STAFF SALARIES. Leading indicators are pointing toward a general economic slowdown in 2001, but according to a survey of medical practices, salaries for medical staff should increase at least as fast as last year, if not faster.
The Health Care Group, a practice management consultancy in Plymouth Meeting, Pa., surveyed approximately 1,200 medical practices nationwide during the fourth quarter of 2000 and found that practices expect salary increases for staff in 24 nonphysician job categories to range from 2.6% to 5.3% this year. Last year's increase range was 2.6% to 5.1%.
The survey also indicated that practices believe staff turnover will remain low, reflecting stability in healthcare despite ongoing consolidation, mergers and ownership changes at medical practices.
Health Care Group spokesperson Melissa Fegley says the results suggest that competition for top medical workers will remain tight no matter what happens in other economic sectors. "Even though the economy is slowing, practices feel they need to reward good work by motivating staff with higher salaries in order to retain workers," Fegley says.
LAWSUITS MOVE FORWARD. The morass of lawsuits before a Florida judge shrunk somewhat last month, but substantive issues survived the initial hearings.
Judge Federico Moreno, who will hear more than 50 class action lawsuits against the nation's health insurers, ruled in late December that only PacifiCare's broad arbitration contract applied to patients. He also ruled that doctors can sue the companies for conspiracy and aiding and abetting. The racketeering charges against Aetna and PacifiCare also remain.
Last year, attorneys began filing dozens of lawsuits against the managed care industry accusing it of everything from mail fraud to deceit. A panel of judges in October ruled that the cases would be heard in one courtroom by one judge. Legal experts caution that doesn't necessarily spell a speedy end to the cases.
These are the first of the class action cases to wind their way through the judicial system.
UNION COMPLAINT. The AMA's Physicians for Responsible Negotiations filed a complaint against Lutheran General Hospital in Park Ridge, Ill., accusing its officials of intimidating residents who are trying to form a union.
The complaint was filed Jan. 2, a month after residents and interns voted on whether to form a union. The results of the vote have been sealed. Hospital officials have questioned the validity of that vote, saying some residents weren't eligible to participate.
PRN says hospital bosses attended regular residents' meetings and additional meetings with PRN officials in an attempt to intimidate residents. PRN also says hospital administrators threatened retaliation against those who joined a union.
When contacted, hospital representatives said they hadn't received an official complaint from the National Labor Relations Board and couldn't comment.
Lutheran General residents are the first in the nation to try to organize since a November 1999 board ruling found that residents, interns and fellows were employees, not students, and thus eligible to form unions.
E-HEALTH RESULTS. Giant WebMD Corp. along with the smaller Drugstore.com reported what passes for good news in e-healthcare these days.
WebMD, of Elmwood Park, N.J., announced Jan. 8 that it expected to lose between $50 million and $55 million for the fourth quarter. The good news is those losses will be $10 million to $15 million less than it previously estimated.
WebMD CEO Martin Wygod attributed the slowing of red ink to an expedited consolidation of the various parts of the company, a conglomerate formed by several mergers and acquisitions. Wygod, the former head of Medical Manager, became CEO of WebMD after it acquired his company last year.
Looking to put a positive spin on the new year, Drugstore.com of Bellvue, Wash., also announced Jan. 8 that it expects to post a positive gross margin of 13% for the fourth quarter based on $35 million of estimated sales. That margin would produce about $4.6 million in gross profits. Sales were $26.5 million in the third quarter.
Drugstore.com did not release loss estimates, but First Call, an online stock market watcher, reported that stock analysts estimate the company will lose about 55 cents per share for the fourth quarter. On 61.2 million outstanding shares, that's a loss of nearly $34 million.
Neither of the two companies appear likely to make money any time soon. In an Securities and Exchange Commission filing, WebMD said it is not looking to have positive EBITDA (earnings before interest expense, taxes, depreciation and amortization) until the end of this year.
In its most recent SEC quarterly report, Drugstore.com projects it will lose money for at least the next four years.
