News in brief - Feb. 16, 2004

More spent on health care mergers - Tenn. company gets funds for hospital purchases - WebMD buys Physicians Online - Highmark makes plans for surplus - Kaiser offers online health info - Zix acquires MyDocOnline - Drug companies form high-tech alliances - New board members join HealthSouth

More spent on health care mergers

The number of health care merger and acquisition deals dropped slightly from the third to fourth quarter last year, but total money invested more than doubled, according to a report released by Irving Levin Associates Inc.

The New Canaan, Conn.-based research company reported deals valued at $43.7 billion in the quarter, a 126% increase over the $19.3 billion spent during the previous quarter. For the year, 906 deals valued at $92.8 billion were announced in 2003, an 8% decrease from the 945 deals and $101.4 billion announced in 2002, according to the report.

Tenn. company gets funds for hospital purchases

Attentus Healthcare doesn't own any hospitals yet, but it's got $77 million to spend toward buying them. Franklin, Tenn.-based Attentus received the money in a round of venture capital financing. About $75 million of that funding came from JLL Partners, which has invested in other Nashville-area for-profit health care companies. The founders of Attentus also are veterans of the Nashville health care industry. Attentus plans to buy hospitals in rural areas and midsized cities that have not attracted the attention of other for-profit chains. The company said it plans to buy two to four hospitals annually.

WebMD buys Physicians Online

Andrx Corp. has sold its physician portal subsidiary, Physicians Online LLC, to WebMD Corp. for $2 million in cash. Physicians' Online claims that it has 230,000 registered physician users, with more than 25,000 of them logging on monthly to access electronic mail, continuing medical education information, practice management tools, clinical surveys and other services.

WebMD, which sells transaction processing services and practice management and electronic medical records software, also operates Web sites for doctors and consumers.

Highmark makes plans for surplus

The CEO of Highmark Inc., a BlueCross BlueShield-affiliated plan in Pennsylvania, says the company would likely lower premiums for low-income customers or extend health insurance to those who lack coverage if state regulators force it to reduce its surplus.

In an interview with the Pittsburgh Post-Gazette, Kenneth Melani, MD, said he's not sure that the state's insurance department will find Highmark's surplus excessive. The department said in January it is placing a cap on how much the state's four Blues plans may keep in reserve. Insurance plans must keep a minimum to prove financial solvency.

Kaiser offers online health info

Kaiser Permanente is making available tens of thousands of pages of physician-approved health content to all consumers regardless of whether they are Kaiser members. The information is free and can be accessed online (www.kp.org).

Zix acquires MyDocOnline

Zix Corp., a seller of e-prescribing systems, has acquired all the assets of MyDocOnline Inc., a seller of secure messaging systems, for $6.9 million in stock. The acquisition of MyDocOnline, which was a subsidiary of Aventis Pharmaceuticals, enables Zix to expand its offerings to include one that facilitates online consultations, disease management, lab ordering and reporting services.

Drug companies form high-tech alliances

In separate actions, Locus Pharmaceuticals has signed a deal with IBM Corp. and Concurrent Pharmaceuticals has signed with Intel Corp. to aid their drug research efforts, according to the Philadelphia Business Journal.

The two Pennsylvania-based pharmaceutical companies hope that the massive computing power of the high-tech behemoths will help them discover and design new drugs.

New board members join HealthSouth

Two new independent directors have been elected to HealthSouth's board as part of a board overhaul plan first announced by the embattled outpatient services giant in December 2003.

HealthSouth said on Feb. 2 that Steven R. Berrard and Edward A. Blechschmidt were joining its board of directors and the special committee of its board of directors. The moves were effective as of Jan. 31.

Berrard is a former vice chair, president and chief executive officer of Blockbuster Entertainment Group. Blechschmidt is a former chair and chief executive officer of Gentiva Health Services and former chief financial officer of Unisys Corp.

HealthSouth acting chair Joel C. Gordon said the pair would bring extensive financial, administrative and health care experience to the board.

The Birmingham, Ala.-based company announced in December 2003 that it had agreed to replace five long-standing directors who were on the board while major accounting fraud was brewing at the company. The move was part of a settlement with Teachers Retirement System of Louisiana, a group of shareholders that sued HealthSouth in the wake of the accounting scandal.