Healthcare Roundup: Aetna Pink Slips, MCO Recession Forecast, OIG Investigations, and More

Aetna pink slips -- Just after predicting that its earnings per share would grow 3 to 5 percent in 2009, Aetna announced it was going to lay off 1,000 of its employees, or about 3 percent of its workforce. Ronald A. Williams, chairman and CEO of Aetna, said the layoffs would "allow us to manage through the economic downturn from a position of strength." While the company has expanded membership in its commercial fully insured plans this year, management has cited concerns about slower overall growth in membership. Aetna has added 5,725 jobs over the past 18 months as its revenues have increased, so these reductions represent only a modest pullback for the insurance giant. [Source: CNN Money]

MCO recession forecast -- Most managed care organizations project flat to lower commercial enrollment this year and further declines in 2009, notes Phillip Seligman, an equity analyst for Standard & Poor's Equity Research Services. But as unemployment rises, stripping more people of health insurance, MCOs serving Medicaid and SCHIP populations should see enrollment rise, Seligman predicts. The problem is that Medicaid margins are thinner than commercial margins, and economic pressures on states will cause them to pare those margins even more, he says. As for the impact of national healthcare reform, which could raise the number of people seeking coverage, Seligman believes that will be put off for some time--except for increased SCHIP and Medicaid funding. [Source: Business Week]

NJ safety-net hospital in crisis -- University Hospital in Newark, the largest safety-net hospital in New Jersey, says it desperately needs additional state funding to avert a financial meltdown. Officials at the University of Medicine and Dentistry of New Jersey (UMDNJ), which operates the hospital, say operating losses threaten its viability. University Hospital's operating loss for the past fiscal year was $57.2 million, and it lost $8.4 million for the quarter ended in September. UMDNJ officials say they have provided University Hospital with $150 million in the past seven years but can't continue to cover its losses. [Source: Newark Star Ledger]

HIMSS wants $25B for healthcare IT-- The Healthcare Information and Management Systems Society (HIMSS), which represents health IT professionals, has called for the Obama Administration to invest $25 billion to help non-governmental hospitals and physician practices adopt electronic medical records. HIMSS also wants the government to expand Stark exemptions and anti-kickback law safe harbors to cover additional healthcare software and related devices that meet federally sanctioned specifications for interoperability. The current regulatory exceptions allow hospitals to provide financial aid to physicians for acquiring electronic prescribing systems or electronic medical records that include an e-prescribing function. [Source: Healthcare IT News]

HHS inspector general on a tear: The Office of the Inspector General in the Department of Health and Human Services is investigating two major providers in unrelated cases. OIG is looking into the relationship between Northwestern Memorial Hospital in Chicago and an affiliated physician practice, the Northwestern Medical Faculty Foundation. The federal office has also subpoenaed records from renal-care firm DaVita related to its use of Vitamin D and anemia drugs. DaVita has been under pressure from Medicare for some time because of its allegedly aggressive use of Epogen, a drug made by Amgen. [Sources: Chicago Tribune, Modern Healthcare]