Dr. Kiran Patel, one of the best-known players in Tampa Bay health care, emerged Friday as the new buyer of troubled St. Petersburg Medicare provider Universal Health Care Group.
But even if Patel wins approval from regulators, he knows this acquisition won't have a storybook ending for everyone.
He said an undetermined number of Universal's 1,000 employees in its downtown St. Petersburg headquarters, including much of upper management, will lose their jobs as Universal's operations are melded into two other Florida health plans run by Patel. The insurer will keep offices in St. Petersburg, but will look for other tenants to take at least some of Universal's current headquarters.
That scenario, he said, is better than the alternative facing Universal if he had not acted: regulatory liquidation of the firm with its current Medicare membership of roughly 37,000 distributed to other health plans. "Without my involvement … the company is disbanded and gone," Patel said in an interview Friday. "The outcome would be zero employment then. Whatever (we) are able to retain is better than zero."
Several former and current Universal employees on Friday indicated another round of layoffs was already under way. In response to an email, Dr. A.K. Desai, Universal's CEO, said there would be some workforce reductions to remove redundancies, but he did not elaborate.
Universal, founded by Desai in 2002, swelled to offer Medicare plans in 20 states, including Florida. But in recent months the company has run into problems with regulators and declining membership. Two weeks ago, Universal stopped marketing its Medicare services in all areas.
The company has received poor marks from Medicare regulators, prompting a warning letter to Medicare customers during the fall enrollment period. Regulators from Georgia and Ohio late last year cited concerns over the company's relatively low reserves compared with its rising losses.
Patel said he believes any financial mismanagement within Universal was tied to issues like poorly negotiated hospital contracts and too much overhead.
"There is a difference between stealing and just not having the right people," he said. "I feel comfortable there is no siphoning of the money, but what I see … are contract-related issues."
Under his bid, Universal would become part of America's 1st Choice Holdings of Florida LLC, a holding company of which Patel is majority owner. Terms of the letter of agreement were not disclosed.
MBF Healthcare Partners, a private equity fund based in Coral Gables, initially cut a deal to buy Universal, but that was called off earlier this week.
Patel said he considered buying the company before MBF was involved, but held off given the complex nature of a turnaround.
Why roll the dice now?
"Maybe (it's being) a glutton for punishment. Maybe stupidity," he laughed.
"I thrive on challenges," he added. A cardiologist and major philanthropist, Patel made his mark and initial fortune as founder of WellCare Health Plans. After selling WellCare, he perfected the model of buying small managed-care plans, pumping in capital for expansion, and cutting overhead costs.
"All those have been troubled assets, so this is something I've been doing, I enjoy, and I've been successful at."
Jeff Harrington can be reached at [email protected] or (727) 893-8242.