Off the beaten PATH. The 18 clinical practice plans affiliated with the University of Pittsburgh School of Medicine recently agreed to settle charges of improper Medicare and Medicaid billing between 1990 and 1996, and pay the state and federal government $17 million. It is the first settlement that includes both Medicare and Medicaid billing issues.
The university decided to conduct its own audit after learning the federal government's Physicians at Teaching Hospitals (PATH) initiative was coming to town, according to Greg Peaslee, executive director of the University of Pittsburgh physician practices. PATH is a nationwide search for Medicare fraud by physicians at teaching hospitals. It has resulted in several settlements totalling more than $42 million. The audit cost the University about $500,000, Peaslee says. That and the fine will come out of the system's revenue stream, he says, and will not have an affect on patient care.
HMO golden days over? The profitability of HMOs is declining, according to a new study on HMO financial performance by InterStudy.
In 1994, almost 90% of all HMOs were profitable, but by the third quarter of 1997, only 49% of plans were profitable, according to the study. InterStudy attributes the drop to HMOs' increasing medical expenses combined with public and private purchasers' ability to secure low premiums. The typical HMO premium rose about 5% in 1994. In 1996, the average premium increase was only 0.5% Despite the declines, researchers at Bloomington, Minn.-based InterStudy say they are "cautiously optimistic that the profitability trend may be turning around." Through 1997's third quarter, half of all HMOs had improved their operating profit margins, and 142 plans had increased profit margins more than 4% over the previous year, according to the study.
IPO update. A physician practice management company and a medical mall operator have filed for initial public offerings.
Medi-Can Medical Management, which runs three medical malls in the Washington, D.C., area, on March 16 filed with the Securities and Exchange Commission for a 2-million-share offering. At a proposed IPO price of $8 to $10 per share, Medi-Can hopes to raise from $16 million to $20 million.
Houston-based Physicians Trust on March 4 filed for a 4-million-share offering, hoping to raise $36.8 million with shares priced at $9.20. Physician Trust is consolidating 14 neuromusculoskeletal practices in six states and the District of Columbia and acquiring a sleep disorder clinic.
Neither company has said when it will start selling shares.
Coastal sells HMO to founder. Coastal Physicians Group Chief Executive Officer Steven Scott, M.D., is taking more money-losing operations off his company's hands.
On March 19, Coastal announced it sold its Doctors Health Plan HMO for $6 million to DHP Holdings, a private company controlled by Scott. The Durham, N.C.-based company lost more than $11 million in 1997 despite growing to 42,000 members from 8,900 at the beginning of the year.
Coastal still has control of another HMO, Tallahassee, Fla.-based HealthPlan Southeast, which has 85,000 members in northern Florida.
Doctors Health Plan was the second division Coastal has sold to a Scott-affiliated company in three months. In January, Scott Medical Group paid $10 million for Coastal's last 17 free-standing medical clinics.
On second thought. After initially refusing the Gay and Lesbian Medical Association's (GLMA) request to exhibit at its annual clinical meeting in New Orleans next month, the American College of Obstetricians and Gynecologists (ACOG) has reconsidered and invited the group to exhibit. GLMA is an organization of 2,000 lesbian, gay, bisexual and transgendered physicians.
ACOG first refused GLMA's request in early March, citing a policy of not accepting applications from organizations that want to solicit membership. GLMA appealed the rejection and spread the word to its members, who in turn contacted ACOG and voiced their disappointment, according to GLMA spokeswoman Sue Rochman.
After a flurry of activity on GLMA's behalf, ACOG reconsidered and told the group it was welcome to attend, as long as it stuck to educational health issues.
PRG civil trail delayed. Physicians Resource Group avoided a March 23 civil trial date in Austin, Texas, when a co-defendent requested arbitration proceedings with plaintiff Texan Eye Care.
American Ophthalmic says that under a contract it signed when it purchased Texan Eye Care's assets in 1995, it has the right to arbitrate lawsuits with the 20-physician practice. Physicians Resource Group, a Dallas-based physician practice management company, purchased American Ophthalmic in 1996.
The move forced a delay in the trial, says Texan Eye Care attorney Mark Mitchell. There's no timetable yet on when an arbitrator will be selected, Mitchell says.
Texan Eye Care's lawsuit accuses PRG and American Ophthalmic of cutting off services and setting up competing clinics after it refused to adjust its management fees to PRG's liking after PRG bought American Ophthalmic.
Working it out. Physicians are successfully resisting the market forces that threaten them, according to a new study by consulting firm Deloitte & Touche and VHA, a national network of 1,600 healthcare organizations and their physicians.
Physician incomes are on the rise despite the fact that more physicians are working as employees and in capitated environments. In part, this is because physicians are consolidating and banding together.
The report reinforces gloomy findings about healthcare organizations that buy physician practices -- 62% are unprofitable, according to the appraisal, and only 15% break even.
VHA officials also warned physicians face "impending conflict."