Charter names president. Atlanta-based Charter Behavioral Health Systems last week named Steve Davis, 49, as its new president and chief executive officer. Davis replaces John DeStefanis, who resigned Nov. 10. Davis had been chief operating officer of provider operations at Magellan Health Services, Atlanta. Charter also promoted Vernon Westrich, 46, to COO of hospital operations. Westrich has been with Charter since 1987, most recently as senior vice president of hospital operations. Charter, a joint venture of Magellan and Crescent Operating, owns and operates 88 psychiatric hospitals in 31 states.
Clinton to nominate West as VA head. As expected, President Clinton said last week that he will nominate Army Secretary Togo West to succeed Jesse Brown as secretary of the Department of Veterans Affairs. If confirmed, West would oversee the VA's 800-facility healthcare system. Clinton said he is appointing West to serve as acting secretary until Congress reconvenes in January. Clinton's first choice to succeed Brown, Deputy VA Secretary Hershel Gober, withdrew his name in November after congressional inquiries into his private life. Gober has served as acting secretary since Brown's July 1 departure.
Association forms for hospital-sponsored MSOs. Cleveland-based consulting firm Medimetrix has launched an association for executives of hospital-sponsored management services organizations, called the MSO Collaborative. Membership is limited to executive directors, chief financial officers, medical directors and chief operating officers. The association's activities will include benchmarking and salary/compensation surveys. The association also is exploring a possible affiliation with the integrated healthcare practice society of the Englewood, Colo.-based Medical Group Management Association.
AMA challenges Aetna contracts. Upping its rhetoric against the managed-care industry, the American Medical Association, in conjunction with the Florida Medical Association, has sent a letter to Aetna U.S. Healthcare complaining its contracts with doctors contain "gag clauses," are one-sided and allow Aetna to override physician decisions about medically necessary care. The AMA, which released the letter publicly last week, said Aetna contracts are representative of the managed-care industry. An Aetna spokeswoman denied the charges, but said the HMO has modified some contracts to remove language considered objectionable.
VA adopts telemedicine services. The Department of Veterans Affairs said last week that it will use telemedicine to link its medical centers with 20 veterans counseling centers to provide primary-care services. The links will benefit high-risk groups, minorities and homeless or disabled veterans with limited healthcare access. The VA will spend $3 million on startup costs at 20 sites and an additional $1 million to expand existing primary-care programs at 10 other centers.
Respiratory-care companies to consolidate. Respironics of Pittsburgh has agreed to buy Healthdyne Technologies through a stock swap and assumption of debt valued at about $370 million. The deal is expected to close in the first quarter of 1998, subject to shareholder and regulatory approval. Both companies make a variety of respiratory-care devices. They would have combined annual revenues of about $350 million. Earlier this year, Marietta, Ga.-based Healthdyne resisted three takeover attempts by Elyria, Ohio-based Invacare Corp., whose highest bid was worth $191 million.
S&P sees strong managed-care growth potential. Managed-care organizations can expect strong growth opportunities in the next several years as more people move into managed-care products, Standard & Poor's Corp.'s CreditWeek reported recently. But the rating agency also points to potential risks. Most notably, the 1998 introduction of new "risk-based" capital guidelines developed by the National Association of Insurance Commissioners will change the way managed-care organizations' capital adequacy is viewed. Those with only minimal amounts of surplus capital will have to strengthen their financial houses.