Two Blue Cross and Blue Shield plans filed their merger agreement last week with regulators in Maryland and the District of Columbia, setting out the approvals and filings needed before they can combine operations under a not-for-profit holding company that would oversee the two subsidiaries' operations. Blue Cross and Blue Shield of the National Capital Area and Blue Cross and Blue Shield of Maryland announced their merger plans in January (Jan. 20, p. 9). National Capital has a service region encompassing the District of Columbia and two adjacent counties in Maryland, while the Maryland Blues covers the remainder of the state. The national Blue Cross and Blue Shield Association has agreed to grant a primary license to the as-yet-unnamed parent company and controlled affiliate licenses to the two plans pending regulatory approvals.
University of Pittsburgh Medical System has completed its acquisition of Shadyside Hospital in Pittsburgh through a full-asset merger completed April 1. The two sides began merger talks last June (June 10, 1996, p. 12). In a departure from the system's recent community hospital acquisitions, 603-bed Shadyside is a tertiary-care center that previously competed with the system's Presbyterian University Hospital. In the wake of the merger, the system said it will discontinue acute-care services at Montefiore University Hospital, shifting patients to other system institutions. Acute-care admissions at Shadyside should increase by 6,000 annually as a result, the system said.
The District of Columbia Superior Court has ordered the board of Columbia Hospital for Women Medical Center in Washington to return to work to select a purchaser on its own. The court contended the board inappropriately used a local law that allows not-for-profit organizations to ask a court to select a trustee to make such decisions when the board can't reach a consensus (March 17, p. 6). Three healthcare systems are bidding to buy the 110-bed hospital: Medlantic Healthcare Group of Washington; Suburban Hospital in Bethesda, Md.; and George Washington University Hospital in Washington, which is forming a partnership with Tenet Healthcare Corp.
Its troubled workers' compensation operations caused Miami-based Physicians Corporation of America to post an unaudited fourth quarter 1996 net loss of $182.6 million, or $4.70 per share. That compares with a net loss of $36.5 million, or 92 cents per share, for the prior-year period. For 1996, PCA posted a net loss of $277.7 million, or $7.16 a share, compared with a net loss of $24.6 million, or 62 cents per share, in 1995. Revenues for the quarter were $365.1 million, an 11% increase from the $330 million posted in the year-ago quarter. Revenues for 1996 were $1.45 billion, up 20% from 1995's $1.21 billion. PCA claimed a $284 million pretax loss on its workers' compensation operations for the year, stemming from additional liabilities. The losses caused Las Vegas-based Sierra Health Services to call off its merger with PCA (March 17, p. 11). Sierra also has called due a $16.8 million loan it made to PCA, part of the company's overall debt of $118.5 million. PCA has yet to file its 10-K registration with the Securities and Exchange Commission. It expects to do so by April 15, and company officials said the results will be unchanged.
HCFA has suspended the automatic enrollment of Medicaid recipients into managed-care plans in Los Angeles County out of concern beneficiaries will be confused over the various provider choices available. In a letter to the California department of health services, HCFA regional Administrator Elizabeth C. Abbott said the suspension will last until the agency is satisfied recipients are being properly educated about their choices. The subcontracting company responsible for enrolling and educating recipients, Fairfax, Va.-based Maximus, only began the task Jan. 1. Maximus replaced another contractor that had been the target of numerous complaints (March 3, p. 36). Medicaid recipients in Los Angeles County have a choice of seven HMOs and would be automatically assigned a plan if they did not pick one. Those stating a preference will still be enrolled but those who have not will remain in fee-for-service programs until the issue is resolved.