What are the latest mergers and acquisitions?
Sacramento, CA-based Sutter Health has completed its purchase of the 420-bed Summit Medical Center in Oakland, CA, following the rejection by a federal judge of an antitrust challenge posed by the California attorney general.
Sutter, which owns 26 hospitals in addition to Summit, plans to merge its latest acquisition with the 555-bed Alta Bates Medical Center in Berkeley, CA. Sutter will spend about $450 million on capital improvements, as well as assume $100 million of Summit’s debt.
Sparta Surgical Corp. in Concord, CA, has signed a non-binding letter of intent to purchase all the common stock of HomeTech Medical Services Inc. in Stockton, CA. Sparta is a home medical equipment manufacturer and distributor.
The 30-bed Manhattan Eye, Ear, and Throat Hospital (MEETH) was recently denied permission to sell its campus for $41 million to Memorial Sloan-Kettering Cancer Center in New York City by a state Supreme Court judge. Under New York state law, not-for-profit organizations, such as MEETH, need the approval of the state Supreme Court to sell.
The judge deemed that while MEETH might have been fairly compensated for the value of the real estate, the board of directors, which petitioned the court to sell, did not take into account offers from competing avenues which would have allowed the 130-year old hospital to continue operations.
Under MEETH’s proposal, Sloan-Kettering would have used the space to develop a breast cancer center while a real estate developer had plans to construct an apartment building. MEETH, meanwhile, had planned to partner with New York Presbyterian Hospital to open and run outpatient centers in underserved areas of the city.
New association formed
Three of the home care industry’s largest associations have announced their intent to merge. The Home Health Services and Staffing Associa tion (HHSSA), the National Association for Home Medical Equipment Services (NAMES), and the home care division of the Health Industry Distrib utors Association are combining their memberships to form the American Association for Homecare (AAH).
The new association will be based in Alex-andria, VA, and have about 1,000 members, representing more than 3,000 home care locations nationwide. NAMES brings to the group some 800 members while the remaining two associations each are bringing about 200 members. AAH’s focus will be on issues concerning home health agencies and home medical equipment companies.
HCFA offers service that’s above-average
According to the American Customer Satis-faction Index, a study by the University of Michigan Business School, the Health Care Financing Administration (HCFA) ranks as offering above-average customer service. That’s better than most government agencies but worse than private-sector businesses.
HCFA earned a score of 71 out of a possible 100 in the study, which looked at 29 "high impact" federal agencies that serve 90% of the American public. The average score for government agencies was 68.6 while the private sector finished with an average score of 73.
Senior’s health costs are on the rise
According to a recent study by the American Association of Retired Persons titled "Out-of-Pocket Spending on Health Care by Medicare Beneficiaries Age 65 and Older: 1999 Projections," on the average, elderly Americans are paying more than $2,400 — about 19% of their income — on out-of-pocket health care costs.
A quarter of all Medicare beneficiaries, the study goes on to say, will pay more than $3,000 annually in out-of-pocket medical expenses. More than half of these out-of-pocket payments go toward health care goods and services as opposed to premiums and deductibles, the study reported. Those expenses include such items as Medicare premiums, copays, deductibles, and premiums for supplemental insurance, as well as prescription drugs and eyeglasses. Prescription drugs, the study found, constitute 17% of total out-of-pocket spending and equal what seniors spend on physician care, vision services, and medical supplies combined.
Seniors with Medical supplemental insurance, known as MediGap, will spend $3,250 in out-of-pocket expenses due in part to the cost of the MediGap premium. This is compared to those beneficiaries who participate in Medicare health maintenance organizations and don’t generally pay supplemental premiums. They pay $1,630 on average in out-of-pocket costs.
Long-term nursing home care and home health payments were considered as long-term costs and therefore excluded from the study.
Eight files you should keep
The Health and Human Services’ Office of the Inspector General (OIG) has urged home medical equipment suppliers and home health agencies to self-disclose any legal or internal regulatory violations they may detect or risk stiffer penalties. To that end, the OIG has issued a checklist of areas for which organizations should audit and retain documentation. They are:
• all internal audit results;
• hotline call logs and their resolutions;
• corrective action plans;
• due diligence efforts;
• employee training records including the number of training hours;
• disciplinary action and modification;
• distribution of policies and procedures and disclosures;
• overpayment refunds to the carrier or intermediary.
PROs enter home health
If the Health Care Financing Administration (HCFA) has its way, home health agencies may be seeing more of peer review organizations (PRO). HCFA is encouraging the PRO program, which it administers, to expand its quality initiatives into the home care arena. PROs at one time were limited to hospitals, but in 1986, Congress agreed to expand their jurisdiction to include home health agencies and skilled nursing facilities. Up until now very few PROs chose to enter the home health sector, but under HCFA’s urging that might be about to change.
The program, which consists of 53 PROs each responsible for ensuring the quality, effectiveness, efficiency, and economy of health care service provided to Medicare beneficiaries in a given state and territory, is currently engaged in what HCFA calls the Sixth Scope of Work.
Under that, HCFA has requested that PROs submit proposals describing their plans involving home health agencies and skilled nursing facilities, as well as for a new quality project based on the use of OASIS data for home health agencies’ outcome improvement.
NAHC thanks Congress, recognizes advocates
The National Association for Home Care (NAHC) in Washington, DC, has released its list of top home care advocates for 1999 in the U.S. House of Representative and in the Senate. The top advocates in the Senate are:
• Sen. William Roth (R-DE). As the chair of the Senate Finance Committee, Roth formulated a home care provision package for inclusion in the Balanced Budget Amendment Refinement Act and for marshaling the Finance Committee and obtaining full Senate support for the measure.
• Sen. Tom Daschle (D-SD). Daschle, as the senate minority leader, introduced S 1678 and rallied support from the Democrats to support meaningful home health relief, thus helping to convince the administration to take action.
• Sen. James Jeffords (R-VT). Jeffords introduced S 1358 and advocated for home and hospice care in critical Senate Finance Committee deliberations on the BBA Refinement Act.
• Sen. Susan Collins (R-ME). Collins served as chair of the Governmental Affairs Subcommittee on Investigations and introduced S 1063. She conducted hearings on the need for home health relief and on the regulatory burdens faced by the industry.
• Sen. Christopher "Kit" Bond (R-MO). Bond worked as chair of the Senate Small Business Committee to introduce S 1063. He fought for regulatory relief for home health care agencies and frequently spoke on behalf of home care beneficiaries and providers.
• Sen. John Chafee (R-RI). The late senator introduced home health relief legislation, played an important role in securing BBA relief during the past Congress and served as a champion of home care throughout his time in office.
In the House, NAHC honors:
• Rep. Bill Thomas (R-CA). Thomas, as chair of the House Ways and Means Subcommittee on Health, was a leader among those seeking relief through the BBA Refinement Act and ensured that home health and hospice issues were addressed throughout the year.
• Rep. Pete Stark (D-CA). As a ranking member of the House Ways and Means Subcommittee on Health, Stark worked tirelessly to correct the "technical glitch" in the provisions the delays the 15% automatic reduction and to reform home health surety bonds.
• Rep. J.C. Watts (R-OK). Watts served as Chair of the Republican Conference and introduced HR 2628, the home health industry’s legislative package to reform IPS.
• Rep. John Peterson (R-PA). Peterson played an important role in the creation of the Home Health Working Group as part of the House Rural Health Caucus. Under his leadership, the working group was successful in communicating a number of home health and hospice concerns to Health Care Financing Administration.