Healthcare Roundup: More Uninsured, Cardinal Layoffs, Device Makers' Angst, GE and Intel's Big Plans, and More

Health care loses customers – Health care is thought to be less subject to economic fluctuations than other industries, because people always get sick. But, since November 2007, 3.7 million American adults–500,000 of them in California—have lost their health insurance, according to a report from UC Berkeley’s Center for Labor Research and Education. Much of this increase, of course, is related to the increase in unemployment over the past year. The researchers believe their estimate is conservative, because many workers have gone from full-time to part-time work, losing their coverage in the process. Even after the U.S. returns to full employment, the researchers predict, the number of insured people will not return to its pre-recession level, because the percentage of employers offering coverage is continuing to decline. [Source: San Francisco Chronicle]

Ripple effect - Cardinal Health, one of the largest U.S. medical supply distributors, is eliminating 1,300 jobs in its clinical and medical products unit. The region most affected will be southern California; 200 jobs are being cut in San Diego alone. Cardinal, which has revenues of nearly $4 billion a year, said it would take a $33 million restructuring charge in fiscal 2009, and a $24 million charge in fiscal 2010. The job cuts will not affect Cardinal’s plan to spin off its clinical and medical products division as a publicly traded company called CareFusion this summer. Cardinal blamed hospital cutbacks in equipment purchases for the layoffs.[Source: Columbus Dispatch]

Device Makers Suffer – Another casualty of hospitals’ financial difficulties is device makers. JP Morgan analyst Michael Weinstein warns that medical equipment manufacturers will have a tough year as hospitals slow their equipment purchases. Hospitals will cut back on both hi-tech and low-tech orders, he predicts. [Source: Fierce Healthcare]

Going where nobody has gone – Some technology companies are taking a longer-range view of the health-care economy. Intel and General Electric, for example, have announced that they plan to spend $250 million over the next five years to develop health IT and home monitoring tools. The partnership makes sense, say some analysts, because GE is much better positioned than Intel is in health care. At the same time, Intel has been developing new methods of monitoring sick people at home, using its chips in all sorts of new devices. And the Obama Administration is pushing telemedicine. The only catch is that relatively little money is being spent on home monitoring, because insurers and Medicare still don’t cover it. [Source: iHealthBeat]

Buying distressed hospitals – Atlanta-based Jackson Healthcare, which started as a physician recruiting firm known as Jackson & Coker, has expanded into locum tenens, nurse staffing, and most recently, hospital management and ownership. Its new hospital division has signed a letter of intent to buy its first hospital, Sparks Regional Medical Center in Fort Smith, AR. A 303-bed facility, Sparks Regional posted a $37.9 million loss on operations and a $17.2 million net loss in its 2008 fiscal year, and has lost money for five straight years. But Jackson sees gold in dem dar hills and expects to close on the deal by June 30. Terms of the sale were not disclosed. [Source: Modern Healthcare]

New Surescripts chief – Surescripts, the company that links physician offices electronically with pharmacies for e-prescribing purposes, has a new president and CEO. Harry Totonis, Surescripts’ new topper, was formerly head of advisors services at MasterCard and a “strategic consultant” at Booz Allen Hamilton. The appointment signals the emergence of Surescripts as an important healthcare player at a time when Medicare incentives, federal stimulus funding, new state initiatives, and health plan programs are expected to expand physician e-prescribing substantially. [Source: Surescripts]