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Week of April 29, 2024

HEADLINE NEWS OIG gives Oxygen Provider Green Light to Keep Inventory at Hospitals, Doctors' Offices WASHINGTON--Distributing portable oxygen systems on-site at hospitals and physicians' offices to departing patients would not violate anti-kickback laws, according to a recent advisory opinion from the U.S. Health and Human Services Department's Office of Inspector General. OIG issued the opinion at the request of a durable medical equipment provider--referred to in the document as "Company A"--and insisted that the opinion applied only to Company A. "This opinion may not be relied on by any persons other than Company A, the requestor," OIG said. Like other oxygen providers nationwide, Company A supplies and delivers home oxygen systems, and other DME, to patients within a specific service area. But recently Company A has arranged to place an inventory of its oxygen equipment on-site at referral sources' offices, clinics and hospitals, to allow patients who choose Company A's equipment to take the equipment home right away. Apparently wary of OIG's reaction to this arrangement, Company A asked the Inspector General whether such an arrangement would constitute a violation of anti-kickback laws. Based on the specific arrangement that Company A described--which included signed contracts between company A and referral sources, the promise that Company A would not reward referral sources for acting as a distributor and the certification that patients would retain a choice of oxygen providers--OIG determined that such an arrangement would not violate anti-kickback laws. "We conclude that the proposed arrangement would not generate prohibited remuneration under the anti-kickback statute and, therefore, the proposed arrangement would not constitute grounds for the OIG to impose administrative sanctions on Company A under [sections of the Social Security Act]," OIG said. To ensure that the arrangement would not compromise patients' freedom of choice, Company A also promised to provide each referral source with a list of local DME suppliers and to "encourage each [referral source] to provide the list to its patients." This advisory opinion is available at http://oig.hhs.gov/fraud/docs/advisoryopinions/2002/02-4.pdf. Tyco Backpedals on Split, Announces Financials PEMBROKE, Bermuda--Three months after announcing plans to split into four separate companies, Tyco International has changed its mind. "Our rationale for the break-up plan was based on a simple premise," Tyco's chairman, Dennis Kozlowski, wrote in a letter to shareholders. "Despite superior growth in earnings and cash flow, Tyco was being valued at a significant discount to its peers." However, while the goal of unlocking stock value was laudable, the letter continued, the market did not react well to Tyco's decision to split, and the company's stock price fell. "It is now clear that we took the market by surprise with our announcement, and failed to adequately take into account the extraordinarily fragile market psychology and hostile environment that has distracted and damaged our business in recent months." The letter also announced Tyco's plans to retain its plastics business and to sell its New York-based CIT finance business. At the same time, Tyco announced a net loss of $1.9 billion, or a loss of 96 cents per share, on revenues of $9.8 billion for the quarter ended March 31, 2002. Attributing the loss to "restructuring and other unusual charges," the company blamed the bulk of these losses on its suffering telecommunications electronics businesses. By contrast, Tyco's Healthcare and Specialty Products business posted net earnings of $505.1 million for the quarter--in increase of 10 percent, compared to net earnings of $493.8 million for the same period a year ago. Health care revenue for the quarter was $2.45 billion, compared to $2.22 billion for the same period a year ago. After these announcements, Tyco's stock price dropped to a 52-week low, and market analyst McDonald Investment downgraded Tyco's stock from "aggressive buy" to "buy." Report Predicts Double Digit Growth for Diabetes Management Market TUSTIN, Calif.--Already a $6.2 billion market, diabetes management will grow at an annual rate of 11 percent during the next decade, according to a report from the market research firm Medtech Insight. Consequently, by 2010, annual sales for this market will reach $15 billion, Medtech said. Because of the large and growing diabetes patient population, the larger undiagnosed population and the fact that patients are responsible for 99 percent of diabetes-management responsibilities, "opportunities for device manufacturers to develop patient-friendly solutions in this market abound," said Sharon O'Reilly, Medtech's president and chief executive officer. Among the most promising diabetes-management products are oral therapies, glucose monitoring and insulin infusion products, Medtech continued. By 2005, revenues for the glucose monitoring market will surpass $2.5 billion, and revenues for the external insulin pump market will reach $625 million, Medtech predicted. While inhaled insulin products have captured headlines recently, Medtech identified some roadblocks to growth in the inhaled insulin market. "Pulmonary delivery is not expected to completely replace insulin shots or insulin drugs," the company said, noting that some studies have "raised concerns about the effectiveness of inhaled insulin over time, and possible adverse effects on the lungs." Medtech also pointed to islet cell transplantation and pancreas transplantation as promising possible cures for diabetes. However, the company conceded that a shortage of suitable organs and the risks of lifetime immunosuppression have hindered the use of such procedures. Nearly Half of U.S. Amputees are Under-Prescribed, Study Finds CORAL GABLES, Fla.--In studying 267 lower-limb amputees, a professor at the University of Miami's School of Medicine discovered that 46 percent of these amputees received insufficient prosthetic devices. According to the study, although the proper prosthetic technology for amputees is available, the lack of an objective assessment tool to evaluate patients' needs often leads doctors to prescribe the cheapest solution rather than the most effective solution. "The result is that almost half of lower-limb amputees are using components that limit their function," the Newport Beach, Calif.-based International Conference of Advanced Prosthetics said in a press release. To learn more about this study, read HomeCare Monday's "Spotlight" section next month. Pieratt Promoted to Editor of HomeCare ATLANTA--HomeCare has promoted J.P. Pieratt to editor, responsible for guiding the magazine's editorial content. Pieratt joined HomeCare as a senior writer in September 1999 and has contributed to many award-winning issues, including the October 1999 "Seeing Red" issue, for which HomeCare won the American Society of Business Press Editors Gold award for best feature series. As managing editor of HomeCare Monday, Pieratt spearheaded the newsletter's transition from a fax-broadcast to an online medium. Subsequently, during its first year as an online publication, HomeCare Monday in 2001 won the American Society of Health Publication Editors Gold award for best online newsletter. "J.P. has a long-term, advocacy-oriented commitment to the home care industry," says HomeCare's publisher, Paisley Stevens. And the magazine's group publisher, Gregg Herring, called Pieratt "a vital part of the successful move of the editorial function of HomeCare magazine from Malibu to Atlanta. "He was our link to the past editorial success of the magazine," Herring continued. "Under his leadership, HomeCare has once again taken its rightful position as the premiere magazine in home health care." Before joining HomeCare's staff, Pieratt worked for four years as an assistant editor and editor of two transportation-industry trade magazines. He graduated from Auburn University, Auburn, Ala., in 1995 with a bachelor's degree in corporate journalism. HomeCare's editorial staff also includes Paula Patch, assistant editor; Brook Raflo, senior writer; Wes Clark, art director; and Bill Wolpin, editorial director.

PROVIDER NEWS Matria Reports First Quarter Earnings MARIETTA, Ga.--For the first quarter ended March 31, 2002, Matria Healthcare reported net earnings of $1.6 million, or 17 cents per diluted share, compared to $1.1 million, or 13 cents per diluted share, for the first quarter of 2001. Revenue for the first quarter of 2002 grew 6 percent to $65.2 million, compared to $61.4 million for the same period in 2001. Lincare Announces Q1 Results CLEARWATER, Fla.--For the first quarter ended March 31, 2002, Lincare reported a net income of $45.2 million, or 41 cents per diluted share, compared to a net income of $31.5 million, or 29 cents per diluted share, for the same period a year ago. Revenue for the first quarter of 2002 grew 19 percent to $228.5 million, compared to $191.7 million for the same period in 2001. Praxair Releases First Quarter Results DANBURY, Conn.--For the first quarter of 2002, Praxair reported a net income of $127 million, or 77 cents per diluted share, compared to a net income of $126 million, or 77 cents per diluted share, for the first quarter in 2001. Sales for the quarter dropped slightly, compared to sales in the first quarter of 2001, from $1.34 billion to $1.23 billion. Apria Announces First Quarter Earnings LAKE FOREST, Calif.--For the quarter ended March 31, 2002, Apria announced a net income of $23 million, or 41 cents per diluted share, compared to a pro forma net income of $18.5 million, or 33 cents per diluted share, for the same period a year ago. First quarter 2002 sales rose 11 percent to $301.3 million, compared to sales of $271.4 million in the first quarter of 2001. O2 Science Acquires Health N Home TEMPE, Ariz.--On the heels of two recent acquisitions in Colorado and Nevada, O2 Science has announced its acquisition of Phoenix-based Health N Home. The acquisition will bring approximately 5,000 new patients under O2 Science's umbrella, increasing the company's presence throughout Arizona, California, Nevada and Kansas. To serve these newly acquired patients, O2 Science has opened additional locations in Tucson, Ariz., Santa Clara, Calif., and Kansas City, Kan. PSA to Acquire MedLink Division NORCROSS, Ga.-Pediatric Services of America has entered an agreement to acquire the South Florida-based skilled pediatric home health division of The MedLink Group. Although the terms of the agreement were undisclosed, PSA said the acquisition will be complete by the end of June 2002. Transworld Announces Reorganization and Name Change NEW YORK--To simplify its corporate structure and to seek further opportunities in the United States, Transworld Healthcare has announced a reorganization plan and a name change. Under the terms of the reorganization plan, minority investors in the company's United Kingdom-based Allied Healthcare Group operations will exchange their stock for convertible preferred and common stock in Transworld. This will give Transworld complete ownership of the company's United Kingdom operations, according to a Transworld press release. Additionally, Transworld will change its name to Allied Healthcare International "to better reflect its new business focus," the release said. SureCare Launches Respiratory Self-Management Program HOUSTON--In cooperation with its managed care partners, SureCare has launched a respiratory self-management program that will "combine the distribution of specialized medications like albuterol and ipratropium bromide with a focused product offering including nebulizers and peak flow meters," according to the company. Having recently acquired a pharmacy license and signed an agreement with Prescription Solutions, a national pharmacy benefits management company, SureCare is taking the next step in its long-term growth plan, the company added. MANUFACTURER NEWS Respironics Posts Record Net Income for Q2 PITTSBURGH--Respironics posted a record net income of $11.3 million, or 36 cents per share, for the second quarter ended March 31, 2002, a 21 percent increase over the $9.3 million, or 30 cents per share, for the same quarter a year ago. The company also posted record sales for the quarter of $126.7 million, up from the $110.2 million in sales recorded for the same period a year ago. AmerisourceBergen Posts Q2 Results VALLEY FORGE, Pa.--AmerisourceBergen posted record operating revenue of $9.9 billion for the second quarter 2002, compared to $3.5 billion for the same period a year ago. Net income for the quarter was $91.9 billion, or 84 cents per diluted share, compared to a net income of $31.5 million, or 57 cents per diluted share, for the same quarter a year ago. "This was an outstanding performance by AmerisourceBergen, reflecting our ability to rapidly leverage the cost saving and scale synergies of our new company," said David Yost, AmerisourceBergen's president and chief executive officer. "We have succeeded in capturing merger synergies earlier than we expected. Improved capital management and a historically low interest rate environment also positively impacted the company's performance. These factors drove operating margin expansion, record earnings per share, significant cash generation, and a very strong return on committed capital."

SPOTLIGHT Government Recovers Billions from Medical Fraud Cases WASHINGTON--Since 1996, the federal Health Care Fraud and Abuse Control Program has recovered more than $3 billion in health care judgements, settlements and administrative impositions, according to the Centers for Medicare and Medicaid Services' annual report. Nearly all of these recoveries have returned to the Medicare Trust Fund's coffers, prompting fund trustees to extend estimates of Medicare's financial life by 30 years, the report said. Established to comply with a massive medical-reform law, CMS--which is a partnership between the U.S. Department of Justice and the U.S. Health and Human Services Department--has convicted more than 2,000 defendants for health care fraud-related offenses and has excluded more than 15,000 entities or individuals from participating in Medicare, Medicaid and other federally sponsored health care programs, the report continued. In 2001, CMS collected $1.3 billion in fraud-related actions, which accounts for nearly half of the CMS' total collections to date. CMS returned $1 billion of these recoveries to the Medicare Trust Fund, and the federal government retained the remaining $42.8 million as a share of Medicaid restitution, the report said. Among the high-profile fraud cases CMS resolved in 2001 is the case of diabetes product manufacturer LifeScan, a subsidiary of New Brunswick, N.J.-based Johnson & Johnson. LifeScan paid $60 million to settle allegations that the company marketed an adulterated and misbranded medical device for which federal and state health care programs paid. According to CMS, these annual results justify federal spending to reduce fraud-and-abuse. "These continuing accomplishments of DOJ and HHS and other partners in the coordinated anti-fraud effort, as well as the extensive preventive activities, demonstrate that the increased funds to address health care fraud and abuse are sound investments," the report concluded. To read this report, go to http://www.usdoj.gov/dag/pubdoc/hipaa01fe19.htm.

SOURCES SAY ARLINGTON, Va.--Health care information technology budgets are expected to increase 5.1 percent during the next five years, according to the Government Electronics and Information Technology Association. "Information technology products and services are seen as a key tool to help manage rising costs and demand for health care services; as a result, GEIA sees solid growth in the IT budgets for the [Department of Veterans Affairs], the [Department of Health and Human Services], and the [Department of Defense's] Military Health System," said Mary Freeman, budget forecast chairperson for GEIA. GEIA will present its complete five-year forecast of trends in health care information technology--based on a series of interviews with key government decision-makers--at the Federal Healthcare Information Technology Conference in Washington on April 30. NEW HAVEN, Conn.--Restorative home care tops traditional home care when it comes to enhancing elderly patients' ability to remain at home, according to a new study from a Yale researcher. The study, published in the April 24 issue of the Journal of the American Medical Association, finds that patients who were provided home care under a restorative model--which takes a holistic, team- and goal-oriented approach to rehabilitation--were more likely to remain at home, less likely require an emergency hospital visit, and had better scores in self care and mobility. "These findings are important because a large number of older people receive home care services and they tend to have a large burden of illness and are at risk for functional decline," said Mary Tinetti, professor of medicine at Yale School of Medicine and lead author of the study. "This restorative approach to care appears to be . . . effective in maintaining or improving function and symptoms, in reducing the number of home care and emergency visits, and in potentially saving costs." WASHINGTON--Federal agencies and patient advocacy groups went a few rounds on medical privacy issues--particularly issues concerning patient consent and notice--during an April 16 oversight hearing before the Senate Health, Education, Labor and Pensions Committee. Claude Allen, deputy secretary of the Department of Health and Human Services, defended HHS' proposed loosening of privacy regulations as "common-sense revisions that are intended to eliminate serious obstacles to patients getting needed care while, for the first time, providing federal privacy regulations for patients' medical records." However, Mary Lou Powers, founder and director of the Patients' Rights Advocacy Group, called the HHS proposal "fundamentally flawed," adding that if the proposal becomes law, "every ordinary American will not only have lost the right to medical privacy and the right to choose how [his or her] medical data will be used, but [also], the right to free speech [and] the right to protest."

INDUSTRY BRIEFS The Alexandria, Va.-based American Association for Homecare has named Steve Knoll its chairperson-elect. Knoll, president of Knoll Patient Supply in Topeka, Kan., and current vice-chairperson of AAHomecare, will assume his new position in June. The American Accreditation HealthCare Commission, or URAC, has elected Stephen Gammarino its chairperson for the next two years. Gammarino is senior vice president, national programs for the Illiinois-based Blue Cross Blue Shield Association. Kent Hugill has been named vice president of marketing and business development for the orthopedics division of Bethesda, Md.-based Hanger Orthopedic. Hugill has more than 25 years' experience in health care business development and marketing. Blueair, Chicago, has promoted Ariella Winograd to general manager. Winograd, who joined the company in 2000, previously was client relations manager. IN OTHER NEWS New Brighton, Minn.-based Rehabilicare has received U.S. Food and Drug Administration approval to market its Compex Sport muscle stimulator as an over-the-counter product. The Compex Sport is designed to stimulate healthy muscles to improve muscle endurance, resistance and strength. As promised, the Baltimore-based Centers for Medicare and Medicaid Services has issued the first edition of its new quarterly publication that lists changes in Medicare or Medicaid regulations occurring in the previous quarter or scheduled for the following quarter. The Quarterly Provder Update: The One Source for National Medicare Provider Information is available at http://www.cms.hhs.gov/providerupdate. Roscoe Medical, Strongsville, Ohio, has been selected as a Western Medica master home care distributor for all of Western Medica's home care products, including regulators, oxygen-conserving devices, cylinders and cylinder accessories. Roscoe Medical will assume responsibility for servicing a portion of Western Medica's customers nationwide. Blueair, a manufacturer of air purifiers, has moved its corporate headquarters from Petaluma, Calif., to Chicago. The new office is located at 435 N. LaSalle Drive, suite 410, Chicago, Ill., 60610. The Blueair telephone number is 1-888-258-3247 and the fax number is (312) 245-5272.

STOCKS Scarsdale, N.Y.-based National Home Health Care's board of directors has declared a 5 percent stock dividend payable May 17, 2002, to stockholders of record on May 10. Danbury, Conn.-based Praxair's board of directors has declared a quarterly dividend of 19 cents per share payable June 17, 2002, to shareholders of record on June 7. Valley-Forge, Pa.-based Amerisource Bergen's board of directors has declared a quarterly dividend of 25 cents per share payable on June 3, 2002, to shareholders of record on May 20. Salomon Smith Barney has upgraded San Francisco-based McKesson's from an "outperform" to "buy" rating. Johnson & Johnson's board of directors has declared a quarterly dividend of 21 cents per share payable on June 11, 2002, to shareholders of record on May 21. Company High Low PE Ratio 4/19/02 4/26/02 Change Abbott Laboratories 58.00 44.16 31.97 54.75 54.12 (0.63) Allied Healthcare (AHPI) 5.30 3.00 126.24 5.02 5.00 (0.02) American HomePatient (AHOM.OB) 1.70 0.25 N/A 0.70 0.70 0.00 AmerisourceBergen (ABC) 76.40 50.00 30.12 72.30 78.61 6.31 Apria Healthcare (AHG) 29.85 19.50 18.83 27.50 25.35 (2.15) Cardinal Health (CAH) 77.32 60.30 29.49 72.18 69.85 (2.33) CareCentric (CURA) 3.00 0.46 N/A 0.64 0.64 0.00 Chad Therapeutics (CTU) 4.35 0.88 N/A 3.05 2.51 (0.54) Coram Healthcare (CRHEQ.OB) 0.76 0.13 N/A 0.43 0.50 0.07 Gentiva Health Services (GTIV) 27.55 15.60 31.34 26.87 26.37 (0.50) Invacare (IVC) 41.25 28.50 33.17 37.50 36.91 (0.59) Johnson and Johnson (JNJ) 65.89 45.44 32.85 64.49 63.61 (0.88) Lincare Holdings (LNCR) 34.39 22.25 23.53 32.60 31.11 (1.49) Matria Healthcare (MATR) 40.00 12.66 26.84 24.00 23.25 (0.75) McKesson (MCK) 41.50 26.02 101.05 38.74 41.81 3.07 National Home Healthcare (NHHC) 19.85 6.10 14.63 13.75 14.15 0.40 Option Care (OPTN) 22.15 10.01 24.00 19.48 18.00 (1.48) Pediatric Services of America (PSAI) 14.10 4.70 17.02 11.00 10.55 (0.45) Praxair (PX) 61.11 36.50 22.35 59.17 58.95 (0.22) ResMed (RMD) 62.20 35.20 83.44 40.16 37.48 (2.68) Respironics (RESP) 37.88 23.79 24.92 32.53 32.31 (0.22) Transworld Healthcare (TWH) 4.83 2.21 N/A 3.70 4.20 0.50 Tyco (TYC) 60.09 20.50 7.66 29.89 19.90 (9.99) Walgreen (WAG) 44.30 28.70 42.10 39.30 37.64 (1.66)

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