When words divide
Two years after Blue Cross and Blue Shield of Louisiana and the parent group of Our Lady of the Lake Regional Medical Center came to a contract talk impasse, a similar detente over insurance reimbursement rates has led to a fresh war of words.
The state’s largest health-care insurer fired off a statement last week saying, “The Franciscan Missionaries of Our Lady [FMOL] Health System has made the decision not to renew its contracts with Blue Cross,” adding this from Blue Cross President/CEO Mike Reitz: “The amount they requested to renew their contract was unjustifiable.”
That surprised Scott Wester, the president/CEO of OLOL, who thought the two sides had until the current contract expired Jan. 31, 2010 to talk. “Hopefully we’ll reach an agreement between now and then,” he says. “We have 50 different relationships with health-insurance providers. This one seems to be the one that gets all the public attention.”
FMOL responded in its own statement that Blue Cross was verging on social irresponsibility by charging the health system’s mission to provide subsidized care for AIDS patients, children, trauma victims and others was a “luxury” that the insurer was unhappy to underwrite.
“Both parties have worked very well over the past two years,” Wester says, pointing out an irony in Blue Cross’ stance that it is unwilling to fund cost increases for cancer and heart-disease screenings for the community. “We do health screenings with Blue Cross in their corporate office.”
Reitz says it isn’t that Blue Cross is a Big Blue Meanie. The problem is that its customers, who “own” the nonprofit company, have demanded the insurer find ways to trim costs, including the cost-shifting Franciscan officials admit dings privately insured patients in order to subsidize Medicaid and Medicare patients, and mission work.
“Under today’s current reimbursement model with the FMOL system, 55 cents out of a dollar is going to pay for direct patient care in their facilities,” Reitz says, his voice rising. “That remaining 45% is where we are challenging them. It’s not that we’re not going to continue to pay for their mission-related expenses. We just want to stop paying more.”
If FMOL does leave the Blue Cross network, Reitz says patients can expect to pay on average 30% more out-of-pocket for health services from FMOL hospitals and physician groups. He expects that many of the 300,000 card-carrying Blue Cross members in East Baton Rouge Parish would seek care at Ochsner Health Center, Baton Rouge General Medical Center or Lane Regional Medical Center in Zachary.
Wester says health care always gets more expensive, from drug costs and technology improvements to specialist salaries. He says OLOL is unique in the Capital Region in providing 24-7 trauma surgeons and critical-care doctors, plus an array of pediatric specialists. “Hospitals are very capital intensive,” he says. “With that sophistication, to maintain that quality of care everyday, there’s a cost of doing services that grows every year.”
And because Blue Cross is on track to raise premiums an average of 9% to 10% next year, he says it makes sense for FMOL to be reimbursed for its own rising expenses. “Most hospitals in the United States are living at break even, maybe a little bit below or a little bit higher,” he says. “We’re no different. To maintain a modest rate of return, we need to make sure we get the insurance companies to help.”
Cynics might be forgiven for expecting a contract resolution by February. The same sort of battle over reimbursement rates two years ago resulted in a last-minute deal in which FMOL reduced its reimbursement-rate request. This time, however, Blue Cross seems to be digging in against any uptick.—Todd R. Brown
Taxing trends
Taxes might be as certain as death, but that doesn’t mean individuals aren’t choosing the method of their execution.
A push from the Internal Revenue Service for individuals to e-file their tax returns has not impacted most Baton Rouge CPA firms or their plans for the 2010 tax season. Losing clients to the dubious method of at-home, tax-preparation programs, easy key-in mistakes and missed tax breaks? Not a chance, says William Potter, tax director for Postlethwaite & Netterville.
“As we get ready for the upcoming tax season, we’re anticipating more and more electronic filing,” he says. “But we think that will be done through us, not because clients decide to file their individual returns themselves.”
CPA firms are now required to e-file individual tax returns by the Worker, Homeownership and Business Assistance Act passed in November. Some Baton Rouge firms already had offered the service. Last year, Hannis T. Bourgeois created a policy requiring CPAs to e-file unless the client requests otherwise.
The IRS reported that out of the almost 95 million individual returns e-filed filed last year, more than one-third were sent from a home computer. Tax professionals accounted for the rest.
Faulk and Winkler has not lost any clients to e-file because it specializes in business returns, which take much more time than individual returns, Tax Manager Jeremy Klibert says. Not to mention if a firm files a business client’s returns, it generally picks up the individual returns as well.
Convincing clients that their information is secure has been a challenge for several Baton Rouge firms, but e-filing has been generally well accepted. Some clients, however, still prefer paper returns.
“It’s that old-school thought more than anything,” says Debra Whitt, a partner at Hannis T. Bourgeois. “They sign their return, look over the attachments and mail it in.”—Emma James
Re-innovation
The Baton Rouge Area Chamber released the second half of a report earlier this month detailing a strategy to promote innovation-based economic development in Louisiana. The report assesses the role of entrepreneurship, workforce development, risk capital and long-term coordination of state efforts.
“Our research shows that innovation happens in all industry sectors and is the key to our long-term economic growth,” BRAC President/CEO Adam Knapp says. “BRAC undertook this project to create one of the most thorough examinations of the fundamental elements of innovation-driven economies, a key strategy for our region’s future. The state’s newly established Louisiana Innovation Council and Louisiana Economic Development’s strategy to develop a new ‘Blue Ocean’ strategy for innovation-driven, high-growth industry sectors across Louisiana are critical elements to this effort.”
The white paper, titled “Towards and Innovation-Based Economy in Louisiana,” focuses on three primary strategies for achieving its goals:
Accelerating growth-oriented businesses and a knowledge-based workforce;
Nurturing private risk capital investments in new and expanding businesses;
Coordinating statewide efforts to generate innovation-based economic development over several decades.
Long-term planning, but a plan indeed.
A man on the move
Bhaba Sarker knows something about getting around. The distinguished professor at LSU’s College of Engineering recently learned that a Taiwanese study named him one of the most productive researchers of the past 50 years in the field of “production and operations management,” including moving goods and resources for the military.
In the past decade, he ranks No. 6 on the list, ahead of any other U.S. researcher.
“It must be computer-based modeling,” he says of research that determined who is most productive in his field. Besides the sheer volume of what was issued, he says the study’s authors weighted certain journals for quality control. “Publishing some article does not mean it is a good article,” Sarker says.
Sarker focuses on supply-chain issues, lean production, and logistics and industrial distribution, with the goal of effecting just-in-time delivery to cut down on storage costs and idle time.
And Sarker has plenty of firsthand experience in mobility. Hailing from Bangladesh, he studied for a master’s degree in India and earned a Ph.D. in industrial engineering from Texas A&M. He came to LSU in 1990 and says he has traveled to 45 U.S. states.
He has received funding from the Army, Navy, National Science Foundation and NASA, which tapped him for a space-shuttle deployment project.
This month, he travels to Guangzhou, China, for two weeks to lecture and research. So what does he do to unwind from such a dense field? “I don’t have spare time,” he says with a laugh.—T.R.B.
BookReview
Edwin Edwards, Governor of Louisiana
Author: Leo Honeycutt
Publisher: John Folse & Company Publishing
Year: 2009
Pages: 649
It’s often easy to remember fantastic political figures for their moments of outrageous speech, their unforgivable sins and their inability to remember what they wanted to accomplish when they began their public-service career. That’s why accurately remembering Edwin Edwards as he sits in a federal correctional facility in Oakdale, insisting that he is soon to be pardoned, can be difficult. He was man, myth and, sometimes, monster to those who accused him. Leo Honeycutt’s authorized biography, Edwin Edwards, Governor of Louisiana, attempts to slice through the rhetoric [even Edwards’ own elaborate stories] to reveal the innards of the former governor’s controversial life.
“[B]orn into a family of extremes and birthed where those polar opposites converged—north versus south, rich versus poor, Catholic versus Protestant, French versus English, black versus white,” Honeycutt writes.
Edwards was a walking, but intelligent, set of contradictions. Honeycutt’s hours of digging through the archives in Louisiana libraries, studying microfilm and probing interview subjects led to the most comprehensive account of Edwards and what he meant to the people around him and the state of Louisiana.
The best part of Honeycutt’s account of the man who stirred up controversy only equal to that of Huey Long is that it reads like a novel—not a dull, monotonous tale of a tainted politician. Honeycutt weaves in and out of the story like a poet remembering a troubled protagonist. And while this style of writing about Edwards’ life and times might make the biography almost excruciatingly long, the pages pass so quickly the reader barely has time to notice.—Olivia Watkins
ExecutiveSpotlight
David Tiner
Co-director/Chef instructor
Louisiana Culinary Institute
Hometown: Pine Grove
Chef David Tiner has held numerous important positions, from a U.S. Army Military Police to a civilian police officer to his current job as the co-director and chef instructor at the Louisiana Culinary Institute. In addition to keeping the peace and keeping his students from ruining a risotto, he’s also inspiring his sons’ Cub Scouts den. Tiner (pictured with, from left, Tregg Walker, Kenyon Tiner, Cole Tiner and Walker Brassette) became involved because his oldest son, Kenyon, needed a way to become involved. He’s not only spending time with his family, he’s teaching them what he calls the best advice he ever received. “Work smart, not hard, and always do your best.” Scout’s honor.
Want to read more of Tiner’s Q&A? Click here.
FastForward
Purple and gold [and green]
Two years ago, Business Report wrote about Baton Rouge retailers bracing for a windfall connected to LSU’s second appearance in the BCS championship game [“Cashing in on LSU,” Dec. 31, 2007]. The Tigers won their second BCS title in four seasons with a 38-24 victory over Ohio State in New Orleans on Jan. 7, 2008. Though LSU hasn’t returned to the championship game, the Tigers remain one of the top merchandising performers in college football.
For the fiscal year ending June 30, 2007, LSU brought in just over $3 million from the sale of licensed merchandise, according to information furnished by Brian Hommel, the school’s director of trademark licensing. That ranked the Tigers No. 11 of the 200 universities that have deals with Atlanta-based Collegiate Licensing Company.
LSU jumped to fourth that next fiscal year, when it reaped the benefits from the sale of BCS championship game. The school brought it $5.3 million, a figure that was boosted by a higher royalty rate that took effect Jan. 1, 2008.
“You always hope to establish a new plateau,” Hommel says. “You don’t want to go back to what you were bringing in before the championship.”
That’s what LSU did. For fiscal-year 2009, the school brought in $5.1 million, reporting just a 3% drop in revenue from the previous year. And LSU remained fourth on Collegiate Licensing Company’s list, behind only Texas, Florida and Georgia and ahead of other traditional football powers with large, rabid fan bases, such as Alabama, Michigan and Notre Dame.
“For the one full quarter for this fiscal year, we’re still at No. 4,” Hommel says. “That’s a great testament to retailers doing a great job and fans being excited about LSU.”
Jared Loftus, who manages the Tiger District, a shop across the street from the North Gates of LSU, says his sales this past football season were “on par” with the 2008 numbers. “It was kind of an interesting season,” Loftus says.
The week of the Florida game, when the Gators were ranked No. 1 and LSU No. 4, was his biggest of the year for sales. But after the Tigers lost by 10 points to Florida and nine points to Alabama, business dropped off. “Our location and success is based on how people feel about LSU,” he says.—Timothy Boone
TheGoodLife
An investor’s best friend
What Marilyn Monroe should have sang when she pursed her lips and jutted her hips from side in Gentlemen Prefer Blondes was that diamonds aren’t only a girl’s best friend—they’re an investor’s best friend, too. From the recent Christie’s Geneva sale of a “chameleon diamond” to impressive sellouts on specialty cut heart-shaped pink diamonds by Australian-based mining company Rio Tinto, diamonds are selling quickly and for a pretty penny.
But jewelers and investors have begun to notice that buyers aren’t laying down huge sums for white diamonds. They’re going after more elusive, more extravagant fancy-colored diamonds.
“Fancies are much more rare,” Lee Michaels Fine Jewelry representative Anthony O’Connor says, meaning one carat of a fancy-colored diamond for every thousand carats of white diamonds.
That’s not to say, however, there aren’t any fancy-colored diamonds lurking under the glass cases of jewelry stores in Baton Rouge. They can be found, but—like most gemstones—there are key indicators of quality and investment value.
Rather than value being determined only by the carat weight, cut and clarity, fancy-colored diamonds are valued more for their intensity of color. The darker the color, and the more intense the stone, the more valuable. And there is a hierarchy to which colored stones are worth more.
O’Connor says yellow diamonds, sometimes called canary diamonds, are the most prevalent, while the most rare are red, blue and purple. The stones are often set in specific-colored metals to accent their color; for example, yellow gold for a yellow diamond or rose gold for a pink diamond.
That said, the best reason to purchase a fancy-colored diamond might not be for the investment. It might just be to own a timeless treasure. After all, “square-cut or pear-shaped, these rocks don’t loose their shape.”—O.W.
Fortnight December 16 – 29
December 17 – The life and times of former Gov. Edwin Edwards will be the topic of conversation at a lecture and book signing held by his official biographer, Leo Honeycutt, at the Old Governor’s Mansion. Honeycutt was selected to write Edwards’ biography in 2005. The event begins with a reception at 6 p.m., followed by the lecture at 6:30. For more information on the book, see page 11 or visit fhl.org.
December 18 – On this day in 2007 – LSU System President John Lombardi criticized the state’s decision to invest an additional $456 million in the transportation fund—a move he said would put higher education at risk during future budget shortfalls. To prevent that from happening, he said the state should protect funding for higher education and public health care. Two years later, as LSU has battled with legislators and officials over budget cuts, Lombardi has suggested the state revise its TOPS program. Read more about his suggestions here.
December 18 – On this day in 2008 – Mall of Louisiana parent company General Growth Companies received an extension on a $900 million loan. The financial kindness only delayed the inevitable; GGP filed for Chapter 11 bankruptcy in April 2009. Less than a year later, it appears as if the debt restructuring has worked. GGP recently announced it has filed a reorganization plan and has deals to restructure about $9.7 billion of its loans.
December 19 – More than 50 local farmers and fishermen and more than 80 artists will participate in the Red Stick Farmers’ Market and the Baton Rouge Arts Market from 8 a.m. to noon at Fifth and Main streets. The gathering is an opportunity for residents to finish their holiday shopping and also an initiative of BREADA that fosters sustainability. For more information, visit breada.org or artsbr.org.
December 19 – The Nubian Kruzers United Motorcycle Club, in conjunction with the Capital City Rotary Club and Southern University Rotaract Club, conclude a drive to collect and donate more than 5,000 toys for underprivileged children. For more information, contact Mark W. Shirley at marks@dandwepa.org.
December 22 – On this day in 2008 – Daily Report reported that even though Louisiana gained 37,486 residents in 2007, it likely would lose a congressional seat in redistricting because of a 1.3% decrease in population since the 2000 Census. That has Republicans excited about the start of fundraising for next year’s elections. Read about the party’s goal of an all-GOP roster in “Business of Politics.”
BusinessOfPolitics
Feel free to snoop
Hundreds of contracts that detail the amount of state money being awarded to businesses in the Capital Region and the cost of some local government services can now be viewed using an online database. It’s all on LaTrac, the state’s Web site that compiles government spending. The data is regularly updated, and November expenditures were the most recently added. Only three other states—California, Georgia and Texas—provide such contract information online.
The Web site offers so many filtering options that a plethora of local information is only a few mouse clicks away. Let’s say you want to look at the latest contracts coming out of LSU. A few select phrases in the search engine would show that DDK Design Group of Baton Rouge just replaced an elevator in Choppin Hall for $75,000. Want to know what private companies in the region are benefiting from state money? That’s easy as well—a search of Red Stick contractors reveals that Crump Wilson Architects made more than $27,000 in October working on a new public health lab.
You can even peruse ongoing and active contracts. For instance, by reviewing contracts that end in 2010, you can find $3 million in state money going to Village of Baton Rouge for lease payments from the Department of Social Services. Information on the Web site also covers the state’s cooperative agreements, professional, personal, consulting and social-services contracts. Check it out at latrac.la.gov/contracts.
GOP war cry
Roger Villere, chairman of the Louisiana Republican Party, says GOP donors could come together to repeat their 2007 money drive that was aimed at electing a Republican majority in the state House. Only this time around, the bucks will be directed at claiming all seven of Louisiana’s U.S. House seats. “There’s a lot of interest in that, even if it’s only for one term,” Villere says, referring to the changeup expected in district lines from the 2010 Census.
By all means, Republicans have a fighting chance. U.S. Rep. Charlie Melancon of Napoleonville presently is the only Democrat in the House delegation, and his 3rd Congressional District seat, which trends Republican, will technically be open as Melancon makes a bid for the U.S. Senate. The seat held by Congressman Joseph Cao (above) of New Orleans might be a bit trickier for the state GOP to hold on to, despite high hopes by Villere and others. Because of his overwhelmingly Democratic district, Cao has supported President Barack Obama on occasion, but his party has vowed to keep him off their major hit lists.—Jeremy Alford
Blame game
Several restaurants in Baton Rouge and Lafayette have filed a class-action suit against the makers and distributors of a cash-register system after hackers got in and stole thousands of credit-card numbers. The restaurants say they shouldn’t be responsible for the fines levied by credit-card companies and payment processors after the hack, reports PC World magazine. Restaurants included in the suit against Radiant Systems and Computer World include Sammy’s Grill, Jones Creek Café, Don’s Seafood and Steak House and Picante’s Mexican Grill in Baton Rouge and Mel’s Diner in Broussard.
The suit was filed last month in the 15th Judicial District Court in Lafayette. This follows an earlier suit from Boudreaux & Thibodeaux’s and the now-defunct On The Half Shell. The restaurants say the equipment they were sold was not compliant with standards demanded by big credit-card companies. The suit charges at least 200 operators had the same password. The lawsuit is seeking compensation to repay the penalties levied by the credit-card companies and the costs to track down and repair the problems. According to the attorneys, damages “could run well into seven figures.” Radiant told PC World the allegations were without merit.—T.B
Walmart goes local?
Maxwell’s Market has opened a meat-and-seafood counter inside the Walmart Neighborhood Market in Mandeville. Ron Lewis, who owns Maxwell’s, says Walmart officials approached him about locating in the store. Walmart has launched a pilot program of partnering with local grocery stores as a way of customizing its smaller Neighborhood Market stores, Lewis says. “We figured it would be a good opportunity for us,” he says. “Mandeville is a market we’re trying to reach.” The counter sells fresh premium products.
The Neighborhood Market opened just before Thanksgiving, but Lewis says he’s received some good responses so far. “There were a couple of customers that I recognized in there, and their eyes kind of lit up when they saw our sign,” Lewis says. The counter could lead to a full-size Maxwell’s store in Mandeville, or smaller locations in other Neighborhood Markets, Lewis says. Maxwell’s opened its third Baton Rouge location earlier this month on Highland Road.—T.B.
ONTHEBEAT
Legal woes: Perkins Rowe and its developer, Tommy Spinosa, have been hit with another lawsuit, this one for nearly $1.5 million. Michigan-based De Lage Landen Financial Services, which financed the security-and-surveillance system, filed suit in U.S. District Court in Baton Rouge claiming Spinosa defaulted on his lease agreement and owes $1.36 million plus $131,000 in interest for equipment, goods, software and services.
Hold-up: A rumored move for the Baton Rouge Area Chamber and the Baton Rouge Area Foundation won’t happen. There had been talk that BRAF would move into the Capital One building downtown, freeing up space for BRAC. A spokesman for the foundation says there is no activity with its Fourth Street offices, and no plans for anything in the coming years.
Slowdown: After months of being one of the few cities to see gains in building employment, the number of construction jobs in Baton Rouge dropped slightly in October. The number of construction jobs was down 500, or 1% from October 2008, to come in at 41,700, according to figures from the Associated General Contractors of America.
Not banking on it: A report by the FDIC finds that 8.7% of Louisiana residents are more likely to not have a checking or savings account than the national average of 7.7%. The study also found that 22.9% of Louisiana residents were “underbanked”—meaning they had a checking or savings account but also used services such as pawn shops, check-cashing businesses or nonbank money orders—compared with 17.9% nationally.
Racial disparity: Twenty-four percent of children in East Baton Rouge Parish lived in poverty in 2007, compared with 16% of children in Ascension Parish and 15% in Livingston Parish, according to a detailed report by Agenda for Children. Citing Census data, the group said in 2007, about 46% of black children lived in poverty, compared with 13% of white children.
Artfully done: An LSU graphic design graduate student, Santanu Majumdar, and researchers at the school’s Center for Computation & Technology have developed Exhibition Next, a software program that allows patrons at museums or galleries to touch a radio card in order to receive e-mails about exhibits and displays they find interesting.
Mixed bag: A report by the Federal Reserve on economic conditions for a region that includes south Louisiana says activity is “mixed,” with improved retail and home sales. The Fed’s Atlanta Region says auto dealers reported “dismal” sales and transportation companies were seeing weak freight demand.
Winter wonderland: Less than one-third of an inch of snow fell in parts of Baton Rouge on Friday, Dec. 4, but it qualified for the earliest recorded snowfall in the city’s history, the National Weather Service says. The previous record was Dec. 11, 2008.
