The flow of tax-exempt municipal healthcare bond issues slowed to a relative trickle in the three-month period ended Sept. 30, with 82 deals totaling $2.6 billion coming to market. That compares with 192 issues worth a total of $6.8 billion in the year-ago period when a flood of refundings hit the market. Sixty of the third quarter's 82 issues were new-money deals; the balance were simple refundings or refundings combined with new financing. J.P. Morgan Securities topped the list of managing underwriters, with four issues totaling $609.8 million.
The U.S. Justice Department will assign 450 FBI agents to investigate healthcare fraud in the next year and intends to establish multi-agency healthcare fraud working groups throughout the country. Gerald Stern, the Justice Department's special counsel for healthcare fraud, said last week the FBI has reassigned more than 100 agents from financial institution fraud cases to its healthcare fraud unit, bringing its total to 300 agents as of Oct. 1. An additional 150 will be reassigned during fiscal 1995, which began Oct. 1. Healthcare fraud cases investigated by the FBI in fiscal 1994 netted more than $530 million in fines, restitution, civil settlements and other recoveries, Mr. Stern said, up from $139.5 million in fiscal 1993.
Shareholders last week approved the $161 million acquisition of Hallmark Healthcare Corp. by Community Health Systems. The acquisition of Atlanta-based Hallmark boosts Community to a chain of 38 hospitals in 16 states. Both hospital management companies specialize in operating hospitals in rural and small towns. As part of the deal, Community will close Hallmark's Atlanta office, which has about 30 workers. Hallmark shareholders will receive 0.97 shares of Community for each Hallmark share. Houston-based Community last week applied to have its stock listed on the New York Stock Exchange. The company's stock is now traded over the counter.
Blue Cross and Blue Shield of Ohio offered a voluntary severance package to 1,300 of its 3,000 employees last week. Notices went to executive, administrative and professional workers, who have until Nov. 23 to decide. The state's largest insurer said it would accept at least 200 voluntary resignations, based on years of service, and "additional reductions could come by the end of the year." It said the reductions are intended to combat "redundancies brought on by the rapid changes and complexities of the health insurance marketplace."
Owens & Minor said it will provide medical-surgical supplies to Group Health Cooperative of Puget Sound for a set fee per enrollee per month. The contract is expected to involve $60 million in purchases over five years and may be the first example of true capitated purchasing for hospital supplies. Many vendors are developing contracts that help hospitals and other buyers set their supply expenses. Typically, however, they target a set cost per surgical procedure or patient day. Owens & Minor said it's gathering data on Group Health's supply use to project a supply cost per enrollee. Richmond, Va.-based Owens & Minor is the nation's second-largest medical-surgical distributor. Group Health is a Seattle-based HMO with about 500,000 enrollees. It operates two hospitals, five specialty centers and 30 primary-care centers.
Military hospitals this month will begin using DRGs when billing for care given to military beneficiaries covered by outside health insurance. The DRG rule, which replaces a per-diem billing system, seeks to improve Department of Defense collections from third-party payers. In the past, military hospital billings have been inconsistent. That has caused some private insurers to re-fuse to pay for the military hospital care of military beneficiaries or retirees covered simultaneously by private health insurance and the military's health program. The new rule takes effect Oct. 26.