News in brief - April 26, 2004

Tenet board members leaving - Study finds economic power shifted to hospitals - Highmark closes wellness centers - WebMD acquires Dakota Imaging

Tenet board members leaving

Three board members of Tenet Healthcare Corp. have told the troubled hospital chain that they won't seek re-election at the company's annual meeting.

Tenet's chair, Edward A. Kangas, said in a written statement on April 5 that the Rev. Lawrence Biondi and Sanford Cloud Jr. decided "to focus their energies on other endeavors." Their terms on the board were set to expire at the May 6 meeting. The company also announced that Robert C. Nakasone had submitted his notice of resignation from the board.

Tenet has come under fire in the last 18 months with government investigations of its billing practices and relationships with doctors. In an effort to reverse its fortunes, the company underwent a leadership overhaul last year and has launched a major restructuring of its operations.

Meanwhile, in its proxy statement filed with the Securities and Exchange Commission on April 5, Tenet disclosed details about the compensation of its executives.

The filing showed that Trevor Fetter, CEO and president, received $6.1 million in compensation in 2003. The figure included $848,539 in salary, a $262,500 bonus, $1.25 million in "other compensation," $3.7 million in restricted stock awards and nearly $34,000 in additional payment.

Study finds economic power shifted to hospitals

Hospitals and medical groups, once partners, are now more likely to be competitors with conflicting economic interests, according to a new study of California's health care market.

The study for the California HealthCare Foundation concluded that there has been a fundamental shift in the way economic power is held and used in health care business relationships. Under the old model, the report said, physician groups and hospitals shared risk. But that changed after the late 1990s, when the payment pools stopped growing, leaving less money to divide.

The study said that hospitals have used system building and more strategic negotiating to escape from risk-sharing contracts.

The study was compiled using data on health plans and hospitals as well as interviews with nearly 40 leaders of California health plans, hospital systems, state associations, purchasers and government agencies.

Highmark closes wellness centers

A Pennsylvania Blue Cross and Blue Shield plan that had operated several free wellness centers since 1986 closed all of them April 1, in part because few people had time to use the facilities during the day.

Highmark Blue Cross Blue Shield shut down the seven HealthPlace centers that it owned and operated in central Pennsylvania.The number of centers had declined in recent years and at its peak stood at 16.

The centers offered such classes as smoking cessation, nutrition, exercise, meditation and CPR.

Only about 5% to 6% of Highmark's members were using the centers when they closed.

Highmark will work with YMCAs and other community organizations as well as hospitals to offer various wellness programs on a fee basis, and also will beef up wellness resources available to members on the Internet, said Anna Silberman, vice president of preventive health services.

WebMD acquires Dakota Imaging

WebMD Corp. has agreed to buy Dakota Imaging Inc., which provides document imaging and automated claims processing services. WebMD says it will pay $40 million in cash plus an additional $25 million over three years if certain conditions are met. WebMD sells practice management software and transaction processing services to physicians, hospitals and other health care interests.