News in brief - July 14, 2003

Tenet issues earnings warning - Analysts see booming migraine market - Maryland starts contract help service - MDeverywhere acquires Med e-Manager

Tenet issues earnings warning

Tenet Healthcare Corp. has warned investors its earnings will be significantly lower than expected, another sign of financial woe at the beleaguered for-profit hospital chain.

The Santa Barbara, Calif.-based company, stinging from changes to its Medicare billing policy, blamed higher costs and lower revenues for the reduced expectations and said the financial "transitional period" could last through the first half of 2004.

"We are dealing with both industry issues and company-specific issues, most importantly past pricing practices that have placed the company in a difficult position," said Trevor Fetter, Tenet's president and acting chief executive officer, in a written statement on June 23.

Tenet's financial posture has suffered in recent months. A company filing in May revealed that an Internal Revenue Service ruling could force Tenet to pay $269 million in back taxes and interest. The company said it would appeal. Also pending is a lawsuit brought by the Justice Dept., which sued the company in January, saying Tenet overbilled Medicare by submitting claims with inflated diagnostic codes. The same month, Tenet voluntarily changed its Medicare outlier billing policy and subsequently has seen revenues decline.

The company said earnings from continuing operations in April and May, the first two months of its second quarter, were 2 cents per share, well below analyst estimates of 34 cents per share. Tenet also said earnings per share from continuing operations in the third and fourth quarters will likely total between 40 cents and 50 cents, a drop from Wall Street estimates of 70 cents.

Analysts see booming migraine market

Led by growth in the triptan drug class, the international migraine pharmaceutical market is expected to double by 2012, according to Decision Resources Inc., a health care and pharmaceutical research and advisory firm. The market, now about $2.9 billion, is expected to reach $5.6 billion, analysts said.

Maryland starts contract help service

Doctors don't need additional patients as much as they need the know-how to look at their existing managed care contracts and decide, with precision and candor, which ones are making money. That is the assumption underlying UKAN, a new educational program being offered to doctors by MedChi, the Maryland State Medical Society.

The UKAN program is open only to society members. Those in the program use detailed worksheets to record fee schedule information from all of their payers, analyze revenue and figure profit per patient visit for each payer. Afterward, practices should be better equipped for negotiations at contract renewal time or willing to drop undesirable carriers altogether, if they discover they can afford it, the society said.

MDeverywhere acquires Med e-Manager

Med e-Manager, a Melville, N.Y., billing services company, has acquired MDeverywhere Inc., Durham, N.C.

Terms were not disclosed. There will be layoffs, said David Fetterolf, who is president and CEO of Med e-Manager and will head the newly combined company. MDeverywhere, which sells handheld-based charge capture software, has been struggling to survive and previously laid off more than half of its work force.