A major defense contractor last week withdrew from the healthcare battle after deciding it couldn't adapt its high-powered technology in time to capture a sufficient share of the information systems market for integrated delivery networks. The decision to exit healthcare was sudden for Hughes Healthcare Systems, a Fullerton, Calif.-based unit of Hughes Aircraft Co. Alan Pelegrini, marketing director for the healthcare unit, said the company decided to exit now instead of continuing to invest money and then deciding in six months to pull out of the market. The early decision also avoids compromising the competitive position of customers that would have committed to Hughes products and lost valuable time in choosing and implementing new systems, he said. Last week, Hughes was notifying customers of the decision; all contracts were in the early stages, before any systems had been delivered, Pelegrini said.
Bergen Brunswig Corp. will acquire Colonial Healthcare Supply Co. to expand its medical-surgical distribution business by about 50%. The Orange, Calif.-based distributor didn't disclose terms of the deal. It expects to complete the transaction in late July or early August. Owners of 68% of Colonial stock have agreed to support the deal. Colonial, based in Lake Zurich, Ill., distributes $180 million in medical-surgical supplies annually to 1,100 hospitals and 10,000 physician practices or other outpatient-service providers. Bergen Brunswig, one of the nation's leading drug distributors with more than $8 billion in revenues, operates a subsidiary for medical-surgical supplies. Its Durr Medical now distributes about $400 million in supplies, mostly to physician practices and other outpatient providers.
OrNda HealthCorp reported strong earnings for the second quarter ended May 31. The company posted net income of $21.6 million, or 47 cents per share, compared with a net loss of $36.9 million, or 95 cents per share, in the year-ago quarter. The 1994 quarter contained $40.8 million in nonrecurring charges, including transaction costs from its three-way merger with Burbank, Ca.-based Summit Health and Dallas-based American Healthcare Management. Revenues grew 51% to $497.9 million. For the six months, the Nashville, Tenn.-based firm reported profits of $53.9 million, or $1.20 per share, compared with a loss of $32.6 million, or 91 cents per share, a year earlier. Revenues increased 54% to $1.4 billion. OrNda operates 47 hospitals in 14 states.
Community Health Systems, Houston, has agreed to acquire the operations of 55-bed Kentucky River Medical Center, Jackson, Ky. Community, a 40-hospital chain, will operate the hospital under a long-term lease. Terms were not disclosed, but Community said the hospital generated revenues of $20 million in 1994. The hospital is now leased by Cumberland Health System, Nashville, Tenn.
Eastern Maine Healthcare has dropped out of Yankee Alliance to join VHA, an Irving, Texas-based alliance of 1,200 not-for-profit hospitals and healthcare organizations. Eastern Maine owns two hospitals in Bangor. Yankee Alliance is an 18-member hospital group based in Andover, Mass., and is a shareholder in American Healthcare Systems, La Jolla, Calif.
The IPA Association of America has attracted 100 members in its first six months, founder and President Albert Holloway said. The Oakland, Calif.-based association aims to help independent practice associations run better. It made membership applications available in January. IPAs-networks of physicians in solo or small practices formed to contract with managed-care organizations-are appearing rapidly. Holloway estimates they number more than 1,000. The association will help members establish governance structures, information systems and monitoring systems such as utilization review. Dues are $500.