Columbia/HCA Healthcare Corp. reported higher earnings for the fourth quarter and year ended Dec. 31, 1994. The Nashville, Tenn.-based hospital chain reported a 28% increase in net income to $227 million, or 62 cents per share, for the fourth quarter, compared with $176 million, or 52 cents per share, in the year-ago period. Revenues grew 14% to $2.9 billion. For the year, the company reported a 24% increase in net income to $630 million, or $1.80 per share, compared with $507 million, or $1.50 per share, in the prior year. Revenues grew 9% to $11.1 billion.
National Medical Enterprises sued Hillhaven Corp., charging it breached its fiduciary duties by rejecting rival nursing home chain Horizon Healthcare Corp.'s $1.4 billion merger proposal. The complaint, filed Feb. 15 in state court in Los Angeles, accuses Hillhaven and various executives with engaging in entrenchment and failing to fairly consider the Horizon bid. Santa Monica, Calif.-based NME is Hillhaven's former parent company and is now its largest shareholder, owning 27% of Hillhaven stock. Tacoma, Wash.-based Hillhaven earlier this month rejected Horizon's $28-per-share offer, claiming it would perform better for shareholders if it remained independent.
Negotiations between the California Public Employees Retirement System and 22 health plans resulted in an overall 5.2% reduction in HMO premiums-returning some to their 1991 levels-for the 1995-96 contract year. That represents a reduction of $80 million in healthcare costs from the last fiscal year for the 1,000 public employers CalPERS represents. It is the third consecutive year CalPERS has pressured health plans to lower prices. The organization has received national attention for its continuing ability to use its purchasing clout to cut better deals with insurers.
Executives of Blue Cross of California and the plan's controversial for-profit HMO, WellPoint Health Systems, declined comment last week on published reports that said the plan is entertaining buyout offers for WellPoint. The reported potential suitors include New York-based buyout firm Kohlberg Kravis Roberts and two competing managed-care plans, Foundation Health and FHP International Corp. Executives at the three firms either declined comment or were unavailable for comment at deadline.
Blue Cross and Blue Shield of Georgia last week announced its intention to convert into a for-profit corporation. The not-for-profit insurer is seeking passage of state legislation that would permit it to issue stock. The Atlanta-based Blues said the change would not significantly affect its 1.2 million enrollees. "Our structure limits us," said Neil Vannoy, a Blues executive vice president. "We can't attract funds from the investment market."
The Federal Trade Commission gave final approval to a consent agreement with Charter Medical Corp., Atlanta, on its purchase of 47 psychiatric hospitals from National Medical Enterprises. Under the agreement, Charter will not acquire NME facilities in Atlanta; Memphis, Tenn.; Orlando, Fla.; or Richmond, Va., in order to protect competition. Charter must obtain approval from the FTC before buying or selling psychiatric hospitals in those markets in the next 10 years.
Universal Health Services, a King of Prussia, Pa.-based chain of 28 hospitals, reported a 20% increase in 1994 net income to $28.7 million, or $2.02 per share, compared with $24 million, or $1.71 per share, in the year-ago period. Revenues grew 3% to $782.2 million. For the fourth quarter, Universal reported an 18% increase in net income to $4.4 million, or 32 cents per share, compared with $3.8 million, or 18 cents per share, in the year-ago period. Revenues grew 6% to $204.1 million.