U.S. District Judge Walker Miller in Denver has granted a temporary restraining order blocking HCFA's proposed Medicare HMO competitive-bidding demonstration project that would affect Denver-area managed-care plans. The American Association of Health Plans, the Colorado HMO Association, five Denver-area HMOs and one Medicare beneficiary sued HCFA earlier this month to stop the project, which they claim would hurt plans and beneficiaries (May 19, p. 6). The restraining order expires June 12, when Miller will hold a hearing on the groups' motion for a preliminary injunction to stop the demonstration project for an indefinite period. HCFA had set a May 16 deadline for bids under the project, but Miller ordered HCFA to return any bids unopened. Congress also is considering legislation that would kill the project.
HHS' inspector general's office will increase to 17 from five the number of states that are a focus of its anti-fraud initiative, Operation Restore Trust, on its way to expanding the program nationwide. The program, which began in 1995, focuses on Medicare home health, skilled-nursing and durable medical equipment providers (May 8, 1995, p. 8). HHS said it will extend the program's focus to other providers but didn't offer specifics. It also said it would be working with such groups as the American Association of Retired Persons to publicize its hotline for beneficiaries to identify fraud.
Las Vegas-based Transitional Hospitals Corp. said its board has decided not to take a position on Louisville, Ky.-based Vencor's cash tender offer to buy the company for $16 per share, or $639 million. By not taking a position, Transitional said it has more time to determine if the Vencor deal will run into antitrust clearance problems. Vencor made the bid when Mechanicsburg, Pa.-based Select Medical Corp. agreed to buy Transitional for $14.55 per share earlier this month (May 12, p. 2). That deal included a $19.4 million breakup fee. A spokeswoman for Transitional said the company doesn't want to risk paying the fee and then have antitrust issues kill the Vencor deal. She said a response to Vencor's request for antitrust clearance is expected from federal regulators soon.
Harris Methodist Health System and Presbyterian Healthcare System, both based in Dallas, signed a definitive agreement last week to merge. The pair announced their tentative merger plans in February (Feb. 10, p. 26). The new organization, which has yet to be named, will be the Dallas-Fort Worth area's largest not-for-profit healthcare system with 11 hospitals, $1.5 billion in assets and a 22% market share. Douglas Hawthorne, Presbyterian's president and chief executive officer, will be president and CEO of the new system, while Ronald L. Smith, president and CEO of Harris Methodist, will be senior executive vice president of the new organization. The system is expected to be operational by July after gaining final state and federal regulatory approvals.
Braxton County Memorial Hospital in Gassaway, W.Va., has agreed to merge with Charleston, W.Va.-based Camcare Health System. Camcare said it will assume $1.6 million of Braxton's debt and provide $1.2 million over the next three years to make capital improvements to the 30-bed not-for-profit hospital. Braxton has had a management contract with Camcare for the past 15 years but decided it needed deeper support from a larger system to continue operating. Camcare runs 794-bed Charleston Area Medical Center. A preliminary plan announced last year called for Camcare to purchase Braxton outright for $750,000 and $1.6 million in assumed debt (May 27, 1996, p. 14). Camcare said after it completed its financial review of the county hospital in November 1996 it decided to pursue a merger structure. The Braxton board approved the new plan in December 1996, and in January Camcare filed for state and federal approval. In March, the state's Health Care Cost Review Authority gave the deal a green light, and the IRS cleared it this month. The merger is expected to be completed by May 31. Braxton will still be governed by a local board of trustees when it joins Camcare.