Two New York-based bond rating agencies assigned speculative ratings last week to a $200 million subordinated debt offering by HealthTrust-The Hospital Co., Nashville, Tenn. Moody's Investors Service assigned a B1 rating on the debt; Standard & Poor's Corp. rated the debt B. Both agencies affirmed similar ratings on HealthTrust's $800 million in current subordinated debt. The new bonds, along with an equity issue, will help finance HealthTrust's $1 billion acquisition of Epic Healthcare Group. HealthTrust is set to complete that acquisition of Dallas-based Epic next week, creating a 115-hospital chain.
Hallmark Healthcare Corp., an Atlanta-based chain of 17 hospitals in eight states, reported net income of $1.5 million, or 42 cents per share, for the third quarter ended March 31, compared with income of $5.2 million, or $1.56 per share, in the year-ago period. Last year's profits were boosted by $2.9 million in one-time credits that included the early repayment of debt. In addition, the 1994 second-quarter results were depressed by $1.6 million in additional interest expenses from the company's refinancing last November. Revenues for the quarter grew 3% to $48.8 million. For the nine-month period, the company reported net income of $24 million, or $6.54 per share, compared with net income of $7.4 million, or $2.21 per share, in the year-ago period. Revenues increased 9% to $144.1 million. The nine-month results included a $19.8 million one-time gain on the early repayment of debt.
Caremark International said net income for the first quarter ended March 31 dropped 72% to 4.3 million, or 6 cents per share, compared with $15.7 million, or 22 cents per share, during the year-ago period. Net revenues rose 22% to $524 million. The company attributed earnings' results to the Critical Care America purchase, which Caremark completed for $175 million. In addition, the company announced that its orthopedic services division recently acquired Chicago-based United Rehabilitation Services for an undisclosed amount. Northbrook, Ill.-based Caremark is the nation's largest provider of home infusion and prescription drug services.
Medical Care America's net income for the first quarter ended March 31 was $99 million, or $2.81 per share, compared with $11.8 million, or 32 cents per share, in the year-ago period. Revenues rose 8% to $105 million. MCA executives said the results were boosted by the sale of Critical Care America, its home infusion line, for $175 million in cash to Caremark International. Dallas-based Medical Care America is the nation's largest operator of outpatient surgical centers, managing 93 centers nationwide.
Tennessee's new Medicaid managed-care program may pay providers as much as 25% less than the cost of care because of a faulty calculation of the state's capitated payment rate, according to a report released by the National Association of Public Hospitals. Larry Gage, president of the NAPH, warned that the difficulties being encountered in Tennessee could happen in national reform "if managed care is implemented too hastily, designed primarily for cost-containment purposes and targeted only to the poor."
Christine W. McEntee last week was named executive vice president in charge of the American Hospital Association's Chicago office. Ms. McEntee is now the AHA's vice president and deputy director of federal relations in Washington. AHA President Richard Davidson said Ms. McEntee will coordinate all Chicago-based activities and will be acting president in his absence.
Two integrated healthcare networks designed specifically for pediatric managed-care enrollees have been formed. Health Network for Children, which consists of a 150-pediatric physician group and 100-bed Children's Memorial Hospital in Omaha, Neb., has been established to pursue managed-care contracts in the Omaha area. Mervin Riepy will serve as the network's executive director. In Palo Alto, Calif., the 156-bed Lucile (Calif.) has formed a management services organization to create an integrated network with Northern California Pediatric Medical Group, a 67-pediatrician practice that will offer care for children in managed-care plans.