Seventeen Chicago-area hospitals, led by EHS Health Care, have banded together to craft a regional distribution program. They awarded a five-year, $300 million contract to Deerfield, Ill.-based Baxter International last week. Baxter is expected to deliver about 90% of the distributed medical-surgical products they purchase, said John Umbeck, vice president of materials management at EHS. The contract should save the hospitals about $14 million over its life, Mr. Umbeck said. It will begin Sept. 1. The 17 hospitals are linked by their affiliation to the San Diego-based alliance American Healthcare Systems. EHS, which operates five hospitals in the Chicago area, is an AmHS shareholder. The remaining hospitals are members of EHS' group purchasing affiliate program. AmHS sets up national contracts with manufacturers for its hospital members, but it doesn't have distribution agreements.
Presbyterian Medical Center in Philadelphia announced it intends to join the integrated healthcare system being developed by Independence Blue Cross. Joining the system could involve a switch to for-profit status by 344-bed Presbyterian and other providers that join the network, said I. Donald Snook Jr., Presbyterian's president. He said no decision has been made on whether hospitals entering the system will be converted to for-profit status or remain not-for-profit organizations. Earlier this year, Philadelphia-based Independence Blue Cross announced that it would merge its for-profit subsidiaries with the for-profit businesses of Graduate Health System in Philadelphia. It also announced plans to bring Graduate's seven not-for-profit hospitals into an integrated delivery network.
In a management reorganization, Sister Celeste Sullivan has been appointed president and chief executive officer of Allegany Health System, Tampa, Fla., and two of the system's four hospitals have agreed to share resources. Sister Sullivan replaces Michael O. Bice, who unexpectedly resigned in March after four years with the Roman Catholic system (April 4, p. 10). Allegany also announced that its two Tampa Bay-area hospitals, 883-bed St. Joseph's Hospital in Tampa and 427-bed St. Anthony's Hospital in St. Petersburg, Fla., have agreed to consolidate some management services. Further details weren't released. Earlier this month, 430-bed St. Mary's Hospital, an Allegany hospital in West Palm Beach, Fla., agreed to merge with 279-bed Good Samaritan Medical Center, West Palm Beach, to form Palm Beach Health Systems (March 21, p. 16).
St. Jude Medical plans to buy the cardiac device businesses of Siemens AG for about $500 million. It will acquire Siemens' Pacesetter unit, based in Sylmar, Calif., and its cardiac-rhythm management business in Solna, Sweden. The transaction is expected to be completed later this year. It will turn St. Paul, Minn.-based St. Jude into a more diversified cardiac-device company with annual revenues of about $600 million. Primarily a maker of heart valves, it now has annual revenues of about $250 million.
Integrated Health Services is attempting to raise $196 million through a public offering of common stock and senior notes. IHS will offer 3.5 million shares of its common stock at $30.25 per share and $100 million in aggregate principal through 10.75% senior subordinated notes due in 2004. Some 3.47 million shares of common stock are being sold by Owings Mills, Md.-based IHS and 22,616 shares are being sold by stockholders. Net proceeds of the offering will be used to develop additional subacute-care units in existing IHS facilities, to finance acquisitions, to repay debt and for general corporate purposes. IHS provides subacute and rehabilitative care through 148 facilities in 27 states.
John P. McGuire, senior vice president at Jewish Hospital of St. Louis, was installed last week as chairman of the Healthcare Financial Management Association. As chairman, he heads a 17-member board of directors that establishes policy directions for the 32,000-member association. Some 1,700 people attended HFMA's annual national institute in Washington last week.