In a legal victory for providers, HHS' inspector general's office has decided not to appeal the long-running Hanlester Medicare kickback case to the U.S. Supreme Court. The decision lets stand a ruling issued last April by the 9th U.S. Circuit Court of Appeals in San Francisco that created a narrow definition of an illegal kickback (May 1, 1995, p. 24). Federal law bars any form of remuneration to induce patient referrals. The appeals court said providers can run afoul of the law only if they do so with specific intent to violate the law.
Rep. Henry Hyde (R-Ill.) introduced legislation in Congress giving physicians and other providers antitrust relief to form networks that deal collectively with payers. The bill would ease the legal burden for networks that want to avoid price-fixing charges (Feb. 5, p. 14). The American Medical Association, which helped draft the bill, is "actively supporting" the legislation, a spokeswoman said. Hearings on the measure are expected later this month.
Cardinal Health, a Dublin, Ohio-based pharmaceutical distributor, and Pyxis Corp., a provider of healthcare information and pharmacy management services, signed an agreement to merge in a stock swap valued at $920 million. San Diego-based Pyxis would become a wholly owned subsidiary of Cardinal Health under the agreement. Pyxis systems automate the distribution, management and control of medications in hospitals and alternate-care facilities. The firm also has a subsidiary, Allied Pharmacy Management. Cardinal, which posted more than $8 billion in revenues in 1995, distributes pharmaceuticals and provides related services to hospitals, independent and chain pharmacies, managed-care facilities and other providers, as well as pharmacy departments of supermarkets and mass merchandisers.
Mayo Health System and Myrtle Werth Medical Center in Menomonie, Wis., will merge March 1, paving the way for development of the city's first fully integrated healthcare system, officials said last week. A majority of the Myrtle Werth corporate membership approved the merger with Rochester, Minn.-based Mayo. The 55-bed hospital will be renamed Myrtle Werth Hospital-Mayo Health System. One of the city's largest healthcare providers, Red Cedar Clinic, merged with Mayo and Midelfort Clinic in November 1994. The Mayo-Myrtle Werth merger will make it easier to work with the clinic, now known as Red Cedar Clinic-Mayo Health System, said Thomas Miller, Myrtle Werth's administrator. The agreement between Mayo and Myrtle Werth hinged on control of the hospital and creation of a hospital foundation. Merger votes scheduled for last November and December were postponed because officials sought changes in the deal.
Detroit-based St. John Health System last week signed a memorandum of understanding to discuss affiliation opportunities with 170-bed Saratoga Community Hospital, on Detroit's east side. St. John Health System had net income of $27.8 million on net revenues of $468.6 million last year, according to Crain's Detroit Business, a sister publication of MODERN HEALTHCARE. The proposed agreement calls for St. John to become the parent organization of Saratoga. Each organization will earn a seat on the other's board of trustees. St. John Health System has four acute-care hospitals and several outpatient sites throughout the Detroit area.
Three hospitals in southeastern Massachusetts will merge and hope to provide services for which patients now must leave the area. The hospitals are 344-bed Charlton Memorial Hospital in Fall River, 396-bed St. Luke's Hospital of New Bedford and 60-bed Tobey Hospital in Wareham. Charlton Memorial and St. Luke's announced last December that they planned to merge. Tobey said last week it will join them. The merger needs the approval of federal and state regulators. The merged hospitals will have 800 beds, 700 physicians, 3,700 employees and more than $287 million in patient revenues. They will be governed by one board and one management team. The hospitals expect to save $50 million during the first five years by streamlining administrative and support services. The hospitals declined to say whether jobs would be eliminated because of the merger.
Two Roman Catholic systems in Arizona will affiliate to form a statewide Catholic healthcare system and integrated delivery network. The boards of Carondelet Health Care and Mercy Healthcare Arizona both approved the union. The systems will define the affiliation's structure during the next few months. Carondelet and Mercy have worked together for 11 years through the Southwest Catholic Network, which sponsors Mercy Care Plan, an HMO covering patients through the state's Medicaid managed-care program. In Tucson, Carondelet operates St. Joseph's Hospital and St. Mary's Hospital. It also runs Holy Cross Hospital in Nogales, as well as several other properties. Mercy operates St. Joseph's Hospital and Medical Center, as well as Barrow Neurological Institute, both in Phoenix.