News in brief - Feb. 17, 2003

Merger volume up in 4th quarter - Market growing for equipment leasing - Tenet settles with patients - ADAM transfers stock listing - Cerner issues earnings - Group offers HIPAA accreditation

Merger volume up in 4th quarter

The health care mergers and acquisitions market saw a 38% jump in volume between the third and fourth quarters of 2002, but the cash value of the transactions was down significantly on the strength of one big third-quarter deal, says the research firm Irving Levin Associates Inc.

Preliminary data from the New Canaan, Conn.-based firm said there were 286 deals in the fourth quarter, compared with 208 in the third quarter and 204 in the fourth quarter of 2001.

But the deals' value was only $12.1 billion in the fourth quarter, compared with $68 billion in the third quarter. Levin Associates officials said the third-quarter figure was inflated by Pfizer Inc.'s proposed $60 billion acquisition of Pharmacia Corp. Officials from the companies said they hoped the deal would be settled early this year.

Without the proposed Pfizer deal included, merger and acquisition spending increased almost 50%.

Market growing for equipment leasing

The growth of outpatient facilities and rapid technological advances have spurred growth in the health care equipment leasing industry, and analysts predict the market will continue its strong performance in the next few years, says a new report by the Equipment Leasing Assn.

Forecasts of the Arlington, Va.-based association say the market, which was worth $5.8 billion in 2002, would grow by 8.5% a year through 2005, when it is expected to reach $7.4 billion. More than 50% of all health care lease financing in 2002 was secured for diagnostic imaging equipment, by far the most active category of the market, according to the report.

Tenet settles with patients

Tenet Healthcare will bill uninsured hospital patients at prices equivalent to managed care rates and will not place liens on the homes of patients who cannot pay, the hospital chain has agreed as part of a price-gouging lawsuit settlement.

Tenet, the nation's second-largest hospital company, said its new "Compact with Uninsured Patients" would settle 10 suits coordinated by a group of California Hispanic patients, who sued Tenet a year ago, asserting that the company charged the uninsured much more than what it billed HMOs, and that it engaged in billing and collection techniques that violated state law.

Under Tenet's plan, which still must be approved by state and federal regulators, Tenet's uninsured patients will be offered discounted pricing, giving them the same discounts as hospitals' managed care rate, and also would be offered reasonable payment schedules. Patients would, in addition, be guaranteed financial counseling to help them find ways to pay their medical debts.

The hospital chain agreed not to sue any patients for nonpayment of bills if they are unemployed and to not try to take away patients' homes if their residence is their sole asset.

The settlement comes at a time when Tenet is under federal investigation for allegedly reaping many millions of dollars through undue collection of Medicare outlier payments.

ADAM transfers stock listing

ADAM Inc., which licenses online health information, has transferred its stock listing from the Nasdaq National Market to the Nasdaq SmallCap Market after being unable to meet the former's minimum stock price requirement of $1 a share.

Cerner issues earnings

Cerner Corp., which sells software to physicians and others, reported that its net income fell in the fourth quarter compared with the same period a year earlier, although revenue rose.

For the quarter ending Dec. 31, 2002, Kansas City, Mo.-based Cerner reported net income of $9.9 million, down from $11 million in 2001, after one-time charges of about $6.3 million related to investment losses.

Revenue for the quarter was $205.7 million, up from $152 million for the same period a year ago.

Revenue for all of 2002 was about $752 million, up from $542 million in 2001. Net income in 2002 rose to $48 million from $42 million.

Group offers HIPAA accreditation

URAC, a nonprofit accreditation organization in Washington, D.C., is developing programs that would let doctors certify that the compliance plans they have developed and implemented meet upcoming federal privacy and security standards.

As part of the accreditation process dictated by the Health Insurance Portability and Accountability Act, URAC, better known for accrediting managed care plans, will assess a group practice's compliance plan and ability to comply on an ongoing basis, said Lisa Gallagher, URAC's senior vice president of information and technology accreditation.

URAC plans to release draft standards for its privacy and security accreditation programs this month for public comment. It is expected that the accreditation program will be finalized and available in April and the security program shortly thereafter. Pricing has not been determined yet.

Gallagher said prices will vary according to the size of the entity seeking accreditation and the scope of URAC's assessment. Thus, doctors are expected to pay less for accreditation than hospitals and insurers.

A key benefit for doctors who seek URAC accreditation is that it gives them a seal of approval from an independent third-party, which in turn would help their cause if they were cited for violating HIPAA, Gallagher said.