Community Psychiatric Centers is taking a charge of $45 million to settle a class-action shareholder suit, which accused the company of not disclosing sufficient information about a downturn in its psychiatric operations in 1990 and 1991. The settlement produced a $24 million loss in the third quarter for the Las Vegas-based company. Excluding the charge, CPC earned $4 million from operations in the quarter. According to the settlement, the company will pay the plaintiffs $21.3 million and issue them an additional $21.3 million in CPC stock. CPC officials continued to deny the suit's allegations. They said they settled because the case was distracting management and the company faced rising legal costs. For the quarter ended Aug. 31, CPC reported a net loss of $24.3 million, or 56 cents per share, compared with net income of $1.7 million, or 4 cents per share, in the year-ago period. Revenues grew 22% to $128.6 million. For the nine months, the company reported a net loss of $9.2 million, or 21 cents per share, compared with net income of $4.7 million, or 11 cents per share, in the year-ago period. Revenues increased 26% to $385.6 million.
Woman's Hospital in Baton Rouge, La., has agreed to enter a joint venture with Columbia/HCA Healthcare Corp. Terms were not disclosed. The 234-bed hospital is the target of an investigation by the U.S. Justice Department concerning its physician-hospital organization (July 17, p. 8). The PHO was formed by the hospital and 144 physicians in 1994. Officials said the hospital is one of the nation's largest women's specialty hospitals. Nashville, Tenn.-based Columbia operates 23 hospitals in Louisiana.
A proposed joint venture between Denver system HealthOne and Columbia/HCA Healthcare Corp. cleared federal antitrust scrutiny. Last week the deadline for federal intervention expired with no action from the Federal Trade Commission, a HealthOne spokesman said. The 16-member board of HealthOne still must give final approval to the partnership. The board isn't expected to vote on the deal until late October, the spokesman said. The assets of the joint venture, which will own five acute-care hospitals, four specialty facilities and about 60 clinics, are valued at $730 million. In addition, the new company will lease Rose Medical Center in Denver, a Columbia facility.
David Nathan, M.D., chairman of the department of medicine at Boston's Children's Hospital, will become president of Dana-Farber Cancer Institute when the resignation of the current president, Christopher Walsh, becomes effective Oct. 17. Walsh announced his resignation last month following a year of federal and state sanctions in connection with chemotherapy-related medical errors (Sept. 18, p. 6). Nathan, 66, said he has a 30-year relationship with Dana-Farber going back to 1966. He established the joint division of hematology and oncology at Children's and Dana-Farber and served as chief from 1974 to 1984. A professor of pediatrics at Harvard Medical School, Nathan was within a few months of completing his employment contract at Children's.
McManis Associates, a Washington-based management consulting firm, said it will acquire Managed Care Planning Associates, another consulting firm that specializes in managed care. With offices in Encino, Calif., and Atlanta, MCPA will expand McManis' consulting prospects. McManis is a subsidiary of Deerfield, Ill.-based MMI Cos., a healthcare risk-management firm. Terms of the agreement weren't disclosed.
Birmingham, Ala.-based MedPartners announced the completion of its first physician network, in Palm Beach, Fla., with the acquisition of the five-physician Cardiology Associates of Palm Beach practice and the eight-physician Infants and Children practice. President and Chief Executive Officer Larry House said the 85-physician network can provide 90% of services needed to serve a population as well as numerous locations. MedPartners will contract with other practices for subspecialities that it cannot provide. The company said the network took 11 months to complete. MedPartners also announced its second acquisition in central Florida, the Clark & Daughtrey Medical Group, a 21-physician multispecialty practice in Lakeland. Terms of the deals weren't disclosed.
The Senate last week passed a Veterans Affairs Department spending bill that increases the VA's fiscal 1996 healthcare budget 1.8% over 1995.
The approval came after lawmakers defeated a Democratic bid to boost it nearly 5%.
Funding for a variety of healthcare-related programs administered by HHS was delayed, meanwhile, as Senate Democrats blocked consideration of an HHS appropriations bill.
The VA appropriations bill raises the Veterans Affairs healthcare budget from $16.2 billion in fiscal 1995 to $16.5 billion in fiscal 1996, which began Oct. 1. The Senate-passed appropriation is $327.5 million less than what the House passed and $511.5 million less than President Clinton requested.
And by cutting the VA's major construction budget from $354.3 million to just $35.8 million, the bill also cancels funding for construction of two proposed VA hospitals.
One of those scrapped hospitals was slated for Brevard County in Florida, and the other was a planned VA wing to be added to the military hospital at Travis Air Force Base in California. The California facility was to replace a shuttered center outside San Francisco.
Sen. Jay Rockefeller (D-W.Va.) tried to amend the VA appropriations bill to increase funding by nearly 5% over 1995 to what the Clinton administration requested. He proposed to finance the increase by limiting planned tax cuts for people earning more than $100,000 a year.
Although Rockefeller's amendment received 51 yes votes in the 100-member Senate, it needed 67 votes to waive Senate rules requiring that increased spending on one department be offset by savings elsewhere in that department.
The HHS spending bill, meanwhile, was temporarily blocked by Democrats who voted against a procedural motion to allow debate on the measure. That legislation included $11.6 billion for the National Institutes of Health, $343.8 million for health professions training programs, and $127.3 million for the Agency for Health Care Policy and Research.