News in brief - Sept. 20, 2004

HMO profits up - Tenet sells more hospitals - UnitedHealth enters claims clearinghouse market

HMO profits up

HMOs in the United States saw profits increase by 86% in 2003, says a survey by Weiss Ratings Inc.

Earnings for the 502 health plans evaluated by Weiss soared from $5.5 billion in 2002 to $10.2 billion last year. California-based Kaiser Foundation Health Plan had a $1.1 billion increase in profits, which accounted for about 20% of the gain in the industry's overall profit. That increase resulted from new regulations that permitted consolidation in the plan's year-end financial statements for its hospitals, physician groups and other units.

Blue Cross Blue Shield plans taken together had a 63% increase in profit, from $3.3 billion in 2002 to $5.4 billion last year, Weiss said.

HMOs in California ranked first in earnings increases, with an aggregate gain of $774 million, while Oregon HMOs performed most poorly, with an aggregate loss of $68.5 million.

Tenet sells more hospitals

Tenet Healthcare Corp. has reached an agreement to sell three hospitals in the Los Angeles area to a newly formed health system that is partially owned by physicians.

Centinela Freeman HealthSystem, which is owned by an investment firm, members of the hospitals' management, community leaders and physicians, said Aug. 31 that it had reached an agreement to take over the hospitals and operate them as one system.

Tenet is selling the 370-bed Centinela Hospital Medical Center, the 358-bed Daniel Freeman Memorial Hospital in Inglewood and the 166-bed Daniel Freeman Marina Hospital in Marina del Ray. Terms of the deal were not disclosed. It is expected to be completed by Oct. 31.

The hospitals are among 27 that the troubled chain said it would sell or divest as part of a major restructuring plan announced in January. The endeavor is one of several Tenet has undertaken as it tries to recover from a series of legal and financial woes.

Another blow was revealed on Sept. 1 when Tenet disclosed that the U.S. Attorney's Office in San Francisco had subpoenaed documents relating to medical directorships and physician relocation agreements at the company's San Ramon Regional Medical Center in northern California. Tenet said the subpoena appeared to be consistent with other federal reviews of its physician relationships and medical directorships at hospitals in other states.

UnitedHealth enters claims clearinghouse market

UnitedHealth Group announced in August that it was expanding an internal claims clearinghouse into a commercial operation, enabling physicians outside its network to electronically submit claims and related transactions to other health plans.

In addition to claims, physicians who use UnitedHealth's network also will be able to exchange claim status, insurance eligibility verification and other transactions over the Internet for what the company characterized, in a prepared statement, as a "minimal cost." UnitedHealth did not respond to requests by AMNews for an interview.