Healthcare Updates by Tim Meyer (MF Attila) McLEAN, VA (Feb 23, 1997) - OUR POLITICAL HEALTH (Call the Doctor) This tidbit was carried on the UPI wireservice. Illinois extended voting privileges to more than 1,600 mental patients last year because of the federal motor-voter law. A report says 4,400 more mental patients will be added to voting rolls by next year which has raised a controversy over whether voting privileges should be denied to incompetent patients. The article discussed comments from the president of Equip for Equality, an advocacy group for the developmentally challenged, who said her organization would fight any attempt to make mental competence a requirement to vote. The Federal Bureau of Investigations (FBI) wants "access to and use of health information" according to testimony before the National Committee on Vital and Health Statistics' subcommittee on privacy and confidentiality. At the hearing, the FBI's deputy assistant director of the criminal investigative division, urged that law enforcement be exempted from restrictions on medical information access. The American Medical Association (AMA) testified that exceptions to limits must be "...minimal and narrowly drawn" and that law enforcement organizations "...should be required to show probable cause in establishing why medical records should be divulged without the patient's consent...." There was further information out this week about Health Care Financing Administration (HCFA) Administrator Bruce Vladek's call to repeal the portion of the Kassebaum-Kennedy health insurance reform bill that makes it illegal to dispose of assets in order to qualify for Medicaid coverage of nursing home costs (some of the more vocabulary-challenged opponents of this concept are calling it the "Send Granny to Jail" law). Medicaid helps pay the bills for two-thirds of the 1.6 million people in nursing homes in this country. Clinton administration officials said abuses in the program were not common (then why the uproar if it only effects a few people?) and that the law was ambiguous as to what transactions may result in criminal charges. The American Association of Retired Persons (AARP) and the American Bar Association (ABA) are among groups calling for repeal of the law. Under the law, anyone who "knowingly and willfully disposes of assets" in order to qualify for Medicaid may be fined or imprisoned, although a person will not generally be subject to criminal penalties if they give away assets more than three years before applying for Medicaid. (In other words, it is OK if you retain somebody represented by the ABA to shift Granny's assets more than three years before applying for Medicaid, even after this heinous law, and have the U.S. taxpayer subsidize Granny's nursing home bills.) Federal regulators announced that for the next six years they would pay New York state hospitals not to train physicians. New York trains 15% of the nation's doctors. The federal government finances most of that training through the Medicare program, which pays hospitals up to about $100,000 a year for each resident they train. The New York hospitals have agreed to reduce the number of residents they train by 20% to 25% over the next six years. In the first year, the hospitals will get as much Medicare money for medical training as they are now. During the second year they would get 95% of the amount, then 85% in the third year, dropping to zero in the seventh year. This pilot project is brought to you by the HCFA, who's Administrator, Bruce Vladek, says, "I believe this will be a pathbreaking project." (I wonder if Mr. Vladek is registered to vote in Illinois?) According to The New York Times, "Hospital executives around the nation and powerful members of Congress are reacting with rage to the federal government's highly unusual plan to pay hospitals in New York state that agree to train fewer doctors." Is the rage over the fact we will spend $400 million from the Medicare program (already on its way to insolvency)? No, Fools, the rage is because "they too should receive the compensation that New York hospitals will be getting." (Have you ever seen piglets jockeying for suckling positions on the sow?) HEALTHCARE STOCKS IN THE NEWS HEALTHSOUTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HRC)") else Response.Write("(NYSE: HRC)") end if %> announced the signing of a definitive agreement to acquire HORIZON/CMS HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HHC)") else Response.Write("(NYSE: HHC)") end if %> in a stock swap valued at about $950 million. Horizon would swap each of its 52.2 million shares outstanding for 0.42169 shares of HealthSouth. HealthSouth will also assume about $700 million in debt. Horizon is HealthSouth's largest competitor in the rehabilitative-care business. The deal is subject to regulatory approval. For the week, HealthSouth was down 1 1/8 closing Friday at $42, while Horizon was up 2 5/8 closing at $16 7/8. Nonprofit Sharp HealthCare of San Diego announced it will terminate a proposed joint venture agreement with COLUMBIA/HCA HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:COL)") else Response.Write("(NYSE:COL)") end if %>. The California Attorney General had announced in November 1996 that he believed that the assets of Sharp had been undervalued by as much as $200 million, and that if "this deal should close in the proposed form, (he) would seek to hold Sharp directors who voted to approve the transaction personally liable for this amount." Columbia said it is "very Disappointed' with Sharp's decision. For the week, Columbia/HCA was up 1/8, closing on Friday at $43 3/8. PHYSICIAN CORP. OF AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PCAM)") else Response.Write("(Nasdaq: PCAM)") end if %> announced on Thursday that it will take a $60 million charge for its workers' compensation business (it took a $130 million charge related to the same subsidiary in November). On Friday, the company changed that figure to $80 million and its stock took a tumble. Speculation is that based on the latest announcements, Physician Corp.'s acquisition by SIERRA HEALTH SERVICES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SIE)") else Response.Write("(NYSE: SIE)") end if %> will be cancelled. On Thursday, Sierra's chairman and chief executive officer, called the new charge an "adverse development that we are seriously evaluating." I couldn't find a comment on Friday, following the change to the charge. For the week, Sierra was up 1 1/4 closing at $26 7/8 while Physician Corp. was down 5 1/16 closing Friday at $5 1/16 (that's not a typo, they fell 50%). SmithKline Beecham (a British company with its U.S. headquarters in Philadelphia) has tentatively agreed to pay $325 million to settle allegations that its clinical laboratory business defrauded the government. It would be one of the largest settlements in the governments ongoing investigation of health-care fraud, and the largest from a clinical lab. EARNINGS REPORTS OXFORD HEALTH PLANS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %> reported fourth quarter net income of $32 million, or 39 cents a share (beating estimates of 36 cents), on revenues of $880.3 million, compared to last year's fourth quarter net income of $15.6 million, or 21 cents a share, on revenues of $537.4 million. For the year, net income was $99.6 million, or $1.24 a share (beating estimates of $1.22), on revenues of $3.1 billion, compared to 1995 net income of $52.4 million, or 71 cents a share, on revenues of $1.8 billion. The company reported a medical-loss ratio for fourth quarter was 80.0%, up from 76.9% a year ago, and administrative expenses were 15.4% down from 19.4% for the same period last year. For the week, Oxford was down 2 5/8 closing at $58 7/8. HEALTHCARE COMPARE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HCCC)") else Response.Write("(Nasdaq: HCCC)") end if %> reported fourth quarter net income of $20.2 million, or 59 cents a share, on revenues of $63.2 million, compared to last year's fourth quarter net income of $18.1 million, or 51 cents a share, on revenues of $55.7 million. For the year, net income was $79 million, or $2.24 a share, on revenues of $247.8 million, compared to 1995 net income of $66.5 million, or $1.89 a share, on revenues of $214.3 million. For the week, HealthCare Compare finished down 7/8 closing at $42 3/4. RIGHTCHOICE MANAGED CARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RIT)") else Response.Write("(NYSE: RIT)") end if %> reported a fourth quarter net loss of $3.7 million (including a one-time pre-tax charge of $1.3 million), or 20 cents a share, on revenues of $170.2 million, compared to last year's fourth quarter net income of $4.9 million, or 26 cents a share, on revenues of $154.6 million. For the year, the company had a net loss of $2.0 million (including one-time charges), or 11 cents a share, on revenues of $653.4 million, compared to 1995 net income of $23.6 million, or $1.26 a share, on revenues of $591.9 million. The company reported a fourth quarter medical-loss ratio of 84.8% compared to 79.3% for the fourth quarter of 1995. Fourth quarter administrative expense ratio was 22.2% compared to 25.3% in last year's quarter. For the year, the company's medical-loss ratio was 82.6% compared to 1995's 76.1% and administrative expense ratio was 22.0% compared to 23.7% last year. For the week, RightCHOICE was down 3/8 closing at $14 1/8. CYTYC CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYTC)") else Response.Write("(Nasdaq: CYTC)") end if %> reported a fourth quarter net loss of $3.8 million, or 28 cents a share, on revenues of $2.7 million, compared to 1995's fourth quarter net loss of $1.7 million, or 15 cents a share, on revenues of $1.5 million. For the year, the company reported a net loss of $11.9 million, or 92 cents a share, on revenues of $8.2 million, compared to 1995's net loss of $5.9 million, or 54 cents a share, on revenues of $4.3 million. Cytyc developed the ThinPrep Pap Test which the FDA approved last May. Foe the week, Cytyc was down 2 1/8 closing at $26. WELLPOINT HEALTH NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WLP)") else Response.Write("(NYSE: WLP)") end if %> reported fourth quarter net income of $47.0 million, or 71 cents a share (beating estimates of 66 cents a share), on revenues of $1.2 billion, compared to 1995's fourth quarter net income of $13.3 million, or 20 cents a share, on revenues of $778.7 million. For the year, the company had net income of $202.2 million, or $3.04 a share (Compared to estimates of $2.99), on revenues of $4.2 billion, compared to 1995's net income of $180.0 million, or $2.71 a share, on revenues of $3.1 billion. For the week, WellPoint was up 3 1/8 closing at $38 7/8. 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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