Vanderbilt University's attempt to sell its managed-care business has hit a speed bump.
The only offer for the university's three money-losing health plans is off the table, and there have been no others. Originally, the university had hoped to sell by the end of March.
Philip Hertik, chief executive officer of Nashville-based Vanderbilt Health Plans, and Chief Operating Officer Michael Bailey made an offer last summer to buy the plans for an undisclosed amount (Aug. 30, 1999, p. 8).
"That offer didn't meet our expectations, so we continue to look at other offers that come in, but there's no imminent sale," said Matt Scanlon, spokesman for Vanderbilt University Medical Center, Nashville.
Not-for-profit Vanderbilt University owns a plan serving Medicaid recipients under Tennessee's TennCare Medicaid managed-care program, a commercial insurance plan and a Medicare managed-care plan. The three plans, operated through a for-profit subsidiary of the university, have a combined 76,000 enrollees and lost $25.7 million on revenue of $139 million in 1998, according to state figures.
Bailey, who is in the somewhat awkward position of managing the plans while awaiting a decision from Vanderbilt, said he and Hertik have encouraged Vanderbilt to seek outside buyers. Vanderbilt has hired an investment banking firm to shop the plans around.
The university characterized the plans as a discontinued operation on its financial statement for the fiscal year ended June 30, 1999. Under accounting rules, that gives Vanderbilt until June 30, a year after the filing, to dispose of the business through a sale or liquidation.
J. Richard Wagers Jr., senior vice president and chief financial officer of Vanderbilt University Medical Center, said the June deadline is not set in stone. If Vanderbilt has not divested the plans by then, it could reverse the accounting procedure, he said.
"We'll make the business decisions as to whether we want to sell it, who we want to sell it to, how much we're willing to sell it for, all based on the actual deal at hand," Wagers said.