With Columbia/HCA Healthcare Corp. finally ready to peddle its home health operations, rival firms are making them less valuable by snatching away the hospital giant's business.
The undisclosed losses are a result of physician frustration with delays in Columbia's sale of the home health unit and concerns about the ongoing federal probe of the company's operations, which has focused on home health.
According to rival firms, physicians and a Columbia spokesman, doctors are referring patients away from Columbia's mostly hospital-based home health operations to other providers.
In August 1997 the Nashville-based healthcare giant said it would sell Dallas-based Columbia Homecare Group as part of a restructuring of the company. That decision came after the government launched a massive probe of the company, with home-care operations as a target.
"A lot of physicians are uneasy with Columbia," said Joseph Provenzano, M.D., past president of the medical staff of Bethesda Memorial Hospital, Boynton Beach, Fla. "Everybody is concerned with the fraud allegations. They may be trying to distance themselves."
Benefactors of Columbia's troubles are Flagship Healthcare of Miami Lakes, Fla., which has seen double-digit growth in its home health visits in the past three months, and Owings Mills, Md.-based Integrated Health Services, which is looking to purchase Columbia's 500 home health agencies (Feb. 16, p. 2).
"Physicians are confused" about Columbia's intentions, said Francis "Biff" Shea, Flagship's president and chief executive officer. "No one communicated to them what was going on. They told us rather than be confused, `we'd rather be unconfused with you.' "
In South Florida, Shea said, physicians who referred to Columbia's home-care agencies stood by the company in the first three months after the government's probe was disclosed, but they became more frustrated with the company in recent months.
"We've probably picked up 2,000 to 3,000 visits a month, a 10% growth in Broward and Palm Beach counties," Shea said of the company's primary business locations where Columbia is a dominant healthcare provider.
Flagship, a privately held home-care firm, visited 9,000 patients a total of 475,000 times last year, accounting for $35 million in revenues. The company, founded in 1996, includes subsidiaries that operate durable medical equipment businesses and home health agencies.
Columbia acknowledged it is losing home health business but wasn't clear on how much.
"We do know the numbers are down a bit," said spokesman Jeff Prescott. "Whether that is because we announced we were selling (home health operations) or the result of other issues, we don't know for sure. The reality is probably that it's all of the above."
Columbia Homecare Group, the nation's largest hospital-based home health company, has more than 500 locations in 32 states. It accounts for between 1% and 2%, or $200 million to $400 million, of Columbia's nearly $19 billion in annual revenues.
Prescott said the company has been preoccupied in recent months working with financial experts to carve out its home-care operations in preparation for a sale.
"Now it's just a matter of negotiating a transaction," Prescott said.
Another company noticing an uptick in business from Columbia's home-care woes is IHS, which is in due diligence with Columbia on a possible purchase. IHS Chairman and CEO Robert Elkins, M.D., told Wall Street investors last month about the increase in business but declined to release specifics.
IHS operates 525 home health agencies in 34 states. Home care accounts for about $600 million in annual revenues, or 17%, of the company's business.
IHS also is considering spinning off its home health business -- possibly including Columbia's -- to its shareholders.
Columbia's turmoil not only has many physicians referring patients elsewhere but also has some dropping staff privileges at Columbia facilities and seeking to join medical staffs at other Florida hospitals.
"We're seeing an influx of physicians from Columbia who want to join our staff," said Provenzano, who is also on Bethesda's physician credentialing committee. "It's been about one or two physicians a week recently."
Most of those physicians are coming from Columbia JFK Medical Center in Atlantis, Fla., which is also in Palm Beach County, he said.