News in brief - Aug. 8, 2005

Nonprofits' health improves slightly - Charges dropped in HealthSouth case - Patient, doctor data stolen in Arizona - WebMD Health to have single CEO - LifePoint to buy five hospitals from HCA

Nonprofits' health improves slightly

The nonprofit health care sector is showing some signs of sustained financial improvement for the first time in several years.

In a report on July 12, Standard & Poor's said upgrades outpaced downgrades for two consecutive quarters -- the first time that has happened in more than five years. And in a July 7 report, Moody's Investors Service said it had 34 upgrades for nonprofit health care and 24 downgrades in the first two quarters of 2005.

Moody's said the primary reason for the improvement was a shift by nonprofit health care to focus more on core acute care operations while shedding other health care business lines, such as insurance.

But those in the industry cautioned that such financial pressures as increasing charity care and lower reimbursements remain.

Charges dropped in HealthSouth case

Prosecutors have dropped criminal charges against former HealthSouth president and chief operating officer James Bennett just weeks after his ex-boss was exonerated of criminal wrongdoing in the same accounting scandal.

U.S. Attorney Alice H. Martin gave no explanation for the move in a brief motion to dismiss the indictment against Bennett. A federal judge approved the motion on July 20.

Prosecutors had accused Bennett of securities fraud, insider trading, lying to investigators and more for allegedly being involved in a $2.7 billion accounting scandal in which HealthSouth executives conspired to artificially inflate the company's earnings and boost its stock price.

Eighteen former HealthSouth executives were charged with crimes in the plot, including ousted founder and chief Richard M. Scrushy. He was accused of masterminding the scheme but was cleared of all charges in June following a five-month jury trial.

At a Feb. 10 hearing, Bennett had pleaded innocent to the charges.

Patient, doctor data stolen in Arizona

The personal information of 57,000 members of BlueCross BlueShield of Arizona and 3,000 physicians and clinicians who treated them has been compromised after a safe containing backup tapes was stolen on June 29 from the offices of Arizona Biodyne, The Associated Press reported on July 13.

It's unclear whether the thief knew what was in the tapes, which included the social security numbers, addresses and patient histories of some patients. Arizona Biodyne, a Phoenix-based affiliate of Magellan Health Services that manages behavioral health for the Blues plan, began notifying people whose information was stolen on July 8. A spokeswoman for Arizona Biodyne told the AP that it took more than a week for it to start alerting people because a copious amount of information was stored on the tapes.

WebMD Health to have single CEO

WebMD Corp. said that the online health information division it's spinning off to the public will have a single chief executive officer instead of two, as it had originally announced several months ago. The Elmwood, N.J.-based company on July 13 said Wayne Gattinella will be the sole CEO and president of WebMD Health, and David Gang will serve as executive vice president of product and programming, and chief technology officer. WebMD had named the two men as co-CEOs in April.

LifePoint to buy five hospitals from HCA

LifePoint Hospitals Inc. has agreed to buy five rural hospitals in Virginia and West Virginia from hospital giant HCA Inc. for about $285 million plus working capital.

HCA said it was selling the hospitals as part of a previously announced plan to divest 10 hospitals in rural or nonurban areas so the company can streamline its focus to facilities in urban and suburban areas.

LifePoint, which has 52 hospitals, focuses its business on facilities in nonurban communities.

Both companies are based in Tennessee.

The hospitals being sold are the 200-bed Clinch Valley Medical Center in Richlands, Va.; the 325-bed St. Joseph's Hospital in Parkersburg, W. Va.; the 155-bed Saint Francis Hospital in Charleston, W. Va.; the 369-bed Raleigh General Hospital in Beckley, W. Va.; and the 68-bed Putnam General Hospital in Hurricane, W. Va.

The sale is expected to be completed by the end of the year.