News in brief - Oct. 20, 2003

Study tracks online prescriptions - 2 more HealthSouth executives resign - Tenet counsel resigns - OrthoNeuro changes name, focus - HealthGate to buy EBM Solutions

Study tracks online prescriptions

Twelve percent of households wired to the Internet have purchased prescriptions online, according to Forrester Research Inc.

Of that total, 6% said they had bought a drug on the Internet without a prescription from a physician and 9% said they intentionally had bought drugs from overseas pharmacies, said Elizabeth W. Boehm, an analyst at the Cambridge, Mass.-based market research company. That means the majority of people buying drugs online are doing so legitimately, she said. But it's likely that some people unknowingly bought prescriptions from overseas pharmacies, because many Internet pharmacies don't say where they are located, she said.

Many pharmacy chains allow people to buy refills online, which helps boost the number of people who buy prescriptions online legitimately.

2 more HealthSouth executives resign

Two more HealthSouth executives have resigned and another former executive has agreed to plead guilty to criminal charges in the wake of a widespread accounting scandal that caused a shakeup at the outpatient services giant.

The Birmingham, Ala.-based company has been feeling fallout from the scandal since March, when federal investigators first publicly alleged that HealthSouth inflated earnings by as much as $2.4 billion. A string of former executives were subsequently snared in the criminal investigation, and founder and former CEO Richard Scrushy was fired. He has not been charged with a crime but is under investigation for civil insider trading.

The company's corporate counsel and corporate secretary, William W. Horton and Brandon O. Hale, respectively, are the latest executives to depart. HealthSouth announced their resignations on Oct. 1, but provided no further detail.

The news came less than one week after U.S. Attorney Alice Martin announced that HealthSouth's former cash manager, Catherine Fowler, had become the 15th former executive to agree to plead guilty to criminal charges in the fraud probe.

Tenet counsel resigns

Tenet Healthcare Corp.'s general counsel is stepping down, saying her departure will help the embattled hospital chain because she has become a target for critics.

The Santa Barbara, Calif.-based company, which is the subject of several government investigations, announced on Sept. 26 that Christi R. Sulzbach was resigning effective Nov. 1. She will continue to assist the company through March as it searches for a replacement.

Tenet has come under fire with several government probes in the last year, including investigations of its Medicare billing practices and its physician relocation agreements. In August, the company agreed to pay $54 million to settle claims that physicians performed hundreds of unnecessary heart procedures at one of its hospitals. Tenet did not admit any wrongdoing.

OrthoNeuro changes name, focus

OrthoNeuro Corp., a Charlotte, N.C.-based business that builds and manages orthopedic and neurosurgical specialty hospitals, changed its name last month to Hospital Partners of America Inc. It also expanded its focus to include the operation of general acute care hospitals.

To prove that point of expanded focus, the company purchased Twelve Oaks Medical Center, a 524-bed Houston hospital spread across two campuses, from a subsidiary of Tenet Healthcare Corp. The company made the purchase as a joint venture with physicians. Tenet officials estimated proceeds from the sale of the buildings, property and equipment to be about $25 million.

Twelve Oaks Medical Center was one of 14 hospitals Tenet planned to sell, close or otherwise consolidate in the face of recent financial strife.

HealthGate to buy EBM Solutions

HealthGate Data Corp. has agreed to acquire EBM Solutions Inc., a privately held vendor of evidence-based guidelines and care management software tools in stock transaction valued at about $1.3 million plus assumption of certain liabilities.

Under the terms of the deal, shareholders of Nashville, Tenn.-based EBM will receive 752,048 shares of HealthGate common stock and a warrant to purchase an additional 333,333 shares at $1.20 a share. HealthGate, Burlington, Mass., sells online health information to hospitals and health systems.