News in brief - Dec. 22/29, 2003

HealthSouth board members to be replaced - Poll: More favor nonprofit plans - Tenet completes sale of 4 Ark. hospitals

HealthSouth board members to be replaced

HealthSouth has agreed to replace five longstanding directors who were on the board while major accounting fraud was brewing at the outpatient services giant.

The move was announced Dec. 2 as part of a settlement with Teachers Retirement System of Louisiana, a group of shareholders that sued HealthSouth in the wake of a massive accounting scandal that has resulted in numerous guilty pleas from executives and the indictment of founder Richard Scrushy. Under the agreement, the board members will voluntarily step down over the next eight months. Their replacements will be chosen with input from shareholders.

"What we got, to quote our president, was a regime change," said Stuart Grant, a Wilmington, Del.-based attorney representing Teachers Retirement System of Louisiana. HealthSouth spokesman Andy Brimmer said the settlement provides for an orderly change in leadership.

In addition to replacing board members, HealthSouth agreed to hold an annual shareholders meeting no later than 60 days after the company's audited financial statements are released, which is expected in mid-2004. At that time, shareholders may elect new board members.

HealthSouth has not held an annual shareholders meeting since May, 2002. A scheduled meeting last April 1 was canceled due to the fraud scandal, which erupted in March.

Poll: More favor nonprofit plans

More people favor insurance plans run by nonprofit businesses and government agencies than for-profit companies, according to a new Harris Interactive poll.

Out of nearly 2,600 respondents to a recent survey, 31% felt the U.S. government should provide most health insurance, while 25% thought nonprofit organizations should be the main provider. Only 22% of those surveyed preferred insurance provided by for-profit companies.

At 37%, pharmaceutical manufacturing was the sector people most felt should be handled by for-profit companies. It was followed by in-home care with 25%. Meanwhile, 35% felt hospitals should be run by nonprofit organizations, compared with 19% who felt they should be run by for-profit companies.

Tenet completes sale of 4 Ark. hospitals

Tenet Healthcare Corp. has completed the sale of four hospitals in Arkansas to Triad Hospitals, Inc.

Tenet, the nation's second largest for-profit hospital chain, said it expected nearly $163 million in net proceeds from the sale to Plano, Texas-based Triad, which operates 57 hospitals and 14 ambulatory surgery centers in 18 states.

The completion of the sale was announced Dec. 1. The four hospitals are Central Arkansas Hospital in Searcy, National Park Medical Center in Hot Springs, Regional Medical Center of Northeast Arkansas in Jonesboro and Saint Mary's Regional Medical Center in Russellville.

Tenet has said the move was part of a cost-cutting plan launched in March to sell, divest or pull out of 14 hospitals. In October, the company completed the sale of six of those hospitals.

Tenet said it expected $593 million in net proceeds after taxes and transaction costs from sales of the 10 hospitals already sold. Two of the other hospitals have closed, an agreement for the sale of another has been reached and negotiations for selling the remaining facility are pending.