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Home Health & Hospice Week

Industry Notes:

Drug Cuts, Managed Care Take Bite Out Of Apria's Bottom Line

Published on Sat Aug 07, 2004

Company not for sale, execs insist.

The latest Medicare payment cuts to inhalation drugs are taking their toll on suppliers, and Apria Healthcare Group Inc. is no exception.
 
While Apria's revenues increased 5 percent in the most recent quarter, the Lake Forest, CA-based company saw its profits sag. The company reports net income of $29.1 million on revenues of $359.6 million for the quarter ended June 30, compared with a $29.4 million profit on $343.3 million for the same period in 2003.
 
Medicare's cut to 80 percent of average wholesale price for respiratory medications is partly to blame for a $17.5 million bite out of Apria's revenues, the company says.  And the company's decision not to renew its contract with Gentiva Health Ser-vices Inc.'s CareCentrix managed care division makes up the balance (see Eli's HCW, Vol. XIII, No. 4, p. 31).
 
Meanwhile, the company is fending off rumors that it is up for sale. The New York Post ran an article July 29 saying Apria has retained Banc of America Securities to explore a possible sale, and that the company has been in talks with several investment firms about buying the company and taking it private.
 
Apria issued a statement saying it "does receive inquiries from time to time concerning the possible acquisition of the Company." As part of their fiduciary duty, Apria's board of directors "considers, from time to time, whether the best interests of stockholders would be served by pursuing such a transaction."
 
But the company promises "at this time, there is no transaction pending and Apria is not engaged in any effort looking to, or negotiations with any party concerning, a sale of the Company."

 

  • Newly increased Medicare spending estimates will mean even more pressure to cut reimbursement rates to providers next year - and home care is always a favorite target. The Office of Management and Budget has bumped up its Medicare outlay predictions by $67 billion over the next five years. The change is due to Medicare Advantage technical corrections and updated economic assumptions. The OMB's estimate is at www.whitehouse.gov/omb/budget/fy2005/05msr.pdf.

     

  • Heads up, consultants: Wrong reimbursement advice could end up costing you a bundle. That's what Ernst & Young has found out the hard way.

    The consulting giant has settled with the government to resolve charges that it violated the False Claims Act by giving clients misleading advice. The settlement reached July 20 was $1.5 million.
     
    "This settlement should provide a wake-up call not only to health care providers but also to the consultants on whose advice they rely," said U.S. Attorney Patrick Meehan. "Those who market themselves as experts have the responsibility to provide accurate information."

     

  • Option Care Inc. saw double-digit increases to its earnings figures for the latest quarter. The Buffalo Grove, IL-based infusion and specialty pharmacy provider reports net income of $4.7 million on revenues of $99 million for the quarter ended June 30, compared with a $3.8 million profit on $85 million in revenues for the same period in 2003.
     
    Option Care completed "two small acquisitions" in July, the company says. One of those was infusion and pharmacy provider Care IV in St. Louis, reports the St. Louis Business Journal. Option Care bought the location for an undisclosed price July 21.
     
    Option Care already has a St. Louis presence and wanted to realize economies of scale and acquire employees and client relationships, the Business Journal says. All of Care IV's 25 employees were offered jobs.
     
    Little Rock, AR-based Care IV's owners have been selling off its offices to concentrate on a staffing business, the paper says. Three offices in Arkansas remain.

     

  • Odyssey Healthcare Inc. has seen another quarter of surging earnings. The for-profit hospice chain reports net income of $9.3 million on revenues of $86.8 million for the quarter ended June 30, compared to a $7.6 million profit on $64.9 million in revenues for the same period in 2003. Dallas-based Odyssey's average daily census increased to 7,714 patients in the quarter, and average length of stay reached 79 days.

     
  • Praxair Inc. completed the acquisition of Texas-based Home Care Supply Inc. for $245 million in June, the Danbury, CT-based industrial gas company reports. Calling the deal "an important home healthcare acquisition," Praxair reported overall net income of $175 million on revenues of $1.6 billion for the quarter ended June 30.

     

  • Coram Healthcare has inked an agreement with Humana Inc. to become a preferred pro-vider of home infusion, respiratory therapy and home medical equipment. In combination with existing Humana agreements, Denver-based Coram will provide services to 5.8 million Humana enrollees nationwide.

     

  • Long-term care giant Beverly Enterprises' hospice business has bought Memphis, TN-based Hospice USA for undisclosed terms. Fort Smith, AR-based Beverly's AseraCare Hospice provides services to 1,100 hospice patients through 25 agencies in 10 states, and another eight locations are being developed this year, reports the Memphis Business Journal.

    Hospice USA operates 18 locations, and has another 16 under development, the Journal says. Its average daily census totals 900 patients, and revenues for 2004 are projected at $37 million.

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