PPM/MSO News
PPM/MSO News
• In January, a 600-doctor independent practice association in San Mateo County, CA, walked away from Aetna U.S. Healthcare. Association members continue to see 20,000 Aetna patients through temporary contract provisions, but if an agreement is not made, the patients will need to find new doctors. Health plan providers have said that increased reimbursement will only result in increased premiums to employers, and that poor management is a bigger problem than reimbursement issues. Ben Singer, a spokesman for PacifiCare Health Systems (Santa Ana, CA), cited FPA Medical Management as an example. The company filed for bankruptcy last summer, leaving several Orange County doctors with unpaid bills. "FPA took the money we paid them and bought other medical groups instead of paying doctors," Singer told the Register. "Is that a reimbursement problem? I don’t think so." Within the last year, two of the five major physician networks that served Orange County have bailed out because of low reimbursement and financial problems. St. Joseph’s acquired FPA when it filed for bankruptcy in July, and Medpartners (Birmingham, AL) announced in November it was leaving the business. The company closed its Talbert Friendly Hills Medical Group (Laguna Hills, CA) a few weeks ago.
• Six months after PhyMatrix (West Palm Beach, FL) sold its physician practice management business, the company is launching a network of hospital doctors in March. The company will provide billing and negotiate contracts, but will not own the doctors’ practices.
• Phycor (Nashville, TN) posted a wider-than-expected loss for its 4Q98, even though revenue increased by 29%. The company reported a net loss of $68.4 million, 90 cents per share, on revenues of $409.9 million, compared to a net loss of $37.8 million, 59 cents per share, on revenues of $317.3 million a year earlier. The quarter included a $79.8 million asset writedown. The company expects to record restructuring charges of about $5.7 million in 1Q99.
• AmeriPath (Riviera Beach, FL) said 15 acquisitions contributed to earnings in 4Q98 and FY98. In FY98, revenues were $177.3 million, compared to $108.4 million in FY97. Net income was $18.6 million, 89 cents per share, compared to $7.3 million, 53 cents per share, the previous year. In 4Q98, net income was $5.34 million, 25 cents per share, on revenues of $51.5 million, compared to 4Q97 net income of $3.3 million, 18 cents per share, on revenues of $35.3 million.
• Pediatrix Medical Group (Fort Lauderdale, FL) rescinded a 2-for-1 stock split scheduled for Feb. 26. The company made the decision because of the market volatility in the past few weeks. The company has said that it may have to restate its earnings pending the completion of an audit. It hired KPMG Peat Marwick (San Francisco) to conduct a concurrent audit because its auditor of record had a conflict of interest. A class action lawsuit has been filed in the U.S. District Court for the southern district of Florida, West Palm Beach division, against the company. The complaint alleges that the company issued a series of false statements concerning its financial condition, and as a result, the price of stock was inflated.
• A new PPM in Jacksonville, FL, could create more than 150 new jobs within two years, reported The Florida Times-Union. Nova Healthcare Group (New York City) is relocating to the Baymeadows area because the cost of doing business in New York is increasing and because Jacksonville is where many healthcare providers are headquartered.
• As a result of struggling practices and failing PPMs, more doctors in Colorado are turning to the year-old Millenial LLC, an association that promises its members more money if they allow it to negotiate HMO contracts. The association is a consortium of eight independent physicians’ associations that take on financial risks under the assumption that doctors can do insurance better than insurers can. PacifiCare (Santa Ana, CA) reached an agreement with the association for a 1999 contract, even though other HMO providers refused to meet Millenial’s terms. The association will take control of claims and do in-house medical management reviews. It will publish its own clinical protocols in which specialists teach primary-care physicians when it is appropriate to refer patients.
• UroCor (Oklahoma City, OK) reported a net loss in FY98 of $2.5 million, 24 cents per share, compared to a net income of $4.3 million in FY97. Revenues were $47.6 million, compared to $33 million the previous year. 4Q98 net income was $1.3 million, 12 cents per share, on revenues of $13.9 million, compared to 4Q97 net income of $1.9 million, 17 cents per share, on revenues of $9.3 million. The year’s net loss included $8.2 million in special charges and $1.5 million in other non-recurring charges related to the company’s discontinued Urology Support Services unit.
• According to a report in The Wall Street Journal, shares of Medpartners (Birmingham, AL) plummeted 76.5% in 1998, making it the second worst performing stock of the year. The company is also the worst three-year performer on the Shareholder Scoreboard, with an average compound annual total return of negative 45.8%. For example, a $1,000 investment in 1995 dwindled to $159 in 1998, the Journal reported. In response, the company decided to sell its PPM last fall, taking a one-time charge of $1.23 billion in 4Q98 to discontinue the business. It will focus on its pharmacy benefits management unit instead.
• Physicians’ Specialty Corp. (Atlanta) announced last week that it has received full accreditation under the Health Utilization Management Standards of the American Accreditation Healthcare Commission. The accreditation will expire Jan. 1, 2001.
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