Contracting News September/October 2006

Kindred Health plans hospital expansions
Louisville, Ky.-based Kindred Healthcare Inc. plans to expand hospital operations by 69 LTAC hospital beds and 110 SNF beds in Springfield, Ill.; Seattle, Wa.; Indianapolis and Las Vegas. A new freestanding 50-bed LTAC hospital is planned for Springfield. In Seattle, Kindred plans to convert a defunct nursing home in the downtown area into a 50-bed LTAC hospital and a 30-bed SNF offering subacute services. The hospital will be called Kindred Hospital Seattle at First Hill. Kindred also plans to renovate its existing Kindred Hospital Seattle into a 30-bed LTAC hospital with a 30-bed SNF and rename it Kindred Hospital Seattle at Northgate. Kindred’s existing 46-bed Kindred Hospital Indianapolis South, of Greenwood, Ind., will be replaced by a new 60-bed hospital with all private rooms. All three projects are expected to be completed in the first quarter of 2008. Finally, Kindred is developing a 50-bed SNF at Kindred Hospital Las Vegas Flamingo Campus that will offer subacute rehabilitation and care for medically complex patients.

Premier’s insurance management services pays $1 million in dividends
San Diego-based Premier Inc.’s subsidiary, Premier Insurance Management Services, returned almost $1 million in dividends, on July 31, 2006, to 35 healthcare systems through its Excess Worker’s Compensation program. The Excess Worker’s Compensation program provides participating members the opportunity for profit-sharing of up to 30 percent of their premium. The program, offered to Premier members since 1993, has 53 participants with premium volume of $11.3 million.

McKesson offers pharmacy franchises
San Francisco-based McKesson Corp. revitalized its retail pharmacy business, Health Mart, with plans to become the nation’s largest pharmacy franchisor, competing with Dublin, Ohio-based Cardinal Health’s Medicine Shoppe International Inc., based in Earth City, Mo., by the end of 2006. McKesson’s Health Mart pharmacy franchises require no start-up fees or revenue royalties, instead, McKesson charges $350 monthly. In addition, dissatisfied franchisees may leave the relationship before the end of their 10-year contract by giving a 90-day notice. A total of 350 pharmacies signed on to the program when it launched in July 2006. McKesson hopes that 1,000 stores are signed up by the end of 2006.

Tenet Healthcare records net loss of $398 million
Dallas-based Tenet Healthcare Corp. recorded a net loss of $398 million on revenue of $2.2 billion in the quarter ending June 30, 2006. This compares with a net loss of $33 million on revenue of $2.14 billion in the second quarter of 2005. The company announced that its fraud settlement with the federal government led to a $711 million pretax charge in the second quarter that obscured improved operating results. Minus litigation costs, Tenet had operating income of $113 million, up from operating income of $78 million in 2005.

» CORRECTION In “10 People to Watch in Healthcare Contracting” (July/August 2006 Journal of Healthcare Contracting), we mistakenly quoted George Hersch, vice president of materials management, Norton Healthcare, Louisville, Ky., as saying that the IDN is exploring the use of bone marrow transplantation in spinal procedures. Rather, he said that the IDN is exploring the use of bone morphogenic protein in spinal procedures. JHC regrets the error.

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