News Briefs
News Briefs
What are the latest mergers and acquisitions?
Pharmaceutical manufacturer Glaxo Wellcome has announced that it will buy SmithKline Beecham for an estimated $76 billion in stock swap. When complete, the deal, which is expected to close by the end of the year, would create the world’s largest drug company and make it the top seller of prescription drugs in the United States. The newly formed company will be known as Glaxo SmithKline and will have its worldwide headquarters in the United States.
In other pharmaceutical merger news, Warner-Lambert in Morris Plains, NJ, has agreed to begin discussions with Pfizer in New York City, which not long ago initiated a $77 billion hostile takeover of Warner-Lambert.
Up until recently, Warner-Lambert was refusing to even consider a bid from Pfizer, preferring instead to consider an offer from American Home Products in Madison, NJ. American Home Products’ sagging stock prices — now with only $57 billion to offer — may have caused Warner to change its mind.
With the stroke of a pen, the 768-bed University of Maryland Medical System in Baltimore and the two-hospital North Arundel Health System in Glen Burnie, MD, created Maryland’s third-largest health care system when the companies announced their intent to merge. The new company would have more than $900 million in revenues and 8,600 workers.
Trousdale Medical Center in Hartsville, TN, has announced that it will be purchased by Sumner Regional Health System in Gallatin, TN, for an undisclosed sum. Trousdale is a 35-bed facility owned by Frank T. Rutherford Memorial Hospital in Carthage, TN. When the deal is completed, Trousdale will be turned into a critical-access hospital.
Mercy Health Services in Farmington Hills, MI, and Holy Cross Health System Corp. in South Bend, IN, have announced their intention to merge under the name Trinity Health. The new system will be based in Detroit and will be the country’s third largest Roman Catholic system. The new 44-hospital system will become operational in April and is expected to earn about $4 billion in annual revenues.
Plans for the merger of two Honolulu hospitals have been put on the back burner when talks recently ended without agreement. The 430-bed Queen’s Medical Center and the 139-bed Straub Clinic and Hospital had initially hoped to combine operations to combat rising costs and decreasing revenues.
Tenet Healthcare Corp. has announced that it may consider combining some of the eight Philadelphia hospitals it bought in 1998 for $345 million at the bankruptcy auction of Allegheny Health, Education and Research Foundation’s assets. Profits, it seems, are not shaping up to be what Tenet had originally hoped.
Just a few notes in health care news
Columbia/HCA Healthcare Corp. in Nash-ville, TN, may become a thing of the past if Chairman and CEO Thomas Frist Jr. has his way. The legally troubled health care giant may shorten its name to HCA (Hospital Corporation of America). According to Frist, a name change would signify that the company is changing its course and direction with respect to its practices. Frist founded HCA with his father in 1968. The company was then purchased by Columbia in 1994.
Olsten Corp. in Melville, NY, may find itself owing money to Medicare if the Health and Human Services’ Office of the Inspector General (OIG) discovers that Medicare overpaid the company’s home health division. In December, the OIG issued a subpoena for documents from Olsten.
After examining the six-month health outcomes of primary-care patients, a study by the Columbia University School of Nursing has found that there is no significant difference in outcome whether the patient was treated by a nurse practitioner or by a physician.
Published in The Journal of the American Medical Association, the study examined 1,316 New York patients randomly assigned to either a nurse practitioner or physician. Despite the results, an accompanying editorial warns that the long-term outcomes may prove to be a different case.
Americans’ insurance woes continue
Californians are faring worse than the rest of the nation when it comes to having health insurance. A recent study releases by the Uni-versities of California at Berkley and Los Angeles show that of the state’s approximately 30 million residents, nearly a quarter of them (24%) lack health insurance.
This figure is striking when compared with the national rate of uninsured citizens at 17%. In 1998 alone, more than 276,000 Californians lost their health care coverage.
Moreover, working Californians are less likely than employees in other parts of the country to have health care coverage through their employers: The study showed that only 58% of working Californians have job-based health care coverage compared with 69% of employees nationally.
Perhaps some of this can be attributed to the rising cost of insuring employees. To that end, a recent survey released by the consulting firm of Watson Wyatt Worldwide and the Washington Business Group on Health shows that while health care providers’ service fees will rise by an estimated 3.1% in 2000, employers are experiencing insurance costs increase about 10.4%, no matter the type of plan, as a result of a growing demand for high-priced services and products such as prescription drugs.
In what would prove to be at the very least a stopgap measure, President Clinton has proposed a four-pronged effort to help some 5 million of the 44 uninsured Americans get access to affordable health care coverage.
The plan, estimated to cost taxpayers about $110 billion over the next 10 years, is in effect a rehashing of some of the administration’s previous plans and uses a Medicare "buy-in" for people between the ages of 55 and 65.
Under his plan, the State Children’s Health Insurance Program (SCHIP), which now covers 3 million children nationwide, would be expanded to include the children’s parents. Applications would be made "equally simple" for both Medi-caid and SCHIP to accelerate the number of children who are enrolling in either plan each year.
In still another effort to increase American’s access to health care insurance, the House, according to the Congressional Budget Office, has passed legislation allowing for the creation of regulated purchasing pools.
These coalitions would be federally regulated and allow small employers to join forces. In all, about 4.6 million people, including 330,000 additional employees, would receive their insurance from these association health plans.
Home care cost-effective, says Canadian study
While U.S. home health care agencies were facing the conundrum of how to cope with the Balanced Budget Act of 1997 and still stay in business, the Canadian government, specifically the Canadian Federal Government’s Health Transition Fund, was authorizing a study to learn more about how the rising costs of home care could be stemmed.
The $1.5 million program, the "National Evaluation of the Cost-Effectiveness of Home Care," was composed of 15 interrelated studies each attempting to determine the differences between home care and various forms of institutional care in terms of their costs and the quality of care.
In March 1998, the commission released its preliminary results, stating that not only was home care cost-effective but that its use should be increased rather than restricted. Now, a just-released report confirms the initial findings. According to a passage from the executive summary, the "central finding of this study was that, on average, the overall health care costs to the government for clients in home care are about half to three-quarters of the costs of clients in facility care."
According to a recently released statement from the National Association for Home Care in Washington, DC, the "Comparative Cost Analysis of Home Care and Residential Care Services" compared the costs for home care and institutional care, pharmaceuticals, fee-for-service physician visits, and hospital services for elderly persons living in the province of British Columbia. On average, home care settings were $7,000 Canadian dollars less costly than residential settings.
The Canadian study went beyond its national border and examined studies previously done in the United States, reaffirming those that show home care’s cost effectiveness and criticizing those that have come to opposite conclusions.
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