Let's call 1996 the year of the consumer. Patient protection bills clogged legislative dockets. A new purchaser-consumer alliance, the Foundation for Accountability, urged better quality measures. Newsweek, Money and Consumer Reports magazines rated HMOs. And Ralph Nader figured prominently in efforts to save a Connecticut hospital and pass a California ballot initiative (both failed). Then again, it could be the year of insurance reform, given the passage of the Kassebaum-Kennedy bill and progress in Medicaid and Medicare. Or perhaps the year of not-for-profit conversions, as states' attorneys general and Mike Wallace brought scrutiny to the sale of not-for-profit assets. Or how about the year of the hospital merger, what with a record number of transactions. Then again . . .
Marc Finucane takes the helm of the Los Angeles County Department of Health Services and champions public-private partnerships to save the county's healthcare facilities.
The Illinois and Texas Blue Cross and Blue Shield plans announce a merger, prompting many to say: "Huh?" But interstate alliances and for-profit conversions soon become almost routine as the nation's Blues plans struggle to remain competitive. A few plans that seek to reincarnate as for-profits prompt consumer advocates to worry that communities won't be properly compensated for years of taxpayer support.
The nation's governors unanimously endorse a Medicaid reform plan giving states the ability to change the duration of benefits and move Medicaid recipients into managed care.
A secret witness, face hooded and voice electronically altered, tells Congress how hospitals defrauded Medicare of as much as $1 billion. Meanwhile, Sutter Memorial Hospital in Sacramento, Calif., agrees to pay
$1.3 million, becoming the first hospital to settle false-billing charges in a probe involving investigational devices. Academic medical centers find themselves in the feds' sights during the year, and a crackdown on laboratory billing in Ohio provokes the American Hospital Association and the Ohio Hospital Association to sue the government.
The combined HMO trade group Group Health Association of America/American Managed Care Review Association renames itself the American Association of Health Plans, notably avoiding the dirty expression "managed care." The industry mounts a campaign to bolster its image against a barrage of negative media coverage. In Washington and nearly every state capital, legislators introduce bills to outlaw physician "gag" clauses and guarantee minimum hospital stays following childbirth and mastectomy. The PR fires flare all year, but HMOs continue to grow and serve a quarter of the nation. A coup: The American Association of Retired Persons decides to endorse some HMOs.
Robert O'Leary, chairman and CEO of the newest and largest hospital alliance, Premier, introduces tough new compliance policies that change the landscape of the purchasing industry.
Columbia/HCA Healthcare Corp. announces its foray into the insurance business with an agreement to buy most of the assets of Blue Cross and Blue Shield of Ohio for $299.5 million. But the deal is blasted by consumergroups and policyholders who charge the price is too low and the golden parachutes for Blues executives too rich. The deal fails to clear regulatory hurdles and becomes mired in litigation. By year-end, the plan is on the verge of termination from the national Blues system. Not surprisingly, Columbia doesn't announce any more insurance deals.
Seems everyone is tying the knot. Aetna announces its $8.9 billion acquisition of U.S. Healthcare, becoming one of the nation's largest managed-care firms. The deal is one in a series of managed-care mega-mergers including PacifiCare Health Systems' plan to acquire FHP International for $2.1 billion and the planned merger of Foundation Health Corp. and Health Systems International to create a $6 billion company. Even long-dormant Kaiser Permanente announces acquisitions in New York and the District of Columbia, as well as a merger with Group Health Cooperative of Puget Sound.
In the name of preserving Catholic healthcare, three systems merge to forma coast-to-coast mammoth called Catholic Health Initiatives, with 61 hospitals and $4 billion in annual revenues. Among Catholic systems, only Daughters of Charity National Health System is of comparable size. It's not long before San Francisco-based Catholic Healthcare West purchases seven hospitals, becoming California's largest healthcare system with 30 hospitals.
Two leaders emerge in physician practice management. MedPartners/Mullikin decides to buy Caremark International for $2.5 billion, making it and PhyCor the top firms organizing doctors. MedPartners pledges to integrate everything fr om pharmacy benefits to hospital-based physician services. Meanwhile, hundreds of smaller players introduce their own brand of physician management. Even the Premier purchasing alliance enters the game. Adding more juice to this lu crative industry, some HMOs sell their staff physician groups.
Trent Lott (R-Miss.) becomes Senate majority leader and sets about using his dealmaking skills to advance health insurance reform legislation, which passed in August.
Michigan Attorney General Frank Kelley files a lawsuit to thwart Columbia's first hospital deal in the state. It's among the strongest in a series of actions by states to block the advance of for-profit healthcare. Later in the year, California Attorney General Dan Lungren tries to thwart Columbia's purchase of a controlling interest in six hospitals owned by San Diego's Sharp HealthCare. The General Accounting Office decides to investigate how foundations created by the sales of not-for-profit hospitals spend their money. Meanwhile, communities fight to block sales of their local hospitals to Columbia, and the people of Ville Platte, La., buy back their community hospital from the chain. VHA launches a company that offers alternative arrangements to not-for-profit hospitals that are tempted to sell to for-profit chains.