Hospital margins on the rise
Hospital margins rose in the first half of fiscal 2002 to a seasonally adjusted average of 4.3%, compared with a 3.6% average in the first two quarters of 2001, the Medicare Payment Advisory Commission said. However, "the increase . . . may not be representative of the increase that will be observed when full fiscal year 2002 data are available," MedPAC said. According to a hospital lobbyist, the House Ways and Means Committee requested the margin data to rebut industry arguments that one-third of the nation's hospitals are losing money. Responding to the MedPAC brief, Federation of American Hospitals President Chip Kahn said, "You can't make policy based on averages."
FTC sees anticompetitive acts
The Federal Trade Commission continues to see a "wide variety of overt anticompetitive behavior" in healthcare, FTC Chairman Timothy Muris said at a healthcare antitrust forum in Chicago. Vowing to protect consumers and encourage free competition, Muris said the FTC and the Justice Department will hold 20 joint hearings during 2003 on the healthcare marketplace and competition law, covering a range of topics including hospital mergers, the significance of not-for-profit status and vertical integration. At the conference co-sponsored by Modern Healthcare and Modern Physician magazines, Muris said quality outcomes would play a greater role in healthcare competition.
WellChoice finally for-profit
The former Empire Blue Cross and Blue Shield, New York-now named WellChoice-raised $417.5 million in an initial public offering, completing its six-year transition to a for-profit, publicly traded company. The health insurer sold 16.7 million shares at $25 each; earlier this week, it had been expected to sell 13.9 million shares for an estimated $21 to $24 per share. However, late last year when the insurer was negotiating its conversion plan with the state, the offering was expected to raise $1 billion. The insurer, which has 4.6 million members in New York and New Jersey, first applied to convert to for-profit status in 1996. WellChoice earned $227 million on operations in the nine months ended Sept. 30. Its premium revenue was $3.5 billion.
Another failed Ohio HMO
Ohio insurance regulators moved to liquidate Renaissance Health Plan, Cleveland, making it the state's fifth failed Medicaid HMO since 1997. The plan was seized by the state in August after an independent audit discovered it had suffered a deficit of $8.1 million last year. Renaissance had 55,772 enrollees at the end of 2001, but membership plummeted this year after the company discontinued its commercial and Medicare+Choice plans. In August, Renaissance notified providers that it planned to sell its Medicaid operations to a potential buyer in Texas, but the proposed sale fell through. Renaissance had 35,500 Medicaid enrollees as of Aug. 1. The HMO blamed its woes on low reimbursement, computer system problems and rising healthcare costs. In May, the company dismissed its president and CEO, replacing them with a five-member management team.