News in brief - April 10, 2006

HealthSouth delays annual report - Automaker bases premiums on pay - RHIOs standards contract awarded - Academic practice pay flat

HealthSouth delays annual report

Still struggling to recover from a massive accounting fraud, HealthSouth Corp. said it would delay filing its 2005 annual financial report, which it expects will show at least $260 million more in losses than the year before.

In a March 17 filing with the Securities and Exchange Commission, the Birmingham, Ala.-based outpatient services giant said it had to delay the report, because its resources have been tied up with restructuring its finances, reconstructing accounting records, defending litigation and revamping leadership in the wake of the $2.7 billion accounting fraud. The company said it expected to file its report March 31, rather than its March 16 deadline.

This would be the third straight year HealthSouth has missed the filing deadline.

The filing also said HealthSouth expects its 2005 pretax losses to be $260 million to $280 million greater than 2004's loss of $174.5 million, largely because of a litigation settlement and changes in federal reimbursement rules.

That would mean a loss of at least $434.5 million for 2005, about the same as the company's 2003 loss but less than its $466.8 million loss in 2002.

HealthSouth also said it expects an "adverse opinion" from auditors examining how the company is handling internal financial controls.

The accounting fraud was first disclosed in March 2003 and resulted in more than a dozen former HealthSouth executives losing their jobs and either pleading guilty or being convicted on criminal charges, although ousted founder Richard Scrushy was found innocent of having any role in the fraud.

Automaker bases premiums on pay

DaimlerChrysler Group executives and managers will pay higher premiums for health coverage than shop workers and administrative employees in a move the car manufacturer hopes will help curb its health care costs.

The company, which estimates total health care cost per employee to be $11,000 annually, will use a sliding scale for premiums.

Top executives could pay up to the full company cost for their health insurance, while workers on the lowest levels would not be affected, DaimlerChrysler officials said.

The company estimated middle managers would see an average increase of $450 in 2007, while executives could see increases as high as $1,500.

Retirees younger than 65 would see their premiums change based on the employee's exit base salary, according to the company.

DaimlerChrysler also said it will establish health care retirement accounts and contribute $1,750 annually for retirees eligible for Medicare.

Expected to cost $2.3 billion in 2006, health care is one of DaimlerChrysler's highest fixed costs.

RHIOs standards contract awarded

The Dept. of Health and Human Services' Office of the National Coordinator for Health Information Technology has awarded a contract to the Foundation of Research and Education of the Chicago-based American Health Information Management Assn. to develop best practices for state regional health information organizations.

FORE will work with the National Conference of State Legislatures to convene meetings with emerging state-level RHIOs and other stakeholders to determine performance standards in the areas of governance, structure, financing and health exchange policies.

RHIOs, networks that would enable physicians and hospitals to exchange patient data electronically, are a cornerstone of President Bush's plan to create a national health information network. FORE anticipates it will complete its project by the end of August.

Academic practice pay flat

Physicians in academic practices reported stagnant income in 2005, according to a report by the Englewood, Colo.-based Medical Group Management Assn.

Academic physicians in primary care saw compensation increase only 0.2%, from $135,000 in 2004 to $135,278 in 2005, according to the report. Specialty physicians in academic practices saw compensation hold steady at $195,000, according to the report.

Experts said the leveling of compensation, combined with stagnant incomes in other academic practice positions, seemed to indicate more of a cost-conscious attitude among academic practices.

"Many academic practices find themselves in a vise. Squeezing them on one side are increased operating costs and malpractice insurance premiums, and squeezing them on the other side are decreased reimbursement and funding," said Billy Newton Jr., administrator for the Dept. of Pediatrics at the Duke University School of Medicine, in Durham, N.C.