Working all the angles: Mike Fernandez's full spectrum of health care companies will do more than $1 billion in revenues this year. His formula: find or start companies in undervalued niches, build them up, and sell them to the majors - Health Care

South Florida CEO, Feb, 2004 by Barbara Perkins

* Every week Mike Fernandez spends 20 minutes sitting in a cubicle with a headset on. That's where the effusive, impeccably dressed 51-year-old listens to customer service calls for any one of the seven health-care companies he's chairman of--including Coral Gables-based CarePlus Health Plans, CarePlus Medical Centers and Healthcare Atlantic Corporation, the three of which cumulatively did over one billion dollars in sales last year. On a typical day Fernandez's schedule is chock full of meetings usually set to start at 7 a.m., but, he says, "I learn more in those 20 minutes than I can from being in meetings all day long."

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The first sign that Mike Fernandez was destined to become an entrepreneur came when he was just 14 years old. That's when Fernandez, working at the souvenir kiosk of the American Museum of Natural History in New York, noticed there were no replicas of a Brontosaurus for sale--the most popular exhibition at the museum. Armed with his first paycheck, Fernandez bought a box of 100 of the plastic dinosaurs and sold them within 2 hours. He was promptly fired for his ingenious scheme.

Fast forward to the '70s. Fernandez, who moved to Miami after 3 years with the Army's 82nd Airborne Division, started out selling life insurance. He then went into an underserved market--selling employee health insurance to small companies. That's when he got lucky. His first account, a company with just 19 employees, grew to about 6,000 within three years. That company was Air Florida, and when various top executives left it to head up operations at other airlines, Fernandez got the call for booking their health care business. "I had seven airline clients and was generating a million dollars in commissions a year," says Fernandez. "But I knew that big, established insurance companies could go after my little sector. So I packaged that book of airlines and I sold it for three and a half million dollars."

Fernandez didn't stop there. He invested his profits into developing the first national data base for group health insurance, and started Physicians Healthcare Plans (PHP), a managed care company.

Next, in December of 2001, Fernandez jumped from the payer side of the healthcare equation to the provider side. At the time, 15 neighborhood health clinics in South Florida, known as Clinica Asociacion Cubana (CAC), were abruptly closed. The clinics, started by Cuban doctors back in the early '60s, had long provided services for Cuban immigrants who could not afford health care. The facilities, which employed 600 people and provided services to 100,000 patients, had been faltering for years, losing $60 million the previous year. "These health care facilities were very close to me as a Cuban-American" says Fernandez, who was determined to save them. Within 20 days of the shut down, Fernandez acquired them, invested $10 million, made management changes and re-opened 11 of the facilities. His company rehired more than 100 physicians and half of the clinic's workforce. Profits for 2003 were expected to exceed $10 million.

Meanwhile Fernandez's PHP sold its Medicaid operations in 2002 for $181 million to Virginia-based Amerigroup Corp. The remainder of the company became CarePlus Health Plans, another health maintenance organization (HMO), which today is the largest minority-owned and operated Medicare plan in the country. CarePlus, says Fernandez, is expected to "do about $500 million in revenue this year."

Fernandez shows no signs of slowing down. This past year he's already spun off two new companies, including a pharmaceutical distribution firm that Fernandez is convinced has an even better future than his HMO does. How'd he come up with this latest business concept? The idea came to him, says Fernandez, while he was listening to those calls back in customer service.