Qualis Care, a 2-year-old company created to provide healthcare billing and accounts receivable financing, is weighing a possible bankruptcy filing, MODERN HEALTHCARE*has learned. Although no decision has been made, Qualis is considering whether to seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. The company has suffered from negative publicity stemming from an alleged $20 million fraud committed by the company's former chairman, John Hall. Hall and others were named in a lawsuit brought by the limited partners of Qualis, who are creditors of the former Towers Financial Corp., a now-defunct healthcare receivables financing company. Qualis acquired some of Towers' assets in 1994. Concerns stemming from the litigation ultimately caused Qualis to lose a major contract last week with Sinai Hospital of Baltimore. It was believed to be Qualis' only hospital client for billing management services.
Woodland Hills, Calif.-based WellPoint Health Networks has partnered with two local, not-for-profit provider systems to offer a new HMO in the District of Columbia and Northern Virginia. National Capital Health Plan, licensed in Virginia April 18, is WellPoint's first HMO on the East Coast and was formed by a Massachusetts Mutual Life Insurance Co. subsidiary. WellPoint purchased Massachusetts Mutual's group health operations in March. WellPoint's co-owners in National Capital Health Plan are local provider systems Adventist Healthcare Mid-Atlantic, based in Rockville, Md., and Inova Health System, based in Springfield, Va. WellPoint made its first foray out of California late last year when it received a license for a Houston-area HMO.
Aurora Health Care, Milwaukee, and Advocate Health Care, Oak Brook, Ill., agreed to a strategic alliance under which they'll coordinate provider networks in overlapping service areas. The systems, which have respective large market presences in eastern Wisconsin and northeastern Illinois, also might pool their networks for contracting with various payers. Among other initiatives, they plan to create a Midwest Clinical Systems Institute to share information about clinical outcomes. Aurora runs 10 hospitals and a medical group with 400 physicians. Advocate operates eight hospitals in the Chicago area. Both companies are members of the new Premier hospital alliance.
Blue Cross of Northeastern Pennsylvania, Wilkes-Barre, and Capital Blue Cross, Harrisburg, Pa., announced their intent to merge, creating a company with more than 2 million enrollees in 34 counties and combined annual revenues of $1.7 billion. The companies said their respective boards have approved the plan to merge, solidifying an 18-year relationship during which the companies shared resources such as computer systems. Officials hope to secure required regulatory approvals within six months.
FHP International Corp. has set aside $45 million in reserves after being notified by the U.S. Justice Department that its Fountain Valley, Calif.-based HMO may have violated the federal False Claims Act. FHP said the Justice Department notified it that a government audit indicated it may have overcharged for managed healthcare services provided to federal employees over a four-year period starting in 1987. The $45 million transfer, as well as restructuring costs, reduced FHP's earnings for the nine months ended March 31. Net income fell 94% to $2.9 million from $51.7 million. Earnings per share dropped to 39 cents from $1.21. Revenues for the nine months were flat at $3 billion.
Hospitals' average length of stay inched up to 5.1 days last year from 5 in 1994, according to a study by HCIA, a Baltimore-based healthcare information company. After falling annually since 1979, it's the first time HCIA's data revealed an uptick in length of stay. The company speculated that the decline, driven by tougher reimbursement policies from payers, has bottomed out. HCIA's data appeared in the Wall Street Journal one day after the company's parent,
AMBAC, issued nearly 4.2 million shares of HCIA stock in a public offering.
The preliminary injunction hearing in a Grand Rapids, Mich., hospital merger case ended last week after five days of testimony during which 19 witnesses appeared. The Federal Trade Commission wants U.S. District Judge David W. McKeague in Lansing, Mich., to block the proposed merger of 515-bed Blodgett Memorial Medical Center and 529-bed Butterworth Hospital pending the resolution of the FTC's antitrust complaint against Grand Rapids' two largest hospitals. Sealed hospital price data soon will be submitted for analysis by expert witnesses, after which McKeague will issue his decision.