Oklahoma Gov. Frank Keating signed legislation late last week that allows the University of Oklahoma to enter a mergerlike partnership with Columbia/HCA Healthcare Corp. to operate the university's hospitals. Columbia will pay $40 million to Oklahoma's University Hospitals Authority, which operates two facilities in Oklahoma City. In turn, Columbia will get the first $30 million of each year's profits, and the authority will earn the next $9 million. Any profits thereafter will be split 70-30, with Columbia getting the lion's share. The state and Columbia will share equally in the hospitals' governance with a new board. The law also calls for the state Supreme Court to review the deal before it can be completed.
Value Health Corp., which is being acquired by Columbia/HCA Healthcare Corp., late last week reported flat net income for the first quarter ended March 31, of $19.2 million, or 35 cents per share, the same results as in the year-ago quarter. The Avon, Conn.-based pharmacy benefits and healthcare consulting company said revenues dropped 2.4% to $478.5 million. Value Health's prescription drug services business continued its recent slide, contributing 58% of company revenues, down from 60% in the year-ago quarter. Value Health said it expects to complete its sale to Columbia for $1.1 billion in cash within the next few months (April 21, p. 14).
The Senate last week passed legislation revoking a demonstration of competitive bidding by Denver Medicare HMOs and repealing a law allowing public hospitals to buy supplies at discounted federal prices. The legislation also would extend Medicaid benefits through Sept. 30 to legal immigrants receiving them on Aug. 22, 1996, the day President Clinton signed welfare reform legislation.
Hartford (Conn.) Health Care Corp. has agreed to add Natchaug Hospital, a 56-bed psychiatric hospital in Mansfield Center, Conn., to its integrated delivery network. It is one of several consolidations announced by Connecticut healthcare providers last week. Under a memorandum of understanding approved by both boards of directors, Natchaug will become a wholly owned subsidiary of Hartford Health Care, the parent of 824-bed Hartford Hospital. A certiciate of need application is being prepared for state approval. Officials expect to complete the deal in four to six months.
Blue Cross and Blue Shield of Kansas is asking a court to decide whether it has any charitable trust obligation prior to 1992. The Topeka-based Blues plan filed suit in Sedgwick County (Kan.) District Court. In 1992, the Blues was declared a mutual insurance company by the state Legislature. Kansas Attorney General Carla Stovall has said it previously acted like a public benefit corporation, raising the possibility that the Blues might owe the public some of its assets. The debate over its previous status was one legal tangle that helped block a merger with Blue Cross and Blue Shield of Kansas City (Mo.) last month (April 21, p. 24).
Gary Strack, 51, chairman and chief executive officer of Orlando (Fla.) Regional Healthcare System, will retire effective Aug. 1. Strack, who has been with the system for the past 23 years, had been top executive since 1980. "He has decided to leave the organization to pursue other personal and professional interests," said David Hughes, who will replace Strack as board chairman. Hughes currently is chairman of the board executive committee. John Hillenmeyer, who was promoted to president 18 months ago, will succeed Strack as CEO. ORHS owns and operates six not-for-profit hospitals in four counties in the Orlando area.
Benedictine Health System and one of its affiliated facilities, St. Mary's/Duluth (Minn.) Clinic, plan to lease 30-bed Pine Medical Center and its 86-bed skilled nursing facility, both in Sandstone, Minn. The district-owned hospital agreed in principle to the three-year lease with automatic renewal earlier this month. The agreement is expected to take effect July 1. Duluth-based Benedictine operates 24 hospitals and nursing homes. St. Mary's/Duluth includes two hospitals and 21 clinics.