PacifiCare Health Systems Inc. of Cypress could escape the scrutiny of New York Attorney General Eliot Spitzer’s investigation into fraud and anti-competitive practices in the insurance industry, according to an analyst.
The reason: good old Medicare.
PacifiCare and other insurers offering Medicare and Medicaid plans “typically rely less on brokers,” Morgan Stanley’s Carl McDonald told newsletter Wall Street Transcript.
Unlike PacifiCare’s plans for employers, the Medicare side doesn’t use brokers because the government sets reimbursement rates, McDonald said.
Spitzer’s inquiry mainly has focused on property and casualty insurance and has cast a shadow over some of the insurance industry’s largest brokerages, including Marsh & McLennan Cos.
“It would be more difficult to collude or rig bids in the health insurance business,” McDonald said.
That’s because employers often use multiple health insurers and move accounts more often, he said.
According to McDonald, PacifiCare fits a “defensive” model of insurers with less exposure to risky managed care plans and that have a big chunk of government businesses and a high level of reserves.
The analyst also cited UnitedHealth Group Inc. of Minnetonka, Minn., and WellCare Health Plans, a Tampa, Fla.-based Medicaid and Medicare insurer.
About 75% of PacifiCare’s earnings before interest, taxes, depreciation and amortization in the first half of 2004 came from Medicare, McDonald said.
The company’s specialty operations, including pharmacy subsidiary Prescription Solutions of Costa Mesa, accounted for about 15% of EBIDTA.
Commercial business, which McDonald indicated was more at risk as a potential target of fraud or price collusion inquiries, made up only 10% of PacifiCare’s EBITDA.
Stem Cell Research
Researchers at the University of California Irvine Reeve-Irvine Research Center have created new insulating tissue for nerve fibers from human embryonic stem cells.
The finding could have implications for treating spinal cord injuries and multiple sclerosis, researchers said.
Reeve-Irvine researchers used the stem cells to create oligodendrocytes, which are the building blocks of myelin, a tissue that wraps around and insulates nerve fibers.
Myelin is critical for proper nerve signaling in the central nervous system,if it’s stripped away through injury or disease, it can cause sensory and motor deficiencies and paralysis.
The researchers injected oligodendrocyte cells into mice genetically engineered to have no myelin. The cells then formed into full-grown ones and migrated to appropriate sites within the spinal cord.
“What we plan to do next is to see how these cells improve sensory and motor function, and hopefully it will lead to further tests with people who suffer from these debilitating illnesses and injuries,” said Dr. Hans Keirstead, a UCI neurologist and research team leader, in a release.
Reeve-Irvine researchers collaborated with Geron Corp. of Menlo Park for the study. Results were published in the journal Glia.
Emergency Room Training
Saddleback Memorial Medical Center, Laguna Hills, is taking part in MedTeams, a training project that aims to boost patient care and safety in emergency rooms.
The MedTeams training comes from Dynamics Research Corp., an engineering, logistics and information technology service company based in Andover, Mass.
MedTeams has its roots in training for aviation crews. Specific issues addressed include working in teams, planning, communication and workload management.
Saddleback said that all of its emergency department staff doctors and nurses are required to attend an all-day training course.
“Applying principles from aviation to the ER makes perfect sense,” said Dr. Gregory Simsarian, Saddleback’s emergency department medical director, in a release. “In both cases, you have highly trained professionals making critical split-second decisions, which must be effectively carried out as a team.”
Saddleback is one of three local hospitals owned by Memorial Health Services, a Long Beach-based nonprofit health system. The others are Orange Coast Memorial Medical Center in Fountain Valley and Anaheim Memorial Medical Center.
Bits and Pieces:
Health Net Inc., which has more than 140,000 members in Orange County, introduced its Salud con Health Net program, aimed at Latinos who work for businesses that don’t offer health insurance. Health Net is working with Anaheim General Hospital and Cl & #283;nica M & #269;dica General, a Los Angeles-based clinic that has six clinics in OC, on the project Ista Pharmaceuticals Inc., Irvine, licensed marketing rights to ecabet sodium, a late-stage prescription eye drop for treating dry eyes, from Senju Pharmaceuticals Co., its Japanese partner. Separately, Ista Chief Executive Vince Anido presented at Lazard Fr & #269;res & Co.’s annual life science conference in New York last week … TruDental Inc., Newport Beach, opened a 20,000-square-foot practice facility. Services include orthodontics, oral surgery, pediatric dentistry and cosmetic dentistry. American Health Guard, an Arcadia-based dental insurer, administers TruDental’s dental care plans.
