News in brief - Oct. 18, 2004

UnitedHealth hires airline exec - Empire test-drives e-visits - Health care venture capital down - Tenet to sell 4 hospitals - Report details Calif. ED crisis

UnitedHealth hires airline exec

Minnetonka, Minn.-based UnitedHealth Group announced in October that it had hired the former CEO of Northwest Airlines Corp. as its executive vice president.

Northwest Chief Executive Richard Anderson, who had led the Eagan, Minn.-based airline for more than three years through financial struggles and cost-cutting, was scheduled to start work at United by the end of October.

Anderson, 49, was chosen because of his knowledge of technology, consumer services and products, and operating efficiency, United said in a press release.

Empire test-drives e-visits

New York-based Empire BlueCross BlueShield announced that it would test reimbursing for online consultations this fall. Under the pilot, the insurer will pay doctors $20 for an online consultation, which includes a $5 patient co-payment.

Health care venture capital down

Venture capital firms committed less money to health care investments in the third quarter of 2004 compared with the second quarter, according to Jenks Healthcare Business Report published by Irving Levin Associates Inc., a health care research and publishing firm based in New Canaan, Conn.

The report counted 94 investments equaling $1.3 billion in the quarter, a 15% decline in the number of investments and a 34% decline in the total amount invested from the previous three-month period.

So far this year, venture capitalists have invested $5.3 billion in 408 transactions, according to the report. Investors are devoting most of their funding to the pharmaceutical, biotechnology, biopharmaceutical and medical device sectors, according to the report.

Tenet to sell 4 hospitals

Tenet Healthcare Corp. has agreed to sell four hospitals in Orange County, Calif., to a newly formed hospital acquisition and management company for about $72 million.

Integrated Healthcare Holdings signed a definitive agreement to buy the 114-bed Chapman Medical Center in Orange, the 178-bed Coastal Communities Hospital in Santa Ana, the 188-bed Western Medical Center in Anaheim and the 280-bed Western Medical Center in Santa Ana, Tenet said. The deal is expected to be completed by Nov. 30, pending regulatory approval.

Tenet said Integrated Healthcare Holdings, a publicly traded company based in Costa Mesa, has agreed to continue to operate the facilities as acute care hospitals, keeping their emergency departments open.

The four hospitals are among 27 that Tenet said it would sell and divest as part of a major restructuring effort announced in January.

Report details Calif. ED crisis

Financial losses in emergency departments at hospitals across California surged to $635 million in fiscal 2002, underscoring the worsening conditions that have forced scores of hospital to close in recent years, according to a new report by the California Medical Assn.

In an annual survey released Sept. 21, the CMA said hospital emergency department losses reached $460 million while losses to physicians in those EDs totaled more than $175 million. Combined, the figures were an 18% increase from the $540 million in losses reported a year earlier.

The report said hospitals are suffering from declining reimbursements from government and private payers and from the large volume of uncompensated care delivered to some of California's 7 million uninsured residents.

Meanwhile, the CMA said more than 65 emergency departments had closed statewide in the last decade, including 28 since Jan. 1, 2000.

Also in September, Robert F. Kennedy Medical Center in the Los Angeles area announced that it would close by the end of the year, citing financial woes, the CMA said. The medical association said it marked the eighth California emergency department to announce its closure this year.