OrNda HealthCorp completed arrangements for a $900 million bank credit line, which will enable the company to finalize its acquisition of Houston Northwest Medical Center. The Nashville, Tenn.-based chain of 47 hospitals had said its lenders would expand its credit line from $660 million when it announced the acquisition (Oct. 2, p. 10). Bank of Nova Scotia and Citicorp head the lender group.
A former colleague of Tenet Healthcare Corp. Chairman Jeffrey Barbakow has joined him at the hospital chain. Trevor Fetter was named to the newly created position of executive vice president in Tenet's executive offices in Santa Monica, Calif. Fetter had been executive vice president and chief financial officer at MGM, where he managed and restructured financial, licensing and merchandising functions. Fetter joined Culver City, Calif.-based MGM in 1988 when Barbakow was chairman of the entertainment company.
Rejecting tougher terms sought by HCFA, New York City last week pulled its request to move more Medicaid recipients into managed care. Meanwhile, New York State Health Department officials turned up the heat for approval of a waiver application that would allow New York City and counties across the state to mandate managed-care enrollment for Medicaid recipients. On Oct. 27, HCFA announced that it would only approve New York City's waiver application if it met certain terms and conditions, which state officials claim were not part of the agreement negotiated with HCFA. Most onerous was a requirement that the city come back to the federal government every 90 days to request permission to move ahead with enrollment in managed-care plans. HCFA sought that condition to protect patients and ensure that adequate numbers of doctors were participating.
California has enacted a law detailing the steps not-for-profit health plans must follow when converting to for-profit status. The state Department of Corporations has the authority to require a converting plan to donate its fair market value to charity. The new law clarifies that this obligation applies to plans that "restructure" by creating a for-profit subsidiary with a substantial part of the plan's assets. In a protracted spat with state officials, Blue Cross of California originally claimed it was not bound to set up a charity when it restructured and formed a for-profit subsidiary, WellPoint Health Networks, in 1993. Blue Cross resubmitted its conversion plan, which includes establishing two foundations worth $3 billion as part of WellPoint's merger with Health Systems International.
Salaries at psychiatric hospitals increased 3.1% in 1994 and were expected to increase 3.2% in 1995, according to a new survey by the National Association of Psychiatric Health Systems. The Washington-based trade group last week released its 1995 salary report, which surveyed 175 hospitals in March. The survey showed salary increases ranged from 1.9% to 7% in 1994, and hospitals expected them to range from 2% to 7% in 1995. It didn't include specific increases for hospital chief executive officers. However, it showed that CEOs who also were medical directors were paid more than twice as much as CEOs who were not physicians. On average, CEO/medical directors received $232,625, compared with $102,483 for CEOs who were not physicians. However, physician CEOs appear to be an East Coast phenomenon. Salaries for such executives were reported only in Connecticut, Delaware, the District of Columbia, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. In the rest of the country, no hospital respondents had CEOs who doubled as medical directors.
The Food and Drug Administration cleared for marketing a laser to correct nearsightedness in a procedure that some observers think could revolutionize the eye-care industry (Oct. 16, p. 50). The $485,000 laser, manufactured by Waltham, Mass.-based Summit Technology, is the first to receive marketing approval for laser vision correction. Santa Clara, Calif.-based Visx, which sells a similar laser for $525,000, was told by the FDA last month that its laser product could be approved for vision correction if it provided more follow-up data. The Visx laser already is approved to treat corneal scars.