Here's what we know. Here's what we think.
* California's leap into expanded HMO regulation remains a mysterious work in progress. The new Department of Managed Care is supposed to provide oversight to managed-care plans covering millions of Californians. However, the new department's core likely will come from the much-criticized Department of Corporations unit that has regulated California HMOs for the past 25 years.
The state's current HMO regulatory budget is about $16 million a year. The new department's annual budget will double that within a few years. That's the price of protection these days.
* The tumultuous breakup of the UCSF Stanford Health Care System further punctures the bigger-is-better merger mentality. In 1996, it actually seemed sensible to bring together four high-cost, inefficient teaching hospitals dominated by medical specialists and researchers.
What never made sense, however, were the predictions by UCSF Stanford executives that they would slash spending, which would allow the system to generate big profits. In reality, the system incurred an operating loss of $86 million in the fiscal year ended Aug. 31. Instead of reducing staff, UCSF Stanford added nearly 1,000 employees during its first 18 months of existence.
Chalk up this lesson in hard knocks to inflated expectations, faulty strategy, poor execution, an unwillingness to cut expenses and bloated corporate overhead. Other than that, it might have worked.
* The money grab continues. In one of the weirdest financing deals of the go-go 1990s, New York City last week was expected to sell about $700 million in bonds backed by money it expects to receive from settlements with tobacco companies. Approaching its debt limit for other types of borrowing, the city created the Tobacco Settlement Asset Securitization Corp. to issue about $2.5 billion in tobacco bonds over the next four years, with the first offering scheduled later this month.
In our Oct. 4 issue, Jonathan Gardner reported that most states are allowing tobacco settlement money to flow into general coffers, rather than designating the money for health programs. Now it looks like New York City will use the lure of big settlement cash to finance much of its ambitious capital program.