News in brief - Sept. 19, 2005

Hospitals damaged by Katrina - California hospital pays millions in fraud case - Per-Se Technologies and Wolters Kluwer acquire NDCHealth - Physicians join other investors to buy California hospital - McKesson announces stock buyback

Hospitals damaged by Katrina

Tenet Healthcare Corp. is among the health systems bracing for a significant financial impact from the Hurricane Katrina disaster in the Southeast.

Preliminary reports showed that at least five of its hospitals in the New Orleans area and one hospital near the Mississippi Gulf Coast had considerable wind and water damage from the storm, according to the company. At least three were forced to evacuate patients and staff.

In an Aug. 30 announcement, Tenet said it was too early to estimate the total damages. But the Dallas-based company said it expected that "the cost will be significant even after taking into account its existing insurance coverage for property damage and business interruption."

Tenet's six hospitals in Louisiana and Mississippi as well as an imaging subsidiary with five New Orleans locations made up nearly 6% of its operating revenue in the first half of 2005.

California hospital pays millions in fraud case

A California hospital has paid the federal government $8 million to settle claims that a consulting firm helped it fraudulently overbill federal health insurance programs.

The settlement involving Eisenhower Medical Center in Rancho Mirage, Calif., helps resolve allegations made in a 1998 whistle-blower lawsuit in which a former employee of the consulting firm Healthcare Financial Advisors claimed the firm helped its clients seek reimbursements for unallowable costs.

According to the lawsuit, HFA helped clients prepare two cost reports. One was inflated and submitted to Medicare; a second, more accurate one was done for internal use, prosecutors said. The alleged overbilling took place during the 1990s.

Former HFA employees, allegedly involved in these activities, were not expected to be prosecuted, according to press reports.

Eisenhower did not admit any wrongdoing under the settlement. The hospital said in a written statement that it was "pleased the matter was resolved appropriately."

U.S. Attorney Debra Wong Yang said other defendants in the lawsuit previously had reached settlements.

Per-Se Technologies and Wolters Kluwer acquire NDCHealth

Per-Se Technologies and Wolters Kluwer NV on Aug. 29 agreed to acquire NDCHealth Corp., an Atlanta-based company that sells physician practice management software and health care transaction processing services, in separate transactions valued at more than $1 billion.

Under the proposed agreement, which is expected to close within three to six months, Per-Se Technologies, Alpharetta, Ga., will acquire the physician, hospital and retail pharmacy operations of NDCHealth for $665 million in cash and stock, including the assumption of $270 million in debt.

The transaction will enable Per-Se Technologies to expand its physician and hospital client base and enter the retail pharmacy market. Per-Se Technologies, which sells software and services to 19,000 hospital-affiliated physicians and 2,000 hospitals, will gain an additional 100,000 office-based physicians, 1,800 hospitals and 50,000 retail pharmacies as clients.

Separately, Netherlands-based Wolters Kluwer, a Dutch publisher of medical and legal journals, will acquire the NDCHealth unit that sells pharmaceutical market research to drug companies for $382 million in cash.

NDC Health, which is under investigation by the Securities and Exchange Commission for alleged accounting improprieties, had put itself up for sale earlier this year.

Physicians join other investors to buy California hospital

A group of more than 50 physicians on staff at Brotman Medical Center in Culver City, Calif., have joined other investors to take over the 420-bed facility.

The investment group, which also included a subsidiary of Prospect Medical Holdings and private investors from the community, bought the hospital for about $27 million from Tenet Healthcare Corp. The sale was completed Sept. 1.

The hospital was among 27 facilities Tenet wanted to shed under a divestiture program announced in January 2004. The Dallas-based hospital chain said it had sold 23 hospitals and is in negotiations to sell the remaining four.

McKesson announces stock buyback

McKesson Corp., which sells software to physicians and hospitals, announced Aug. 29 that its board of directors had authorized the repurchase of up to $250 million of its common stock in the open market or in private transactions.

The new stock buyback program follows the recent completion of a previous $250 million repurchase program authorized in October 2003.