Vanguard misses out on Arizona Medicaid contract extension

Company seeks capped contract for part of $600M business

Arizona health care officials have told Vanguard Health Systems that the company's Phoenix Health Plan's contract to provide acute care to almost 200,000 Medicaid enrollees will not be extended.

The move means Vanguard's work with the Arizona Health Care Cost Containment System in nine counties will end Sept. 30. The company has asked to receive a capped contract in two of the counties that would let it continue to work with its 116,200 current members there. A response to that request is expected this week.

“After serving the residents of Arizona for nearly 30 years under the AHCCCS program, we were both surprised and disappointed to receive this news,” said Vanguard Chairman, President and CEO Charlie Martin. “The Company will continue to pursue vigorously the opportunity to continue to serve the residents of Arizona under this program.”

Vanguard officials said Phoenix Health Plan had revenues of almost $300 million in the first six months of its 2013 fiscal year and accounted for "substantially all" of the $24.6 million in EBITDA posted in its health plans segment. Vanguard also has the right to protest Arizona officials' decision but must file those papers by April 1.

Shares of Vanguard (Ticker: VHS) ended Friday trading at $16.62 and have climbed more than 35 percent so far this year.