Bankrupt firm gets 2nd chance
Bankrupt Doctors Community Healthcare Corp., Scottsdale, Ariz., was granted the right to try to buy back four hospitals it is managing under debtor-in-possession provisions, including 303-bed Greater Southeast Community Hospital, Washington, and 364-bed Michael Reese Hospital and Medical Center, Chicago. The company filed for bankruptcy last November after its primary financier, National Century Financial Enterprises, collapsed. Doctors Community subsequently sold one of its five hospitals. Its bid to buy the four remaining hospitals out of bankruptcy will be evaluated against competing offers after bidding closes Dec. 5. The system has offered $40 million to $60 million in cash for the properties, said Thomas Reardon, Doctors Community chief restructuring officer and independent outside director. The other hospitals are 109-bed Hadley Memorial Hospital, Washington, and 155-bed Pacifica Hospital of the Valley, Sun Valley, Calif.
Coventry to pay $29 million
Coventry Health Care, Bethesda, Md., and its subsidiary, HealthAmerica Pennsylvania, agreed to pay $29 million to the U.S. Justice Department to settle a dispute over premium charges for federal employees. After an audit, the Justice Department and the Office of Personnel Management questioned $31.1 million of HealthAmerica's subscription charges from 1993 to 1997. In a company news release, Coventry Chief Financial Officer Dale Wolf said the settlement does not reflect wrongdoing by Coventry and its subsidiary and will not affect earnings. The managed-care company has 3.1 million members in employer and government-funded groups in 14 markets.
Consolidation to close facility
Two Memphis, Tenn., hospital systems-the Regional Medical Center at Memphis and Methodist Healthcare-announced a plan to consolidate some services, that will result in the closing of 104-bed University of Tennessee Bowld Hospital. The vast majority of the services offered at Bowld are organ transplants or transplant-related services, and those will be shifted in late 2004 to the transplant program at Methodist University Hospital, the system's flagship campus. Methodist has been managing Bowld since last year. Methodist also will end maternity services at the flagship and move them to Regional Medical Center, which is also known as the Med. The providers also will establish a 15-bed neonatal intensive-care unit at Methodist's Le Bonheur Children's Medical Center. Methodist, which operates 1,345 staffed beds on five campuses in Memphis, said it would file certificate-of-need requests next month. The plan furthers a drive for consolidation that began in spring 2002, when Methodist formally affiliated with the University of Tennessee Health Science Center.
Doctors earn bonuses
An employer-backed pay-for-performance program called Bridges to Excellence distributed its first bonuses to doctors for meeting standards of care for diabetes. The program, based on an existing physician-recognition initiative of the National Committee for Quality Assurance, paid doctors $100 per patient per year for providing recommended screenings and working to control blood pressure, blood sugar and cholesterol. It was established earlier this year in Cincinnati and Louisville, Ky., two areas heavily populated by employees of the companies supporting the program. The highest payout was $7,500 to a physician with 75 diabetes patients. Backed by employers such as General Electric Co., Procter & Gamble Co. and United Parcel Service, the program saved $350 per patient per year while costing no more than $175 per patient per year.
Scrushy told to repay loan
The Delaware Chancery Court ruled that HealthSouth Corp.'s founder and former Chief Executive Officer Richard Scrushy must repay a $25 million cash loan he used to buy shares in the company. Scrushy borrowed the money in May 1999, paying $5.78 a share for 4.4 million shares. In July 2002, HealthSouth authorized him to repay the debt with company stock, which was allegedly artificially inflated by misleading financial statements issued under Scrushy's management, Leo Strine, vice chancellor of the Delaware court, ruled, according to the Associated Press. In a response, Scrushy's attorney, Abbe Lowell, issued a written statement countering that Scrushy was not aware of any financial wrongdoing and saying he would appeal. Lowell also said Scrushy's legal team filed a motion to unfreeze the ex-CEO's assets, which the government has been restraining for the past three weeks. Earlier in the week, the 15th former HealthSouth executive, Catherine Fowler, 36, former vice president of treasury and cash manager, pleaded guilty to charges in the government's investigation of $2.7 billion in alleged accounting fraud at the company.
Draft targets disclosure
The National Federation of Municipal Analysts released draft guidelines for operating data disclosure by hospitals. Supplementing previous financial disclosure guidelines, the draft guidance includes a list of 46 recommended data points for hospitals to include in reports to investors and analysts including details on utilization, payer mix and admitting physicians. The NFMA said an informal survey of reporting practices in various financial sectors last year found that 41% of sampled filings lacked adequate operating data. he public comment period ends Jan. 20.