MedPartners/Mullikin, Birmingham, Ala., completed its $2.5 billion acquisition of Caremark International, Northbrook, Ill., to create the largest physician practice management company (May 20, p. 2). The new company, MedPartners, has projected annual revenues of $4.6 billion and 7,400 affiliated physicians. PhyCor, with $1.3 billion in revenues, is the nation's second-largest physician management company.
Policyholders of Trigon Blue Cross and Blue Shield overwhelmingly approved the health insurer's proposal to become a for-profit company, said Norwood H. Davis, Trigon chairman and chief executive officer. Davis told a sparsely attended meeting of policyholders in Richmond, Va., that the conversion proposal was endorsed by 92% of those voting. Trigon spokeswoman Brooke Taylor said about 44% of the eligible 200,000 policyholders cast ballots. Trigon, Virginia's largest health insurer, wants to change from a mutual company owned by its policyholders to a public company that would sell shares of stock to outside investors and be traded on Wall Street. The company recently ran newspaper advertisements that said conversion was essential for raising capital to challenge large for-profit HMOs that are moving aggressively into Virginia. But the Virginia Citizens Consumer Council has argued that the conversion blueprint places profits over patient care. Trigon, with $1.7 billion in annual revenues, has about 30% of Virginia's health insurance market. It pays for the healthcare of 1.8 million people. The final decision on the conversion plan rests with the State Corporation Commission, which will hold a series of public hearings beginning this week.
The Blue Cross and Blue Shield plans of Massachusetts and New Hampshire filed plans to create a regional company that will enhance their ability to market managed-care products across state lines. The two plans announced their intent to form the company in May. The as-yet-unnamed company will continue discussions with other Blues plans in New England aimed at bringing them into the regional, not-for-profit organization.
A physician-hospital organization in Southeast Missouri has announced it will cooperate with the U.S. Justice Department in an investigation of anti-competitive behavior. The PHO, MedAmerica HealthNet, was formed in 1994 by 220 physicians and five hospitals in and around Cape Girardeau, Mo. Rob McCann, a lawyer for the PHO, said the government sent MedAmerica HealthNet a request for documents on Aug. 20. The Missouri attorney general's office previously had made the federal investigation known (May 6, p. 6). Employers and managed-care plans have complained that the five hospitals and the doctors effectively have restrained trade in the area.
Laboratory giant SmithKline Beecham declined to comment on a Wall Street Journal report that it's nearing an agreement to pay more than $300 million to settle allegations that it falsely billed Medicare. SmithKline has acknowledged that it is part of a government probe of the clinical laboratory industry (Feb. 27, 1995, p. 16). In fact, the London-based company set aside $395 million in 1995 to cover liabilities from that investigation and lawsuits charging it and other drug companies with price discrimination. Earlier this year, SmithKline agreed to settle one lawsuit for $30 million in cash and $20 million in prescription drugs. A second suit is pending.