LAS CRUCES, N.M.-Province Healthcare Co., Brentwood, Tenn., said in May that it has signed a definitive agreement for a long-term lease on 240-bed Memorial Medical Center in Las Cruces. When the parties reached a tentative agreement late last year, the terms were reported as $150 million upfront for a 40-year lease. The hospital is owned by the city of Las Cruces and Dona Ana County. Province expects to close the deal by June 30, provided it receives regulatory approval. The company currently owns 19 hospitals.
TUCSON, Ariz.-University Physicians, which will take over 114-bed Kino Community Hospital from Pima County in June, has hired a criminal defense lawyer to represent it during an ongoing investigation into the disappearance of prescription drugs from the hospital pharmacy. Law enforcement officials said more than 200,000 hydrocodone and diazepam pills, with an estimated street value of $1 million, have disappeared from the pharmacy over a two-year period. The investigation involves the U.S. Drug Enforcement Agency, the Tucson police, the U.S. attorney's office and the state pharmacy board. If violations are found, the hospital could be fined, put on probation or lose its pharmacy license. Calls to the physician group and to Stanton Bloom, the lawyer it hired, were not returned. Bloom told the Associated Press that he was hired because many of Kino's former employees now work for University Physicians, which wants to make a lawyer available to the employees if they are interviewed by investigators.
WOODLAND HILLS, Calif.-Health Net said in May that it would cut 500 jobs, or 6% of its workforce, after reporting an 80% drop in first-quarter profits amid higher-than-expected hospital claims. The health insurer's net income for the quarter ended March 31 fell to $15 million, or 13 cents per share, from $72.1 million, or 60 cents per share, for the year-ago quarter. Revenue rose 7.7% to $2.92 billion as total enrollment inched up 1% to 3.6 million members. President and Chief Executive Officer Jay Gellert said the earnings drop resulted from the large number of hospital claims paid in March 2004 for services rendered in 2003 and earlier. "In light of these higher costs, we have already started raising commercial premiums," Gellert said. Health Net planned to take a $15 million second-quarter charge for severance pay for the layoffs, most of which will take place in the Northeast. The company lowered its full-year earnings estimate, predicting slower enrollment growth and higher medical costs than previously anticipated for the remainder of the year. It now expects 2004 per-share earnings of $2.07 to $2.42, down from its February estimate of $2.92 to $3.07. Health Net operates health plans in seven states in the West and Northeast.
LOS ANGELES-Three officers of an allegedly bogus health insurance company were arraigned in Los Angeles federal court in May on charges of bilking more than 22,000 policyholders in 50 states and leaving $30 million in unpaid claims. The company, Employers Mutual, Carson City, Nev., allegedly collected more than $14 million in premiums in 2000 and 2001-but paid only $3 million in claims-after falsely telling employers it was insured by three credible companies. The 37-count indictment by the U.S. attorney in Los Angeles accuses Employers Mutual officers James Graf, 43, William Kokott, 60, and Kari Hanson, 43, of committing mail fraud, misappropriating funds, obstructing justice, lying to federal agents and falsifying evidence. The company is not to be confused with Employers Mutual Insurance Co. of Des Moines, Iowa.