Community Care of America, a Naples, Fla.-based rural healthcare services company, said it would sell 3 million shares of stock in a secondary offering. The company will sell 2 million newly issued shares, raising about $28 million. Current stockholders will sell another 1 million shares in the offering. The company also reported net income of $1.3 million, or 19 cents per share, for the fourth quarter ended Dec. 31, 1995, compared with a net loss of $45,000, or 2 cents per share, in the year-ago quarter. Revenues grew 84% to $29 million. For the year, the company reported net income of $1 million, or 22 cents per share, compared with a net loss of $259,000, or 13 cents per share, in 1994. Revenues grew 64% to $94.2 million. The previous year's earnings included a $992,000 charge for repaying debt after Community Care's initial public offering during the third quarter.
Baylor Health Care System, Dallas, signed a five-year affiliation agreement with Texoma HealthCare System, Denison, Texas. As part of the agreement, Texoma and Baylor will work together on strategic planning, facility development and continuing education. Texoma includes four hospitals and primary-care clinics in four area cities.
David Langness, vice president of communications for the Healthcare Association of Southern California for 10 years, is being promoted to senior vice president of COHR, which runs one of the nation's largest hospital purchasing groups. A leading healthcare spokesman in California, Langness will be in charge of media relations and public affairs at for-profit COHR. Now a HASC subsidiary, Los Angeles-based COHR plans to go public through an initial public offering this year. HASC will try to fill Langness's position at the director level, said James Lott, senior vice president of public policy.
Several drug manufacturers will pay more than $400 million to settle a class-action suit under a proposal before the U.S. District Court in Chicago. The suit is one of many filed by independent retail pharmacies and chain drug stores that accuse drug companies of price discrimination and conspiracy. The retail stores say drugmakers illegally charge them higher prices than those paid by hospitals, HMOs and mail-order pharmacies. The proposed settlement is about $200 million less than previously reported (Jan. 22, p. 6). It doesn't require any change in pricing practices, so groups such as the National Association of Retail Druggists vow to oppose it. Hospitals are watching the remaining cases closely. A negative ruling could result in higher hospital expenditures for drugs if companies raise prices to offset damages or end discounts altogether (Oct. 9, 1995, p. 84). Several purchasing groups interviewed by MODERN HEALTHCARE*said the settlement alone, however, was unlikely to affect hospital prices.
Cincinnati's largest HMO has dropped its treatment guideline for urinary-tract infections after doctors complained it favored a Procter & Gamble product. ChoiceCare tried to implement a treatment plan that was developed with Procter & Gamble Pharmaceuticals. P&G selected ChoiceCare in 1994 to provide health benefits for many of its employees. The guidelines recommended Macrobid, which is made by P&G, as one of three antibiotics for treating female urinary-tract infections. ChoiceCare sent the guidelines to its 700 primary-care doctors last October. ChoiceCare pays physicians a bonus if they prescribe preferred drugs and meet other cost-saving goals. The guidelines noted that P&G helped develop the recommendation but did not mention that Macrobid is one of the company's products. Some doctors were upset by the way the guidelines were developed. ChoiceCare dropped the urinary-tract guideline because of their complaints. Officials from ChoiceCare and P&G said nothing illegal or improper occurred.
Foundation Health Corp. reached a definitive agreement to acquire privately held Managed Health Network, a behavioral health and employee assistance firm, in a stock transaction valued at $45 million. Los Angeles-based MHN will be consolidated with Foundation's subsidiary, Foundation Health PsychCare Services. The acquisition makes Rancho Cordova, Calif.-based Foundation one of the largest managed behavioral healthcare companies in the nation. MHN, with annual revenues of $44.4 million, has operations in 12 states and provides services to more than 2.7 million people, the bulk of them in employee-assistance plans, with 350,000 in behavioral health. Foundation, with fiscal 1995 revenues of $2.6 billion, provides a range of managed-care services to 1.5 million people nationwide.