Hartford Business Journal

14 Hartford Business Journal • March 13, 2017 www.HartfordBusiness.com numbers, in what's likely to be a small group of privately-held Hartford companies in the billion-dollar club. The state has helped private-equity- backed CareCentrix along the way, promis- ing it as much as $24 million in grants in 2012 as part of Gov. Dannel Malloy's First Five program. In exchange, the company agreed to keep its headquarters in Connecticut until 2023, retain 213 jobs in the state and create another 290 jobs by the end of 2017. As of Feb. 28, CareCentrix was five posi- tions shy of that goal, with 10 months to go, Driscoll said. "We'll exceed that target," he said. Driscoll said the concentration of health insurers and providers in Greater Hartford and sur- rounding the com- pany's Stamford office has made for easy recruitment. "We want to build where we can find the talent," Driscoll said. "There's a lot of talent in Greater Hartford." Hired in 2013 after executive roles at healthcare technol- ogy maker Castlight Health and pharmacy benefits manager Medco, Driscoll said Care- Centrix's aggressive revenue growth over the past few years has been organic and spread among new and existing customers. Home care is a growing sector, with total industry spending — both government and commercial — reaching nearly $89 billion in 2015, according to the Centers for Medicare and Medicaid Services. Insurers, Driscoll said, hire CareCentrix because they want to control homecare costs and improve care delivery. The 20-year-old company builds and manages a network of approximately 8,000 homecare providers and vendors of durable medical equipment (a $48.5 billion indus- try), such as wheelchairs, insulin pumps and crutches. It negotiates contracts with provid- ers, pays their claims, and handles customer- service inquiries. CareCentrix's business proposition is that a patient's home can be both a cheaper and more preferable setting to deliver cer- tain healthcare services, including drug- infusion therapy and sleep studies, two Care- Centrix niches. The homecare industry has long embraced that premise, but for an insurer, coordi- nating those ben- efits and patients requires expertise and manpower. Rather than keep- ing them in house, some insurers farm out those functions to CareCentrix. "If we aren't providing a better price and service, [insurers] won't pay attention," Driscoll said. "We in many cases sit in the shoes of the health plan. Then, once we are managing, we try to enhance the experi- ence of what happens to patients when they leave the hospital." The company has developed a variety of technology to help it do that, including soft- ware for care coordination, provider order- ing and remote patient monitoring. Insurers could handle home care in- house, and some do, but those that hire CareCentrix or one of its competitors — which include California-based Apria and South Carolina-based eviCore — have calculated that it would be more costly or difficult to build capacity internally. "It's just a huge undertaking," said Dr. Jef- frey Hankoff, medical officer at Cigna, which is CareCentrix's oldest customer. "You'd have to have a presence in every market. At this point, this just makes sense for us." CareCentrix's other clients include Aetna, Blue Cross Blue Shield of Florida and Horizon Blue Cross Blue Shield of New Jersey. Growing opportunity Each contract CareCentrix negotiates is different. Some have flat fees while others pay CareCentrix a percentage of the money it saves, Driscoll said. CareCentrix claims it oversees about 23 million covered lives. Of that number, just under 370,000 are in Connecticut, as of October, according to CareCentrix. That includes Medicare Advan- tage customers. But home care is not just for older patients. Connecticut employees may encounter CareCentrix after a surgery or when recovering from an injury. Contracting directly with large employers could be a potential growth area for CareCen- trix. Driscoll said large, self-insured employ- ers are showing an increasing interest. "There's certainly a lot of activity," he said. "Whether it turns into something, I don't know." While there is much uncertainty over what Congress and President Donald Trump might do to Obamacare, Driscoll doesn't seem con- cerned about any major impact on his company. "From a sector perspective, [Obamacare] felt kind of neutral," he said. However, he hopes that Trump's Depart- ment of Health and Human Services Secre- tary, Tom Price, a politician and physician, will continue HHS' encouragement of pay- ment and care innovation, which could ben- efit CareCentrix. Cigna's Hankoff predicts the growing homecare industry will become increas- ingly important for insurers. "As long as quality is kept at the same level, we think it's the way to go," he said. n Growing Homecare Sector Total home healthcare spending by government and commercial payers in 2015: $88.8 billion, or 3 percent of total healthcare spending. 2015 increase: 6.3 percent 2014 increase: 4.5 percent Medicare and Medicaid accounted for 76 percent of home health spending in 2015, but spending by commercial insurers accelerated. S O U R C E : C E N T E R S F O R M E D I C A R E & M E D I C A I D S E R V I C E S from page 1 CareCentrix's revenues climb CareCentrix CEO John Driscoll is no stranger to public speaking. Here, he explains his company's HomeBridge software to a crowd at the HIMSS healthcare IT conference in Orlando last month. P H O T O | C O N T R I B U T E D Battle resumes over opening utility markets to Millstone By Keith Phaneuf CT Mirror S tate legislators are grappling for the sec- ond year in a row over whether to allow the owners of the Millstone Nuclear Power Station to sell electricity to Connecti- cut's utilities. Whether the measure to allow Dominion to temporality enter the mainstream market is enacted, or stalls as it did last year, may hinge on whether lawmakers can pull off the ultimate balancing act, which includes ensur- ing it: Doesn't hinder Connecticut's push toward renewable energy sources; doesn't disadvantage natural gas, oil and coal-fired plants; and doesn't harm ratepayers. "We're trying to develop a transitional program that's not a subsidy for nuclear, that doesn't overwhelm the market, and that still protects solar and wind," said Rep. Lonnie Reed, (D-Branford) chair of the Energy and Technology Committee. The committee is considering a bill that would allow the Waterford-based nuclear power station to sell electricity directly to utili- ties such as Eversource and UI, which provides power in the New Haven and Bridgeport areas. The two units at Millstone, which generate about 2,100 megawatts of carbon-free power, currently sell energy to hedge funds and Wall Street financial institutions, which, in turn, sell it on the regional wholesale market, according to Kevin Hennessy, New England state policy director for Dominion Resources. By selling directly to utilities, Dominion believes it still would trigger savings for rate- payers by offering a better price than some of its competitors. The measure would allow Dominion to compete in a bidding process to sell to the util- ities. Last year's measure would have allowed Dominion to provide up to 33 percent of the utilities' needs. Legislators still are deliberat- ing about what share to recommend this year. But is it a fair competition with Dominion in the same field with generators using renew- able energy sources? All sides in the debate acknowledge that nuclear power is on the decline as falling prices for natural gas have been driving down prices for power over the last decade. But how severe is that decline? Millstone generates more than half of the power produced in Connecticut, and Sen. Paul Formica of East Lyme, Senate GOP chair on the Energy and Technology Committee, said the nuclear facility still can play an important role in the state's market for several years. "This bill is about protecting our baseload power source as a bridge to the renewable sources of energy that are coming," he said. But critics say the measure ultimately would increase electricity rates that already are among the nation's highest. n Water from Long Island Sound cools the Millstone reactor. P H O T O | H B J F I L E

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