News in brief - Sept. 4, 2006

Vanguard to sell California hospitals - WellPoint adds 68,000 Medicaid members - Fallon offers nonsmoker incentive - HCA hospital to discontinue inpatient care

Vanguard to sell California hospitals

Vanguard Health Systems Inc. has announced plans to sell all three of its acute care hospitals in California so it can focus on other markets.

The Nashville, Tenn.-based hospital chain said on Aug. 16 that it had reached an agreement to sell the hospitals to Prime Healthcare Services Inc., a Victorville, Calif.-based company that owns four acute care hospitals in Southern California.

Vanguard, which owns 19 hospitals in five states, said the move would enable it to allocate resources to existing core markets in Arizona, Illinois, Massachusetts and Texas. Terms of the deal were not disclosed.

The three hospitals being sold were the 131-bed Huntington Beach Hospital, the 141-bed La Palma Intercommunity Hospital and the 219-bed West Anaheim Medical Center. All are in Orange County.

WellPoint adds 68,000 Medicaid members

WellPoint Inc., has acquired QualChoice Select Inc., the Medicaid plan from QualChoice Health Plan, an Ohio-based managed care organization. As part of the deal, Anthem Blue Cross and Blue Shield will serve as the insurer for business customers of QualChoice's commercial insurance plans and individual policies. QualChoice serves approximately 68,000 Medicaid members.

WellPoint didn't disclose financial terms of the deal, but a statement from the company said the transaction does not have a material impact on WellPoint's current earnings-per-share guidance of $4.74 for 2006.

Fallon offers nonsmoker incentive

Massachusetts-based Fallon Community Health Plan is offering a $10-per-pay-period payment toward the health insurance of nonsmokers. The plan says it hopes the discount will encourage smokers at its workplace to quit. The discount would total $260 for a year.

More employers are using such discounts as an incentive for employees to stop smoking, thus saving on later health costs. On July 1, Massachusetts codified such incentives into its landmark law requiring all of its residents to have health insurance, believing the incentives could make insurance more affordable. Fallon says it is testing its plan in its own office before offering it as part of the health plans it sells or manages to other employers.

HCA hospital to discontinue inpatient care

The troubled general acute care hospital carved out of a transaction to sell several HCA hospitals to Brentwood, Tenn.-based LifePoint Hospitals Inc., will be converted into an outpatient urgent care center instead.

HCA officials on Aug. 1 announced plans to discontinue inpatient services at Putnam General Hospital in Hurricane, W.Va., by Aug. 29, blaming ongoing litigation brought by more than 100 patients who have filed malpractice lawsuits against an orthopedic surgeon who used to practice there. The surgeon has denied wrongdoing, and the cases are in their early stages in court.

"Personal injury trial lawyers have filed lawsuits to block [Putnam's] sale to LifePoint and engaged in an ongoing campaign that has unfairly discredited our employees and affiliated physicians. These actions are devastating to the hospital, and they jeopardize our ability to continue providing high-quality inpatient care in the future," said Margaret Lewis, president of HCA's Capital Division, in a written statement.

Officials said the hospital, licensed for 68 beds, has seen a drop in its average patient census and lost $2.4 million since 2005.

Putnam was originally part of an agreement to sell five rural hospitals to LifePoint, but it was carved out and the transaction was restructured without it.