News Briefs
News Briefs
Joint Commission sees red
For the first time in 20 years, the Joint Com-mission on Accreditation of Healthcare Organizations (JCAHO) in Oakbrook Terrace, IL, will lose money on its operations — about $2 million to be exact. JCAHO, which had budgeted for $5 million in profits, reports that approximately half of its loss will be for operating expenses with the other half stemming from restructuring charges.
The organization had originally planned to earn $136 million in revenues but fell far short of that, earning somewhere in the neighborhood of $119 million. As for expenditures, JCAHO had foreseen spending about $131 million. Instead, when the projected shortfall was first noticed, the group slashed its budgets dramatically. But even with the elimination of 79 jobs early last fall, the organization was only able to bring expenses down to $120 million.
When taken together, this represents a dramatic change for JCAHO, which had been experiencing dramatic growth over the past several years. Revenues in 1998 were up 20% from the year before with the organization bringing in about $122.8 million compared with $102.4 million in 1997. Moreover, the groups $4.1 million profit in 1998 was JCAHO’s third-highest profit margin in the 10 years prior.
Costs up, revenues down
Now JCAHO faces growing costs and dwindling revenues just as others in the health care industry are facing. Particularly hard hit have been the group’s accreditation programs for home health and long-term care. Perhaps in reaction to this, the Joint Commission’s 28-member board voted unanimously to stop recognizing hospitals that receive exceptional scores on their accreditation surveys as well requiring surveyed hospitals to pay no matter what their final score.
The special accreditation category "with commendation" was created in 1991 in response to hospital executives who felt that a positive distinction should be made from the then newly created "conditional accreditation" whereby hospitals with quality-assurance problems were put on a six-month probation. In the last three years, some 14.5% of all hospitals surveyed received the special commendation, which was often touted by hospitals as a marketing tool.
Accidental deaths could be on rise
The results of a recently released independent report conducted by the National Academy of Sciences’ Institute of Medicine show that more than 98,000 Americans die annually as a result of medical mistakes made by physicians, pharmacists and other health care professionals. This figure is larger than the total number of people who die annually as a result of breast cancer, highway accidents, or AIDS and costs the country up to $29 billion annually.
Experts believe the number of deaths attribut-able to medical error could be reduced by 50% in the next five years if the medical community were to establish a coordinated safety program to collect and analyze accident trends. Other sectors of the economy use similar methods to examine accidents and then make the appropriate changes to reduce the likelihood of them occurring again.
Medical errors can run the gamut from the miscommunication of a drug’s name to the incorrect programming of a complex medical device and often stem from a simple lack or communication and coordination as patients move from one health care provider to the next. The report found that the most common mistakes involve medications such as mislabeling or administering the wrong dose or at the wrong time or to the wrong patient.
The top 10 leading causes of death in the United States are: heart disease (727,000), cancer (540,000), stroke (160,000), obstructive lung disease (109,000), medical errors (98,000), pneumonia/influenza (86,000), diabetes (63,000), auto accidents (44,000), suicide (31,000), and kidney disease (25,000).
They are having their day in court
The Minnesota state attorney general, along with a senior citizens advocacy group and a 72-year old Medicare beneficiary have filed suit on behalf of the state against Health and Human Services claiming that as a result of Medicare reimbursement disparities, the state has lost hundreds of millions of dollars.
According to the lawsuit, low reimbursement rates for the state of Minnesota have resulted in higher premiums and out-of-pocket costs for those state residents enrolled in Medicare managed care programs. This, the suit claims, violates senior citizens’ rights to equal protection under the Constitution.
A $485 million preliminary agreement has been reached between kidney dialysis provider Fresenius Medical Care in Lexington, MA, and the U.S. government in charges that the company overcharged Medicare for services provided by National Medical Care. While the proposed settlement is the largest health care fraud settlement to date, Fresenius has said that $70 million will be deducted from the total for funds due the company for nutrition therapy services.
Quorum Health Group is in even more trouble, faced with four civil whistleblower Medicare fraud lawsuits. The Brentwood, TN-company has been embroiled in a suit since 1993 in which it is accused of filing reserve cost reports documenting two Medicare claim estimates. More recently, the company has been charged with Medicare violations related to home health care at two of the company’s hospitals with the remaining two charges alleging Medicare violations at one of Quorum’s owned hospitals and two of its managed hospitals.
What are the latest mergers and acquisitions?
Anthem in Indianapolis has purchased Blue Cross and Blue Shield of Colorado and Nevada for $215 million.
As part of the purchase of the 475,000 enrollee-plan, Anthem agreed to pay $155 million to the charitable foundation Caring for Colorado
Scottsdale, AZ-based Doctors Community Healthcare Corp. has agreed to purchase the Greater Southeast Community Hospital in Washington, DC, for $21.3 million. The 262-bed hospital, which serves the city’s inner-city neighborhoods southeast of the Anacostia River, is a part of the Greater Southeast Healthcare System, which recently filed for Chapter 11 bankruptcy protection after accumulating $70 million in debt.
UNC Health Care in Chapel Hill, NC, and Rex Healthcare in Raleigh, NC, are one step closer to a merger when the UNC Health Care board voted to recommend the deal to its full board of governors.
The deal, if passed, would in all likelihood pay down Rex’s debt of some $120 million as well as create a new nonprofit foundation in Wake County.
This would represent the third such agreement involving Triangle-area hospitals in the past two years: Duke University acquired the 215-bed Raleigh Community Hospital for more than $190 million and is operating Durham Regional Hospital under a 20-year lease.
Two medical staffing companies, Cross Country Staffing of Boca Raton, FL, and TravCorps Corp. of Malden, MA, have announced their intention to merge their operations.
The company will be owned by an affiliate of Charterhouse Group International, certain investment funds managed by Morgan Stanley Dean Witter Private Equity and management. Cross Country provides temporary nurses, operating room technologists, therapists, and other allied health professionals to acute care hospitals and other health care facilities; TravCorps provides fixed-term temporary (including traveling) and permanent placement of a broad range of health care professionals.
These health care people are making news
Boyd Hendrickson, president and COO of Beverly Enterprises in Fort Smith, AR, has resigned. He will be replaced on a temporary basis by Chairman and CEO David Banks until a replacement is found. Beverly is the nation’s largest nursing home operator.
The president of Olsten Health Services, Robert A. Fusco, has announced his decision to step down from the company’s home health care division to pursue personal interests. He will be replaced by Olsten Corp. President and CEO Edward A. Blechschmidt.
Wendy Simpson, CFO of Coram Healthcare Corp. in Denver, has announced her resignation. This follows the announcement that bank lenders for the home health company have agreed to forgo up to $13 million in interest payments for up to six months while the company solves contract problems with Aetna US Healthcare.
King of Prussia, PA-based Home Health Corporation of America has obtained approval to name David Gellar as its president and CEO. Gellar, who was most recently CFO for the company which filed for Chapter 11 bankruptcy protection last year, has been interim CEO since March.
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