Congressional committees delayed expected action last week on the federal fiscal 1997 budget resolution as congressional leaders tried to determine how much in savings they would seek from Medicare and Medicaid between now and 2002. House and Senate Republican leaders differed on whether to slow Medicare spending growth by $168 billion and Medicaid by $85 billion, as the House wants, or seek Medicare savings of $124 billion and less than $85 billion for Medicaid, as some Senate leaders want.
Rep. Fortney "Pete" Stark (D-Calif.) told a group of largely not-for-profit hospital executives last week that he's drafting federal legislation that would dictate how the proceeds from the sale of a not-for-profit hospital to a for-profit chain would be used. Speaking at the spring public policy forum of InterHealth and the Volunteer Trustees of Not-For-Profit Hospitals, Stark said he wants to require that the reserves of the old not-for-profit hospitals stay in community control and not in the hands of the acquiring for-profit entity.
Olsten Corp. signed an agreement last week to acquire Quantum Health Resources in a deal valued at approximately $300 million. The merger allows Olsten to expand its home infusion and disease management services. Olsten, through its Olsten Kimberly QualityCare subsidiary, is the nation's leading home-care provider. In addition, the Melville, N.Y.-based company will bolster its pharmaceutical distribution network. Quantum specializes in providing alternate-site therapies to patients with chronic diseases. The Indianapolis-based company provides therapies to patients through 25 licensed pharmacies and pharmacy centers, 14 service branches and a central mail-order facility. The proposed merger is expected to be completed in July.
Horizon/CMS Healthcare Corp. said stockholders filed three lawsuits against the Albuquerque, N.M.-based long-term-care company April 19. In addition, two class-action lawsuits were filed April 24 and 25. The stockholder lawsuits allege five current and former directors used nonpublic corporate information when they sold 1.4 million shares in January and February, just before Horizon's stock price fell significantly. The five directors sold $37 million worth of shares. Horizon declined to comment on the three most recently filed suits but said it disputes the factual and legal premises upon which the two class-actions suits are based and "intends to contest this litigation vigorously."
Medline Industries of Mundelein, Ill., will pay $6.4 million to settle charges under the False Claims Act that it wrongly billed the U.S. Department of Veterans Affairs. Under its VA contract, Medline, a manufacturer and wholesaler of healthcare products, was supposed to provide products made in the United States, a designated country or the Caribbean basin. It failed to disclose that 126 items included in the award were manufactured elsewhere, according to the U.S. Attorney in Chicago. The settlement, which covers about $1.5 million in payments from 1990 to 1995, was approved last month. Medline President John Mills said the company overlooked the questionable products among hundreds of items, and no wrongdoing was intended. The settlement stems from a 1995 whistleblower complaint. The False Claims Act allows a private party to file a fraud suit for the United States and receive a portion of the settlement if the government takes over the case and prosecutes it successfully. The whistleblower, former Medline vice president for international sales Ralph Rybacki, will receive $1 million of the settlement.