News in brief - July 28, 2003

CareFirst, leaders face fines - SEC investigates Tenet - Study: Emergency physicians' pay up - GE Medical adds to product line

CareFirst, leaders face fines

The insurance commissioner of Maryland declared July 8 that he would seek to impose fines against CareFirst BlueCross BlueShield, its chair and two top executives.

Commissioner Alfred Redmer, in a lengthy report, accused the company and leaders of violating state laws that govern nonprofit insurers during CareFirst's effort to win state approval of a for-profit conversion.

Redmer said he will pursue a $500,000 fine against the company and lesser individual fines against CEO William L. Jews, Executive Vice President David D. Wolf and board chair Daniel J. Altobello.

The commissioner accused the company of transforming itself into a de facto for-profit operation through greedy management strategies and setting themselves up to receive a windfall in bonuses if a planned sale of CareFirst to California-based WellPoint Health Networks Inc. went through. That conversion was rejected in March by Redmer's predecessor.

WellPoint's $1.37 billion offer was contingent on the Blues plan going for-profit.

A state regulatory hearing will be held to consider the fines.

CareFirst said it will fight the penalties.

SEC investigates Tenet

Tenet Healthcare Corp. has revealed that it is being formally investigated by the Securities and Exchange Commission, the latest in a series of government inquiries into the troubled hospital chain's practices.

The Santa Barbara, Calif.-based company announced July 9 that it had received a civil subpoena from the SEC requesting documents related to Medicare outlier payments and other financial records compiled since May 31, 1997. Tenet had disclosed in November 2002 that the SEC was conducting an informal inquiry but the latest action revealed an intensified probe.

Tenet's financial practices were already under scrutiny by the Dept. of Justice, which filed a lawsuit in January accusing the company of overbilling Medicare. The same month, Tenet voluntarily changed its Medicare outlier billing policy and later saw revenues decline.

The company, the nation's second largest for-profit hospital chain, is also under investigation by the FBI over allegations that two physicians at a Redding, Calif., Tenet hospital performed unnecessary heart operations. In addition, the Internal Revenue Service is looking into whether the company owes $269 million in back taxes and interest.

Study: Emergency physicians' pay up

Emergency physicians' salaries increased about 18% on average since 1997, though incomes varied dramatically across different regions of the country, according to the 2002 National Emergency Physician Salary & Compensation Survey.

The survey, conducted by Daniel Stern and Associates, a Pittsburgh-based physician placement and health care consulting firm, reported the national salary average for emergency physicians was $218,469 in 2002, up from $184,800 in 1997.

Salaries were not the same across the country, however. The survey reports the median compensation for emergency physicians in southern states was $241,378, compared to $185,937 for physicians in the Northeast.

The survey generated more than 800 responses from emergency department staff physicians and directors.

GE Medical adds to product line

GE Medical Systems Information Technologies has agreed to acquire Triple G Systems Group Inc., a Canadian vendor of laboratory information systems, for about $55 million.

The acquisition, which is expected to close in the third quarter, is the latest Milwaukee-based GE Medical has made as part of a goal to offer a "next-generation" clinical information system spanning across the continuum of care. Last year, the health care technology business of General Electric Corp. acquired MedicaLogic and Millbrook Corp., which respectively sell electronic medical records and physician practice management software.