Major Contractor On Vermont Health Connect May Be Going Out Of Business

Nov 2, 2015

A Boston-based tech firm responsible for constructing a major component of Vermont’s online health insurance exchange looks to be going out of business.

Lawrence Miller, chief of health care reform for the Shumlin administration, confirmed Monday evening that Exeter, which has been working on Vermont Health Connect since the project’s outset, appears to be dismantling operations.

“They’re suspending operations and they’ve laid people off and they may be winding up,” Miller said.

Exeter was originally brought on as a subcontractor for CGI, a firm hired to construct Vermont Health Connect in 2012 but later sent packing after a series of high-profile letdowns. Exeter was hired to perform software development work on the portion of Vermont Health Connect that transmits user information to internal databases.

Despite the apparent dissolution of the company, Miller says operations at Vermont Health Connect will continue unscathed. Miller says Exeter delivered the final piece of the product it was hired to build on Friday. Miller says the state had also been planning to have Exeter perform service and maintenance on the product for years into the future. But he says transitional agreements will secure the technical resources Vermont needs to ensure the long-term integrity of the components for which Exeter was responsible.

“I am obviously making sure that we will be able to maintain it properly. But they behaved responsibly in fulfilling their core obligation,” Miller says. “The IT industry goes through a lot of changes, and we know it’s a volatile space, so our contracts anticipate that these sorts of things will happen.”

Miller says Exeter has handed over rights to the “source code” for the product Vermont purchased. And Miller says key members of the Exeter team, who had been working exclusively on the Vermont project, will soon be hired by Optum, the contractor that now performs the bulk of the technical work on Vermont Health Connect.

“Exeter is facilitating the transition of key employees to other organizations to be able to continue to support Vermont as we go forward,” Miller says.

It was unclear Monday evening how much state and federal money have gone to Exeter to perform the work, since many of the payments came when it was a subcontractor of Optum. Exeter, however, has been paid many millions of dollars under its Vermont Health Connect-related contracts.

The software that Vermont purchased from Exeter is what’s known as a “commercial off-the-shelf” product.

“So this was not custom code for Vermont Health connect, this was a product that they were developing for, they hoped, multiple customers,” Miller says.

The product, designed specifically for state-based insurance exchanges called for in the Affordable Care Act, wasn’t as popular as Exeter had anticipated. Vermont was the only state to purchase its software.