News in brief - May 3, 2004

Report: E-prescribing would be a big money-saver - More government probes for Tenet - HealthSouth loses with bondholders

Report: E-prescribing would be a big money-saver

National adoption of electronic prescribing could save $27 billion from increased use of generics, fewer medication errors and less duplication, according to a report by the eHealth Initiative.

Physician adoption of e-prescribing has increased significantly over the past three to five years, but the level of adoption overall is modest because of the cost of the technology, lack of payer reimbursement and doctors' fears that the technology will reduce their efficiency, said eHealth Initiative, a Washington D.C.-based nonprofit group that promotes use of health care information technology.

Between 5% and 18% of doctors prescribe electronically, according to the report, which was produced by more than 70 experts drawn from the industry, including practicing physicians, hospital systems, pharmaceutical companies and technology vendors.

The report, "Electronic Prescribing: Toward Maximum Value and Rapid Adoption," is available online (www.ehealthinitiative.org/initiatives/erx).

More government probes for Tenet

Federal prosecutors have launched two new, unrelated inquiries into the practices of two Tenet Healthcare hospitals in California, the troubled hospital company announced.

Tenet said on April 14 that it had received a request from the U.S. Attorney's Office in Los Angeles seeking information about coding and billing practices at a cancer center at Desert Regional Medical Center in Palm Springs, Calif.

The company said it also had received a request for documents about the relationship between Centinela Hospital Medical Center in Inglewood, Calif. and Allied Homecare Consultants Inc., an independent home health placement service.

Tenet has come under fire in the last couple years with government investigations of its billing practices and relationships with doctors. In August 2003, the company agreed to pay the federal government $54 million to settle claims that doctors performed unnecessary cardiac procedures to boost profits at Tenet's Redding Medical Center in northern California.

On April 16, Tenet announced that it had reached an agreement to sell the Redding Medical Center in northern California to Hospital Partners of America Inc., for $60 million. The proceeds will be retained by a Tenet subsidiary that owns the 246-bed hospital. The sale is expected to be completed by June 30.

HealthSouth loses with bondholders

HealthSouth Corp. lost a round in its legal effort to block bondholders from seeking accelerated payments, possibly putting the troubled outpatient services giant at risk for bankruptcy as it tries to revive itself following a massive fraud scandal.

In an order on April 14, Circuit Judge Allwin Horn III in Jefferson County, Ala., denied HealthSouth's request for a preliminary injunction and dissolved a temporary restraining order against the bondholders, who have accused HealthSouth of defaulting on the bonds.

According to published reports, the bondholders are seeking the immediate repayment of more than $2 billion. HealthSouth reportedly argued that the accelerated payment could force the company to seek bankruptcy protection.

In a written statement on April 15, HealthSouth said it had received a notice from the bondholders that they would not pursue accelerated payments for at least 30 days as long as HealthSouth engaged in good-faith negotiations to find a resolution.

Another hearing in the case was set for April 23.

HealthSouth has been accused by federal prosecutors of overstating earnings by $2.7 billion or more over several years in a scheme to meet Wall Street expectations. Seventeen former employees have agreed to plead guilty to various criminal charges, and ousted chief executive Richard M. Scrushy is awaiting trial for fraud.