Lexington jobs that represent more than $12 million in annual wages and benefits.

The company has also filed a lawsuit alleging that in its rush to privatize Medicaid management, the state provided inaccurate cost information to bidders.

“Since the inception of the contract, we have been in discussions with the Cabinet about our concerns with the Medicaid managed-care program but have been unable to resolve our differences,” said Jesse Hunter, executive vice president of operations for Centene Corp., the parent company of Kentucky Spirit. “Consequently, we do not believe there is a viable path to a sustainable managed care program in Kentucky.”

Kentucky Spirit is one of three managed-care organizations – the other two being Coventry Cares and WellCare – that signed three-year contracts with the state in 2011 to provide Medicaid managed care. Kentucky Spirit offered the lowest bid in response to the Requests for Proposal that were issued in early 2011, but now cites lost profits as the motivating factor in the company’s decision to leave.

The company currently serves approximately 125,000 Medicaid recipients in 104 counties. Health and Family Services Secretary Audrey Tayse Haynes said those enrolled in Kentucky Spirit will be moved to another managed-care organization in the coming months.

LOUISVILLE: Nucleus iHub space is reflective of new co-working trend

The new Nucleus iHub facility in downtown Louisville.

A vacant building in Louisville has been transformed into the iHub, an inexpensive space for entrepreneurs and start-up companies to set up shop and share ideas with their peers.

The iHub is offering co-working space, meeting rooms and training for very early-stage companies where entrepreneurs can interact and network with their peers – and possibly form collaborations and new businesses. Located on property owned by Nucleus, the life sciences innovation center and economic development arm of the University of Louisville Foundation, the iHub hopes to help users grow to where they and their companies can move into a larger Nucleus business incubator building, such as the $18 million, eight-story facility now under construction just across the street from the iHub.

“The iHub will foster entrepreneurs and innovation. It also will give UofL faculty the chance to rub elbows with other creative people as they explore new ideas, develop their inventions and get them to the marketplace,” University of Louisville President James Ramsey said.

iHub spaces are being rented out for $80 per month and offer free Wi-Fi, private meeting rooms, conference phones and photocopiers as well as other benefits for entrepreneurs.

The iHub facility represents a new trend in workspaces that is being seen on a global basis, with nearly 700 such spaces in the United States alone. The rapid rise of “co-working spaces” is driven by numerous factors, including technologies such as cloud computing that allow workers to access files from any place with an Internet connection; more freelancers, women and caregivers in the workforce seeking more flexible work arrangements; and economic pressures on growing companies needing to provide offices for workers.

LOUISVILLE: Churchill Downs bets on big payoff with recent expansions

The Riverwalk Casino and Hotel, which was purchased by Churchill Downs Inc., sits on the Mississippi River in Vicksburg, Miss.

Churchill Downs Inc. hit the track running in October. In less than three weeks, the company announced the launch of a new online gambling site, obtained authorization to move forward on the development of an Ohio racetrack/casino, received approval from the Kentucky Horse Racing Commission to offer September racing in 2013, and expanded its network of facilities with the acquisition of Riverwalk Casino and Hotel in Vicksburg, Miss.

CDI Chairman and CEO Robert L. Evans said the acquisition of Riverwalk – for which the company paid $141 million in cash – reflects the Louisville-based company’s commitment to growth via diversification.

“We continue to look for opportunities to invest capital in growth opportunities, and we are hopeful that other jurisdictions, such as Kentucky and Illinois, will offer us a similar opportunity to invest and create jobs in the near future,” Evans said, alluding to the fact that casino gambling is not allowed at racetracks in those states.

Riverwalk includes a 25,000-s.f. casino, an 80-room attached hotel and a 5,600-s.f. multi-functional event center and employs a staff of around 400. Churchill Downs estimates Riverwalk’s annual impact to be approximately $55 million in revenue.

In Ohio, Churchill Downs received approval from Warren County, Ohio, commissioners to move forward with plans to develop a new racino there. CDI and its partner, Delaware North Gaming & Entertainment, plan to move the Lebanon Raceway harness track from its existing location at the Warren County Fairgrounds to a 120-acre site that previously served as a state prison farm. The Ohio racino is expected to create 700 jobs.

The decision by the Kentucky Horse Racing Commission to move September racing to Churchill Downs represents one of the biggest changes to Kentucky racing in years. The approved schedule moves September racing to Churchill from Turfway Park in Florence, which will now offer race days in January, February, March and December. Turfway has struggled to compete with nearby casinos and Turfway officials said the new racing schedule makes it possible “to support a purse structure befitting Kentucky racing.” Churchill has been approved for 12 race dates in September plus four optional days when live racing can be added if business levels permit.

With the launch of online gambling site Luckity.com, the company is working to attract a broader gambling audience that may not be as interested in horse racing. Because federal law allows interstate gambling on horse races, Luckity.com users can make a bet by picking a number and then the game chooses a horse running in a live race somewhere in the world. Ted Gay, president of Churchill Down’s new interactive subsidiary, told the Louisville Courier-Journal that the target demographic for Luckity is “women over 35 who enjoy slots, the lottery, and social networking games” and would be likely to attend night racing and bet on their favorite names or jockeys.

STATE: Entrepreneur program for high-schoolers launches in June

Students selected to participate in the new Governor’€™s School for Entrepreneurs will learn to take an idea, utilize science, technology, engineering and math skills to turn it into a product or service, and develop a business model.

Building on the successes it has seen with its Governor’s Scholars Program and the Governor’s School for the Arts, the state has launched a new program designed to give high school students the opportunity to learn what it takes to succeed in the world of business.

The Governor’s School for Entrepreneurs is a three-week residential summer camp that is open to all Kentucky high school students. The program, which is free of charge to the students selected to participate, will be held June 9-29 on the campus of Georgetown College and will bring students together with scientists, engineers, experienced entrepreneurs, start-up technology companies and university staff.

The program’s goal is to uncover young talent that traditional academic pathways may not draw out and provide an environment that fosters creativity and innovation to develop solutions to real-world problems or needs.

The program is one way to begin addressing the need for more entrepreneurial thinking across the Bluegrass State. The latest U.S. State Entrepreneurship Index put Kentucky at No. 46, a drop of 15 spots from the prior year. The study’s rankings were compiled based on each state’s percentage growth and per capita growth of business establishments, its business formation rate, the number of patents per thousand residents and income per non-farm proprietor.

STATE: PSC studying best option to add new area code in Western Ky.

The Kentucky Public Service Commission held informational meetings last month in six Western Kentucky communities to discuss options for the creation of a new area code for that section of the state.

The PSC was recently notified by the North American Numbering Plan Administrator (NANPA) that area code 270 is projected to run out of available numbers by the beginning of 2014.

The PSC is considering two options for creating a new area code. Telecommunications providers have recommended an overlay, which would create a second area code – 364 – in the same territory now covered by area code 270. An overlay would permit retention of all current 270 numbers but would require 10-digit dialing for local calls. The second option is a split, which would assign area code 364 to a portion of the current area code 270 territory. A split would retain seven-digit dialing for local calls, but would require both wireless and landline customers within about half the current area code to change their phone numbers.

This is the second time in six years that the PSC has addressed a projected number shortage in area code 270. In May 2007, the PSC ordered the creation of a new area code – designated by NANPA as 364 – in the western half of area code 270 (which was created in 1999 by splitting area code 502). However, the projected number exhaustion date for area code 270 was extended several times as the result of changes in the number assignment process and a reduction in demand for new numbers and the split was never implemented.

LOUISVILLE: Humana first to provide discount for buying healthy food

Walmart has introduced a “Great For You”€ icon to help customers quickly identify healthier food options. As part of a new arrangement, members of the HumanaVitality program will receive a 5 percent discount on foods with the “€œGreat for You”€ icon.

A subsidiary of Louisville-based Humana Inc. has partnered with Walmart on a program that provides discounts on the purchase of healthy foods.

The partnership between HumanaVitality and Walmart is a first-of-its-kind effort to help consumers across the United States save money on more-nutritious foods and represents the first time a retailer and healthcare company have come together to encourage people to eat better.

As of Oct. 15, more than 1 million HumanaVitality members who shop at Walmart are eligible for a new program that offers a 5 percent savings on products that qualify for Walmart’s “Great For You” icon, including fresh fruits, vegetables and low-fat dairy.

“The ‘Vitality HealthyFood’ program with Walmart represents a new way we can decrease America’s healthcare bill,” said HumanaVitality CEO Joe Woods. “In a recent survey of our members, 84 percent said that a savings program would motivate them to purchase healthier foods. We will be aggressively communicating this program to more than 600,000 hospitals and physicians, as well as 60,000 insurance brokers to ensure as many members as possible can benefit from it.

The “Vitality HealthyFood” program is available at all Walmart stores. After registering at the HumanaVitality or Humana websites, HumanaVitality members receive a “Vitality HealthyFood” card that entitles them to the 5 percent savings on foods that are labeled with the Great For You icon. The savings are loaded as credits that are available for use on the next grocery trip.

MADISONVILLE: Berry Plastics plant to reopen and create 400 new jobs

Berry Plastics Corp. announced on Oct. 30 that it is investing $96 million to reopen its plant in Madisonville, creating more than 400 full-time jobs.

Berry acquired the Madisonville facility during its acquisition of Rexam’s specialty and beverage closures business in August 2011 but closed the facility earlier this year as a result of a redistribution of production to its other manufacturing facilities. At that time, the plant employed approximately 140.

Berry Plastics manufactures injection-molded plastic packaging, thermoformed products, flexible films and packaging, as well as tapes and corrosion protection products. The company currently has more than 950 Kentucky employees working at facilities in Franklin, Danville, Louisville and Bowling Green.

Prior to closing earlier this year, the Madisonville plant produced rigid closed-top products, but the company is planning to reconfigure the plant for the production of rigid open-top products.

Kent Mills, chairman of the Madisonville/Hopkins County Economic Development Corp., said that the W worked with Berry for several months on the selection of Madisonville/Hopkins County for the project and noted that it is one of the largest projects ever announced in the area.

STATE: Ky. Health Benefit Exchange to be modeled after Anthem plan

Under the federal Affordable Care Act, health plans must cover items and services within at least 10 categories, including preventive and wellness services.

Kentucky has recommended that the Anthem Preferred Provider Organization (PPO) plan serve as the “benchmark” plan for the Kentucky Health Benefit Exchange, as well as for plans offered outside the exchange.

The Anthem PPO is the largest small-group plan currently offered in Kentucky and includes coverage for all state mandates and the 10 essential health benefits, or categories of care, specified by the federal government under the Affordable Care Act.

The benchmark plan sets the minimum level of benefits offered in the individual and small group markets beginning Jan. 1, 2014. Since the Anthem PPO plan does not offer the minimum requirements for pediatric vision and dental services, Kentucky has recommended that the benefits in the Kentucky Children’s Health Insurance Program (KCHIP) be substituted in the benchmark plan.

The U.S. Department of Health and Human Services will review Kentucky’s recommendation for the essential health benefits and accept public comments prior to making a final decision.

MADISONVILLE: Trover Health System is 8th Ky. Baptist Health hospital

Trover Health System is now Baptist Health Madisonville. Trover officially joined Baptist Health on Nov. 1, becoming Baptist’s eighth hospital in Kentucky.

Trover, which operated independently in Madisonville for more than 50 years, began discussions with Baptist nearly a year ago after selecting Baptist from proposals submitted by several organizations. LifePoint Hospitals and Owensboro Medical Health System also were considered as finalists. Trover was seeking a health system with the ability to assist with the design and implementation of new models of care and payment reform, access to capital, experience with recruiting physicians and developing service line partnerships.

“We couldn’t have chosen a finer addition to our already strong, statewide network of hospitals,” said Tommy Smith, Baptist Health president and CEO.

By joining the Baptist Health system, “we are positioning our health system to address the ever-changing needs of providing healthcare in the years to come,” said E. Berton Whitaker, president and CEO of the Baptist Health Madisonville.

Baptist Health Madisonville is recruiting for internal medicine and family practice physicians. Renovations also are planned for the Mother/Baby Unit, Emergency Department and Same Day Surgery, in addition to updates to other areas of the hospital. Baptist also will update technology and facilities at the Madisonville campus.

In addition to Madisonville, Baptist now has hospitals in Louisville, La Grange, Corbin, Lexington, London, Paducah and Richmond. It manages hospitals in Elizabethtown and Russell Springs.

LEXINGTON: Netgain Technologies buys IntraSource, expands support

NetGain Technologies, a Lexington-based regional information technology solutions provider, has further expanded with the acquisition of IntraSource, another Lexington IT solutions company.

“During the past 28 years, IntraSource has focused on providing advanced technical solutions while during the same period NetGain Technologies has developed a more comprehensive sales and service organization with many operational efficiencies,” said IntraSource founder David Reedy, who will serve as a business development manager in the newly merged company. “By combining resources, I feel that we will be able to provide our clients with enhanced capabilities to support their IT operations.”

NetGain has offices in Louisville, Cincinnati, Chattanooga and Little Rock. It recently expanded its tech support operations to offer 24/7 help desk support, adding seven new jobs as a result.

Please wait...

Subscribe to the FASTER LANE business newsletter.

Subscribe and receive breaking Kentucky business news and updates daily.