Healthcare Updates by Tim Meyer (MF Attila) McLEAN, VA (Feb 9, 1997) - OUR POLITICAL HEALTH The President's Budget was officially delivered to Capital Hill this week. In view of the fact that most of the health related issues were previewed in both anonymous-source and official discussions over the past couple of weeks there weren't any major surprises. The previously reported payment reductions to health-maintenance organizations of $34 billion and hospitals of $33 billion were in the package as was the transfer of home health costs from Medicare Part A to Part B. By having Part B pick up this tab, the Part A hospital trust fund insolvency has been put off to 2007 instead of 2001 (remember Fools, this didn't save money it just switched accounts). The Rhode Island Attorney General is looking for outside experts to review the value of Roger Williams Medical Center prior to approving its sale to COLUMBIA/HCA HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COL)") else Response.Write("(NYSE: COL)") end if %>. He placed an add in the Wall Street Journal looking for a firm to examine the hospital's worth. The Health Care Financing Administration (HCFA) announced that it has selected Denver as the location for its Medicare Managed Care Competitive Pricing Demonstration project, which will use competitive bidding to set payment rates. Denver has six managed care plans that participate in the Medicare program. The demonstration is scheduled to last for about three years. It was not clear whether or not anyone at HCFA has talked with anyone at the Department of Defense (DOD). DOD has a few years experience with competitive bidding contracts for military retiree and dependent health care in their Tricare program. (Remember the "Cone of Silence" on the television show Get Smart?) HEALTHCARE STOCKS IN THE NEWS OXFORD HEALTH PLANS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %> announced a pilot project with Columbia Presbyterian Medical Center that will assign primary-care status to nurse practitioners. The project will test the ability of nurses to assume an increasing share of the primary-care duties now performed by doctors and whether patients will choose a nurse instead of a doctor as their principal primary-care provider. The nurse-practitioners will have broad authority including privileges to admit patients to the hospital and write prescriptions for most drugs. The rates paid by Oxford for primary-care services will be the same whether a patient is cared for by a nurse-practitioner or a doctor. For the week, Oxford finished down 3 closing on Friday at $51 3/8. WELLPOINT HEALTH NETWORKS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WLP)") else Response.Write("(NYSE: WLP)") end if %> announced that the planned acquisition of the group health and related businesses of John Hancock Mutual Life Insurance Company did not close on January 31, 1997 as previously anticipated. SelectCare, Inc. (a network manager of doctors and hospitals in Detroit) filed a lawsuit in Federal Court on January 28, 1997, claiming the deal would violate agreements between John Hancock and SelectCare. The court issued a preliminary injunction in favor of SelectCare. John Hancock and WellPoint have agreed to an extension of the agreement until March 1, 1997. WellPoint finished the week up 1/2 closing at $33 1/2. Business Wire reportedan announcement by COASTAL PHYSICIAN GROUP, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DR)") else Response.Write("(NYSE: DR)") end if %> that the company expects to report a net loss for the fourth quarter ended Dec. 31, 1996 in the range of $55 to $65 million. The article also stated the company may not have sufficient resources to meet all of its near-term cash needs. Coastal finished the week down 1 3/8 closing at $2 1/2. CVS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CVS)") else Response.Write("(NYSE: CVS)") end if %> has reached agreement to acquire REVCO DS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RXR)") else Response.Write("(NYSE: RXR)") end if %> in a stock swap valued at more than $40 a share. The acquisition will increase CVS's current sales to about $13 billion making it the nation's number two drugstore chain, behind WALGREEN CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WAG)") else Response.Write("(NYSE: WAG)") end if %>. For the week, CVS was up 3 7/8, closing at $47 1/8, REVCO was up 3 7/8 closing at $41 3/8, and Walgreen was up 2 1/8 closing at $43 1/4. EARNINGS REPORTS CVS CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CVS)") else Response.Write("(NYSE: CVS)") end if %> reported fourth quarter net income of $60.1 million, or 53 cents a share, on revenues of $1,550 million, compared with last year's fourth quarter net loss of $610 million (which included special charges), or $5.85 per share, on revenues of $1,364 million. For the year, net income was $75.4 million, or 57 cents per share, on revenues of $5,528 million, compared to 1995 net loss of $657 million (including special charges), or $6.41 per share, on revenues of $4,865 million. The stock finished the week up 3 7/8 closing at $47 1/8. MEDAPHIS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEDA)") else Response.Write("(Nasdaq: MEDA)") end if %> reported a fourth quarter net loss of $103.7 million, or $1.45 a share, on revenues of $142.9 million, compared with last year's fourth quarter net loss of $1.2 million, or 2 cents per share, on revenues of $144.7 million. For the year, net loss was $123.6 million, or $1.74 per share, on revenues of $802.1 million, compared to 1995 net loss of $8.5 million, or 15 cents per share, on revenues of $563.7 million. The stock finished the week down 2 closing at $11 3/8. HEALTHDYNE TECHNOLOGIES, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HDTC)") else Response.Write("(Nasdaq: HDTC)") end if %> reported fourth quarter net income of $1.4 million, or 11 cents per share, on revenues of $33.1 million, compared to last year's fourth quarter net income of $1.8 million, or 14 cents per share, on revenues of $29.0 million. For the year, net income was $5.7 million, or 44 cents per share, on revenues of $118.3 million, compared to last year's net income of $6.3 million, or 50 cents a share, on revenues of $110.5 million. The stock finished the week down 5/16 closing at $14 1/8. PACIFICARE HEALTH SYSTEMS, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PHSYA, PHSYB)") else Response.Write("(Nasdaq: PHSYA, PHSYB)") end if %> reported first quarter net income of $31.8 million, or $1.00 a share (beating estimates of 98 cents per share), on revenues of $1.23 billion, compared to last year's first quarter net income of $28.0 million, or 88 cents a share, on revenues of $1.06 billion. The company also reported a slight increase in its medical loss ratio up to 85.1% from 85% in 1995. For the week A shares were down 3/4 closing at $74 3/4, while B shares were down 2 1/4 closing Friday at $78. GENESIS HEALTH VENTURES, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GHV)") else Response.Write("(NYSE: GHV)") end if %>reported first quarter net income of $10.9 million, or 31 cents a share, on revenues of $258.5 million, compared with last year's first quarter net income of $5.9 million, or 23 cents per share, on revenues of $132.8 million. The results included an extraordinary charge of $.6 million or 2 cents per share, related to the early retirement of debt. The stock finished the week up 1/4 closing at $31 1/2. That wraps it up for another week. Please share any comments/suggestions on how to improve this feature via e-mail (MF Attila). In the meantime, here is hoping your investments are healthy!

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