At its annual retreat and meeting last week in Palm Desert, Calif., the American Hospital Association's board began work on a plan to restructure the AHA's operations to reflect the movement of its traditional membership base of hospitals into networks and integrated delivery systems. The board also began work on a plan to re-examine the AHA's relationship with other industry trade groups, given the changes in its membership and operations. In other AHA news, the association has sent out a second wave of letters to investment banking firms informing them of its plans to acquire several businesses whose services would be marketed to AHA members (Jan. 1, p. 2). A spokesman said the AHA has made no acquisitions to date.
New York Hospital announced that Preferred Health Network, a four-hospital network based in Queens, will join its 14-member New York Hospital Care Network. Sources familiar with the deal said New York Hospital will buy Preferred, although a press release mentioned no financial terms. Sources also said Stephen Mills, president and chief executive officer of New York Hospital Medical Center of Queens, will play a network leadership role, although a spokesman for Mills could not confirm that. NYH Care Network has been created through ownership of facilities as well as "sponsorship" arrangements in which New York Hospital makes a cash payment to the affiliate, effectively taking control of its board, sources said.
Congressional Republicans and the White House finished work last week on an omnibus appropriations bill that will close out the fiscal 1996 budget cycle, which began last October. The agreement covers only discretionary spending and has no effect on Medicare or Medicaid funding, which is set automatically according to established formulas. Because the two sides were unable to reach agreement this year on a balanced-budget plan, some parts of the government were operating under a series of temporary spending measures. Last week's agreement includes a measure that would make it easier for the Louisiana and New Hampshire Medicaid programs to comply with the 1993 budget agreement requiring the two states to change their disproportionate-share programs. It also terminates several small, primarily rural, health initiatives. Congress already has begun work on the fiscal 1997 budget, due to be released later this week. Last week, President Clinton said he would be willing to meet with Senate Majority Leader Bob Dole (R-Kan.) to begin a new round of budget negotiations.
The consolidation of Methodist Hospital of Indiana and Indiana University Medical Center in Indianapolis was approved last week by Methodist's board of trustees and the hospital's corporate board, Methodist Health Group. Methodist officials would neither confirm nor deny the approval, saying they were keeping the results of the vote secret until this week's vote by the Indiana University board of trustees. The $1 billion deal would merge the two hospitals' balance sheets, governance and leadership, creating a corporation with one chief executive officer.
Management and board changes announced last week at St. Luke's-Roosevelt Hospital Center in New York reflect board-level disagreements over the institution's future management and strategic direction, industry observers said. The struggle comes amid discussions about a partnership with New York's Columbia-Presbyterian Medical Center. After the resignation of longtime President and Chief Executive Officer Gary Gambuti, the board promoted Ronald C. Ablow, M.D., to the top posts effective May 1. Ablow is the hospital's director of radiology and a professor at Columbia College of Physicians and Surgeons. Gambuti, who announced his retirement after 35 years with the not-for-profit teaching hospital, said he'll remain as a consultant during the transition. The board also tapped Lawrence Smith Huntington to be the new chairman, immediately replacing Frank A. Metz Jr., who left "to pursue personal and business interests," according to the hospital's press release. Huntington is chairman and CEO of Fiduciary Trust Co. of New York. St. Luke's-Roosevelt spokesman Michael Scahill said it was a coincidence that Gambuti and Metz decided to step down at the same time.
Quorum Health Group reported a 24% increase in net income for its third quarter ended March 31. The Brentwood, Tenn.-based hospital chain reported net income of $19.9 million, or 40 cents per share, compared with $16.1 million, or 33 cents per share, in the year-ago quarter. Revenues grew 26% to $286 million. For the nine months, Quorum reported a 24% increase in net income to $51.4 million, or $1.03 per share, from $41.4 million, or 84 cents per share, in the year-ago period. Revenues rose 31% to $813 million. During the quarter, Quorum completed the sale of a minority stake in Midlands Community Hospital, Papillion, Neb., and the sale of Concho Valley Regional Hospital, San Angelo, Texas.