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Week of January 28, 2024

HEADLINE NEWS Tyco Announces Plans to Divide the Company Pie PEMBROKE, Bermuda--By the end of this calendar year, Tyco International will split into four separate, publicly traded companies and will sell its plastics business, the company announced on Jan. 22. Dennis Kozlowski, Tyco's chairman and chief executive officer, will continue to lead Tyco's largest division, security and electronics. Likewise, Rich Meelia will remain at the helm of Tyco Healthcare--a $7.1 billion division with substantial home medical equipment assets--that he has guided since 1995. Along with Tyco's Fire Protection and Flow Control, and Financial Services businesses, these new companies will remain based in Bermuda. The separation plan, unveiled amid slumping company stock prices and concerns about certain Tyco accounting practices, is designed to "close the gap between Tyco's market value in recent years and the value of our business," according to Kozlowski. Currently, Tyco is valued at approximately 13 times its expected 2002 earnings, which is less than half the price-to-earnings ratio of most other Standard & Poor's 500 companies. Despite these explanations, some market analysts are suspicious about Tyco's motivations for the split, and their suspicions are understandable in light of Enron's recent collapse, said Richard Davis, a mergers and acquisitions specialist with Paragon Ventures in Charleston, S.C. "Tyco has been investigated by the Securities and Exchange Commission in the past, and when you're looked at under the microscope once, people tend to be a little bit more skeptical," he said. But there are good reasons for a company Tyco's size to split apart, Davis noted. For example, by splitting away from Tyco International, each separate company now can increase its price-to-earnings ratio, he explained. And, "With a higher price-to-earnings ratio [the new companies] can raise more money for acquisitions." In recent years, Tyco Healthcare has acquired significant home medical equipment businesses, including respiratory manufacturer Mallinckrodt and Kendall Healthcare, a manufacturer of wound care, urological and incontinence products.

CMS Proposes Modifications to Self-Reporting Rule BALTIMORE--The Centers for Medicare and Medicaid Services soon may require all entities that receive Medicare funds to report overpayments within 60 days, according to a proposed modification that appeared in the Jan. 25 Federal Register. The existing overpayment self-reporting rule, published on Mar. 25, 1998, covers only "providers, suppliers and individuals" who receive Medicare funds, but the proposed modification would extend the rule to cover managed care organizations and any other entities that sign contracts with CMS. While the proposed 60-day reporting deadline would apply to all Medicare service providers, the specific guidelines for providers and managed care organizations would differ, CMS said. Under the proposed modifications, "providers, suppliers and individuals that have identified a Medicare payment received in excess of amounts payable under the Medicare statute and regulations to report and return the overpayment, within 60 days of identifying the overpayment, to the appropriate intermediary or carrier at the correct address." "In the case of a managed care organization contracting with us," CMS continued, "the managed care organization must, within 60 days of identifying the overpayment, notify us either in a manner consistent with certification of payment data requirements . . . or in a manner consistent with our cost settlement processes... " This is CMS' second attempt to extend overpayment self-reporting rules to include managed care organizations. The first time CMS tried to require managed care organizations to report overpayments--in June 1998--the organizations claimed that the requirement was unfair because it did not apply to all entities that sign contracts with CMS. Comments on the proposed modification must arrive at CMS no later than 5:00 p.m. on Mar. 26, 2002. To read this Federal Register entry, visit http://www.access.gpo.gov/su_docs/fedreg/a020125c.html, and scroll down to the Centers for Medicare and Medicaid Services heading.

CMS Announces New Temporary Ostomy Codes BALTIMORE--To identify technological advances in the ostomy market, the Centers for Medicare and Medicaid Services has published a program memorandum that establishes new temporary "K" codes for ostomy devices and supplies. Beginning April 1, 2002, CMS will accept 19 temporary ostomy codes--from "K0561" through "K0580"--that describe various types of skin barriers, tape, pouches and pouch accessories. To learn more about these codes, which are valid until April 1, 2003, contact Angie Costello at (410) 786-1554 or [email protected].

Wheelchair Users At-Risk in the Home, Study Finds PROVIDENCE, R.I.--Each year, nearly 40 percent of wheelchair users over age 18 fall while trying to move around their homes, according to researchers at Brown University's Center for Gerontology and Health Care Research. For approximately one in six wheelchair users, these falls cause injuries. Not coincidentally, nearly 40 percent of the 525 wheelchair users included in the study reported having no home modifications to facilitate daily activities. In fact, only 4 percent of the study's respondents reported having installed features from all five of the primary home-modification categories: bathroom modifications, widened doorways and hallways, kitchen modifications, railings and easy-open doors. Study co-authors Katherine Berg, Marilyn Hines and Susan Allen called these findings "an important step in highlighting access and safety problems in the homes of wheelchair users," and concluded, "home environments that facilitate independence and that make it easier to move around should be considered a basic need for disabled persons." Don Everard, president of wheelchair ramp manufacturer HomeCare Products of Kent, Washington, agrees with this conclusion but says there are many barriers to wheelchair-friendly environments. Raising wheelchair users' awareness of the home-modification products available is the first hurdle, Everard says. "I'm always really surprised when an end user calls us up and says he didn't know all of these [products] existed." Through advertising and providing good showroom displays, he continues, home medical equipment providers can play an important role in raising wheelchair users' awareness. However, even when wheelchair users are aware of home-modification options, barriers to wheelchair-friendly environments remain, Everard continues. "I think that most people--whether they own their homes, are renting or are living with someone--typically can't afford or aren't allowed to make those modifications." While the ramps that Everard's company manufacturers are reimbursable for U.S. veterans, these devices still are not reimbursable under Medicare or Medicaid, he says. "From a public health perspective," the study concluded, "both safety and access would be greatly facilitated if home modifications became a reimbursable expense under Medicare, Medicaid, and other health insurers. From a societal perspective, there should be greater movement toward barrier-free, universal design environments." To read the study, visit the American Journal of Public Health at http://www.ajph.org/, and click on the Jan. 2002 issue.

PROVIDER NEWS Health Care Division Positively Impacts Praxair in Q4, Year DANBURY, Conn.--Praxair posted a net income of $118 million, or 72 cents per share, for the fourth quarter 2001 ended Dec. 31, compared to a net income of $122 million, or 76 cents per share, for the same quarter a year ago. For the year, Praxair reported a net income of $487 million, or $2.99 per share, compared to a net income of $480 million, or $2.98 cents per share, for the year prior. "Although we fell short of our goals for the year, Praxair achieved record operating results in 2001 despite a number of external forces holding us back," said Dennis Reilley, chairman and chief executive officer. "Our customer focus and sustained productivity improvement have made all the difference in the face of weak demand and a strong dollar. Product volumes in our traditional businesses declined, but we were able to offset the impact through growth in the health care and energy markets and through stringent cost controls."

MANUFACTURER NEWS AmerisourceBergen Reports Fiscal 2002 First Quarter Results VALLEY FORGE, Pa.--AmerisourceBergen--the company created when AmeriSource Health and Bergen Brunswig merged in Aug. 2001--has reported a first quarter 2002 net income of $67.9 million, compared to AmeriSource Health's 2001 first quarter income of $26.2 million. After special merger integration costs of $4.5 million, the company's diluted earnings per share were 67 cents for the first quarter of 2002. "Our diverse customer base, our focus on the pharmaceutical supply chain, and our developing scale all contributed to our success in the quarter," said R. David Yost, the company's president and chief executive officer. Respironics Reports Second Quarter, Six Months Earnings PITTSBURGH--For the second quarter, ended Dec. 31, 2001, Respironics has reported a net income of $10 million, or 32 cents per diluted share, compared to $8 million, or 26 cents per share, for the same quarter a year ago. Net income for the first two quarters was $18.1 million, up 26 percent from $14.3 million for the same period a year ago. Additionally, earnings per diluted share for the six-month period were 58 cents, compared to 47 cents for the same period in 2000. McKesson Reports Fiscal 2002 Third Quarter Results SAN FRANCISCO--Excluding what the company called "special items and discontinued operations," McKesson has reported a net income of $111.7 million or 38 cents per diluted share for the third quarter 2002 ended Dec. 31, 2001. This is a 38 percent increase in net income, compared to $69.3 million for the same quarter a year ago; and a 37 percent increase in diluted earnings per share, compared to 24 cents for the same quarter a year ago. Cardinal Health Reports Second Quarter 2002 Earnings DUBLIN, Ohio-- For the second quarter of fiscal year 2002, ended Dec. 31, 2001, Cardinal Health has reported a net income of $283.3 million, up 28 percent from $221.2 million for the same quarter a year ago. Additionally, Cardinal's earnings per diluted share increased 27 percent for the quarter, from 49 cents in 2001 to 62 cents. Johnson & Johnson Reports Fourth Quarter 2001 Results NEW BRUNSWICK, N.J.--Johnson & Johnson has reported fourth quarter 2001 net earnings of $1.2 billion, or 39 cents per diluted share, compared to $981 million, or 32 cents per diluted share, for the same quarter a year ago. Consolidated net earnings for the year were $5.9 billion, an increase of 18 percent over $5 billion in 2000. Diluted earnings per share were up 17.2 percent for the year, from $1.63 in 2000 to $1.91. These results exclude special charges, the company said.

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