ABL HEALTHCARE ONLINE
JUNE 26, 2008

CIGNA Reaches Across Borders to Improve Healthcare
El Camino Debuts Region's First Maternal Outreach Mood Services Program
Fresenius One of World's "Most Ethical" Companies
HealthGrades' New Hospital/Doctor Guide in Bookstores Now
Masimo Sees Positive Impacts on Safety, Quality at Dartmouth-Hitchcock
Medsphere Implements EHR Solution at Another West Virginia Hospital
Ossur Offers New Scientific Newsletter
Walgreens' Take Care Clinics Reach 500,000th Patient Milestone

MIMI GRANT'S BLOG

HEALTHCARE & GOVERNMENT - HEADLINES

Federal Reserve Board Chief Assesses Healthcare Challenges   

HEALTHCARE TRENDS - HEADLINES

U.S. Hospital System Profits Jump More Than 23% in 2007
NAHIT Provides Distinctions Between EHR, EMR, PHR, HIE, HIO and RHIO
Healthcare Jobs Top Online Listings; California Health Agencies Continue Hiring
Chronic Health Problems Afflict Over Half of All Americans
Intel Launches Networking Site to Connect Caregivers
Wal-Mart Sets Sights on Healthcare Industry

7/2 - Orange County Round Table
7/10 - Northern California Round Table
7/16 - Life Sciences Round Table
7/18 - Los Angeles Round Table

CalorieKing Partners with Molina Healthcare
CalorieKing, where Keith McGuinness is President & CEO, announced a new partnership with Molina Healthcare, a multi-state managed care organization that arranges for the delivery of healthcare services to persons eligible for Medicaid, Medicare and other government-sponsored programs for low-income families and individuals. Molina Healthcare’s New Mexico Health plan will be the first Molina health plan to integrate CalorieKing’s online weight management program and tools, which will include a 12-week CalorieKing Club membership. The program’s goal is for Molina members to learn how to successfully use the tools; then, using their feedback to make the tools even more effective for Molina’s members, many of whom are ethnically diverse and low income."

CIGNA Reaches Across Borders to Improve Healthcare
CIGNA, where Chris De Rosa is Southern California President and GM, has given a $1 million grant to help create the Global Knowledge Exchange Network, which will explore healthcare systems worldwide to discover what works well and why, and will examine how to replicate successful models that address healthcare challenges and improve quality. Issues to be considered include cost, delivery, administration, public health and the workforce. This three-year program will bring together leaders from government, healthcare, business, philanthropy and academia.  Meanwhile, CIGNA is introducing a home safety program this month targeted to people ages 65+ that focuses on preventing accidental falls. The program is based on a child safety initiative that CIGNA implemented in September 2006 whereby any parent with a child under the age of one who calls the CIGNA nurse line for any reason is mailed a brochure with practical tips about home safety. Nurses then follow up with a phone call to answer any questions and reinforce the importance of home safety to children's health and well-being. When CIGNA looked at data for the first six months of 2007, the number of claims for child head injuries was down 10%; for internal and external trauma, down 24%; and for broken bones, down 27%.

El Camino Debuts Region's First Maternal Outreach Mood Services Program
El Camino Hospital, where Ken Graham is CEO, opened its Maternal Outreach Mood Services Program this month, the only hospital program in Northern California devoted to diagnosis and treatment of perinatal mood disorders. It provides free assessment, outpatient referral to community-based counseling and support services, and a day treatment program, including group and individual counseling and evaluation by the program's medical director. El Camino's analysis of its own patient base showed that 21% of its maternity patients presented risk factors for depression.

Fresenius One of World's "Most Ethical" Companies
Fresenius Medical Care, where Paul Feneck is VP of Physician Strategies, has been named to Ethisphere Institute’s second-annual World’s Most Ethical Companies list. Ethisphere is a think-tank dedicated to the research and promotion of profitable best practices in global governance, business ethics, compliance and corporate responsibility. Researchers and analysts reviewed over 10,000 of the world’s leading companies in order to determine the finalists. Fresenius was selected because it has developed “impressive and meaningful ethical business practices, making it a true standout within its industry."

HealthGrades' New Hospital/Doctor Guide in Bookstores Now
HealthGrades, where Sarah Loughran is Executive VP, has published HealthGrades Guide to America’s Hospitals and Doctors, an 1,100-page reference guide that includes:
• Hospital-quality ratings for virtually every hospital in the country; star ratings compare local hospitals for bypass surgery, knee replacement, births and dozens of other procedures and treatments, as well as patient safety;
• Top doctors lists from across the country that perform procedures at the nation’s top-rated hospitals; and
• Chapters from HealthGrades’ Chief Medical Officer on finding the best doctor and hospital and protecting yourself from medical errors.

Masimo Sees Positive Impacts on Safety, Quality at Dartmouth-Hitchcock
Masimo, where Joe Kiani is CEO, and Dartmouth-Hitchcock Medical Center have announced that initial results of an ongoing clinical evaluation show Masimo Patient SafetyNet with Masimo Rainbow SET Pulse CO-Oximetry provides early warning detection of impending patient deterioration on the general care floor, which helped keep patients safer. Early findings showed a reduction in distress codes, rescue activations, and ICU transfers. Dartmouth-Hitchcock is the first hospital to deploy the Masimo Patient SafetyNet system.

Medsphere Implements EHR Solution at Another West Virginia Hospital
Medsphere Systems Corporation, where Michael Doyle is CEO, has successfully implemented its OpenVista electronic health record solution at Pinecrest Hospital, a 199-bed long-term care facility for the elderly in West Virginia. That state's Department of Health and Human Resources selected OpenVista in 2006 as the centerpiece of an effort to unify the health record systems at state-run healthcare facilities. Pincecrest marks the sixth of seven installations at West Virginia's network of acute, long-term, and ambulatory treatment centers.

Ossur Offers New Scientific Newsletter
Ossur, where Eythor Bender is President of Ossur Americas, has released its latest scientific newsletter, which includes 10 scientific papers covering such subjects as amputation and rehabilitation, prosthetics, orthotics, biomechanics, bionic technology and quality management systems. Click here to access.

Walgreens' Take Care Clinics Reach 500,000th Patient Milestone
Walgreens, where Eileen Goodis, Pharm.D., is VP of Business Development, announced that its Take Care Health Systems subsidiary recently achieved 500,000 patients treated at its convenient care clinics since opening in November 2005. The company currently manages 172 clinics in 14 states and plans to have over 400 clinics open by the end of 2008. Data captured from these 500,000 patient visits include:
• Had it not been for a Take Care Health Clinic, more than 40% of patients would have gone to the ER, Urgent Care or not sought treatment for their condition.
• Roughly 30% of patients that visit Take Care clinics do not have a healthcare home (a primary care provider).
• In addition to recommending that patients have a healthcare home and referring them to one if necessary, Take Care Health Providers also refer up to 20% of patients to other sites of service, mainly primary care providers but also specialists in the area.
• Approximately 20% of patients either are uninsured and/or pay cash for these services.
• Upper respiratory problems, sore throats, sinus infections, skin conditions, ear aches, flu shots, and administrative physicals are the conditions/services that Take Care Health Providers most frequently treat or administer.

It's Still Springtime for Healthcare M&A
Earlier this week about 30 health and technology CEOs convened to hear “How to Buy A Company" from serial entrepreneur and acquisition expert Casper Zublin and two of the senior partners at Stradling Yocca Carlson and Rauth, Craig Carlson and Steve Freeman. Although the afternoon was rich in strategic and tactical insights about the process, some “nuggets" really stood out, particularly for CEOs considering growth through acquisition.

1) Size matters. With the exception of very small deals, the legal fees are going to be about $100,000, the “process" will be all consuming for at least six months, and exceptionally disruptive, so leveraging the costs – in dollars, time, and opportunity, makes the greatest sense.

2) Let the seller set the price – otherwise you risk offending your future “partner" with a low-ball offer, or could end up way over-paying.

3) Set the price in Multiples of EBITDA, not a specific Dollar amount. The Due Diligence doesn’t truly get underway until the LOI is signed – and, ideally, the “exclusivity" clock starts running. “Something" that lowers the value of the company is always found in due diligence that makes the entity worth less.

A final thought occurred to me this morning in reading a New York Times OpEd piece - Medicare Savings vs. the Lobbyists: When it comes to healthcare, Regulation and Legislation really matter. For example, CMS has run several successful demonstration projects for purchasing durable medical equipment (like wheelchairs and oxygen) through a competitive bidding process in ten metro areas. Needless to say, the “loosing bidders" were unhappy about this, so they lobbied Congress, who in turn bowed to their pressure, delaying the program’s official launch for 18 months – which basically means it’s DOA. I bet the folks at Apria who recently sold for one times revenue wish they had waited a few extra weeks.

POST A RESPONSE   |   Mimi Grant's Blog Post: 6/26/2008

HEALTHCARE & GOVERNMENT - IN BRIEF

Federal Reserve Board Chief Assesses Healthcare Challenges
U.S. Federal Reserve Board Chair Ben Bernanke recently said that rising federal spending on healthcare will require cuts in other government programs, higher taxes or increased budget deficits. "Improving access and quality of care may increase, rather than reduce, total costs," he said. "From the economist's perspective, the question of whether we are spending too much on healthcare cannot ultimately be answered by looking at total expenditures relative to GDP or the federal budget," rather, "the question, whatever we spend, is whether we are getting our money's worth," Bernanke added.

Finance Committee Chair Max Baucus (D-Mont.) asked Bernanke about the prospect of developing an independent board of health experts, similar to the Federal Reserve, to address technical aspects of the healthcare system. Baucus said, "As a member of Congress, I sometimes wonder if we're competent to answer some of the questions we're called upon to," adding, "For example, how in the world am I supposed to know what the proper reimbursement rate should be for a certain procedure?"
Bernanke said such an entity could serve one of three roles:
*A simple board that would make recommendations;
*A commission that would generate suggestions to be voted on by Congress, similar to the board used in deciding whether to close military bases; or
*A technical board that Congress could order to make complex determinations related to health coverage.
(Bloomberg & CongressDaily, 6/16/08)

HEALTHCARE TRENDS - IN BRIEF

U.S. Hospital System Profits Jump More Than 23% in 2007
The nation's hospital systems reported robust revenue and profit growth in Modern Healthcare's annual Hospital Systems Survey. Hospital system revenue from patient care grew 8.4% in 2007 compared to 2006 and revenue from all sources, including patient care, climbed 8.9%. Hospital system profits jumped 23.8%. The results are based on surveys of 189 multi-hospital systems, or systems that operated two or more acute-care or psychiatric hospitals in 2007. (Atlanta Business Chronicle, 6/16/08)

NAHIT Provides Distinctions Between EHR, EMR, PHR, HIE, HIO and RHIO
The National Alliance for Health Information Technology (NAHIT) recently convened a range of private and public participants to define EHR, EMR, personal health record (PHR), health information exchange (HIE), and regional health information organization (RHIO). And the group added a sixth term, health information organization (HIO), to clarify the difference between the process of exchanging information (HIE) and the overseer governing that exchange (HIO).
   *EMRs, under NAHIT's recommendation, are used internally in a medical practice and don't have the capability to share information among other providers.
   *EHRs and PHRs would conform to nationally recognized interoperability standards, with healthcare organizations managing EHR information and individuals managing PHR information. Able to exchange information among a wider network, EHRs would have to be nationally certified to prove they are interoperable, a stamp of approval already being granted by the Certification Commission for Healthcare Information Technology.
   *Both a HIE and a HIO also would use nationally recognized standards to move data, while a RHIO governs information exchange within a specific community.
NAHIT used funding from the Office of the National Coordinator for Health Information Technology to develop the project. (Health IT Strategist, 6/5/08)

Healthcare Jobs Top Online Listings; California Health Agencies Continue Hiring  
Some 219,000 jobs for healthcare practitioners were listed online as of this past May, the most of any other job category, according to data from The Conference Board Help-Wanted OnLine Data Series. Online postings for healthcare jobs outdistanced management jobs (191,200), computer and mathematical staff (183,000), financial operations (170,200) and administrative support (169,000) among the top job categories listed online. According to the latest federal hourly wage data, wages average about $31 an hour for healthcare practitioners. (Healthcare Finance News, 6/2/08)  Also, according to the Bureau of Labor Statistics, healthcare employment continued to grow in the first few months of 2008. During the past 12 months, the healthcare sector overall has grown by 363,000 jobs, making it the largest industry in the U.S., accounting for 13.5 million jobs. Further, the healthcare sector will generate 3 million new jobs by 2016, more than any other industry. (ClassesUSA.com)   Meanwhile, despite a nearly $15.2 billion budget shortfall, the California government is still hiring more employees, including within the departments of Health Care Services, Public Health and Mental Health, according to a Sacramento Bee analysis of payroll databases. Many of the new hires are intended either to save money or bring in more revenue, and officials said they do not have to freeze hiring to comply with Gov. Schwarzenegger's order to save $100 million by the end of this fiscal year. (Sacramento Bee, 6/13/08)

Chronic Health Problems Afflict Over Half of All Americans
In 2007, 51% of insured Americans were taking prescription drugs to treat at least one chronic health problem, according to research released by Medco Health Solutions, and many of these patients are on multiple medications. 48% of women ages 20-44 are being treated for a chronic condition, as are 33% of men their age. Treatments for high cholesterol and high blood pressure were the top medications used by the general population, with more than one in five people on antihypertensives and almost one in seven on cholesterol-lowering drugs. Nearly 30% of children ages 19 and under take a chronic medication; asthma and allergy drugs are most commonly prescribed, followed by medications to treat attention deficit/hyperactivity disorder and antidepressants. Among Americans ages 65+, 28% of females and 22% of males take five or more chronic medications. (Healthcare Daily Data Byte, 5/23/08)

Intel Launches Networking Site to Connect Caregivers
Intel Corp. has launched ConnectingForCare.com for family caregivers, nurses, social workers and other providers to join forums, research and discuss health topics, and share stories about patients. Users can also develop their own personal profiles on the site to join networks based on their specific interests or needs. The goal is to improve communication among health professionals and family caregivers, who provide 80% of long-term care for chronically ill family members. (Health IT Strategist, 6/18/08)

Wal-Mart Sets Sights on Healthcare Industry  
In the past few months, Wal-Mart has announced it is working with several companies to process and pay their prescription claims. The company is aiming to increase electronic prescriptions at its stores by 400%, to eight million by year-end. It is introducing walk-in clinics at its superstores to treat minor ailments and is expanding its $4 generic-drugs program. Sound familiar? It's an echo of Wal-Mart's initial steps into the food business 20 years ago. Today, groceries are Wal-Mart's biggest revenue generator, making up 41% of its annual sales. Along the way, Wal-Mart has dramatically reshaped the grocery store industry. Now it's making a bid to do the same in healthcare. "What our company does best is exactly what the U.S. healthcare system needs the most. It needs more affordability. It needs more accessibility. It needs to be more efficient," said H. Lee Scott, Wal-Mart CEO, in a speech earlier this year. Already, Wal-Mart's drug and healthcare ventures provide big chunks of its sales and profits. The chain says that health and wellness products (including pharmacy sales) made up 9% of its overall $374.5 billion in revenues in the 12 months ended Jan. 31, 2008. Analysts say the profitability of the healthcare lines was better than Wal-Mart's overall 23.5% gross margin last year. (BusinessWeek, 6/5/08)

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