Olsten units face fraud probe. Melville, N.Y.-based Olsten Corp., the nation's largest publicly traded home-care company, said the New Mexico Health Care Anti-Fraud Task Force is investigating allegations of improper billing of various federally funded medical assistance programs by the company's Quantum Health Resources subsidiary and its Olsten Health Service's infusion therapy business. Olsten said most of the time period under review predates its June 1996 acquisition of Quantum. It said it also has provided information to various government agencies, including the U.S. Justice Department and the New Mexico attorney general's office.
N.Y. hospitals to affiliate. Benedictine Hospital in Kingston, N.Y., has agreed to join forces with Kingston Hospital and Northern Dutchess Hospital in Rhinebeck, N.Y., creating a 450-bed network serving the Hudson Valley region. Under a memorandum of understanding, Benedictine will enter a formal affiliation with Cross River HealthCare, the parent of Kingston and Northern Dutchess. Together, Cross River and Benedictine will form a new corporation, which has not been named.
Former Pa. rivals plan merger. Crozer-Keystone Health System, Media, Pa., said it plans to acquire 213-bed Taylor Hospital, Ridley Park, Pa., in a full-asset merger. The merger of the onetime rivals in Delaware County, outside Philadelphia, is expected to close this summer, pending federal antitrust review. Financial terms have yet to be completed, subject to a due-diligence review expected to begin later this month, Crozer-Keystone said. For several years Taylor has been an affiliate of University of Pennsylvania Health System, which has right of first refusal to buy Taylor.
Ohio hospitals agree to merge. Western Reserve Healthcare Corp. in Youngstown, Ohio, and Trumbull Memorial Hospital in Warren, Ohio, have agreed to merge July 1 under a new not-for-profit organization. The temporarily named Westrum Healthcare Corp. will have estimated annual revenues of $494 million and assets of about $420 million. Trumbull Chief Executive Officer Charles A. Johns will be president and CEO of the new company; Western Reserve President and CEO Gary E. Kaatz will be chief operating officer. Trumbull has 503 beds; Western Reserve operates Northside Medical Center, Southside Medical Center and Tod Children's Hospital, with a total of 500 beds.
La. governor changes control of charity hospitals. Louisiana Gov. Mike Foster signed legislation last week that turns over control of the state's three-hospital charity hospital system to LSU Medical Center in Shreveport. The Louisiana Health Care Authority of Baton Rouge owns the 1,435-bed public system. "Everybody I run into who knows anything about this system is convinced this can only be an improvement," Foster said. Aside from bringing more overall efficiency to the system, Foster said, LSU is committed to emphasizing access to primary-care and wellness services. The bill also included Tulane Medical Center, which will join LSU in management of the two charity hospitals in New Orleans and one charity hospital in Pineville.
Blues, HSI of Colorado to merge. Fort Collins, Colo.-based HSI Health Plans has signed a letter of intent to merge with Blue Cross and Blue Shield of Colorado. The deal, expected to be completed by June 30, would add HSI's 21,000 covered lives to the Blues' 362,000. Terms were not disclosed. The transaction requires approval from the Colorado Division of Insurance.
Ivax posts first-quarter loss; CEO to step down. Ivax Corp. reported a larger-than-expected loss for the first quarter ended March 31 and said company founder Phillip Frost, M.D., will step down as chief executive officer later this year. Ivax reported a net loss of $7.9 million, or 7 cents per share, compared with net income of $35.9 million, or 30 cents per share, in the year-ago quarter. Analysts had anticipated Ivax would lose only 4 cents per share, according to a survey by IBES International. Revenues fell 15% to $284.6 million. The Miami-based generic drugmaker said its recently hired president, Robert Strauss, would be nominated to succeed Frost, who would stay on as chairman. Ivax had counted on a merger with Bergen Brunswig Corp. to lift its flagging fortunes. But Orange, Calif.-based Bergen Brunswig mysteriously called off the deal in March and filed suit against Ivax for breaching terms of the pact (April 21, p. 22).