Empire Blue Cross and Blue Shield, New York, last week released new and revised details of its proposed for-profit conversion plan. The proposal calls for the sale of $100 million shares of stock in an initial public offering in early to mid-1998. Shares would be offered simultaneously by a newly created not-for-profit foundation and by the insurer's for-profit holding company, called New Empire. The Blues plan also reiterated the importance of preserving its Blues' service marks as part of the conversion. The company said it could pay a penalty of more than $100 million if it terminates its licenses to use the marks. The plan is gearing up for a series of public hearings beginning Sept. 16. It is required to participate in hearings before submitting a final petition to the New York State Supreme Court for approval of the conversion. The plan began its move to a for-profit model last year with the creation of two for-profit subsidiaries (March 11, 1996, p. 3).
Albuquerque-based Sun Healthcare Group has reduced its purchase price of Atlanta-based Retirement Care Associates by $60 million. In the original February deal, Sun planned to buy Retirement Care and sister company Contour Medical for a combined $328 million (Feb. 24, p. 22). The date after which any party may terminate the merger agreement has been extended to Nov. 30 from Sept. 30. Sun said the changes were made to accommodate changes in the companies' stock prices and Retirement Care's announcement that it plans to revise its fiscal 1997 financial statements.
Lansing-based Michigan Capital Healthcare last week dropped its appeal of a court ruling that barred it from selling 50% of its assets to Columbia/HCA Healthcare Corp. Michigan Capital, which operates Michigan Capital Medical Center, called off the deal in June and said it would pursue a merger with Flint, Mich.-based McLaren Health Care Corp. (June 16, p. 16). Michigan Capital said it dropped its appeal only after receiving guarantees that Michigan Attorney General Frank Kelley, who challenged the Columbia deal, would not object to smaller partnerships between not-for-profit hospitals and for-profit organizations. Ingham County (Mich.) Circuit Judge James Giddings ruled in September 1996 that state law did not permit charitable assets to be used in a for-profit venture. The decision was noteworthy because it represented the first time that a state court had ruled on the legality of a joint venture between a for-profit and not-for-profit hospital.
The Health Care Authority of West Virginia approved the $10.5 million lease of 173-bed Beckley (W.Va.) Appalachian Regional Hospital to Beckley-based West Virginia ARH, a subsidiary of Heritage Health System. Lexington, Ky.-based Appalachian Regional Healthcare currently owns the not-for-profit hospital. It's leasing the hospital to Heritage, its not-for-profit joint venture with Camcare, the parent of 794-bed Charleston (W.Va.) Area Medical Center. The healthcare authority said southern West Virginia needs a not-for-profit system capable of competing with area for-profit hospitals. State review of the deal had been pending since April.
Columbia HCA/Healthcare Corp. has ended its two-year fight to relax Georgia's certificate-of-need laws. Last week, Nashville-based Columbia told the Georgia Hospital Association in a letter that the company instead would look for a compromise on state CON laws. Last year the association opposed weakening Georgia's CON laws, which would have allowed Columbia to offer open-heart and obstetric services for managed-care contracting. In reaction, Columbia temporarily pulled 18 of its 19 Georgia hospitals out of the association. The hospitals rejoined the association after the GHA agreed not to take positions on legislative issues that split its membership (Sept. 30, 1996, p. 14).
The Nashville Health Care Council named Matthew S. Gallivan its new executive director. Gallivan, 39, was formerly associate vice president at the Washington-based Health Industry Manufacturers Association. He is a Tennessee native and received his undergraduate degree at Amherst College and his MBA at Georgetown University. Gallivan replaces Laura Campbell Ortale, who left the council in May to launch her own business (May 26, p. 33). Leslie Boone had been serving as acting director.