HMO COSTS. For the first time since the early 1990s, health plan premium increases were higher than medical care cost increases, according to a recent report.
In a Managed Care Outlook report, researchers found that the average premium increase was a little more than 7%, while medical cost increases were a little less than 7%. But the margin of profit was smaller: In 1991, average premium increases were more than 11%, while medical care cost increases were about 7%.
Operating margins were lower for HMOs in small markets, those with fewer than 250,000 people, than in large markets, those with more than 1 million people.
PRN AFFILIATE. Physicians for Responsible Negotiation has an affiliation agreement with a labor organization representing emergency medicine physicians in Austin, Texas.
The new affiliate will be known as Austin Emergency Medicine Physicians for Responsible Negotiation. This is the first time PRN, the union arm of the AMA, has chartered an independent established labor organization. There are 20 physicians in the labor unit.
The physicians are employed by Third Coast Emergency Physicians, which provides staff to the emergency rooms of Seton Medical Center and Seton Northwest Hospital. The affiliate will begin negotiations soon.
SUIT SETTLED. Aetna officials have settled what came to be known as the "weeping widow" lawsuit, avoiding potentially having to pay $120.5 million.
Neither side would disclose the settlement amount, although the Hartford (Conn.) Courant
Courantreported the amount at about $20 million.
In 1995, California resident David Goodrich died from a rare form of stomach cancer. His widow, Teresa Goodrich, sued Aetna, claiming the company's delays and denials of care caused her husband's death. In 1999, a jury found Aetna acted with "malice, fraud and oppression," the Courant reported. Mrs. Goodrich was awarded $120.5 million, and Aetna appealed. The sides had been in negotiations.
The case led then-Aetna CEO Richard Huber to tell the Courant that "you had a skillful ambulance-chasing lawyer, a politically motivated judge and a weeping widow." He later apologized to Mrs. Goodrich.
M&A UPDATE. Following an anemic fourth quarter, mergers and acquisition activity in healthcare services rebounded somewhat in the first three months of 2001, according to a report.
Irving Levin Associates of New Canaan, Conn., reported 105 deals among healthcare services companies during the first quarter, 15% more than the previous quarter's 91 mergers or buyouts, though activity is 15% below the year-earlier total of 123 deals. The research firm says 15 deals involved physician groups, up from the fourth quarter's eight but less than the 20 mergers reported in the 2000 first quarter.
Including the technology sector, however, overall M&A activity declined by 23% from the fourth quarter, to 184 transactions from 238.
According to report editor Sanford Steever, transactions among pharmacy benefits managers, hospital operators and practice management firms were worth $4.6 billion. Levin set the total value of all first-quarter healthcare mergers and acquisitions at $20.8 billion.
CALPERS HMO BENEFITS. Premium increases will be limited, but 1.2 million enrollees will pay significantly more to see their doctor and fill prescriptions since the board of the California Public Employees' Retirement System approved eight HMO contracts and a new benefits design for 2002.
The average premium increase will be 6%; for Medicare HMOs, the increase will be 16.5%. Co-payments for office visits will double from $5 to $10, and prescription drug co-pays will be based on a three-tiered system. A 30-day supply of generics will cost members $5, name-brand drugs will cost $15, and non-formulary drugs will cost $30. Enrollees currently pay $5 for all prescription drugs.
The 2002 package will cost CalPERS $1.76 billion, compared with $1.65 billion for 2001.
These are the first changes for CalPERS' HMO enrollees since 1993 and are similar to revisions adopted for its PPO enrollees.
E-PURCHASING POWER. The Medical Group Management Association of Englewood, Colo., has completed field testing of its joint venture with privately held Esurg.com and is ready to roll out its Internet-based group purchasing services to MGMA members.
MGMA President and CEO William Jessee, M.D., says the alliance was formed to afford small group practices the convenience and purchasing power of a group purchasing organization via the Web. Physicians or practice managers can log onto Esurg from the member's section of the MGMA Web site or directly at Esurg.com.
Seattle-based Esurg, founded last year, provides an online, one-stop shopping catalog for pharmaceuticals as well as medical, surgical and office supplies.
"If you order from them, it comes in one box, and if there is a problem, they fix it," Jessee says.