• California regulators seized control of MedPartners’ (Birmingham, AL) California health plan and filed a petition for reorganization under Chapter 11 bankruptcy just over a week ago. A few days later, a Riverside, CA, physician practice management (PPM) company agreed to acquire 27 hospitals and one clinic from MedPartners, easing the minds of hundreds of California doctors. KPC GlobalCare (River side, CA) solidified the deal March 16, in which the company will take over operations in Riverside and San Bernadino counties and Talbert Medical Group in Orange County. The deal should close within 30 days. Global Care has said that it will sell individual physician’s groups practices back to various physicians groups once the MedPartners deal closes. Once the deal was announced, Dr. Kali Chaudhuri, Global founder, said he received 33 calls from physicians who wanted him to buy other MedPartners group practices. Early in March, the California Department of Corpor ations (Sacramento, CA) ordered MedPartners Provider Network (Long Beach, CA) to stop transferring funds to its parent company because it had not demonstrated "a fiscally sound operation," reported The Wall Street Journal. Under the order, the company in California was barred from transferring funds, except to pay capitation and compensation to providers. The company said it "was surprised by the department’s decision," but that it was confident it could demonstrate a "fiscally sound operation." The company said it received a clarification later in the week that ensured the order wasn’t intended to stop it from paying "ordinary and necessary expenses," including staffing and administration expenses. But on March 11, the regulators seized operations to the surprise of MedPartners officials. "The department’s action was completely unexpected, and we believe it is unwarranted," a spokesman told Dow Jones Business News. The company said the action cost shareholders $500 million. It has asked the Bankruptcy Court, as well as the California Superior Court, to halt the seizure. MedPartners’ stock plunged 77% in 1998, prompting the company’s plans to exit the PPM industry. The company also agreed this month to sell assets and a PPM business it manages, all valued at $150 million, to St. Luke’s Episcopal Health System (Houston) and Methodist Health Care System (Houston), reported Dow Jones. The sale is expected to close by April 30. Last week, MedPartners also announced the sale of its hospital-based physician business, Team Health, to an affiliate of Madison Dearborn Partners, Cornerstone Equity Investors, Beecken Petty & Company and Team Health’s current management team in a recapitalization agreement.
• InSight Health Services Corp. (Newport Beach, CA) and its affiliate, Connecticut Lithotripsy, have received a certificate of need from Connecticut to provide portable lithotripsy services. The affiliate is a partnership owned by InSight and local urologists, which began operating March 1. The certificate endorses the company and expands the breadth of services it can provide in the state. In other news, the company has partnered with NorthTowns Medical Associates (Buffalo, NY) to provide equipment, facilities, and management services to NorthTowns’ multi-modality radiology practice. InSight intends to make more investments with NorthTowns to expand the network throughout the western New York area.
• ProMedCo Management Company (Fort Worth, TX) reported its results for 4Q98 and FY98, both with increases in net revenue. The company saw $225.5 million in revenues for FY98, up 176% from $80.6 million a year earlier. Net revenues were $68.8 million in 4Q98, up 92% from $35.9 million in 4Q97. Net income, including a $600,000 nonrecurring charge for the writeoff of costs in connection with the refinancing of the company’s credit facility, was $12.2 million, 58 cents per share, in FY98, compared to $5.4 million, 38 cents per share, in FY97. In 4Q98, net income was $3.1 million, 13 cents per share, compared to 4Q97 net income of $2.3 million, 15 cents per share.
• Clinical Studies (Providence, RI), a subsidiary of PhyMatrix (West Palm Beach, FL), plans to launch a new clinical trial site management division called Hospital and Network Research Services. The division will focus on expanding clinical research presence among academic and community-based physicians. It fulfills PhyMatrix’s goal to reposition the company along two business lines: pharmaceutical services and provider network services.
• IntegraMed America (Purchase, NY) has announced that Senior Vice President/CFO Gene Curcio will leave the company March 27 to join Tandem Health Care (Pittsburgh). President/CEO Gerardo Canet will act as CFO until someone else is recruited. Curcio accepted the opportunity so he could move closer to his family roots in Pittsburgh.
• Physician’s Specialty Corp. (Atlanta) acquired the nonmedical assets of Advanced Surgical Arts P.C. (Wayne, NJ). Financial terms were not disclosed, but Physician’s said doctors from Advanced Surgical will join its ENT Associates unit in New York. The acquired company provides otolaryngology, plastic surgery, and audiology services.
• MIM Corp. (Elmsford, NY) has appointed Recie Bomar as vice president of sales and marketing. Bomar has over 10 years experience in the managed care industry, most recently as the vice president of sales and marketing at PharmaCare. Before that, he was the national director of sales and services at Revco D.S. MIM Corp. is an independent pharmacy benefit management and prescription mail service organization that partners with managed care organizations and healthcare providers to control prescription drug costs.
• A shareholder of Concentra Managed Care (Boston) is suing the company for shortchanging him in a $1.1 billion buyout by an investment firm. Concentra, which reported $616 million in sales for FY98, said in early March it would be acquired for $16.60 per share in cash by Welsh, Carson, Anderson & Stowe (New York). On March 4, a suit was filed by stockholder William Steiner who said the company directors had themselves in mind when they sold the company. He said they failed to maximize shareholder value.
• PhyMatrix (West Palm Beach, FL) has closed a $30 million revolving line of credit, which has a three-year term. About $9.2 million of proceeds from the loan were used to pay off the previous credit agreement. In September, the board authorized an initial share repurchase plan whereby the company could repurchase up to $15 million of its common stock. By November, it had repurchased 213,000 shares for $.5 million.