News in brief - Feb. 13, 2012

Physician employment a factor in negative projections for nonprofit hospitals

The fiscal outlook for most nonprofit hospitals does not look good for 2012, and the growth in the number of physicians employed by these facilities is playing a significant role, according to a report issued Jan. 25 by Moody's Investors Service.

Moody's first downgraded the nonprofit health care industry from stable to negative in November 2008 in response to the recession and expected cuts to government programs. The latest report, U.S. Not-For-Profit Healthcare Outlook Remains Negative for 2012, maintained this evaluation because the economy is weak. Payment from Medicare, Medicaid and private third-party payers is expected to go down. In addition, Moody's wrote, hospitals are hiring more physicians.

"The short-term negative credit impact of ramping up physician employment can be significant because the main benefits of the strategy might only emerge over a longer period, while the costs are effectively immediate, possibly causing material stress on operations in 2012 and 2013," the authors wrote. "There are often high initial costs involved with new physician employment -- salary guarantees, physician integration or even practice acquisition."

Large integrated health systems are expected to fare better financially than small, free-standing facilities.

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ONC launches new developer contests

The Office of the National Coordinator for Health IT has announced three new health-related app development challenges.

"The EHR Accessibility Challenge" will award three cash prizes for first-, second- and third-place apps that help people with disabilities access their electronic medical records.

The "Discharge Follow-up Appointment Challenge" will pick a winning app that will help patients make an appointment with their primary care physicians after being discharged from the hospital.

The "Health Innovations in Commuting Challenge" seeks to find ways to better collect, transmit and analyze data from daily commuters in an effort to improve their health.

Information on the three challenges, and instructions for entering, can be found online (www.health2challenge.org).

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WellPoint subsidiary fined for improper rates and coverage rules

Washington State Insurance Commissioner Mike Kreidler has fined WellPoint subsidiary UniCare $100,000 for violating three state laws in the sale of insurance policies for international students.

In a consent order signed in January, the company was found to have used unapproved methods to set rates, allowed unlicensed insurance brokers to sell the policies, and used a coverage exclusion for injuries and illness caused by intoxication that was outlawed in Washington state in 2004.

The violations were found to have occurred beginning in 2003 and in some cases until 2011.

UniCare did not admit or deny wrongdoing. UniCare spokesman Chris Dugan said the company has been working to fix the problems since the consent order was signed.

"The process is now concluded, and the issues have been completely addressed," he said in a statement.

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