Managed Care Report
• RightChoice Managed Care (St. Louis) said it is comfortable with the range of analysts’ earnings estimates for 4Q99 and FY99. Analysts polled by First Call have a 4Q99 consensus view of 21 cents per share, with a range of 18 cents to 23 cents. In FY98, the company reported earnings of 19 cents per share. The consensus for FY99 is 88 cents, with a range between 85 cents and 90 cents, and in FY98, RightChoice posted earnings of 33 cents per share, excluding some items. RightChoice COO and CFO Sandra Van Trease attributed the company’s continued improving financial performance to strategies the it implemented a few years ago and will continue into 2000. The efforts include reducing general and administrative costs, focusing on effective and appropriate medical management, working with doctors more effectively, and simplifying procedures and work processes.
• The WellCare Management Group (Kingston, NY), parent company of WellCare of New York and WellCare of Connecticut, signed a definitive agreement to acquire all of the outstanding and issued stock of DirectCare, an Alabama licensed commercial HMO. The terms of the transaction involve a capital infusion, in a form acceptable to WellCare, to allow for the growth and financial stability of DirectCare. Additionally, DirectCare will exchange 100% of its outstanding and issued shares for 750,000 shares of WellCare stock. In addition, Comprehensive Health Management, an affiliate of WellCare, will enter into a management agreement with DirectCare. The transaction is subject to certain customary conditions, including clearance by the Alabama Department of Insurance and approval by DirectCare shareholders.
• Humana’s (Louisville, KY) Employers Health Insurance (EHI) company has entered into an agreement with Laboratory Corporation of America Holdings (LCA; Burlington, NC) in which LCA will be the preferred provider of laboratory services for EHI. Under the agreement, LCA will service EHI’s 1.4 million covered lives throughout the country, and, in the future, will be a cornerstone laboratory services provider for Humana’s ChoiceCare Network.
• Aetna U.S. Healthcare (Blue Bell, PA) recently urged the healthcare industry to work together to reduce the number of deaths caused by medical errors. The company said, "Managed care organizations can play a critical role in reducing medical errors that result in 44,000 to 98,000 avoidable deaths each year through their data analysis and quality improvement capabilities and by working together with hospitals, physicians, and government agencies." Aetna applauded the White House and Congress’ attention to "this critical public safety and health issue, but thinks the entire healthcare industry can and must do more."