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byline: Robert Burke

Held to high standards

Don Shockey still has his very first pay stub, from October 1948. He was 5 years old and spending time at his grandfather’s wagon and carpentry shop in downtown Winchester. He earned 80 cents. “I must have been sweeping floors or doing something,” he says.

The family business began long before then. His grandfather, Howard Shockey, started working on wagons in 1896 and expanded into other ventures. His sons, Jim and Ralph, joined the business as they grew up.

Today Don Shockey is chairman of the board of the Shockey Companies, which has three businesses – Howard Shockey & Sons, the original company, which is a construction firm; Shockey Precast, a concrete manufacturer; and Shockey Properties, a commercial real estate firm with more than 4 million square feet either owned or under management. Shockey Companies’ revenues last year rose to $117 million, up from $105 million in 2014.

The company, which marks its 120th anniversary this year, employs about 400 people. A key part of its longevity is the leadership provided by three generations of the family. Howard Shockey’s sons eventually took over the business, and in the 1980s Don Shockey succeeded his father, Jim, as president. “My dad and my uncle just gave me the opportunity to grow up in the business,” Don says.

He traces the company’s culture to his grandfather’s high standards. “The customer gets full value for the dollar,” he says.

There have been many changes over the years. In the 1940s, the company added a ready-mix concrete operation, which it sold in 2008. Shockey Precast began in the 1950s, and the real estate unit opened in 1970.

As a family-run business passes from one generation to the next, there is often a shortage of family members for leadership roles. Shockey has developed many longtime employees into company leaders. For example, in 2014 Jeff Boehm was named president of Howard Shockey & Sons, and Tom McCabe became president of Shockey Precast. Both men have long histories with the company. McCabe joined Shockey in 1983, and Boehm came onboard in 1987. “We’ve got a good team; we’ve got things growing in the right direction,” Don Shockey says.

One of the company’s bragging points is the long experience of many of its key people. Sixteen of its 20 project superintendents have 30 or more years of experience.  “We have no issue with retention,” Boehm says. “Because of the culture Don and his family have created, once we get someone on board, they want to stay.”

Boehm says the company’s general contracting business has been handling more projects in its core region — Virginia, West Virginia and Maryland. Shockey & Sons is building a 791-space parking garage at One Loudoun, a mixed-use development in Loudoun County. Shockey Precast is also involved in the project.

Health-care projects also are a growing market for the company. Shockey is general contractor for the $17.5 million, 45,851-square-foot expansion of Valley Health Shenandoah Memorial Hospital in Shenandoah County.

The general contracting business has offices in Winchester, Roanoke and Richmond. Boehm says that sector “has picked up quite a bit in the last several years” as the recessionary pressures eased. There’s still a lot of demand in sectors that Shockey already serves, and it is expanding into Northern Virginia. Plus, it is now licensed to do work in North Carolina, Boehm says.

The company’s commercial real estate business is focused on Fredericksburg and Winchester in Virginia, and Martinsburg and Charles Town in West Virginia. It’s developing property along Interstates 81 and 95.

Across the three businesses, the slogan is to be the “Partner of Choice” for its clients. “If our work doesn’t end with a client who thinks highly of us and we’ve not made a partner, that’s not a successful project.”

Still a buyers’ market

Brian Sykes has fond memories of his law school days when the leap from third-year student to a law career was an easy one.

He graduated from Washington & Lee University School of Law in 1998, “and at that time, if you went to law school, you were pretty much guaranteed a job somewhere,” he says.

These days the market is a lot different, says Sykes, a partner and recruiting chair with the Norfolk-based firm Vandeventer Black, which has about 60 lawyers at offices in Virginia, North Carolina and Germany.

“My impression is that there are still more young lawyers in Virginia than jobs,” he says.

The recession of 2007-09 played a role in creating the current job market by pushing up law school enrollments as students looked for ways to improve their job prospects while waiting out the economic slump.

Once that slump ended, though, not all the lost legal jobs came back, creating kind of a market glut that still lingers. The class of 2013 was the largest ever in the U.S., according to the American Bar Association.

That helps explain why the employment rate nationwide last year for new lawyers was just under 87 percent, 5 percentage points below the 2007 rate.

So, with supply up and overall demand still relatively flat, salaries for new lawyers have stagnated. Overall, the eight law schools in the commonwealth have been feeling the pressure, too. The number of first-year students is down 24 percent this year compared with 2011, while the number of applicants is down more than 30 percent over the same period. Nationwide, total law school enrollment dropped nearly 5 percent from 2014 to 2015, to 113,900. The number of applicants continues to drop as well, to 54,130 this year, compared with 87,900 in 2010.

Of course, there are lots of directions a law career can take. But in general much of Virginia is fairly lucrative in terms of salaries. In Southwest Virginia, the average annual salary for a lawyer is $64,000, according to the Bureau of Labor Statistics. In the greater Richmond region, the mean salary is $128,000, while Northern Virginia leads the state with an average salary of $161,000 a year.

Those figures encompass a lot of different kinds of practices. Large private firms – those with 700 or more lawyers – in larger markets pay the best to new lawyers, with some paying $160,000 a year, according to research by the National Association for Law Placement (NALP) a Washington, D.C.-based group. But even among these highest-paying positions, there have been some cutbacks. In 2009, two-thirds of new hires at the big firms were paid $160,000, but that was the industry’s salary high point for new hires. Last year that share of highest-paid jobs was down to 39 percent of new hires, according to NALP. So, it’s clearly been a buyer’s market.

There are a few reasons salaries went down during the toughest years after the recession, says Janet Hutchinson, associate dean for career development at the University of Richmond School of Law. “The employers that were the most impacted were the large law firms that paid the highest starting salaries, [and] at the height of the downturn some of those employers had to rescind offers,” she says. “After that, they started hiring a smaller number of graduates, and they haven’t returned to hiring the same number.”

The weaker job market has changed students’ approach, Hutchinson says. “They understand it’s more difficult … it’s clear to them that they need to step up their game if they want to land where they want to land.”

The school’s approach to career development has changed, too, after the tough market of five years ago, she says. First-year students are paired with a career adviser who works with them through their three years of study. Third-year students are offered the chance to be paired with a law school alumnus in their chosen practice area. And, the school has beefed up its summer stipend program in the past few years to give students money when they’re doing unpaid work. “We know that the experience students are getting is really valuable to their careers, but that’s not the kind of thing everybody can afford to do,” Hutchinson says.

Such efforts, and what Hutchinson says is an improved job market, are making a difference. Of the school’s most recent graduating class, 93 percent had found work by March of this year. “During tough times, it was in the low 80s,” she says.

For firms, hiring fewer new grads makes it even more important to get the right person. Sykes with Vandeventer Black says his firm starts screening candidates when they’re still in school, bringing a few in for summer clerkships. It even urges its law school candidates to try out other firms so they can get a sense of where they want to work.

“Some huge firms, maybe they don’t care as much if somebody’s going to be with them 10 years down the road,” he says. “We want them to want to be here and to know what the market is like and be very aware of what we’re like, because we want them to stay for the long run.”

The law students he recruits seem to be more serious. “When I was in law school, there were a bunch of my classmates who may not have had an investment in law the way students do now,” he says. “The people I talk to now really want to be in law school.”

There are signs of improvement in the current hiring market. The employment rate for the 2014 class was low compared with prerecession times, but it did bump up two percentage points over 2013, when just 84.5 percent of graduates found work. The caveat, though, is that the percentage went up because there were fewer graduates overall in 2014. That would suggest that demand is catching up with supply, which would be good news for students.

Hutchinson notes that the University of Richmond is bucking the enrollment trend. Its first year class this year is about 175 students. Maybe law schools are bottoming out in terms of dropping enrollments. “We’re typically more in the 140-150 range,” she says. The increase wasn’t planned, but “we’re really glad that a few more said yes. It’s good to be popular.”

Independent minded

Politicians, you might not like hearing this. It turns out that millennials in Virginia don’t think much of your line of work.

It’s not that they vote less than older voters, says Quentin Kidd, director of the Judy Ford Wason Center at Christopher Newport University. It’s just that many in this cohort of 18- to 36-year-olds think there are better ways to solve problems.

The Wason Center has released results of a survey conducted last summer of more than 2,000 millennials around Virginia in an effort to find out what they think in a range of areas. (Read the full text of the Wason Center survey.)

“Millennials don’t like politics,” Kidd says. “Even though they vote at pretty high rates and even though they say they’re going to vote at the same rate in the next election, it’s clear that they don’t like politicians.” Just 11 percent see political engagement alone as the better way to solve important issues, according to the survey. A third say community volunteerism is the better option. Compare this response with the attitude of baby boomers, Kidd says, “who saw politics and politicians as the solution to many problems.”

Millennials’ attachment to the two major parties is “tenuous,” according to the survey. Statewide, more say they are Democrats (37 percent) than Republicans (24 percent), but those in the biggest group (40 percent) identify themselves as “independent/other.”

In the last presidential race (in 2012), 60 percent of millennials in Virginia backed President Barack Obama, while 30 percent chose GOP nominee Mitt Romney. There are regional differences, too: Democratic support among millennials is highest in Northern Virginia and Hampton Roads, while Republicans do best in Southern and Southwest Virginia and the Richmond region.

Kidd says millennials tend to sit out off-year elections when there are no statewide offices on the ballot. In the 2015 races, overall turnout of the total electorate was just 29 percent. “Who are the people who turned out? They’re more likely to be Gen Xers and baby boomers. They’re not younger voters,” he says. “Part of our challenge is finding a way to engage millennials, to make the political process appealing. This is not unique to Virginia; it is unique to millennials, however.”

This generation “grew up hearing the political process as about fighting and not problem solving,” Kidd says. The oldest members of the generation were children when Bill Clinton was first elected, in 1992, and grew up amid all the partisan fights and bad behavior of that time. “They haven’t really experienced the political process as being effective.”

That perception is a little troubling, Kidd thinks. “The things millennials want out of life are the things we all want, and the way we get those things is by holding elected officials accountable. Millennials want those things but don’t want to engage in the political process.”

Kidd might find this attitude troublesome, but Kasia Nielsen, a third-year student at the University of Virginia, sees opportunity. She chairs the College Republican Federation of Virginia and has been involved in GOP politics since she was an intern for the Romney campaign. “There really is no reason to worry about this generation,” says Nielsen, 21. The fact that so many millennials identify as political independents just means they’re up for grabs. “The GOP has a great opportunity” to win them over, she says.

Michelle Woods, 28, a leader of the Arlington Young Democrats, says one factor in millennials’ attitude toward politics is the use of social media. It is a huge part of how they communicate, and that tendency has had both good and bad effects, she says. Political attacks travel fast on Twitter and pretty much every other social media channel.

“There’s definitely been a pattern of calling out politicians … in a really negative way, which is really unattractive to young people,” she says. “It ends up turning people off. They turn to community engagement because it’s something they feel rewarded for, and that they’re making a difference.”

Matt Brown, 26, the president of the Arlington Young Democrats, agrees that the bitter tenor of politics is turning young people away at just the age when they should be getting involved. At the local level, political parties need to show young voters that they need to show up.

“You have to move it beyond just a request to get involved to a discussion of specific issues,” such as housing, education and transportation, he says. “It is the local politics that really makes a difference in the day-to-day.”

Brown became involved in politics as a volunteer with the Obama campaign and points out that it did “energize people of my generation and gave us a belief that our voice can be heard.” If millennials find satisfaction in community involvement, they can find it in the political process, too, he believes. “It’s all about showing people of my generation that the time they invest can be valuable,” he says.

Kidd notes some other distinctive characteristics of millennials. Nationally, they represent the most ethnically and racially diverse generation in the U.S., and the largest as well, with a population of 82 million. They’re also less religious and less partisan than previous generations. In Virginia, more millennials are white (64 percent) than the national average (57 percent). Northern Virginia has the most diverse millennial population, with Southern and Southwest Virginia having the least.

One element of the survey that surprised Kidd was the general optimism Virginia millennials have about their financial situations. The oldest members of the generation came into the workforce amid the 2007-09 recession, and a plurality (46 percent) think they’ve faced a worse situation financially than their parents did.

Yet millennials in Virginia and throughout the country are very optimistic about their financial future. In Virginia: 73 percent expect things to get better in the next five years, and that percentage holds up in every region, including the more economically depressed Southern and Southwestern parts of the state. “They’re excited about their future, even if they feel really beaten up” by the recession, Kidd says.

Nielsen at U.Va. thinks that optimism also shows up in the political process, at the local, state and federal levels. She’s working toward building Republican groups on campuses around the state and says millennials are listening. Plus, technology makes it easier than ever to reach them.

“I cannot stress how much social media has played a significant role in engaging with young voters,” she says. After recent presidential debates, her social media feeds would light up with political commentary, and she knows that discussion spreads beyond her circle of young Republicans. “People are sharing these quick videos from the debate, or a spoof of the debate,” she says. “So students are paying attention.”

Profiting from transit systems?

A good transit system can do more than move people around, says David Green, CEO of the Richmond-based GRTC Transit System. It can also attract people that companies want to hire.

Richmond is next up in Virginia to find out how far a transit network can go in spurring economic growth. Under GRTC’s leadership, the city is close to breaking ground on a $54 million, 7.6-mile bus rapid-transit line (BRT) that will run from Henrico County in the west, down the city’s Broad Street corridor to Rocketts Landing, a mixed-use development on the James River east of downtown.

The plan is to begin construction next spring on the project, called the GRTC Pulse, and start operation in October 2017. The Pulse will have dedicated lanes and 14 stations, along with synchronized traffic signaling. During peak demand, buses will run every 10 minutes. Green and others want to extend the system eventually nine miles west out to the rapidly growing Short Pump area in western Henrico.

The project has been approved in principle by Richmond City Council and is backed by Mayor Dwight Jones, but it is not a done deal yet. A group representing 11 neighborhoods called the RVA Coalition for Smart Transit is seeking to delay the plan for a year. City council must approve an operating agreement governing The Pulse in coming weeks for construction to begin.

“This is what businesses are going to be looking for,” Green predicts. There’s a generation influence going on, with millennials in particular attracted to mixed-use, transit-oriented places, he says. Employers are noticing. “If you don’t have these things, if we can’t provide it here in Richmond, we’re going to lose all this talent,” he says.

The Marriott move
Arne Sorenson, the CEO of Marriott International Inc., cited those kinds of pressures back in February when he announced the hotel company is looking for a new headquarters location. About 2,000 employees work at its current headquarters in Bethesda, Md. “I think, as with many other things, our younger folks are more inclined to be Metro-accessible and more urban,” he told The Washington Post. Those comments have set off competition for the headquarters among Washington-region localities.

Sorenson was acknowledging a trend well underway in many urban markets as suburban office parks empty out in favor of major transit corridors. But his comments “sent shock waves around the country” because it showed even giant companies were feeling competitive pressures to get and keep the best workers, says John Martin, CEO of Southeastern Institute of Research, a Richmond-based firm with a background in community planning and transportation. “We’ve reached a tipping point in moving to a multimodal society.”

Martin says millennials, in particular, prefer the work, play, live environment that transit systems can support. “Technology has hyper-wired them together,” he says. Community is important, and they “are much more interested in being in activity centers. We’ve found they really can’t have an experience unless they’re sharing it.”

So the quality of the community makes a difference. “We’re seeing sort of emerging millennial hotspots, where some cities are getting a decided advantage,” Martin says. “Companies are saying, ‘Gosh I want to be in those places.’ It’s incumbent upon Virginia’s economic development community … you’ve got to invest in place.”

Developments in technology and in the function of transit systems are part of this change, Martin says. Fare cards are common instead of cash, for example, and there are apps that can tell riders when the next bus or train will arrive. Some transit systems have free WiFi. Traffic lights can be synchronized to let buses move through intersections with fewer delays. Plus, teleworking is more common, as is the rise of a “freelance economy” in which workers are less tied to one employer. “So people are really going to pick a place” based on the quality of life and not necessarily on how close it is to their job, he says.

Martin was to be part of a Dec. 1 event being held in Henrico, called “Transit Means Business,” which had support from transit interests and groups like the Greater Richmond Chamber of Commerce. A similar event was held in Northern Virginia in May. The Henrico event also was to include a panel moderated by Selena Cuffee-Glenn, Richmond’s chief administrative officer. Scheduled panel members included Ted Ukrop, who opened the Quirk Hotel on Broad Street in September, and an executive from Stone Brewing Co., which is opening a new location near the James. Among others who spoke at the event was Aubrey Layne, the state’s secretary of transportation, and Laura Lafayette, CEO of the Richmond Association of Realtors.

Good timing
Richmond got lucky when it came to funding the BRT project. About $25 million of its funding came from the U.S. Department of Transportation’s TIGER program (which stands for transportation investment generating economic recovery). The state’s Department of Rail and Public Transportation is providing about $17 million; Richmond is contributing $7.6 million; and Henrico will pay $400,000.

Green says “the planets lined up” for the project because a long study on how to do a BRT system in Richmond had just been  completed when the TIGER grant option came along. “We were ecstatic when they announced the opening for applications,” he says. Gov. Terry McAuliffe threw his support behind the project as well.

The Broad Street corridor was chosen for the Pulse system because it has the “highest existing and projected population and employment densities and the most transit supportive land use in the Richmond region,” according to RVA Rapid Transit, an organization that would like one day to see four BRT lines reaching into surrounding counties and intersecting in downtown Richmond. Within a half-mile of the planned BRT line, there are 33,000 people and 77,000 jobs with the potential for more, the group says.

In Virginia, new rapid transit systems have favored rail, which is far more expensive than BRT. The biggest is the D.C. region’s Metrorail system, which last year opened new stations in Tysons Corner and is continuing extension of the new Silver Line to Washington Dulles International Airport. In Norfolk, a light rail project, The 0, opened in August 2011 on a $318 million 7.4-mile corridor. It may be extended to Virginia Beach.

While transit has the power to drive economic growth, it’s still possible for smaller communities who can’t support that kind of investment to create places that will attract people and employers, says Stewart Schwartz, executive director of the Washington, D.C.-based Coalition for Smarter Growth. Thriving downtowns can have the same kind of success. “It may not be the big employers who come, but it’s still happening with smaller companies, and it doesn’t necessarily require transit,” he says.

But, for bigger regions, “if they’re going to remain competitive, using good transit and transit-oriented development is the key,” Schwartz says.

The Pulse is a major step for the Richmond region and a new test of the appeal transit systems can have, if done well. “Richmond’s never seen anything like this before,” Green says. “We need to make sure we do it right.” As far as expanding into the counties and creating a true regional BRT network, Green thinks the project will sell itself. “Once they experience it, the counties are going to want to expand.”

Data dig

The idea behind collecting huge piles of data is that, if you can sort it the right way, you’ll learn something. Now that option is available to anyone with a stake in Virginia’s health-care sector, from providers to employers to consumers.

Working with the Virginia Department of Health, the nonprofit group Virginia Health Information has prepared the state’s first All-Payer Claims Database (APCD). It represents “hundreds of millions of paid claims” from 2011 to mid-2015, says Michael Lundberg, VHI’s executive director.

There are lots of possible uses of the data, Lundberg says. Self-insured businesses can study the outcome of the health care their employees are getting and figure out what works and what doesn’t work. Accountable care organizations — which can be groups of doctors, hospitals or other health-care providers — can measure the health outcomes for the population they are treating.

Health departments at the regional and state level can evaluate the needs of specific population groups, and insurers can evaluate the effectiveness of treatments and the costs. Consumers might get less direct benefits from the database, but they presumably will benefit when providers and insurers find some new efficiencies in how health care is delivered and priced.

“The variety of different ways that somebody could use it is pretty much endless,” says Doug Gray, executive director of the Virginia Association of Health Plans (VAHP), which helped fund the data project launch. “For any health-care question that deals with the volume of services, this database can help us.”

For example, the data can show how many prescriptions are being filled for a particular drug. “I’ll be interested in looking at a report on how many name-brand drugs are being prescribed versus generic,” Gray says. “So, we can figure out whether advertising campaigns are influencing those drug purchases.”

The data also can be used to measure whether providers are succeeding in their treatment of a certain population. “This is the kind of thing Medicare is after, to incentivize hospitals and nursing homes to make sure that people don’t end up right back” in the hospital after being discharged, Gray says.

There are, however, limits to the data. The information won’t, for example, include the actual costs of services agreed to by providers and insurers. So it won’t allow direct price comparisons, the kind that might create a competitive advantage.

But the data should reveal patterns and practices and help show successes and failures. For example, the use of prescription opioids (pain-killing drugs like hydrocodone, oxycodone and morphine), is a serious health issue because of the rising number of opioid overdoses in Virginia and around the country (See related story.). The database can reveal how often certain physicians are prescribing these drugs and show in greater detail which parts of the state have higher numbers of opioid abuse. “There’re a whole lot of deep policy questions you can ask,” Gray says.

The first batch of data became available in May, and the cost for accessing it varies depending on the user, Lundberg says. Marketing of the data is just beginning. VHI is using a marketing plan based on work by students at Virginia Commonwealth University’s School of Business. Subscribers will get training from VHI on how to access the data and regular suggestions “on how they can effectively use this,” Lundberg says.

Virginia’s APCD effort was launched in 2012 with legislation from the General Assembly. The state’s Health Department contracted with VHI to implement the project. The initial $3.2 million cost for the project’s launch was shared by the Virginia Hospital and Healthcare Association, VHI and the VAHP.

APCDs started catching on among states about a dozen years ago. According to the APCD Council, about 30 states have either established APCDs or expressed a “strong interest” in doing so.

Christopher Bailey, VHHA executive vice president, says all the major health systems in the commonwealth eventually will be subscribing to VHI’s service. “It just takes time,” he says.

The first release had data from insurers Anthem, Cigna, the state’s Department of Medical Assistance Services (which administers Virginia’s Medicaid program), Innovation Health, Kaiser, Optima, Virginia Premier and United Healthcare. Data from Aetna and CareFirst has since been added, according to VHI.

Bailey says the impact of big data is still in the early stages, as providers and insurers navigate what the data means for them, and state and local-level health agencies learn more about the populations they serve.

Another piece of the puzzle is the growing use of electronic medical records (EMR). If providers use EMR technology, the results of treatment decisions can be accessed even more quickly. That will likely raise even more questions. “What this data does is just give you insight into variations and identifies opportunities” to cut costs or improve care, or both, Bailey says.

The Virginia Center for Health Innovation (VCHI) is among the first to tap into the data, says Beth Bortz, the nonprofit organization’s president and CEO. The center is going through the information using a “waste calculator” program, which helps determine which tests or procedures aren’t effective. Milliman MedInsight, the company providing the software for handling the data, created the program. The software’s parameters are based on the Choosing Wisely campaign from the ABIM Foundation (American Board of Internal Medicine).

That campaign, which aims to reduce the number of unnecessary tests and procedures, is funded in part by a grant from the Robert Wood Johnson Foundation. Because the Choosing Wisely campaign “came from the medical community,” Bortz says, it should have some traction in changing behaviors.

The center wants to use the data to narrow its focus and target what is really happening in Virginia’s health-care systems, not what might be happening. “It’s Virginia-specific data,” she says. The next step for the center will be developing a three-pronged campaign, targeting health-care providers, employers and consumers.

One of the issues still unresolved is making sure health-care providers have adequate liability coverage in the event they recommend against a particular procedure. Bortz says VCHI has been talking with legal counsel at the Medical Society of Virginia about what might be done. “You should have what you need,” she says.

Bortz says the center is seeking funding in Gov. Terry McAuliffe’s 2017-2018 budget for additional efforts to show doctors, employers and consumers ways to use the data in reducing unnecessary medical procedures and pricing the value of the health-care services. “This should be the low-hanging fruit that everybody agrees on,” she says.

Growing momentum

Richmond-based kaléo is in a good position to help lessen a very bad problem — the rising number of opioid overdose deaths in Virginia and around the country.

That’s because it has created a device that can be used by almost anyone to treat an overdose, which means potentially life-saving treatment can be delivered without waiting for emergency personnel who often arrive too late.

It’s called the Evzio, a slim, pocket-size device that carries two doses of naloxone, which temporarily counters the effect of opioids. The Evzio also gives audible instructions to users, telling them how to deliver the injection. It’s pretty simple: Remove the cap, press the device against the person’s outer thigh and press a button. Then immediately seek medical care for the victim.

Evzio was approved by the Food and Drug Administration in April 2014. Its median out-of-pocket cost is less than $20, says Dr. Eric Edwards, one of the company founders and its chief medical officer and vice president of research and development.

Kaléo’s product is, so far, the only FDA-approved device of its kind, and there is growing momentum nationwide to make access to naloxone easier. About a dozen states even allow it to be sold without a prescription, though Virginia is not yet among that group.

Virginia did, though, pass several laws this year dealing with overdose preventions, including one that allows pharmacists to dispense naloxone under more lenient rules, allowing family members and other individuals to possess and use naloxone to treat an overdose. That law came out of recommendations from a task force created last year by Gov. Terry McAuliffe to develop new laws and policies for reducing the number of unintentional overdoses and opioid abuse.

Opioids are widely used in prescription medications for pain relief because they work so well, Edwards says. Oxycodone, hydrocodone and fentanyl are among medications that contain opioids.

The problem is that this more effective and legal treatment comes with big risks. Even when patients follow instructions, the drug can interact with some medications, such as those prescribed for depression or anxiety, or with medicines used to treat conditions such as COPD, sleep apnea or asthma.

An opioid overdose often comes on quickly, and by the time emergency care arrives it can be too late. “The goal was: How do you bridge that gap and keep a patient breathing until the ambulance arrives? That was the value proposition” behind creating Evzio, Edwards says.

The number of overdose deaths has been on the rise in recent years. In 2014 prescription opioid deaths in Virginia rose to 547, up more than 8 percent from the previous year, according to the Department of Health. Fatal heroin overdoses rose 12 percent last year from 2013, to 239. The problem is getting worse: In the first six months of this year, there were 126 heroin overdose deaths, a 25 percent increase over the same period last year.

In September kaléo and a handful of medical groups focused on pain management launched a public awareness campaign called “America Starts Talking.” The goal is to raise awareness about the risks of opioid overdoses even from prescription medications.

Many in the medical community have been rallying for several years in support of putting devices like the Evzio in the hands of lay people. Earlier this year the American Society of Addiction Medicine (ASAM) issued practice guidelines that call for providing naloxone to family members, significant others, firefighters and police officers who are trying to help an opioid overdose victim.

Dr. Margaret Jarvis, who helped develop those guidelines for ASAM, says the stigma around drug addiction has slowed the progress of treatment options. “There’s still a huge chunk of the population that does not understand addiction as a disease, and so they don’t understand any need for medication,” she says.

The problem has grown so quickly that many health-care providers are trying to respond without necessarily being sure they’re doing it correctly, Jarvis says. The new guidelines are intended to help physicians and others figure out if they’re doing the right thing. Naloxone has one big advantage in terms of safety — if it is given to a person accidently, someone not suffering an opioid overdose, it has no effect. “There’s just really kind of no downside to this,” she says.

Kaléo’s beginning is partly a personal story. Eric Edwards and his twin brother, Evan, the company’s vice president for product development and industrialization, grew up with life-threatening food allergies. They developed a new way to deliver epinephrine, the drug used to treat many allergic reactions. That work led to the creation of the company.

Kaléo’s near-term plans are to stay privately held and in Richmond. The Edwards brothers are from the Richmond area, and Eric is a graduate of Virginia Commonwealth University’s School of Medicine. “We’re building this right here in Richmond,” he says. “Since we started this company we’ve been able to attract world-class talent.”

Empowering a region

Curry Roberts used to see the Fredericksburg region as akin to Harrisonburg in the Shenandoah Valley — a medium-size city with a university in the middle that helps to boost its economic growth.

Harrisonburg has James Madison University and Fredericksburg has the University of Mary Washington, so there’s a similarity. But now Roberts, who is executive director of the Fredericksburg Regional Alliance, thinks that he was following the wrong model. That realization came last winter after he asked a handful of economic development veterans from around the state to evaluate the FRA’s strategy.

The Fredericksburg area should be competing with the state’s bigger regions, they said. “We really need to start looking at ourselves as the fourth major metro area in the urban crescent,” Roberts says, referring to the swath of development that runs from Northern Virginia down through Richmond to Hampton Roads. That is where much of Virginia’s economy resides, and Fredericksburg is right in middle of it, halfway between Richmond and Washington, D.C., on the Interstate 95 corridor.

Northern Virginia has George Mason University in Fairfax, and Richmond has Virginia Commonwealth University and the University of Richmond. Hampton Roads has Old Dominion University. “We have Mary Washington. We wouldn’t be in that game without them,” he says.

‘Ripe with opportunity’
As this region of nearly 350,000 people continues to grow, UMW has shown that it wants to lead efforts to build the local economy. It is already a major local employer, with about 850 people working at its three main locations, and an annual budget this year of $110 million. The main campus in Fredericksburg has 4,000 students and just enrolled its largest freshman class ever. It also has campuses in Stafford and King George counties.

Plus, the university hosts the region’s economic development programs. In 2011 UMW launched a partnership with the FRA and formed the University Center for Economic Development. UMW President Richard Hurley has been pushing the school to take a lead role, saying the region “is ripe with opportunity to further develop economically, and I would like to see UMW become a key player in that effort.”

Two years ago Hurley and UMW hosted an event, the Transformation 20/20 Regional Economic Development Summit, that was part of an ongoing effort to come up with a plan for the region’s economy. And in August, UMW and the FRA along with the Fredericksburg Regional Chamber of Commerce created the Center for Economic Research. That new initiative, which is based in the school’s economics department, is designed to give the region a more detailed picture of what it can offer potential employers.

Other regions turn to local universities for similar economic data, Roberts says. Both ODU and GMU have major economic research centers, and until now the Fredericksburg region has had to depend on experts from outside the region for that information. When prospects come looking at the region as a potential location, “I don’t want to hand them a study done at George Mason,” he says.

The new research center’s first task is to study the region’s commuting workforce, which is a topic the region has struggled with for a long time. Roberts says there are about 70,000 people who commute to jobs outside the region, primarily to Northern Virginia and the Washington, D.C., region.

Part of the reason why a local research effort might produce better results is that it will take some legwork to get details on these commuters. Tim Schilling, a UMW economics professor who is leading the research center, says the Fredericksburg region is divided between multiple metropolitan statistical areas, or MSAs. “When you look at nationally collected data like that you kind of have to sort through it and do the best you can,” he says.

The FRA has commissioned studies on the topic in the past, says Roberts, but there wasn’t enough detail. “We need to pull our data out and create or own regional report, and Mary Washington has the capacity to do that,” he says. “We’ve got a highly skilled workforce, but we don’t know it to the granular level” — answering questions such as, how many electrical engineers live in the region but commute elsewhere? “We may find that there’s a skill set where we’ve got a critical mass.” The study is expected to be completed by spring 2016.

Foundation projects
Outside of Fredericksburg, UMW has been making a number of investments. In 2012 the school opened the Dahlgren Center for Education and Research, a 42,000-square-foot facility just across U.S. 301 from the Naval Surface Warfare Center. It has classrooms, computer labs, meeting space and a 220-seat auditorium. A variety of graduate-level course options are available there, through on-site and distance learning. The center has partnerships to provide courses with many of Virginia’s major universities, along with the Naval War College and the Naval Postgraduate School.

The university also has its Stafford Campus located in Stafford County a few miles west of Interstate 95. Opened in 1999, with a second 40,000-square-foot building constructed in 2007, it offers academic degrees and professional development programs for midcareer professionals.

Perhaps the school’s most visible impact on the local economy has been through the UMW Foundation, a tax-exempt organization that currently holds more than $50 million in real estate assets. In late 2007 the foundation bought an aging 23-acre shopping center directly across U.S. 1 from the main UMW campus and has since been redeveloping the property as a mixed-use project. It’s now called Eagle Village, after the UMW mascot.

Since then the foundation has built the $115 million Eagle Landing project, which has student housing, a parking garage, Class-A office space, and retail and restaurant space. The shopping center is connected to the main campus by an enclosed pedestrian bridge over U.S. 1. The foundation also brought in a five-story Hyatt Place hotel, which opened last year, and the Children’s Museum of Richmond, which opened its first location outside of the Richmond region.

Jeff Rountree, the foundation’s executive director, says the redevelopment of the rest of the shopping center will happen as the university needs it. The first phase happened because “they needed more apartment-style housing and they needed upscale” office space, he says. “So now what we have to do is simply hold on until they are ready.”

But the foundation is still making tentative plans for what it might do next. “One idea that keeps popping up is … a first-class performing arts center. And UMW is always involved in that discussion.” That could one day be built in the older portion of the Eagle Village shopping center, he says. Plus, the foundation owns about 600 acres of land along U.S. 17 in Stafford, which at some point could be developed by the foundation or by the private sector.

Rountree says it’s way too early to know what might happen there, but the foundation and UMW are ready. “A lot of times I’ll be asked by my board, ‘What are we doing with all this land?’” He tells them that without the land, the school can’t grow. “The more land you have, the better,” he says. “We’re very entrepreneurial.”

Fewer players in the game

These days the old adage that change is the only constant is a good fit for the health insurance business.

Big mergers by major insurance companies, announced in July and driven in part by the impact of the Affordable Care Act, are remaking the industry in ways that aren’t yet clear. For now, though, it seems like bigger is considered better.

In July Humana and Aetna announced merger plans that would create a company with 33 million customers. Later that month Anthem and Cigna announced a proposed merger that would provide coverage for 53 million patients. If the deals go through, there would be just three major insurers, with United Healthcare being the third with 45 million members.

That’s the kind of trend that puts fear into business and individual insurance customers, because fewer competitors often means less competition and thus higher prices. Maybe that will prove correct, but the insurance business is different in some key ways. For one thing, insurers don’t always compete directly against each other.

“When I look at the mergers in Virginia and what lines of business they’re in and where they overlap, the conclusion I come to is these are really complementary mergers,” says Doug Gray, executive director of the Virginia Association of Health Plans. “They’re not really earthshaking developments. There’re ways the [insurers] can diversify their business portfolios and possibly have a little bit more leverage” when negotiating with hospitals and doctors. “But it’s not a big collapse of competition … because the two parts weren’t competing anyway.”

In Virginia and elsewhere, Cigna’s focus is on national accounts and the large-group market in Virginia, businesses with 100 or more full-time-equivalent (FTE) employees. Anthem is very much the opposite, insuring state employees, individuals and small groups. It is the biggest insurer in Virginia and a number of other states. “So Anthem sees a chance to expand enrollment, gain some efficiency and to serve national accounts they might not have gotten before. It helps them compete with United Healthcare and Aetna,” Gray says.

Scott Golden, a spokesman for Anthem Blue Cross Blue Shield in Virginia, says wait and see. “We’re excited about it; we think it’s going to bring exciting new products for our members,” he says. But those details haven’t been developed yet. The merger isn’t supposed to close until the second half of 2016, he says. “It’s too early to tell.”

Few details
The uncertain response to the merger proposals suggests investors and regulators aren’t sure what to make of the deals either. A month after Aetna’s proposed $33 billion takeover, Humana’s stock was trading at about $185, well below Aetna’s offer of $223 per share. The proposed $48.4 billion sale of Cigna to Anthem fared better, with both companies reporting increased earnings and revenue in the second quarter. Of course, both deals still have to get past the antitrust regulators.

Beyond the usual upbeat press statements, the companies involved in these mergers are offering few details about how the deals will affect the market. Anthem launched a website (betterhealthcaretogether.com), telling employers and individual customers that the combined company “will expand access to an unmatched network of hospitals, physicians, and health-care professionals. No company will be better positioned to deal with the challenges of a fast-changing health-care market,” the company says.

There is good reason to think that the businesses most threatened by the mergers are the hospital networks and other health-care providers who will now have to negotiate prices with even more powerful insurers. Sean Connaughton, president and CEO of the Virginia Hospital & Healthcare Association, would like regulators to keep that in mind. “Given current and pending federal health-care cuts, we urge federal regulators to carefully examine whether the proposed mergers will give the insurers more leverage to negotiate lower reimbursements from hospitals and providers that can hurt the continued viability of these critical community and economic assets.”

A key reason that hospitals and insurers are making moves to improve their positions is the controls put in place by the Affordable Care Act. Under its rules insurers have to meet a minimum “medical loss ratio” of 80 percent, meaning they have to spend 80 percent of their premium dollars on medical care. That’s a big deal, because the requirement steers insurers to find more profit in efficient operations through economies of scale that are supposed to come with big mergers.

Many agreements in place
The premise that bigger insurers will have more leverage with health-care providers may not pan out in all markets. For one thing, hospital groups often already have agreements in place with major insurers. Anthem has ongoing agreements, for example, with Bon Secours Virginia Health System in the Hampton Roads and Richmond regions. It also has an agreement, announced in September 2013, to make HCA Virginia Health System a “preferred provider” for insurance coverage bought through the federal exchange.

Gray with the health plan association says hospitals can’t complain too much, because in many areas they are the only game in town. Inova Health System, for example, has hospitals and other health-care facilities all over Northern Virginia. So any insurer who wants customers there has to do business with Inova. And, some hospital groups are going for vertical integration. Sentara Healthcare, for example, owns Optima Health, an insurance plan with about 444,000 members in Virginia.

Sentara Healthcare continues to expand its footprint in Virginia as well. In July it closed on a deal to acquire Pratt Medical Center in the Fredericksburg region. Pratt, a multispecialty physician group, has about 66,000 patients in the region served through seven locations. It solicited bids more than a year ago before entering into negotiations with Sentara.

So the key competition in the insurance and health-care industries is often between different models of doing business and not companies competing on a level playing field. The coming months will bring more changes to that field as the mergers undergo scrutiny from regulators and investors, and health-care providers continue staking out new turf.

No easy path

If insurance brokers seem to have a bounce in their step these days, it might be that they’re feeling very much in demand.

For the next few months, anyone who can help small businesses and individuals with the task of picking health insurance is going to be pretty popular.

Choosing coverage in the individual and small-group markets is never easy, but this year it is especially complicated. For one thing, starting in January the Affordable Care Act will require more businesses to offer insurance coverage to their employees. The threshold for 2015 is 100 or more full-time equivalent (FTE) employees, but next year the employer coverage mandate will include any business with 50 FTEs.

Planning for 2016 is a new challenge for insurers, too — the policies they wrote last year for 2015 were based on guestimates of what kind of claims they would have to pay. This year’s proposed policies for 2016 are based on a year of actual experience. So that means that their premiums and underwriting rules are changing a lot.

“It’s such a complicated decision that we’re finding that employers are really leaning on us to help them,” says David Blanchard, principal with Digital Benefit Advisors in Richmond.

Insurance carriers are farther along in figuring out what next year will bring. They submitted their proposed premiums to the State Corporation Commission’s Bureau of Insurance (BOI) back in April. The ACA rules require insurers proposing plans with rate increases of 10 percent or more to present those plans for a public rate review. Nineteen plans from 10 insurers met that requirement. Overall, the proposed rate increases in Virginia are lower than in many states, where increases above 20 percent are common.
 

Enrollment begins Nov. 1
The selection process for businesses and individuals begins with the start of the open enrollment period, which runs from Nov. 1 of this year through Jan. 31, 2016. In late August, the BOI submitted its recommendations to the federal Department of Health and Human Services. The approved rates won’t be available until the fall, in time for the open enrollment period.

In July, the BOI asked insurers to present details of their most popular plans based on statewide enrollment, as well as rate details on plans with average, minimum and maximum rate changes. It’s not yet clear how many Virginia plans will be offered by carriers participating in the federal exchange (HealthCare.gov), but last year there were 172, with 90 individual plans and 82 small-group plans, says Ken Schrad, spokesman for the State Corporation Commission.

Even with the public presentations and other details available online, it’s nearly impossible to make comparisons. There are different levels of federal subsidies, plus local trends in health costs, morbidity and tobacco use to consider.

Plans also can change significantly from one year to the next, with no immediate clues to help consumers figure out why. One of Aetna’s small-group plans, for example, showed a proposed maximum premium increase of 64 percent for 2016 over 2015. Seems outrageous, right? When asked, Aetna explained that much of that increase is based on the fact that the plan is changing from a bronze-level plan on the ACA exchange to a silver-level plan for 2016, which would offer better coverage.

What’s also true is that insurers and health-care providers come to the market in a variety of ways. Aetna, for example, has four different companies offering small-group business insurance for next year. Its Innovation Health Plan and Innovation Health Insurance Company are joint ventures with Inova Health System in Northern Virginia. Then there’s Aetna Health, which offers health-maintenance organization (HMO) plans across the state, and Aetna Life Insurance, which offers preferred-provider organizations (PPOs).

Plus, not all plans are available in all areas, and even plans that are offered statewide are priced differently depending on location and other factors. Anthem’s popular Healthkeepers plan, for example, has just a 4.8 percent premium increase for 2016 for all ages of enrollees. But while a 25-year-old in Richmond would pay $217 a month for a silver-level plan, he or she would face a higher price in almost any other part of the commonwealth.

Even the available data about average increases proposed for an insurance plan aren’t particularly helpful, Blanchard says. “While the general average [rate increase] from Anthem or some other insurer might be 8 percent or 13 percent, that doesn’t mean some client doesn’t get a decrease, or that they won’t get an increase of 80 percent,” he says. There are simply too many variables and options.

Blanchard also notes there are new reporting requirements for employers to learn, such as how to count your employees to determine what the law requires. “In many ways, the [50- to 99-employee] market segment is the most complicated segment for insurance right now across the country,” he says. “There’s significant pressure on the pricing as well as pressure on the coverage.”

Regulatory pressure
There is pressure on regulators, too. Back in July, as state-level regulators like the Bureau of Insurance were reviewing the proposed rate increases, the federal Centers for Medicare and Medicaid Services (CMS) sent a letter urging them to keep premiums affordable. The letter, from Kevin Counihan, director of the CMS Center for Consumer Information and Insurance Oversight, pointed to data showing that more recent enrollees are healthier and thus making fewer claims.

The letter also said there has been a recent decline in the “pent-up demand for services” that produced more claims in the ACA’s first few years, as previously uninsured people got coverage and started to use it. In addition, Counihan said that recent medical costs were showing “moderate” cost increases. “Because recent trend experience can often provide a useful guide to the near future, these data may be relevant when evaluating the reasonableness of trend assumptions for 2016,” he wrote.

When Virginia’s BOI held its public review session the day after Counihan’s letter was released, insurance commissioner Jacqueline Cunningham made clear at the start of that three-hour meeting that the rules by which the premium increases would be measured were already set.

“You can’t disapprove a rate just because you do not like it, is that correct?” she asked David Shea, the BOI actuary. Shea said yes. “As long as the data and the assumptions are actuarially supportable and justifiable, then Virginia will approve the rate,” he said.

The new rates, though, aren’t necessarily the only option on the exchange. Carriers also are offering to let customers renew policies under the existing 2015 rates, Blanchard says. So that option is at least more specific than the 2016 options, which won’t be known until the rate-approval process is completed this fall. “We’re starting conversations [with clients] now, but they’re not substantive … because we don’t have all the options,” he says.

Consumers can see some details of what carriers are proposing at a website run by the CMS, ratereview.healthcare.gov. Insurers who are proposing rate increases at 10 percent or higher must go through a public rate review, and the website has some details and explanations for the increases. The explanations, though, generally don’t bring the clarity that individuals or businesses want.

The reasons given for a rate increase vary, but they often cite the increase in health-care services, or a rise in the medical claims made. Doug Gray, executive director of the Virginia Association of Health Plans, says consumers and business owners should take some comfort, because Virginia’s insurance marketplace has rate increases being proposed that are lower than many other states. “Our market is relatively stable, and we have more [providers] competing in our market than in some of the others. And frankly that’s what it’s supposed to do.”

Giving legislators cover

A few months ago, Obamacare supporters in Virginia hoped a win in the U.S. Supreme Court case dealing with federal subsidies would force their opponents into accepting the 2010 law and even expand its reach.

Those now seem like innocent times. Supporters did win the King v. Burwell decision, but opponents remained dug in. “The Affordable Care Act remains deeply flawed, and today’s Supreme Court decision does not change that,” said William Howell, speaker of the Virginia House of Delegates, when the ruling was announced in late June.

Actually, the ruling did change the debate because it left in place a pillar of the law and erased a lot of uncertainty. But in an important way, such realities matter less than perception. Virginia’s option to expand Medicaid — where the real federal money is — has steadfastly been blocked by the state GOP despite the ACA’s legal victories.

So, for ACA supporters, the strategy leading up to next year’s General Assembly session is to find a way to let the losing side win a little and make the fight not seem like a fight. Some GOP-leaning states already have adopted rules that have attracted conservative support, like attaching work requirements to benefit programs that draw on Medicaid dollars under the ACA.

Whatever legislative proposals come out this year have to “give cover to people who went out on a limb and lost,” says Doug Gray, executive director of the Virginia Association of Health Plans.

It’s unlikely there will be another straight expansion push in the upcoming session like the one that Gov. Terry McAuliffe tried without success his first year. (Marketplace Virginia, a 2014 state Senate proposal backed by many business organizations, would have used Medicaid funds to subsidize private insurance premiums.) But if there’s any sales strategy that will work, McAuliffe will find it. “The governor’s been pretty clear he wants to see coverage,” says Dr. William A. Hazel Jr., the state’s secretary of Health and Human Resources. “Folks are going to have to at some point sit down and decide how we’re going to do this.”

What he means is find a way to bring in the federal tax dollars that proponents of expanding Medicaid say the commonwealth is foolish to leave on the table.

Sean Connaughton, president and CEO of the Virginia Hospital and Healthcare Association who previously was Virginia’s secretary of transportation, is one of the biggest advocates for Medicaid expansion. The VHHA cites the financial problems faced by hospitals, especially rural ones. The group said last year that about half the state’s 37 rural hospitals are operating in the red. It also says that this year and next, Virginia’s hospitals will face nearly $1 billion in combined cuts to Medicaid and Medicare.

So a partisan fight is the last thing the group wants. “What we have to do is stop focusing on politics and start focusing on providers” and the effects of funding cuts, which are especially high this year, Connaughton says. “We’re not saying we’re proponents or opponents of the Affordable Care Act; we’re just the ones who have to work with it,” he says. “We need to get folks to face the reality that this law is here to stay.”

A state study group is examining the feasibility of using a tax on hospitals, called a provider assessment, to generate money that would be matched by federal Medicaid funds.  Sentara Healthcare, Carilion Clinic and Inova Health System asked the General Assembly last year for a provider assessment after it failed to approve Medicaid expansion. The legislature asked Hazel to lead a study on the issue.

Gray, the health plan association executive, says that, behind the hard line drawn by the GOP, there is support for negotiating a deal that would have some cost-share, so recipients of Medicaid coverage would have to pay something. The conservative opponents of expanding Medicaid “are completely against somebody getting Medicaid without paying anything,” he says.

The white-hot partisanship over Obamacare has made such compromise impossible for the past few years, he says. “But the fundamentals are pretty straightforward. We’re already blowing money taking care of the uninsured, who we would be able to get some funding for” through Medicaid expansion. “Isn’t it smarter to help people get coverage so they can stay healthy instead of waiting until they’re so sick, and then running up the bill?”

Hazel notes that several states recently have gotten waivers from the Centers for Medicare and Medicaid Services (CMS) to set up their own versions of Medicaid expansion. Indiana, for example, won CMS approval in January for a plan that requires premiums from the newly insured and promotes “value-based decision-making and personal health responsibility,” according to a state news release. The new plan extends coverage to 350,000 people. Republican Gov. Mike Pence called the plan “a proven model for Medicaid reform” based on the state’s Healthy Indiana Plan.

Hazel wants Virginia opponents of Medicaid expansion to come to the table with ideas. “Clearly other states have been able to do this,” he says. He also rejects the criticism that Medicaid is a poorly run program. “Medicaid is actually one of the most tightly constructed systems we have,” he says. But, anything connected to Obamacare is a target. “You’d think we could sit down and figure this out, but when you see folks in campaign mode, what are you hearing? It’s all about how bad Medicaid is.”

It’s hard to walk back some of the things that get said in a campaign. Howell just fended off a conservative opponent in a June GOP primary. The challenger accused him of trying to enable Medicaid expansion “and he had to take hard positions on that” to win, Gray says. “Being able to come back and be flexible can be hard to do.”

Howell didn’t respond to an interview request left at his district office in Stafford County.

Hazel says Howell shouldn’t fear attacks from the right because they’re unavoidable. “It doesn’t matter what he does, they’re going to come after him,” he says. “There’s no pleasing these people.”

If the most ardent opponents of more fully implementing the ACA and expanding Medicaid refuse to budge, they might prevail. But in the months to come before the next legislative session, there’ll be a lot of ideas floated.

The budget McAuliffe is drafting now, says Gray, is the first one that will really have his imprint. So in that environment he has more influence than ever and can do some horse trading on a range of policies. What exactly that might mean is unknown. “But it’s definitely being discussed,” he says.