Before closing the book on 2013, Missouri Business Alert is taking a look back at the year’s most important stories in Missouri business, focusing on the top 10 stories overall and the top five in several key industries:
The state’s response — or lack thereof — to provisions of the Affordable Care Act was the dominant theme in Missouri health care in 2013, but it was hardly the only major health care story in the state.
As the Republican-controlled Missouri General Assembly sparred with Democratic Gov. Jay Nixon and, ultimately, decided against expanding Medicaid in Missouri, the state also proceeded without its own online health insurance exchange, relying instead on the federally run healthcare.gov.
But while government-run health care initiatives sputtered in Missouri, a pair of Missouri-based companies providing peripheral health care services, Cerner and Express Scripts, enjoyed considerable growth and progress. The state’s health care providers were not as fortunate, with many resorting to layoffs and changes to employee benefits in an effort to cut costs 2013.
1. Gridlock, glitches hamper health care
Although business groups in Missouri expressed support of Medicaid expansion and Democratic Gov. Jay Nixon led an aggressive campaign for expanding the health care program for the poor, the Republican-led General Assembly rejected federal support provided by the Affordable Care Act that would have paid the full cost of coverage for three years and 90 percent after that.
With expansion defeated for the 2013 legislative session, attention turned toward 2014. Rep. Jay Barnes, R-Jefferson City, presented a fiscal report showing Missouri could save $42 million a year with a revamped and expanded Medicaid system. In December, a study by the Commonwealth Fund reported that Missouri stands to lose $2.2 billion a year in federal money by 2022 if it’s excluded from Medicaid expansion. The Missouri Chamber Chamber of Commerce and Industry, which has expressed opposition to the Affordable Care Act, announced its support of Medicaid expansion.
Still, prospects for expansion appear bleak: In the final 2013 meeting of the Senate Interim Committee on Medicaid Transformation and Reform, which was developing recommendations for the Legislature to consider when it convenes this month, Republican senators held firm to their position that Medicaid in Missouri must be overhauled before it is expanded, prompting Democrats to walk out.
The legislature in 2013 also declined to set up a state health insurance exchange, leaving the federal government to run Obamacare in Missouri. Consumers were greeted with technical glitches when the health exchange marketplace debuted on Oct. 1. Throughout October, only 751 Missourians successfully selected a plan through the federal health care exchange. But, by the end of November, more than 4,100 Missourians had picked a health insurance plan through healthcare.gov, and nearly 63,000 individuals applied for coverage.
2. Cerner announces massive Kansas City expansion
In August, North Kansas City-based health care information technology company Cerner announced plans to build the biggest office development in Kansas City history. Over the next ten years, an estimated $4.3 billion will be spent to develop a 4.5 million-square-foot campus on the site of the former Bannister Mall in south Kansas City. The city agreed to provide $1.63 billion in incentives for the project, which is expected to house up to 15,000 new employees. That August announcement came just weeks before the opening of a new Cerner campus in Wyandotte County that is expected to house 4,000 employees at full capacity.
Cerner, which was crowned as Kansas City’s top-performing public company by the Kansas City Star in May, and its top competitor, Epic, account for a combined 75 percent of their industry’s large-hospital contracts and appear to be squeezing out the competition, according to an August report.
3. Express Scripts continues growth post-merger, is top Missouri company in Fortune 500
After completing the acquisition of rival Medco Solutions in 2012, St. Louis-based Express Scripts Holdings became the largest pharmacy benefit manager in the nation, doubling its annual revenue and cracking the top 25 of the Fortune 500, making it the top Missouri company on Fortune’s list.
Express Scripts also formed an alliance with Walgreens, acquired SmartD from the Smart Insurance Company and set aside $56 million for a new office building, which is expected to accommodate 1,500 new employees in St. Louis.
4. Jobs, benefits cut as Missouri hospitals tighten belts
Health care providers in Missouri showed signs that they were feeling the pinch from changing health care policies and other financial pressures. St. Louis-based ConnectCare filed for Chapter 7 bankruptcy, and health care systems including St. Louis-based SSM Health Care and University of Missouri Health Care announced layoffs.
St. Louis-based BJC HealthCare also cut 160 employees in June. But BJC, which has 27,000 employees and is one of the state’s largest employers, wasn’t finished making changes. In September, BJC announced several alterations to its employee benefits plan: an increase to the minimum number of hours employees must work to be eligible for health benefits; surcharges for some spouses’ insurance; fees for existing BJC employees who use tobacco; and a policy of not hiring tobacco users in the future.
Policies like BJC’s are becoming more common in the state, with hospitals like Truman Medical Center, Saint Francis Medical Center, SSM Health Care hospitals and CoxHealth also mandating nicotine screening or tobacco-free hiring policies.
5. Jackson County rejects medical research tax with prominent backers
In August, civic leaders in Kansas City pushed for a 20-year, half-cent sales tax for Jackson County aimed at recruiting top medical researchers to the area to help spur medical advances and economic development. The tax, which would have generated an estimated $40 million per year to divide between Children’s Mercy Hospital, St. Luke’s Health System, the University of Missouri-Kansas City and a handful of other economic development initiatives, received approval from the county legislature to appear on the November ballot.
Despite backing from groups like the Greater Kansas City Chamber of Commerce and Civic Council of Greater Kansas City, the tax was voted down by Jackson County residents. Donald Hall Jr., the CEO of Hallmark and chairman of the Civic Council, said the Civic Council, which spent $1.3 million promoting the tax, would stay engaged despite the defeat.