Hospitals' profit margin slips in first quarter. Hospitals' total profit margin slipped to 5.6% during the first quarter of this year from 5.8% during the same period last year, according to the American Hospital Association's latest quarterly hospital economic report. The report is based on a monthly survey of about 2,000 hospitals. Hospitals' patient margins, which consider only patient-care revenues and expenses, dipped to -0.1% in the first quarter compared with 0.4% in the first quarter of last year, the AHA said.
Kaiser expects loss for year. Kaiser Permanente will report a net loss of about $34 million for 1997, its first annual net loss in 30 years and possibly in its history, Kaiser spokeswoman Beverly Hayon said. Kaiser's loss-on revenues of about $14 billion-is due to "major one-time charges," she said. Those include consolidation of the Northern and Southern California regions, creating call centers and making major changes to its national information systems, she said. Some of Kaiser's newer divisions also are contributing to losses, since they are "struggling as any new venture would," she said. Compounding the problems, Kaiser's rates, although increasing, are not keeping up with medical costs. But Kaiser is not predicting a series of annual losses because "as we continue quality initiatives, they will drive down costs," she said.
Reports find faults in healthcare system. Three reports released late last month paint a gloomy picture of America's healthcare system. According to the studies, which were commissioned by the National Coalition on Health Care, the level of quality in the healthcare system is being diminished because there is no systemwide quality program in effect. A separate study found total healthcare spending, which doubled between 1985 and 1997, will double again to more than $2 trillion in the next decade. A third study predicted that by 2005 there will by about 47 million uninsured Americans, a rise of about 1 million people a year. Coalition President Henry Simmons said there should be a universal quality initiative for all sectors of the healthcare system funded by the government.
Varian seeks GE unit. Varian Associates has offered to buy General Electric Medical Systems' radiation therapy service and support operation for an undisclosed sum, Varian said. GE confirmed talks are under way. According to Palo Alto, Calif.-based Varian-the world's largest manufacturer of radiation therapy systems-completion of the transaction is expected around year-end. The proposed purchase covers all service and customer support activities for Milwaukee-based GE Medical's installed base of more than 400 medical linear accelerators and 340 treatment planning systems worldwide.
MedPartners to sell Caremark's foreign operations. Birmingham, Ala.-based MedPartners, the nation's largest physician practice management company, recently agreed to sell its Caremark International subsidiary's Canadian and overseas home-care operations to Fresenius AG of Germany in a cash deal for undisclosed terms. Caremark provides home-care services through about 14 locations in Canada, Germany, the Netherlands and the United Kingdom, representing about $80 million in annual revenues. The sale was announced before MedPartners' agreement to be acquired by Nashville-based PhyCor for more than $8 billion (Nov. 3, p. 4).
Premier, pharmaceutical firm form partnership. Premier recently signed a five-year corporate partnership with American Pharmaceutical Partners, a Santa Monica, Calif.-based supplier of generic injectibles and proprietary pharmaceuticals. Under the agreement, hospitals and systems participating in the San Diego-based Premier health alliance will have access to a broad range of American Pharmaceutical products. In announcing the deal, the companies did not disclose the contract value or estimated savings. American Pharmaceutical is a subsidiary of VivoRx Pharmaceutical.