News in brief - June 18, 2007

Justice OKs Pa. Blues merger - Aetna buys Medicaid firm - HealthSouth sells headquarters

Justice OKs Pa. Blues merger

The Federal Trade Commission and the Dept. of Justice have given the thumbs-up to a merger that would create the largest nonprofit Blue Cross Blue Shield company in the nation.

The departments granted an early termination to a 30-day waiting period for review because, according to statements from Pittsburgh-based Highmark and Philadelphia-based Independence Blue Cross, the merger complied with all rules, and they decided not to take any enforcement action against the merger. While not technically an approval of the deal, the move indicates that federal authorities will grant permission for it to take place.

The Pennsylvania Medical Society responded that this means attention regarding the deal, which will create a company insuring more than half of all Pennsylvanians, will be concentrated at the state level. The Pennsylvania attorney general must approve the deal before it can take place.

The society has not yet come out against the deal, saying it wanted to do more research before determining if the deal violated policy "to oppose all health insurance mergers unless it would benefit patient care." On April 9, C. Richard Schott, MD, vice chair of the medical society's board of trustees, testified to the U.S. Senate Committee on the Judiciary, "We hope that regulators and others will not rush this merger marriage down the aisle until we can ensure it will do no harm to the public."

The Pennsylvania House and Senate have approved a bill that would give the state's insurance department authority to review the Highmark-Independence merger -- authority it currently does not have because it does not review mergers between nonprofit holding companies. But Gov. Ed Rendell has threatened to veto the bill because it includes the formation of an advisory committee, appointed by the legislative and executive branches, to the insurance department.

Aetna buys Medicaid firm

Aetna announced on May 24 that it had paid $535 million to acquire Schaller Anderson, a privately held, Phoenix-based Medicaid managed care company.

Schaller Anderson operates Medicaid managed care plans in Arizona, California, Delaware, Maine, Maryland, Missouri, New Hampshire and Texas. One of the firm's founders, Don Schaller, MD, had started Arizona's current Medicaid program.

In Delaware and Missouri, Schaller Anderson also operates non-Medicaid HMOs. Aetna and Schaller Anderson jointly made a successful bid to handle HMO coverage for Delaware's state employees, a contract scheduled to begin in July.

Upon the deal's closure, expected later this year, Aetna's Medicaid managed care business will be based at Schaller Anderson's Phoenix offices.

HealthSouth sells headquarters

The once high-flying HealthSouth has sold a symbol of what it once was.

The firm said June 1 it had reached an agreement to sell its Birmingham, Ala., headquarters to an investment fund sponsored by Dallas-based real estate developer Trammell Crow. The purchase price is $60 million.

Included in the deal was HealthSouth's 200,000-square-foot headquarters, an 85-acre corporate campus and an attached 19-acre property that includes an incomplete, 13-story building that was supposed to be HealthSouth's "digital hospital."

HealthSouth plans to lease the headquarters building for one year while it finds other office space in the Birmingham area.

The real estate sale was part of HealthSouth repositioning as a firm offering postacute care services, with a focus on inpatient rehabilitation.

HealthSouth had provided outpatient and inpatient rehabilitation, as well as operated surgery centers, before an accounting scandal broke in 2003, with various executives -- with founder Richard M. Scrushy not among them -- pleading guilty or being convicted of fraud related to the scandal, which involved inflation of earnings.

The doctors are in the house
The AMA's House of Delegates is holding its Interim Meeting Nov. 7-10 in Houston, addressing issues such as health system reform and physician payment.
AMA House - Slideshow - Updates