Healthtrust-The Hospital Co. reported a 22% increase in net income to $45.6 million, or 52 cents per share, for the third quarter ended May 31, compared with $37.4 million, or 45 cents per share, in the year-ago period. Net revenues for the Nashville, Tenn.-based chain of 166 hospitals rose 26% to $753.5 million. For the nine-month period, profits rose 21% to $131.9 million, or $1.54 per share, compared with $108.6 million, or $1.30 per share, in the year-ago period. Net revenues were up 14% to $2 billion. Healthtrust completed the $1 billion acquisition of Epic Healthcare Group, a Dallas-based chain of 34 hospitals, May 5. The quarter's results reflect Epic's operations prior to the acquisition.
Five state and federal agencies are investigating several former administrators and board members of Cape Coral (Fla.) Hospital to determine whether officials used the not-for-profit hospital for personal gain. Sources close to Cape Coral management said investigators are trying to determine whether former executives received excessive salaries and benefits and whether board members profited from business deals with the hospital. Earlier this month, Cape Coral fired its five top executives. In response, the executives filed lawsuits against the hospital to recover some or all of their benefits (June 20, p. 3). In other developments, the hospital announced layoffs of 200 to 250 employees as part of a plan to reduce losses this year that are projected to exceed $10 million. The hospital employs 4,500 people.
Plans to build a new hospital to replace 82-year-old Cook County Hospital in Chicago cleared a major hurdle last week when the county board of commissioners voted 14-3 in favor of the replacement plan. The county is expected to sell revenue bonds to raise the money for the $570 million project. However, a final decision on how best to finance the project isn't expected until early next year. The new hospital would have 464 beds, compared with the hospital's current bed complement of 932.
The board of Amsco International late last week decided to divest its Sterile Recoveries business if possible. A spokesman said it would make plans to phase out the division if it didn't have a definitive offer by July 30. The 2-year-old Sterile Recoveries unit contracts with about 150 hospitals to supply and service reusable surgical gowns and drapes. It lost $4.3 million in the first quarter of 1994. Executives had hoped it would break even this year.
A survey last year of 24,300 employees at three major companies found that those covered by HMOs were more satisfied with their healthcare than those covered by fee-for-service plans. The study, conducted by the Health Institute at the New England Medical Center in Boston, covered 32 health plans in six regions nationwide. The plans served employees at Xerox Corp., Digital Equipment Corp. and GTE Corp. Some 86% of employees enrolled in group-model HMOs were satisfied with their healthcare, compared with 74% of those covered by fee-for-service plans.
Shareholders last week approved the $342 million merger of Sun Healthcare Group and Mediplex Group. Mediplex shareholders will receive $11 per share and 1.28 shares of common stock, resulting in a total consideration paid by Sun of approximately $106.5 million in cash and 12.4 million shares of Sun's common stock. As a result of the transaction, Wellesley, Mass.-based Mediplex will become a wholly owned subsidiary of Sun. The new company will operate 114 healthcare facilities, largely long-term and subacute-care units, with 13,508 beds in 18 states.
A former HealthSouth Rehabilitation Corp. employee has filed a sexual harassment lawsuit against company Chairman and Chief Executive Officer Richard Scrushy. The complaint, filed June 17 in U.S. District Court in Birmingham, Ala., accuses Mr. Scrushy of violating the rights of his former administrative assistant, Yvonne Stephens Noll. The suit alleges that Mr. Scrushy, 41, made unwanted advances to Ms. Noll between 1989 and 1993. Ms. Noll, who was fired from the company in 1993, is seeking unspecified punitive and compensatory damages from Mr. Scrushy and Birmingham-based HealthSouth. Neither Mr. Schrushy nor the company could be reached for comment. Ms. Noll's attorneys declined to comment.