House Republicans are working on a new balanced-budget plan that would still balance the budget by 2002 and would reduce projected Medicare spending by slightly more than $175 billion from 1996 to 2002, about $25 billion less than the first GOP budget plan, according to several Republican House members. GOP leaders also are negotiating with a group of conservative Democrats known as the "Blue Dogs." They have their own seven-year budget plan that would trim future Medicare spending by about $153 billion. A number of provider groups, including the American Hospital Association, have endorsed the Blue Dog plan. Rep. David Hobson (R-Ohio) said he believed a compromise agreement could be reached with the conservative Democrats that would include savings of about $165 billion. The new GOP plan, which may be introduced early this week, will include nearly all the same spending reductions as the plan that passed Congress last year, according to Rep. Dennis Hastert (R-Ill.). Like the first plan, the new budget would include a Medicaid block-grant proposal to reduce future Medicaid spending by $130 billion over seven years and would cap future increases at slightly more than 5% a year. In return, the program would be turned over to the states.
Columbia/HCA Healthcare Corp. completed the acquisition of financially troubled Good Samaritan Health System, San Jose, Calif. Of the $165 million in sale proceeds, $128 million will repay bondholders. The remaining $37 million, along with $19 million in cash from the hospital system, will establish a not-for-profit foundation. As a result of the acquisition, layoff notices were given to 340 Good Samaritan employees last week, and the system's chief executive officer, chief financial officer and executive vice president were either laid off or replaced by Columbia. Four-hospital Good Samaritan reported a net loss of $42.7 million on $361.5 million in operating revenues for the year ended June 30, 1995. The sale represents the first purchase of a large multihospital system in California by Nashville, Tenn.-based Columbia.
William D. Poteet III, president and chief executive officer of Lubbock (Texas) Methodist Hospital System, abruptly resigned as head of one of Texas' largest not-for-profit health systems. Poteet, 50, headed the system for 10 years and was chairman of the Texas Hospital Association last year. In a written statement, he said he was "looking forward to new opportunities." The system includes Methodist Children's Hospital, a network of rural hospitals and an HMO.
Blue Cross of California has chosen its statewide network of 158 preferred hospitals in its "Partnerships for Quality" program. Blue Cross said the hospitals were designated "tier 1" based on quality and rate data provided by the hospitals in response to a request for proposal. Blue Cross will steer members to those facilities, which will enjoy preferred status and be eligible for long-term support programs including electronic interfacing. Blue Cross also designated 63 hospitals "tier 2 facilities," where members may have higher copayments. The hospitals in the second tier are chiefly urban community hospitals. The preferred-hospitals plan has prompted criticism by providers. "This has nothing to do with quality but with a pricing strategy," said a spokesman for the Healthcare Association of Southern California.
A U.S. District judge in Seattle last week denied a request from Vencor for a restraining order and preliminary injunction against a national support network for employees and relatives of patients in Vencor nursing homes. Vencor, which last year acquired Hillhaven Corp.'s 300 nursing homes, had sued the Service Employees International Union, sponsor of the Vencor/Hillhaven Family and Advocates Network, alleging trademark infringement, defamation and interference with business relationships. The SEIU's Arvid Muller said: "This was a frivolous attempt to stop the union and family members from asking questions and raising concerns regarding patient-care issues affecting their loved ones that reside in Vencor/Hillhaven homes." Vencor spokesman Eric Nadworny said his company asked the court "to enjoin the union from misleading the public and misrepresenting the nature of this family and advocates network." The SEIU is engaged in a long-term public-action campaign to force corporate nursing home operators to raise wages, benefits and standards of patient care.
SunHealth Alliance, Charlotte, N.C., has completed its previously announced merger with AmHS/Premier after its 152 shareholders approved the transaction. The merged organization is operating as AmHS/Premier/SunHealth until a new name is selected. It represents nearly 1,700 hospitals with 315,000 licensed beds and about $10 billion in annual contract purchases. AmHS/Premier was formed in late 1995 through the merger of San Diego-based American Healthcare Systems and Westchester, Ill.-based Premier Health Alliance.