Largest Employers in Dane County — Job one: Creating jobs

Despite everything that gets thrown at them, Dane County employers continue to employ a high degree of business excellence.

From the pages of In Business magazine.

Since 1990, IB’s Largest 100 Employers in Dane County list has been presented in one form or another. As one can imagine, a great deal of change has occurred in that time, and it’s not only reflected in the way we do business — the internet was around in 1990, but it had not yet been introduced into the private sector — but in how economic forces shaped the list.

Alternatively known as the Top 100 or the Top 200, or more recently, the Largest Employers, it began in January 1990, and it was based on annual revenue. On that inaugural list, Oscar Mayer, which no longer anchors Madison’s economy, was the top ranked company and Epic Systems, which has ranked either first or second for the better part of a decade, was still climbing the ladder.

As you review the news made by the Largest 100 employers during the past year, it’s clear that even successful employers experience workforce reductions, but with Madison boasting the lowest unemployment rate (2.8%) of any metropolitan area in the state, it’s not as difficult for laid-off workers to find new opportunities.

Some news was made in the courtroom, as perennial Largest 100 organizations such as Epic and Promega Corp. were and are involved in contentious legal disputes, while other developments spoke to the kind of business growth that’s typical of a strong economic expansion.

In this year’s presentation, UW Health takes the top spot for the second consecutive year, due mainly to its decision to merge with the UW Medical Foundation, which also ranked highly on past Largest 100 presentations.

Health care systems and insurers continue to dominate the top half of the list, but that’s a continuing reflection of local industry strengths.

We also salute a growing business — Fairway Independent Mortgage Corp. — that climbed 23 spots on the list, and Journey Mental Health Center, a not-for-profit organization that debuts at No. 60.

Not-so-fake news

Not long after it surpassed Epic as Dane County’s largest employer, UW Health (No. 1) announced that due to rising costs and declining revenues, it would cut $80 million from its budget over an 18-month period. The health care system did not report how many jobs would be affected because, where possible, employees are able to move to other positions, but most cuts were expected to come from reducing labor, managing overtime, and leaving open positions vacant. Lingering uncertainty over the fate of the Affordable Care Act doesn’t help, but health care consolidation was bound to result in efficiency-focused streamlining.

As usual, it was an eventful year for Epic (No. 2), particularly in the courtroom. In May, the Verona-based electronic medical records company emerged victorious in a case before the U.S. Supreme Court, which ruled in Epic’ favor in a dispute involving arbitration agreements. In a 5–4 decision, the nation’s high court validated the practice of requiring new workers to sign arbitration agreements, and it barred employees who sign such agreements from organizing or filing class-action lawsuits to settle workplace disputes. As a result, their complaints can only be heard and decided via corporate arbitration.

Meanwhile, a federal judge in Florida dismissed a whistleblower case filed against Epic on the grounds that plaintiff Geraldine Petrowski did not provide evidence of fraud. Petrowski, who in 2014 worked with Epic as a liaison on a North Carolina software implementation, had alleged that Epic’s software allowed it to double bill the government for Medicaid- and Medicare-covered services.

Outside the courtroom, Epic completed one of its largest projects ever — $1.5 billion — when it consolidated 300 Mayo Clinic systems, an implementation that impacts 26,000 Mayo employees. The Verona-based company also announced worldwide interoperability through a technology called Share Everywhere, enabling patents (via their smartphones) to grant clinicians anywhere in the world access to their health records even if a provider doesn’t use electronic medical records.

In a noteworthy change in how Epic works with third-party software developers, the company also has developed its own EMR-based app store, the App Orchard, creating an online marketplace of software from non-Epic developers that ties back into the company’s own health records platform.

On a lighter note, Epic agreed to purchase the iconic Ella’s Deli merry-go-round, not to mention all of the toys and art from the ice cream parlor and restaurant, which closed in January. One wonders how it will be incorporated on Epic’s edgy campus design.

SSM Health (No. 3) announced it would cut 1% of its jobs, or about 350 positions in its four-state territory. The St. Louis-based owner of St. Mary’s Hospital and Dean Medical Group in Madison, says the cuts could mean the loss of at least 45 jobs in Dane County, mostly administrative positions.

Meanwhile, in an effort to combat monopolistic behavior in the drug industry, and control the cost of prescription medications, SSM Health announced a venture to manufacture generic drugs with a small group of other health systems. Since that announcement, 75 different systems throughout the country have shown interest in joining the venture.

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American Family Insurance (No. 4) not only saw the soft opening of its new, entrepreneurially focused Spark Building, and announced higher pay, expanded benefits, and one-time bonuses for employees due to federal tax cuts, the company continues to enjoy a smash hit with its championship golf event. It didn’t hurt that this year’s celebrity foursome included Brett Favre, Derek Jeter, and Andy North, or that basketball Hall of Famer Shaquille O’Neal charmed everyone, but Madison’s well-earned reputation as a golf crazy town is likely to keep this Senior Tour event, which in its first two years distributed $2.7 million to area nonprofits, on the leaderboard for years to come.

American Family also is trying to score a hole-in-one with its analytics and customer service capabilities, as illustrated by its purchase of Networked Insights, a Chicago- based data and analytics software company, and with its acquisition of HomeGauge, a home inspection software company based in Asheville, N.C.

If there is one member of the Largest 100 employers who had a forgettable year, it was UnityPoint Health-Meriter (No. 8), as the health system dodged one bullet only to find another one coming at it. After facing the possibility of losing its Medicare contract, UnityPoint Health-Meriter was told by the Centers for Medicare and Medicaid Services that it will remain in the Medicare program after an investigation into the mistreatment of newborns. The decision came after an investigation into bruises and fractures sustained by five babies at the hands of a nurse who Meriter has since suspended.

If that weren’t bad enough, UnityPoint Health has notified thousands of patients that their records might have been breached in two separate incidents. The first security breach, which occurred between Nov. 1, 2017 and Feb. 7, 2018, was the result of a phishing attack that could have resulted in the release of medical record information. A class-action suit filed by patients affected by the first breach has been amended to include the second breach, as well.

Exact Sciences (No. 11) once dreamed of a bustling downtown Madison headquarters as part of the Judge Doyle Square project, but fate (and the U.S. Preventive Services Task Force) intervened and the company instead decided to expand at University Research Park. The five-story, $60 million expansion project took a major leap forward this year as University Research Park requested $2.6 million in TIF from the city of Madison. Exact Sciences has employees working in three separate buildings throughout the park and its proposed headquarters would bring them all together at 501 Charmany Drive. The new facility, tentatively named Innovation One, could add between 200 and 400 new jobs.

The USPS Task Force might have scuttled the company’s JDS plans by failing to classify Cologuard, its non-invasive test for colorectal cancer, as one of the main recommended screening tests, but the market has rendered a different verdict. Not only has Cologuard gained impressive market traction, surpassing the 1 million milestone earlier this year, Exact Sciences has developed screening tests for other forms of cancer.

Acquisitions also continue to shape the local telecommunications industry, as TDS Metrocom, a subsidiary of TDS Telecom (No. 12), acquired the communications and network business of Merrimac Communications in Merrimac, Wisconsin, which served 6,000 homes across parts of Sauk, Columbia, and Dane counties. Meanwhile, Madison- based TDS Broadband Services acquired K2 Communications in Mead, Colorado, adding about 1,200 customers to its service base.

Not to be outdone in the expansion department, Promega Corp. (No. 16) recently announced a $190 million, 270,000-square-foot expansion of the R&D facility next to its Fitchburg campus. Plans call for a 4,800-square-foot central plant and the addition of two floors and 340 stalls to an existing parking structure, and the expansion could be funded with the help of up to $14.8 million in tax increment financing from the City of Fitchburg.

In addition, the biotechnology company plans to relocate some of its instrument manufacturing facilities from California to Greater Madison so the work can be done closer to local research and development activities. The relocation might earn up to $185,000 in state tax credits, depending on the number of local jobs created.

Promega’s expansion plans were announced amid a bitter legal dispute between CEO Bill Linton and disgruntled shareholders. The lawsuit, which headed to a Dane County Courtroom in July, was filed by Nathan Brand and Ted Kellner against Linton in 2016, claiming Linton and Promega’s board of directors kept them from receiving fair market value for their stake in the company. Linton countersued, claiming that former Promega manager Paul Shain had conspired with Brand and Kellner to take over the company after it refused to buy back their shares at inflated prices. Citing a lack of evidence, Dane County Judge Valerie Bailey-Rihn dismissed Linton’s counter claims without prejudice, but the rest of the case is still unresolved.

In the midst of a leadership transition from Andreas Rouvé to new CEO David Maura, Spectrum Brands (No. 22) finalized it merger with the New York-based HRG Group, a publicly traded holding company that happens to be Spectrum’s majority shareholder. The merger gives the combined companies a larger pool of shareholders and, reportedly, the transaction won’t negatively impact the Madison operations.

In other Spectrum Brands news, antitrust concerns reportedly are holding up a $2 billion acquisition bid by rival Energizer for Rayovac batteries. The proposed transaction, which is under review by the Federal Trade Commission, initially boosted stock prices for both the Middleton-based Spectrum Brands Holdings and Energizer Holdings. Spectrum, which is also exploring the sale of its appliance business, would use the proceeds to reduce debt and reinvest in its core businesses.

Meanwhile, hundreds of Wisconsin high-tech workers are on pins and needles with the news that GE Healthcare (No. 25), which has 550 employees at its Madison plant, might be relocating to Chicago if parent company General Electric moves forward with plans to spin it off into a stand-alone company. GE Healthcare, already headquartered in the Windy City, also employs about 6,000 in the Milwaukee area. The spin-off could occur within 12 to 18 months.

Community impacts

While it continues to expand its branch network in Wisconsin, UW Credit Union (No. 30) also is emphasizing financial literacy. The credit union has entered into a partnership with the Middleton-Cross Plains Area School District to open its first high school branch at Middleton High School. It’s a trend that began with Summit Credit Union, which has a similar program at La Follette, Madison Memorial, and East High Schools in Madison.

Madison Kipp Corp. (No. 32) and the state of Wisconsin settled a lawsuit filed over soil and groundwater pollution related to PCBs (polychlorinated biphenyls) and PCEs (tetrachloroethylene) leaching from the company’s Madison plant. Kipp Corp. agreed to pay a $350,000 fine and must also provide financial assurances of up to $1.65 million related to remaining pollutants. In 2013, Kipp paid $7.2 million to settle lawsuits from neighbors after PCEs and associated vapors spread from the plant and affected nearby homes. Both PCBs and PCEs are likely carcinogenic to humans.

American Girl (No. 40) slipped eight spots in the Largest 100 ranking after a couple of rounds of job cuts, the latest being part of a significant global workforce reduction by parent company Mattel, whose second quarter earnings were down 14% from the same quarter in 2017. In July, the Middleton-based doll and book producer cut 22 jobs in Middleton as Mattel slashed 2,200 jobs worldwide, citing the closing of Toys R Us stores as the main factor. In January, American Girl announced that 57 people (21 in Wisconsin) would lose their jobs in a cost-cutting move.

The Greater Madison community still is mourning the loss of Oscar Mayer, which was a perennial member of this listing, but Total Administrative Services Corp. (No. 49) has taken advantage of the vacant offices to solve a space crunch. After signing a one-year lease for 13,000 square feet, TASC is the first tenant in the vacant office space at the former Oscar Mayer site, which now is managed by Reich Brothers Holdings and Rabin Worldwide.

Finally, more health care consolidation took place when WEA Insurance Corp., which is owned by WEA Trust (No. 91), joined forces with Mayo Clinic Health System to purchase Health Tradition Health Plan. The acquisition of the HMO expands WEA’s market to include private-sector medical coverage.

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Long running Fairway

Steven Jacobson knows a thing or two about competitive situations. The Wisconsin native is a former captain of the University of Wisconsin basketball team, where he played for the late Bill Cofield and achieved Academic All-Big Ten honors his final year, but as founder and CEO of Fairway Independent Mortgage Corp., Jacobson and his staff have built a formidable contender in mortgage services.

Steven Jacobson and his staff at Fairway Independent Mortgage Corp. jumped 23 spots on the Largest Employer list with more growth on the way. Through mid July, the mortgage services company had closed on $14 billion in loan volume, up 40% over the same period in 2017.

Fairway is one of the fastest movers in this year’s Largest 100 Employers list, gaining 23 spots after debuting at No. 100 last year. Founded in 1996, the Madison- based mortgage lending company provides loan origination services and actually has two main corporate offices — in Madison and in Carrollton, Texas, near Dallas. In the past year, the Madison workforce has grown by 50 people, and nationwide Fairway has 6,958 employees in over 500 branches with $21 billion in annual loan volume — and growing. Through mid-July, Fairway had closed on $14 billion, up 40 percent over the same juncture in 2017.

“The growth in Madison is because the company is growing overall,” Jacobson explains. “It’s growing across the country more so than locally.”

That contributes to local growth, however, because accountants, human resources and legal professionals, branch support personnel, and compliance and regulatory experts staff the Madison office.

Another factor in Fairway’s local workforce growth is a new, 90,000-square-foot facility at 4750 S. Biltmore Lane. “It offers us more opportunity to grow corporately,” Jacobson explains. “We have roughly 400 corporate employees in the Dallas area, and the building has allowed us to add more infrastructure potential in Madison.”

Jacobson, who holds a Bachelor of Arts degree in management from UW–Madison, has been in the mortgage industry for 35 years, and while the housing market has rarely been this hot, that creates other challenges. “Most places have very low inventory,” he notes. “If you have houses for sale, they go pretty quickly. That’s pretty standard throughout the country, but right now, one of the biggest issues across the board is housing availability.”

Partially funded Journey

Sometimes, organizations pop up on the Largest 100 list due to an oversight, and that’s the case with Journey Mental Health Center, a 70-year-old, not-for-profit mental health/addiction facility in Madison.

For those who are unfamiliar with Journey, President and CEO Lynn Brady believes there is widespread need for a mental health/addiction center in Madison. “You probably can’t find a family, a workplace, or any other community group that hasn’t been touched by a mental illness or substance abuse disorder,” she notes.

Lynn Brady would like to see state government step up its game when it comes to fully funding services for mental health/addiction, which impacted more than 12,000 county residents last year.

By 2017, the population served by Journey had grown to 12,208 people, but they are not broken down by mental health or addiction diagnoses. “You have to understand that many people deal with both situations,” Brady explained. “Oftentimes, people are using drugs and alcohol to self-medicate their mental illness.”

Journey (No. 60) provides emergency, community-based services, and with its new campus, clinic-based services are offered in a stand-alone building. The stand-alone facility is dedicated to increasing the organization’s capacity “to see more people and to provide those services in an atmosphere that feels safe and welcoming,” Brady states. “It allows us to have a clinic area. We’ve got clinicians, doctors, and other prescribers, a pharmacy, and group rooms, and it’s designed specifically for the client population.”

Through Journey, which receives the bulk (68%) of its $27 million in annual funding from the Dane County Department of Human Services, Brady advocates for the patient population in a variety of ways. While the organization remains hopeful that funding challenges at the state and federal level will be resolved through legislation, some additional persuading will be necessary. In particular, she says Medicaid rates in Wisconsin are some of the lowest in the nation and come nowhere near the cost of covering services.

“Medicaid fee-for-service rates cover around 50% to 60% of the cost of providing service,” Brady states. “So you have the most vulnerable population, and the population most in need, without access to services because the very program that is supposed to cover those services doesn’t cover them.”

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