News in brief - May 26, 2003

Justice Dept. OKs HCA fraud fine - Louisiana proposes hospital bill - Smaller loss for WebMD - Study says EMR worth cost - N.M. IPA settles price-fixing charge - United Surgical posts income gain

Justice Dept. OKs HCA fraud fine

The Dept. of Justice has given final approval to an agreement in which HCA Inc. will pay $631 million to settle charges of health care fraud.

The settlement, which still must be approved by a judge, stems from claims raised in eight whistle-blower lawsuits concerning the hospital chain's preparations and submissions to Medicaid, Medicare and other federally funded health programs. It also addresses allegations that HCA unlawfully obtained kickbacks and overcharged the government in connection with its wound care facilities, the Justice Dept. said. The proposed terms of the settlement were first announced in December 2002.

A spokesman for HCA, the nation's largest for-profit hospital chain, said the settlement is fair and reasonable.

Combined with previous settlements in the lawsuits, HCA has agreed to pay about $1.7 billion to the government.

Louisiana proposes hospital bill

Physicians would be required to disclose whether they have a financial interest or employment relationship with a hospital before sending a patient there, under a bill moving through the Louisiana Legislature.

Louisiana Senate Bill 430 would require physicians to disclose such interests at the point of referral. "Then the patient can decide that they'd like to have a second option of other available facilities or decide it doesn't make a bit of difference to them," said Sen. Tom Schedler, sponsor of the bill.

Schedler said the bill was prompted by the emergence of specialty hospitals. General hospitals complain that such facilities, which focus on everything from cardiology to imaging, siphon away the most profitable cases. Physician-owners say the facilities offer better services and promote competition.

Schedler's bill passed the Senate and was expected to be taken up by the House before the end of May. He said several other states are considering similar measures.

Smaller loss for WebMD

Higher revenue and cost-cutting helped WebMD Corp. narrow its first quarter loss.

WebMD, a seller of physician practice management software and medical-transaction processing services, posted a net loss of $7.4 million for the quarter ended March 31, compared with a loss of $29.6 million the year before. Revenue was $234.7 million, up 4% from $225.9 million last year.

Separately, the Elmwood Park, N.J.-based company named Roger C. Holstein as CEO, with Martin J. Wygod retaining the role of company chair. The management change was part of a previously announced plan to separate the two roles.

Study says EMR worth cost

Primary care physicians who scrap paper-based systems in favor of electronic medical records systems can save $86,400 over a five-year period, according to a study published in the April American Journal of Medicine. Researchers at Partners HealthCare System found that an EMR system costs doctors money during the first two years, but that those losses turn into gains as the functionality of the system increased over the next three years, said Samuel J. Wang, MD, PhD, lead co-author of the study.

Analyzing cost and benefit data collected from 400 doctors at 30 ambulatory primary care clinics that are part of the Partners Healthcare System, and data from previously published studies, researchers found that the annual benefit of an EMR system per physician is $50,300 by the end of the fifth year. The figure takes into account Partners' average capitation rate of 17%, Dr. Wang said. The higher the capitation rate, the greater the savings for physicians, he added.

N.M. IPA settles price-fixing charge

Carlsbad Physician Assn., an IPA that represented more than 80% of the primary care physicians in its New Mexico area, agreed to dissolve and stop negotiating on any physician's behalf, as part of a settlement it reached earlier this month with the Federal Trade Commission.

The FTC had charged the association with fixing prices and refusing to deal with health plans that would not meet its terms. The FTC also alleged individual physicians in and around Carlsbad would not deal directly with health plans, choosing instead to work collectively through the IPA.

The FTC alleged because the IPA represented such a large percentage of physicians in the region, it engaged in anti-competitive behavior that was harmful to consumers.

United Surgical posts income gain

United Surgical Partners International, an Addison, Texas-based operator of ambulatory surgical centers, posted net income of $7.1 million for the first quarter of 2003, a 51% increase over the $4.7 million it posted the previous year. The company also reported earnings of 26 cents a share, compared with 19 cents a share during the first quarter of last year. The company, which saw revenues jump from $75 million during the first quarter last year to $102 million this year, attributed the gains to increases in patient volume at current facilities. It also expanded during the first quarter, completing a joint venture agreement with the Catholic Healthcare West system to develop and operate surgery centers and surgical hospitals in Phoenix. United Surgical also completed the acquisition of its ninth facility in Spain during the first quarter.