mergers and acquisitions

SPOTLIGHT: PA insurers face merger scrutiny

Anne Zieger — Fri, 11 Jul 2008 01:41:39 -0400

For many months now, Pennsylvania health plans Independence Blue Cross and Highmark have been waiting for the chance to defend their planned merger--and now, at long last, they've gotten their hearing. However, they're not getting much love from observers. The merger, which would create the state's largest health insurer, has many critics. Among the toughest are the state's doctors, who argue that the merged entity would use its cloud to batter down doctors and hospitals on fees. Doctors voiced their concerns at a recent hearing on the merger run by the state's insurance commissioner. Article

NY hospital, nursing home closure plans progress

Anne Zieger — Thu, 03 Jul 2008 11:17:18 -0400

The state of New York continues to make progress in its plan to merger or restructure more than 50 hospitals and nursing homes. The plan, which is design to cut down on duplication of services and eliminate excess capacity, has already had an impact at almost 80 facilities. The process began when a commission, the Commission on Health Care Facilities in the 21st Century, made a sweeping set of recommendations designed to trim waste from the state's healthcare system.

As part of the process, nine hospitals with almost 1,700 beds will close by January of next year. Meanwhile, another 1,700 hospitals beds will be removed from the market by 2010, through a combination of hospital and nursing home mergers, cooperative agreements and other measures. Meanwhile, seven nursing homes with 1,100 beds will have closed--and the state expects to cut another 1,600 such beds by the end of 2010.

To learn more about the commission's work:
- read this Modern Healthcare article (reg. req.)

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With FTC against deal, No. VA system gives up on acquisition

Mon, 09 Jun 2008 06:59:58 -0400

With the Federal Trade Commission coming out against the deal on antitrust grounds, Northern Virginia's five-hospital Inova Health System has given up on its plans to acquire Prince William Health System. The non-profit Inova system said it was giving up because the FTC challenge could easily have delayed the merger by as much as two years, a delay it apparently found unacceptable. In early May, the FTC filed an administrative complaint contending that adding Prince William Hospital would allow the Falls Church, VA-based Inova system to gain too much control of the region's hospital market, giving it enough leverage to force up managed-care reimbursement for inpatient services.

To learn more about the deal:
- read this Modern Healthcare article (reg. req.)

Related Articles:
FTC works to stop VA hospital merger
FTC scrutinizes PA hospital merger
FTC resolves high-profile IL hospital antitrust dispute
FTC uses leverage to step up antitrust scrutiny
Economists call FTC's Evanston solution flawed

U. of Pittsburgh Med Ctr. starts $20M joint venture with GE

Fri, 06 Jun 2008 06:59:56 -0400

Though a not-for-profit organization, the University of Pittsburgh Medical Center has a portfolio of deals with technical organizations that would make many commercial organizations weep with envy. Recent partnerships include an agreement in which it invested with web-based clinical data sharing company dbMotion, an eight-year, $402 million deal with IBM to jointly develop healthcare software and systems, and a $300 million deal with Alcatel under which the two will work on first responder technology.

This week, UPMC's most recent deal is a $20 million joint venture with General Electric to launch a new imaging company. The new imaging company, to be named Omnyx LLC, will create a "virtual microscope" used to scan and store images electronically. It will be used to digitize the slides analyzed by pathologists.

Perhaps this track record of innovation justifies the CEO's drawing a record $3.95 million in total compensation for fiscal 2007, up 19.7 percent from the year before and well above the $1.2 million average for hospital systems with more than $1 billion in revenue.

To learn more about UPMC's status:
- read this Wall Street Journal blog item

Case study: UPMC partners for integration
UPMC plans rollout of drugmaker relationship limits

Prime Healthcare picks up three Tenet facilities

Mon, 02 Jun 2008 06:59:55 -0400

A growing but controversial hospital chain has agreed to acquire three Tenet hospitals, expanding its network of facilities that reject all forms of managed care contracts. Hospitals included in the deal include the 151-bed Encino campus of Encino-Tarzana Regional Medical Center, 167-bed Garden Grove Hospital Medical Center and 64-bed Dimas Community Hospital. Prime has closed on the Encino-Tarzana deal, but the other two deals await regulatory approval.

The deals fit Prime's pattern of acquiring financially troubled and underperforming hospitals. For example, the Encino facility lost more than $10 million in fiscal 2007, and the other two facilities' performances were "marginal," according to a Prime statement. Prime's chairman, cardiologist Dr. Prem Reddy, says that he plans to sink capital into the hospitals to help turn them around. If Prime's other deals are any indication, he'll also end up realigning the hospitals' service mix dramatically, in some cases low-profit service lines (such as psychiatric services) that, critics say, are needed in the communities the hospitals serve.

Perhaps the most controversial step Prime has taken with its acquired hospitals has been to cancel all managed contracts. However, as of March of this year, Prime signed a contract with Aetna across its network, which now will include 12 hospitals.

To learn more about the acquisition:
- read this Prime press release

Related Articles:
Hospital resists buyout by maverick Prime Healthcare
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Trend: Healthcare chains pick up acquisitions pace

Tue, 27 May 2008 06:59:58 -0400

Over the past couple of years, some of the largest hospital chains have been struggling to pay down massive amounts of debt resulting from acquisitions and mergers. But things may be changing, if recent conference calls by HCA and LifePoint Hospitals are any indication. Apparently, the execs at these chains believe they can pick up some good bargains on smaller chains, as smaller players are struggling to refinance their debts amid the ongoing market meltdown. The chains aren't talking about big buyouts, however; instead, they're talking about opportunistic deals wherein they pick up a single facility or two in markets where they already have a foothold.

Smaller healthcare organizations are also looking into acquisitions, too. For example, Brentwood, TN-based Ambulatory Services of America just picked up $75 million from a venture capital firm to help it add to its string of eight cancer treatment and dialysis clinics. Another example is Franklin, TN-based Capella Healthcare, which just bought nine hospitals for $315 million, partly with funding from private equity investors.

To learn more about this trend:
- read this article from The Tennessean

Related Articles:
Dialysis, cancer service firm gets $75M for deals and growth
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Dialysis, cancer service firm gets $75M for deals and growth

Thu, 22 May 2008 06:59:57 -0400

If you haven't heard of Ambulatory Services of America, you might in the future. The Brentwood, TN-based firm, which offers alternate-site dialysis and cancer treatment centers in partnership with physicians, has snagged a $75 million investment from a New York-based venture firm it will use to expand. The venture firm, Lindsay Goldberg, manages more than $5 billion in equity capital.

ASA is run by Timothy Martin, who previously served as COO of Renal Care Group when Fresenius Medical Care of Germany bought the firm for $4 billion two years ago. Its most recent deal was in December 2007, when it closed the acquisition of Innovative Dialysis Systems and related ventures. It now owns 38 dialysis programs in 11 radiation oncology centers in eight states and Guam.

To learn more about the company's plans:
- read this article from The Tennessean

Related Articles:
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AMA, SEIU ask court to stop UnitedHealth deal

Fri, 16 May 2008 06:59:56 -0400

A group of opponents including the AMA and the SEIU Nevada have filed suit to stop UnitedHealth Group's planned buyout of Las Vegas-based health plan Sierra Health Services. The deal already has been approved by the U.S. Department of Justice, but the groups are asking a federal court to reject the DoJ's decision. Groups opposing the buyout also include the Clark County Medical Society, Nevada State Medical Association and Clark County Commissioner Chris Giunchigliani. The groups say that the combined entity poses the threat of cutting physician compensation, as it would blend two of the three largest buyers of medical services in Clark County.

The two companies previously had signed a consent order with the DoJ that would allow the $2.6 billion deal to move ahead as long as UHG sold most of its SecureHorizons Medicare Advantage business in Las Vegas. (Humana said it would buy UnitedHealth's MA plan for $185 million.) However, the consent order has to be approved by the court.

To learn more about this challenge to UnitedHealth:
- read this Modern Healthcare piece (reg. req.)

Related Articles:
DoJ OKs UnitedHealth buyout of Sierra
AMA tries to block UnitedHealth acquisition
AMA cites antitrust activity among insurers

ALSO NOTED: PA schedules hearings on Independence/Highmark merger; Medical college group urges caution with pharma tech freebie

Tue, 13 May 2008 06:59:50 -0400

> More than a year after the deal was proposed, the Pennsylvania Insurance Department has (finally) scheduled hearings to review public comments on the proposed merger of Independence Blue Cross of Philadelphia and Highmark Inc. Article

> A group representing U.S. medical colleges argues that while the pharmaceutical industry's technology gifts aren't getting as much attention as other freebies, they should be. FierceHealthIT

> Darn that pesky Public Citizen--its members get around. One day it's calling for the withdrawal of the Ortho Evra patch from the market, and now leading light Sidney Wolfe, M.D. is helping the FDA scrutinize expanded use of the painkiller, Fentora. FiercePharma

> The former CEO of Atlanta's Grady Memorial Hospital has filed a suit alleging that the hospital's chairwoman set up his firing so she could take his job. Article

And Finally... Clearly, he was overcome by the Dark Side of the Booze. Article

FTC works to stop VA hospital merger

Mon, 12 May 2008 06:59:58 -0400

The FTC, along with Virginia's attorney general, have announced that they plan to step in to block the planned the planned merger between a Virginia hospital chain and one of its current rivals. Inova Health System Foundation, which runs the largest hospital chain in Northern Virginia, would like to add Prince William Hospital of Manassas to its current roster of five hospitals. Prince William would get access to millions in capital, which execs say they need to keep up with their region's rapid growth.

However, the FTC and state attorney general contend that the merger would violate federal antitrust laws, arguing that eliminating the existing "robust competition" between Prince William and Inova could raise healthcare prices in the region. The FTC and Virginia AG Robert McDonnell plan to seek a temporary restraining order and preliminary injunction this week to stop the deal, which was supposed to close this month. If the order is granted, an administrative trial will follow.

To learn more about the planned deal, and FTC action:
- read this piece from The Washington Post

Related Articles:
FTC scrutinizes PA hospital merger
FTC resolves high-profile IL hospital antitrust dispute
FTC uses leverage to step up antitrust scrutiny
Economists call FTC's Evanston solution flawed