Newport Healthcare Center LLC, an arm of Newport Beach’s Hoag Memorial Hospital Presbyterian, bought the Newport Technology Center, an office complex, earlier this month for an undisclosed price from Newport Superior Group LLC.
Hoag, in a release, said it planned to use the space for medical and administrative offices, and outpatient medical imaging services. The complex is made up of four office buildings and a parking structure. One of the buildings is set to be razed for parking.
The hospital said it “recognizes that there are city approvals required and will work closely with the city to transition the property from its current approvals for office and research/development to medical office space.”
The sale marks a change in plans for Newport Technology Center. The site was built a few years back as a research and development campus for technology companies. It’s been empty for much of its life.
Divergent Paths
A pair of Orange County healthcare technology companies had a divergent day on Wall Street earlier this month.
Investors hammered Irvine-based Quality Systems Inc., one of the hottest local stocks in 2005. The company’s shares are off about 20% since early February after reporting disappointing quarterly results on Feb. 9.
Quality, which makes software that doctors and dentists use to manage their practices, reported a $4.8 million quarterly profit. Analysts expected the company to earn $5.9 million.
Quality’s sales were up 21% to $26.8 million.
The sell-off took Quality’s market value from more than $1 billion to about $930 million as of last week.
Quality faced a bruising shareholder battle last fall in which a dissident shareholder ran his own slate for the company’s board. Management prevailed in the fight.
By contrast, shares of TriZetto Group Inc. of Newport Beach shot up earlier this month after its quarterly earnings beat estimates.
TriZetto reported a fourth-quarter profit of $6.3 million, down 2% from a year ago, but above expectations of $3.7 million.
Revenue was up 1% to $74.8 million. But that too surprised analysts, who were looking for revenue of $72 million.
TriZetto helps health plans and benefits administrators manage data through software and Web sites.
The company gave back some of its gains last week. TriZetto counted a recent market value of $770 million.
The company’s been on something of a roll for the better part of two years. After hitting a market value low of $120 million, TriZetto retooled by bringing on veteran managers, tinkering with its internal operations and it zeroed in on selling software and services to health plan operators.
Chief Executive Jeffrey Margolis has said his company was “unfairly placed in the post dot-com penalty box” in the past.
Margolis, an alumnus of health maintenance organization FHP Inc., founded TriZetto in 1997.
Regulating PPOs
One of California Insurance Com-
missioner John Garamendi’s upcoming goals could be tighter regulation of preferred provider organizations, according to a report from HealthLeaders-InterStudy, a Nashville-based company that provides managed care data and analysis.
The group’s California Health Plan Analysis says that the commissioner recommends that PPOs, which have gained popularity in recent years, provide the same common benefit minimums as licensed HMOs, including prescription drug coverage.
Besides that, Garamendi is calling for strengthening rate reviews of PPOs with an emphasis on scrutinizing administrative expenses.
Garamendi also took a shot at Blue Cross of California, a subsidiary of WellPoint Inc. and the third largest PPO operator in OC, regarding its profitability, according to the study.
The insurance commissioner called it “unconscionable” that profit margins on certain Blue Cross products have increased 15% to 24% in recent years. Large premium rate hikes have contributed to the number of uninsured Californians, which now is about 6.5 million, or just more than 20% of the state’s non-elderly population, he said.
A Blue Cross spokeswoman said the insurer’s overall profit margin only is about 7% when including HMOs.
Blue Cross has introduced a lower-cost insurance product called Tonik that’s aimed at young people who otherwise would be uninsured, the spokeswoman said.
In addition to PPOs, the commissioner, a Democrat who has wider political aspirations, took a swipe at President Bush and health savings accounts after the State of the Union address, charging that health savings accounts basically siphon off healthy consumers and aren’t an answer for controlling healthcare costs.
Bits and Pieces:
Orange County Technology Action Network and the University of California, Irvine Extension plan to present “Winning Government Funds: Building a Business on Innovation” on Feb. 27 and 28 at the University Club on campus. The program is designed to help entrepreneurs, researchers and small companies boost their chances of winning government funds. Information and registration: (949) 824-5267 Ista Pharmaceuticals Inc., Irvine, said that it would submit a new drug application to the Food and Drug Administration for a tobramycin and prednisolone acetate combination product to treat eye inflammations in the first half of this year In the Feb. 6 healthcare special report, the builder of St. Joseph Hospital’s patient center should have been McCarthy Building Cos.
