July 8, 2006

We Need More QualiFacts

Gov. Bredesen's TennCare director is leaving TennCare to become CEO of Qualifacts Systems Inc., a Nashville-based healthcare software company in which Bredesen is the majority owner, reports the Saturday Tennessean. While Bredesen is Qualifacts' majority shareholder, he is not listed in the company's website management page nor its "company overview" web page. One of the company's listed "partners" is Dell - the computer company that Bredesen as Mayor of Nashville gave millions of tax dollars to in order to recruit it to open a facility here.

Bredesen disclosed his investment in Qualifacts in his official Statement of Interests filed with the state. Bredesen's Qualifacts investment is managed by a "blind trust," and has been since he became governor more than three years ago, which begs the question:

And my won't it be convenient that J.D. Hickey, whom Bredesen hand-picked to run TennCare, now will be overseeing a healthcare softare company that Bredesen owns? "Get over there and run it the way I told you to, J.D."

The news of Hickey's move from TennCare to Qualifacts was released on a Friday, the usual day that companies and organizations release bad or potentially damaging news as the weekend papers and newscasts have the fewest readers and viewers, and skeleton staffs are more likely to just regurgitate press releases. Releasing the news on Friday also means the story will be three days "old" by the time Monday rolls around and the newsrooms are back at full strength to investigate and do follow-ups.

(The Knoxville News Sentinel story, for example, buries the Bredesen connection to Qualifacts, which is exactly how the press release was written.)

The Tennessee news media shouldn't let this one go just yet. More questions need to be asked ...

Update: A reader emailed me some interesting additional facts regarding Qualifacts Systems Inc., and its relationship to the state of Tennessee's TennCare program.

A search on "Qualifacts" in the Securities and Exchange Commission''s Edgar database indicates that a Mr. Steven L. Geringer was Chairman of the Board of Qualifacts at one point, and a director of the company since 1997. He may still be a director and/or Chairman of the Board - I don't know.

According to the Edgar search:

Geringer, 59, has been a private investor since June 1996 when he retired as President and Chief Executive Officer of PCS Health Systems, Inc., a pharmacy benefits manager and unit of Eli Lilly & Company. Mr. Geringer became President of PCS in May 1993, when Clinical Pharmaceuticals, Inc., of which Mr. Geringer was a founder, Chairman and Chief Executive Officer, merged with PCS. Prior to May 1993, Mr. Geringer held senior management positions in the hospital management and managed care industry. Mr. Geringer also serves as a director of Providence Service Corporation, a provider and manager of government-sponsored community and home-based counseling and foster care, and as Chairman and a director of Qualifacts Systems, Inc., a provider of web-based management information software and services for health and human services payors, providers and managers.

So, while Gov. Bredesen's healthcare software company may have "sworn off" doing business with the state of Tennessee, one of its board members also serves on the board of a company that has done business with the state's TennCare program. And now the governor's hand-picked TennCare director is leaving TennCare to run the governor's healthcare software company.

All of this may be above board, legal and ethical, but it looks fishy.

Governor Bredesen, the bloggers are digging into this one. And the more intriguing facts they surface, the more likely it is the mainstream press will be digging into it too. I'd suggest an immediate and complete release of all emails, memos, correspondence, written or transmitted communications and any other documents related to Qualifacts, TennCare, and J.D. Hickey's recruitment and hiring by Qualifacts, post haste, if there's nothing to hide. Oh, and Hickey ought to be told to stop stonewalling the media and agree to an interview.

Update: A few months ago the Nashville Business Journal had a lengthy report on Qualifacts and the wonderful progress there under the current CEO. Apart from the questions about the firm's relationship to Bredesen, TennCare and Hickey, readers might want to know what happened to the current CEO.

The story mentions that Volunteer Behavioral Health Care System, Qualifacts' first client, is a "Chattanooga-based network of nonprofit mental health centers." The story says VBHCS "helped build the software firm's system in 2001."

VBHCS has 49 locations spread through 31 counties of central Tennessee - and does business with TennCare. Here are lists of VBHCS's management and board of directors. Anyone want to compare those lists to the list of the governor's campaign contributors?

Qualifacts provides some of its services on an "application services provider" model. If they bill clients per transaction or per use and TennCare under Bredesen and Hickey increased the amount of business it does with VBHCS, that may mean that Qualifacts made more money too. There may be nothing there, but it's worth digging. TennCare money paid to VBHCS may directly benefit Qualifacts and its major shareholder too.

Does Qualifacts have more Tennessee clients who do business with TennCare?

These are the questions the media ought to be asking of the company, TennCare, Hickey and the governor.

UPDATE: More on Providence Service Corp. from a June 20, 2003, story in NashvillePost.com, which makes it sounds as if Qualifacts was used to reward Bredesen political allies with cushy jobs.

Geringer is a director of Providence and AmSurg and was a co-founder of Clinical Pharmaceuticals, in which Bredesen had a stake. That company was sold in the early 1990s to McKesson's PCS Health Systems unit.

Geringer also is chairman of Qualifacts Systems Inc., a Nashville health care information system software developer. Qualifacts licenses its software to Providence. Qualifacts is led by CEO Steve Mason, Chief Operating Officer Fletcher Lance and Stuart Brunson, vice president of business development. Brunson is a former Gore-Lieberman campaign official who was Bredesen's campaign director for his successful bid last year for governor.

Other Camelot shareholders who presumably will have stakes in Providence include attorney and original Camelot CEO Jim Doramus (six percent stake in Camelot), Bredesen's friend and attorney Byron Trauger (five percent), and Steve Geringer's Family Trust (four percent). Aleta Trauger owned 0.4% of Camelot at the time of its sale.

Geringer is a director of Providence and AmSurg and was a co-founder of Clinical Pharmaceuticals, in which Bredesen had a stake. That company was sold in the early 1990s to McKesson's PCS Health Systems unit.