Operating margins at Massachusetts hospitals increased to 1.6% in 1995, from 1.2% in 1994, but remain below the national median of 2.7%, according to a survey released last week by the Massachusetts Hospital Association. Revenues grew at a projected rate of 3.4%, compared with 2.9% the previous year. During 1995, hospitals held cost increases to 2.6%, compared with 4.4% in 1994. The results were based on the responses of 60 hospitals that projected their fiscal year 1995 operating results. Three in four hospitals projected a surplus from patient-care operations, up from 60% the previous year. Lawrence Seck, the MHA's senior vice president of clinical and financial affairs, attributed the results to the continuing impact of managed care on the state, where HMOs have a 40% penetration.
The parent corporations of two hospitals on Cape Cod in Massachusetts have agreed to dissolve and create one parent company over both organizations. The actions complete a merger initiative proposed in July 1995 between Cape Cod Health Systems, which includes 228-bed Cape Cod Hospital in Hyannis, and Falmouth Hospital Foundation, which includes 116-bed Falmouth (Mass.) Hospital (July 31, 1995, p. 18). The new organization, Cape Cod Healthcare, includes 20 other operating units. Plans call for integration of some services, but the hospitals will continue to operate independently, said Helen Wheir, vice president of development, public relations and marketing for Cape Cod Hospital. Located 24 miles apart and connected by a two-lane road, the hospitals' individual service areas are not within easy access of each other, especially during the crowded summer tourist season. The agreement, approved by the Federal Trade Commission and the state attorney general, is expected to become final March 1, Wheir said.
In a nod to Tenet Healthcare Corp.'s proposed acquisition of Hialeah (Fla.) Hospital, Standard & Poor's Corp. has placed Hialeah's D rating on CreditWatch with "positive" implications. The rating affects $60.5 million of hospital revenue bonds. Currently, Santa Monica, Calif.-based Tenet is negotiating with Continental Casualty Co., a major Hialeah bondholder, on a plan for redeeming the bonds. Standard & Poor's said it appears the proposal "will make bondholders whole."
Quorum Health Group, Brentwood, Tenn., completed the sale of a 14% stake in Midlands Community Hospital in Papillion, Neb., to Alegent Health, the Omaha, Neb.-based joint system of Bergan Mercy Health System and Immanuel Healthcare Systems. Quorum owns 14 hospitals and manages another 257.
The National Committee for Quality Assurance issued the final version of Medicaid HEDIS, a version of the Health Plan Employer Data and Information Set targeted for Medicaid populations. The document incorporates comments and suggestions made by about 120 organizations and individuals after reviewing a draft issued last summer (July 17, 1995, p. 24). The final version was sent to the states last week, and HCFA Administrator Bruce Vladeck pledged to "aggressively promote the use of Medicaid HEDIS" in the agency's drive "to pursue and fulfill the promise of managed care in improving access and quality for this vulnerable population." HEDIS is a set of 60 performance measures used by more than 300 managed-care organizations to track and report on the quality of care and service they deliver.
The Senate Governmental Affairs investigations subcommittee has scheduled a Feb. 14 hearing in Washington to review whether hospitals are billing Medicare improperly for investigational medical devices that haven't been approved by the Food and Drug Administration. The issue has prompted a federal fraud investigation, a whistleblower lawsuit against an unspecified number of hospitals and a countersuit by 25 hospitals against HHS over its payment policies for investigational medical devices. At deadline, a list of witnesses who will testify at the hearing wasn't available.