UnitedHealth Group Inc. officials have made a point of saying there stands to be few changes at Cypress-based PacifiCare Health Systems Inc. after its becomes part of UnitedHealth in the next six months or so.
That extends to how PacifiCare provides healthcare to members in California and how it deals with doctors serving them.
In California, which is PacifiCare’s core market, the health plan operator uses what’s called a “delegated model,” where it pays a set amount for treatment. Doctors are on the hook for anything beyond that.
“In California, we’re committed to a delegated model,” said Cheryl Randolph, a PacifiCare spokeswoman. “UnitedHealth understands that and is keeping it the way that it is.”
Not that the delegated model is UnitedHealth’s style. UnitedHealth, which is more dominant in the Southeast, Midwest and Northeast, also contracts with hospitals and doctors’ groups. But it shares more of the burden when treatment costs exceed expectations.
The delegated health maintenance organization model requires “medical groups to have a lot of sophistication in actually taking risk and being able to manage risk in providing healthcare services,” said Richard Chambers, chief executive of CalOptima, an Orange-based agency that serves around 300,000 OC Medi-Cal eligible residents.
Chambers referred to CalOptima’s own operating style as a “PacifiCare model.”
The delegated model also is referred to as capitation, because reimbursement is capped.
Capitation involves a health plan paying a hospital or medical group a set fee per member, per month, for health services. The practice was the center of a row between insurers and providers earlier this decade. Hospitals and doctors demanded at that time that managed care companies such as PacifiCare share more of the costs when treatment surpassed those caps.
PacifiCare eventually responded and moved some of its business to shared-risk contracts.
ICU by way of Hospira
Hospira Inc., the suburban Chicago-based hospital products maker that is San Clemente-based ICU Medical Inc.’s mainstay customer, recently upped its profit projection for the rest of the year.
The news came after Hospira reported lower second-quarter earnings earlier this month. Higher research costs and expenses related to the company’s spinoff from Abbott Laboratories Inc. impacted net income.
The company’s year-ago results also included a one-time gain related to its nixing of a post-retirement employee benefit plan.
Most of Hospira’s spinoff-related costs are behind it, said the company, prompting the better profit outlook.
ICU, which makes needle-less intravenous connectors and other medical devices, derived $47 million of its $68 million sales for the first six months of the year from Hospira.
Earlier this year, ICU spent $35 million to buy a 450,000-square-foot plant in Salt Lake City from Hospira. ICU plans to shift its manufacturing from San Clemente to Utah.
Cameron Picks Defibrillator Maker
Cameron Health Inc., a medical device maker based in San Clemente, said it picked Elkhart, Ind.-based CTS Corp. to produce its implantable cardioverting defibrillators.
Cameron’s defibrillator delivers electric shocks to a patient’s heart when it beats in a rapid, uncontrolled fashion, in a bid to restore normal heart rhythm.
CTS Electronics Manufacturing Solutions, the CTS unit that will make the device, said in a release that it anticipates the first production to start in the first half of 2006.
Cameron made big news in 2004 when Boston Scientific Corp., the Natick, Mass.-based medical device company, bought part of it for an undisclosed price. The company’s attracted a lot of venture capital investment in the past, including a hefty $31 million funding infusion in 2002.
Imaging Genetics
The meeting of medical imaging and genetic science was examined last week at the University of California, Irvine.
Genetic medical imaging, which combines medical images with a patient’s genetic details, is being touted as a way for doctors to personalize medicine and up survival rates. Organizers said that genetic medical imaging possibly could lead to more targeted treatments for Alzheimer’s, schizophrenia, autism, depression, alcoholism and other ailments.
The presentation was put on by Octane@UCI, a group that includes biomedical technology executives and venture capitalists, and the California Institute for Telecommunications and Information at UCI. It featured a demonstration of HIPerWall, a display that visualizes and manipulates massive data sets. It allows medical researchers to see complete genetic data sets that only could be viewed one slice at a time before. Speakers included Bruce Tromberg, director of the Beckman Laser Institute at UCI.
Bits and Pieces:
Cardiac Science Inc., Irvine, set a special shareholder meeting on Aug. 31 for its proposed acquisition by Quinton Cardiology Systems Inc. of Bothell, Wash. The meeting is scheduled for 10 a.m. at the offices of Stradling Yocca Carlson & Rauth in Newport Center Metagenics Inc., San Clemente, said it opened a nutrigenomics research center in Gig Harbor, Wash. Metagenics, a maker of vitamins and other supplements, has manufacturing and research facilities in Gig Harbor.
