Demonstrating resistance among senior citizens to Republican budget-cutting plans, delegates to the White House Conference on Aging (See related story, p. 2) last week forwarded final draft resolutions repudiating rapid expansion of Medicare managed-care plans and Medicaid block grants to the states. Many of the 2,259 conference delegates were handpicked by the Clinton administration and advocacy groups, as well as by Democratic members of Congress prior to last November's elections. The tone of the resolutions indicated that senior citizens may mobilize against the Republican cost-control plans. Delegates debated a wide range of resolutions affecting Medicare and Medicaid coverage, from endorsement of universal health insurance coverage to transferring responsibility for long-term care from Medi-caid to Medicare.
Medicare and its beneficiaries could save almost $4 billion over five years if the government used the latest computer technology to kick out fraudulent claims by physicians, a congressional watchdog agency said late last week. A General Accounting Office report said that for $20 million, Medicare could install state-of-the-art technology to catch the cheating before claims are paid. That investment could save taxpayers and Medicare beneficiaries $782 million in a single year and as much as $3.9 billion over five years, the GAO said. But HCFA questioned whether the off-the-shelf software really would save as much as the GAO claimed.
Three hospitals in northeastern New Jersey last week agreed to consolidate under one governing board and a single management team. The union of Morristown (N.J.) Memorial Hospital, Overlook Hospital in Summit and Mountainside Hospital in Montclair will result in an organization with nearly 1,600 licensed acute-care beds and 9,000 employees. Richard P. Oths, Morristown's president and chief executive officer, will become president and CEO of the new, as-yet-unnamed organization. Michael J. Sniffen, Overlook's president and CEO, will be executive vice president and chief operating officer for health delivery systems.
Vencor has agreed to buy Lincoln West Hospital, a 211-bed facility in Chicago. Terms were not disclosed. In addition, the Louisville, Ky.-based company said it completed its previously announced acquisition of 206-bed Northern Virginia Doctors' Hospital, Arlington, from Columbia/HCA Healthcare Corp. Vencor owns 36 intensive-care hospitals in 16 states.
Deaconess Health System of St. Louis and St. Louis University Health Sciences Center have broken off merger talks, the hospitals announced last week. In September 1994, they signed a letter of intent to look into a strategic alliance. The hospitals declined to tell why the merger did not move forward. Deaconess has two facilities, one in St. Louis and the other in west St. Louis County, with 694 total licensed beds. St. Louis University has 362 beds. Both are not-for-profit religious hospitals: Deaconess is sponsored by United Church of Christ, St. Louis University by the Roman Catholic Jesuit order. Deaconess has a strong primary-care basis, while St. Louis University, a tertiary teaching hospital, is specialist-driven. Leaders of Deaconess and St. Louis University stressed that the discussions ended amicably and that they could possibly work together on future projects.
Mutual of Omaha of South Dakota announced it will launch an HMO in Sioux Falls, bringing managed-care competition to the state. Participating providers in the plan, now called Mutual of Omaha of South Dakota & Community Health Plus HMO, include 90-physician Central Plains Clinic, 21-physician McGreevy Clinic and 407-bed McKennan Hospital, all in Sioux Falls. The HMO network has more than 60 primary-care physicians and access to more than 135 specialists, and it plans to develop a statewide network, the Sioux Falls-based company said. Enrollment starts June 1. South Dakota has one other HMO. Ten-year-old DakotaCare, a statewide, physician-owned HMO, was started by the South Dakota Medical Association. DakotaCare had 69,000 enrollees in 1994.
Drug firms set deal
Hoechst AG sealed plans to buy U.S. drugmaker Marion Merrell Dow for $7.1 billion, or $25.75 per share.
The new company will be the third-largest firm in an industry that's been radically reshaped by mergers this year and last year. Combined, Hoechst and Marion Merrell Dow sold $10.6 billion in drugs worldwide last year. Only Glaxo Wellcome PLC of Britain and U.S.-based Merck & Co. are larger.
Hoechst, a German firm that makes drugs and chemicals, earned $840 million before taxes on sales of $31.5 billion in 1993. Kansas City, Mo.-based Marion Merrell Dow earned $493 million on sales of $2.8 billion.
The companies disclosed their negotiations earlier this spring (March 6, p. 17). They expect to complete the transaction by late summer. Marion Merrell Dow's minority shareholders must approve the terms. The company's majority owner, Dow Chemical Co., has agreed to sell its 71% stake in the firm.
Industry analysts said the acquisition will strengthen Hoechst's U.S. position and bring it new expertise in marketing to managed-care plans.
Charter to repay insurers
Charter Medical Corp. has agreed to repay $29.8 million to five insurance companies, pushing the psychiatric hospital company into a loss for the second quarter ended March 31.
The recoupment by insurers is the second Charter has agreed to in the past six months. Under threat of legal action, the Atlanta-based company last fall agreed to repay $31 million to several insurers (Nov. 21, 1994, p. 15).
Charter spokesman Robert Mead declined to identify the insurers involved in the latest settlement.
In addition to the settlement, Charter reported other nonoperating charges, including $7.8 million in charges related to the company's bankruptcy reorganization in 1992.
For the quarter, the 110-hospital chain reported a net loss of $15.1 million, or 53 cents per share, compared with net income of $1.1 million, or 4 cents per share, in the year-ago period. Revenues rose 41% to $299.8 million.
The revenue increase reflects last year's acquisition of 40 psychiatric hospitals from Tenet Healthcare Corp., formerly called National Medical Enterprises.