News in brief - Feb. 27, 2006

Hospital chain recruits physicians - McKesson pitches to smaller hospitals - GM revises retiree health plan - Boston-area systems split - Speech software company makes deal - EMR company changes name

Hospital chain recruits physicians

LifePoint Hospitals Inc. says it will recruit physicians this year in an effort to help its hospitals.

The Brentwood, Tenn.-based operator of hospitals, most in rural areas, said in a regulatory filing that it would spend $35.2 million to recruit approximately 183 new admitting physicians during 2006.

The filing said company managers believe that recruiting specialists will help LifePoint hospitals increase volume by enabling them to offer new services.

The disclosure came the day after LifePoint reported a drop in its annual earnings. The company posted net income of $72.9 million, or $1.45 per share, for 2005, down from $85.7 million, or $2.31 per share, in 2004. That was on revenue of $1.9 billion, up from $997 million in 2004.

The company, which now operates 52 hospitals, acquired Province Healthcare and its 21 hospitals last April. It is in the process of acquiring five hospitals from HCA, Nashville, Tenn., and expects the transaction to be completed early this year.

McKesson pitches to smaller hospitals

McKesson Corp. on Feb. 6 launched an initiative to make clinical information systems more affordable for rural and community hospitals. The initiative -- Community Care Program --offers hospitals that want to implement clinical information systems, including electronic medical records and filmless radiology systems, more flexible financing arrangements and the ability to spread costs over time instead of having to pay their capital expenditure costs upfront, said Paul Adams, a McKesson spokesman. McKesson, San Francisco, sells information systems to hospitals and medical groups.

GM revises retiree health plan

General Motors Corp. announced a new collection of cost-cutting measures in early February, including benefit changes for salaried retirees that the company expects will save about $900 million per year.

The company said it will cap contributions to retirees' health care benefits at 2006 levels. The change, GM estimated, would trim its total health care costs by about $4.8 billion.

Last fall, General Motors had announced an agreement it had forged with the United Auto Workers to limit the company's health care costs by requiring retired workers to pay monthly premiums for their health coverage. Ford Motor Co. announced a similar deal in December 2005.

Nissan Motor Co. Ltd. joined the trend earlier this month as well, as the company reportedly told American workers it would pay retirees an annual stipend and would drop company-sponsored health care coverage.

Boston-area systems split

Finding itself in a murky relationship that wasn't entirely competitive and yet not fully integrated, the Boston health system Partners HealthCare recently announced plans to end an affiliation with a smaller health system.

Partners, which operates five hospitals, including two academic medical centers, notified Northeast Health System in December 2005 that it would not renew its affiliation agreement at the end of 2006, barring major changes to the relationship.

Thomas Lee, MD, chief executive of Partners' physician network, said the possibility was left open that "if they really want to collaborate, we could do that." Otherwise, the former allies should become competitors.

Northeast Health operates two acute-care hospitals and a network of other health facilities. It has 300 affiliated physicians.

Northeast executives declined to be interviewed for this article, but CEO Stephen Laverty told the Boston Globe in January, "We are saddened by their decision." The paper said he did not rule out the possibility of negotiating to retain the affiliation.

Dr. Lee said it was a painful decision to make because "we have very good relationships with the doctors, who are caught in the middle."

Partners, which was founded by Brigham and Women's Hospital and Massachusetts General Hospital, and Northeast not only negotiated managed care contracts as a network but also pursued pay-for-performance goals together.

According to Dr. Lee, the relationship had been going well. "The problem we're having now is that we're all starting to do things where we're running up against each other that are not directly related to our contracts," he said.

For example, both sides have announced plans to build competing ambulatory surgery centers.

Speech software company makes deal

Nuance Communications Inc., which sells the Dragon Naturally Speaking speech-recognition software to physicians, on Feb. 8 agreed to acquire Dictaphone Corp., for $357 million. The proposed acquisition, expected to close by April 1, enables Burlington, Mass.,-based Nuance, formerly ScanSoft Inc., to expand further into the health care market.

Dictaphone, headquartered in Stratford, Conn., sells dictation and transcription software and has an installed client base of more than 4,000 hospitals and outpatient care facilities, and approximately 400,000 physicians.

EMR company changes name

Physician Micro Systems Inc., Seattle, announced Feb. 6 that it changed its name to Practice Partner, the name of the electronic medical records and practice management software product it markets to physicians.

The company, whose system has been installed in more than 1,500 physician practices, made the switch because its software brand was better known than its old company name, Practice Partner executives said.