PhillyInc

Mack-Cali Realty Corp., a real estate investment trust, signed two new leasing deals in Moorestown and one in King of Prussia in the first quarter, according to a filing with the Securities and Exchange Commission. Xerimis Inc., a clinical packaging firm, signed a lease for 64,000 square feet at 102 Executive Drive, Moorestown. The agreement is a 10-year and six-month expansion of 13,360 square feet and renewal of 50,640 square feet for six years and six months.
Medical supply distributor Sterling Medical Services L.L.C. signed a five-year renewal for a 48,600-square-foot building at 2 Twosome Drive, also in the Moorestown West Corporate Center.
MDS Pharma Services (US) Inc., a life-sciences company, signed a five-year renewal of 47,120 square feet at 2200 Renaissance Blvd., King of Prussia. Financial terms weren’t disclosed. Edison, N.J.-based Mack-Cali reported earnings today. -- Jonathan Berr

Doug Noe’s toddler, Annette, needed cochlear ear implants in both ears. Good thing Noe had health insurance. Except that Cigna, his underwriter, responded to Noe’s claim that implantation in two ears would be “too experimental,” and authorized payment for only one ear.

Noe, however, had been one of 25,000 respondents to filmmaker Michael Moore’s call for health insurance horror stories for Sicko. He had told Moore his tale, and then on his own told a representative for Cigna, presumably in Philadelphia:

“Has your CEO ever been in a movie,” Noe asked the Cigna rep over the phone?

As Moore’s camera closes in on the green glass spire of Cigna’s HQ in Center City, viewers of the film hear the Cigna rep later announce good news on Noe’s answering machine: Cigna will pay for both ears.

Sicko primarily attacks insurers and policymakers and secondarily pharmaceuticals, contrasting the U.S. health system with government-run systems in Canada, Britain, France and Cuba.

While blacking out identification of people or specific companies in documents, the film's narration nonetheless cites actions by Aetna Inc., Horizon, Blue Cross Blue Shield, Humana Inc., United Health Care, Pfizer Inc., Merck & Co. Inc., the trade lobby Pharmaceutical Research and Manufacturers of America (PhRMA), and most pointedly Kaiser Permanente. Moore leaves the medical establishment, including hospitals and physicians, alone.

In the film’s ending section, Moore takes a group of ailing 9/11 cleanup volunteers for diagnosis and treatment to Cuba after, he says, the U.S. government said they were not covered under its insurance.

Sicko blames the Nixon Administration for letting the insurance companies hijack the health care system. He plays one of the Oval office tapes from 1971 in which White House aide John Ehrlichmann is heard telling Nixon:

“Edgar (Kaiser) says the less care they can give ‘em, the more money they can make.”

“Fine,” Nixon responds, and the film cuts to Nixon announcing the HMO plan.

Moore has tempered his previous penchant for guerilla confrontation of powerbrokers in Fahrenheit 9/11 (which won the Palme D’Or at Cannes in 2004), Bowling for Columbine and Roger & Me.

“I decided to make a different film this time… a call to action but not as a vicarious experience but for he American public to do,” he told a packed press conference after the film opend.

Despite citing the drug companies, Moore offers no hard instance in the film of pharmaceutical misbehavior. Ironic, since it was the drug companies, including some in Philadelphia, that had been bracing for the film and warned employees to beware of Moore’s crews in the last two years. Even their lobby group, PhRMA, had prepared a press release (according to the WSJ) condemning the film, in advance. The bigger question here, of course, is whether anything will come of the film as Moore wants, and whether companies will do exactly what Moore's wants by condemning his work and drawing more attention to it. Should be interesting to watch the reaction, maybe even better than watching the film itself. PhillyInc will follow up with Cigna. – Thomas Ginsberg

Put this under the header: Feds spend (probably) tens of thousands of dollars in staff hours to save a few thousand bucks. It goes like this: The Office of the Inspector General of the U.S. Department of Health and Human Services has released an 11-page report about a Medicare claim by Penn State University's Milton S. Hershey Medical Center, located in Hershey, Pa. It found that the medical center had received a rebate of $34,136 from a vendor. The medical center put in a claim to Medicare for the bill. But it did not reduce the bill by a similar amount. In effect, it made $34,136 from tax-payers to which it was not entitled. Some might call that insurance fraud. Was there a bigger allegation of insurance fraud that the feds didn't find? They treat the claim like an accident and report: "We recommended that the provider (1) revise and resubmit its 2004 Medicare cost report, if not already settled, to properly reflect the $34,136 rebate as a credit reducing its health care costs and (2) consider performing a self-assessment of its internal controls to ensure that future vendor rebates are properly credited on its Medicare cost reports. The provider agreed with our recommendations." Well, when you go fishing, sometimes you get a big one. Most of the time you get small fry. - Thomas Ginsberg

Health Benefits Direct Corp. (OTC: HDBT), a Radnor-based developer of online insurance marketing systems, has made an unusual, but perhaps refreshingly honest, admission to the SEC: some executives may not quite know what they should be doing as a public company. "Prior to completing the merger transaction that resulted in our current public company structure in November 2005, our management team operated our business as a private company. Certain members of our current management team have little or no experience managing a public company or complying with the increasingly complex laws pertaining to public companies." The filing doesn't say whether the executives, as a result, need some leeway from the SEC. And it doesn't identify the executives in question. But we can imagine they're under: Health Benefits said it had an accumulated deficit of $21.5 million as of March 31 and expects to need "significant" capital resources to operate in the future. - Jonathan Berr

"Ronald Reagan speaks out against SOCIALIZED MEDICINE"

This makes it the right time, then, to ask whether health care can ever operate under the principles of a classic Marshallian market. I maintain that it is pure fantasy to imagine health care as a classic market. Only right-wing ideologues and apologists for the health-care oligopoly take this notion seriously.
As every student of economics knows, a classic market requires the existence of numerous producers so that no small number of them can set prices in defiance of competitive pressures. In that way prices will respond to factors of supply and demand.

Tenet Healthcare Corp. (NYSE: THC), along with its 2nd-quarter results yesterday, disclosed that Healthcare Property Investors Inc. has demanded that the company turn over possession of hospitals in California, Florida, Georgia and North Carolina by the end of the year. It's part of a dispute over leasing fees.

- Jonathan Berr

Integra LifeSciences Holdings Corp. (NASDAQ: IART) Chief Executive Stuart Essig may be the medical device industry's answer to "Let's Make a Deal's" affable host Monty Hall.

Since 2004, the Plainsboro, N.J.-based company has spent $349 million acquiring 13 businesses or product lines. Earlier this month, Integra reported "strong" quarterly revenue growth for the quarter of 35 percent thanks in part to its acquisition strategy. On the same day, the company also announced it had acquired IsoTis Inc. (NASDAQ: ISOT), another device maker, for $51 million, a deal the company said would "create a global leader in regenerative medicine."

Though that sounds great, there's a big problem: the company's accounting controls are a mess. Its SEC filing said a "material weakness" Integra identified in the first quarter "continued to exist "as of June 30." It added that "remediation of this weakness has not been completed." Though Integra isn't more specific about the problem, it suggested that more might be found:

"While we aim to work diligently to ensure a robust accounting system that is devoid of significant deficiencies and material weaknesses, given the growth of our business through acquisitions and the complexity of the accounting rules, we may, in the future, identify additional significant deficiencies or material weaknesses in our disclosure controls and procedures and internal control over financial reporting."

A company spokesman didn't immediately return a phone call from PhillyInc. For now, investors seem to like the deals Essig is finding. Integra's shares have soared more than 30 percent this year.

- Jonathan Berr

Power Medical Interventions Inc. Chief Executive Michael Whitman doesn't let little things like product delays or lack of profitability get in the way of his plans to sell shares of the medical device company to the public.

The company's PLC 60 linear stapler, which had been expected in 2006, was delayed almost nine months because of design flaws and problems getting parts, the Langhorne, Pa.-based company said in a filing today with the Securities & Exchange Commission.

"Our ability to generate revenue from the PLC 60 staplers that we have placed in hospitals since December 2006 has been adversely affected due to the unavailability in 2007 of certain reload cartridges for the device," the filing said.

A recent FDA inspection also found instances where Power Medical failed to properly process customer complaints. Some of the FDA's "inspectional observations" had also been observed in previous inspections by the agency, the company said

"Whether the FDA will accept our response is uncertain, particularly in light of the similar nature of the current inspectional observations to the previous observations," the company said, adding that the company recently hired a senior vice president of regulatory affairs and quality assurance and has engaged a consultant who has noted that the company is making improvements.

Power Medical, which has an accumulated deficit of $150.9 million as of June 30, also has found "material weaknesses" in its financial reporting that need to be fixed. The company expects to lose money through at least next year.

- Jonathan Berr

IMontgomery County Commission chairman Thomas J. Ellis' new parttime gig as a board member of Independence Blue Cross has raised the hackles of his commission colleague, Ruth Damsker, the lone Democrat on the three-person board.

According to the Evening Bulletin, she's unhappy that the matter came up suddenly and she's worried about how it will look to have an outgoing commissioner land a paying position with the Blues. (Ellis didn't get the GOP nod to keep his seat on the county commission.)

Ellis, a lawyer with Ballard Spahr Andrews & Ingersoll, said he won't take the $12,000 Blue Cross stipend while he's still a county commissioner. It's not clear how long Ellis will have the new job anyway. As it is, the Blue's board is pretty heavy, with some 30 members. If Independence Blue Cross' proposed merger with Pittsburgh's Highmark Inc. goes through, the combined board will need to be trimmed down and some will have to go. Whether Ellis will make it to the new uber-board remains to be seen.

- Jane M. Von Bergen

IMontgomery County Commission chairman Thomas J. Ellis' new parttime gig as a board member of Independence Blue Cross has raised the hackles of his commission colleague, Ruth Damsker, the lone Democrat on the three-person board.

According to the Evening Bulletin, she's unhappy that the matter came up suddenly and she's worried about how it will look to have an outgoing commissioner land a paying position with the Blues. (Ellis didn't get the GOP nod to keep his seat on the county commission.)

Ellis, a lawyer with Ballard Spahr Andrews & Ingersoll, said he won't take the $12,000 Blue Cross stipend while he's still a county commissioner. It's not clear how long Ellis will have the new job anyway. As it is, the Blue's board is pretty heavy, with some 30 members. If Independence Blue Cross' proposed merger with Pittsburgh's Highmark Inc. goes through, the combined board will need to be trimmed down and some will have to go. Whether Ellis will make it to the new uber-board remains to be seen.

- Jane M. Von Bergen

Once again, the Henry F. Kaiser Family Foundation's annual health insurance survey, released yesterday, showed that health insurers' efforts to sell high-deductible health plans haven't met with much success, particularly in larger firms.

That's because, Kaiser researchers said, employees, when given a choice, aren't tremendously excited about having to pay high deductibles, especially if they are low-income and even more especially if their companies don't help them fund the deductibles through a savings or reimbursement program.

That's Kaiser's take, but Ivy Silver, a benefits consultant and president of Commonwealth Consulting Inc., in Jenkintown, has seen a different trend. Yes, companies are looking at these high deductible plans, but they are adopting them with a little twist, she said.

Instead of across-the-board high deductibles, companies, Silver said, are carving out certain benefits, such as surgery, and making just that portion high deductible. Then the companies are self-insuring for that particular deductible. True, they have to employ a half dozen h.r. specialists to sit with their fingers crossed, hoping that nobody has to pay a visit to the OR. But, Silver said, they get a break on the cost of their premiums.

So why do insurance companies keep pitching these products? Kaiser officials had an answer for that too. They pitch them because they are the only real innovation -- other than disease management -- that the insurance companies have to offer.

- Jane M. Von Bergen

Siemens AG’s (NYSE: SI) Malvern division is getting into the online video craze. It is holding a contest to give away, free, one of its newly developed Magnetom Essenza Magnetic Resonance Imaging (MRI) systems to any small U.S. hospital without its own MRI that produces the best self- promotional video, as judged by online viewers. "E.R." wannabees are welcome. Siemens told us that the device normally would fetch between $800,000 and $1 million. So figure that's the promotional cost of this innovative product launch: Siemens is inviting hospitals to stuff the ballot and promote their entries in the Siemens' MRI contest to local media and anybody who can click a mouse. So far about 15 videos have been posted at www.winanMRI.com. Watch out "Scrubs," a few are actually pretty funny.

- Thomas Ginsberg

Today's lesson: The squeaky wheel gets the liver transplant.

Cigna Corp. is on the hot-seat in California today where nurses from the California Nurses Association union planned to march on the Philadelphia health insurer's California offices.

They wanted Cigna to rescind its decision denying a liver transplant to Nataline Sarkisyan, a 17-year-old patient at the UCLA Medical Center. The nurses association said Cigna told the family that the treatment was too experimental.

At first, in published reports in the Los Angeles Daily News and Hartford Courant, Cigna would not comment on the case, citing patient privacy, but urged patients in general to make use of Cigna's appeal process when they disagree with a decision.

But, that wasn't the end of the story.

Here's Cigna's latest comment:

"Our hearts go out to Nataline and her family, as they endure this terrible ordeal. Based on the unique circumstances of this situation, and although it is outside the scope of the plan's coverage and despite the lack of medical evidence regarding the effectiveness of such treatment, CIGNA HealthCare has decided to make an exception in this rare and unusual case and we will provide coverage should she proceed with the requested liver transplant.

Our thoughts and prayers are with Nataline and her family at this difficult time."

This isn't Cigna's first brush with the limelight. In Michael Moore's healthcare documentary "Sicko," Cigna gets slammed for denying cochlear implants to a child. In the end, Cigna relents. By the way, the front page of Moore's website asked people to call Cigna. The headline? "Chopped Liver."

- Jane M. Von Bergen

Nataline Sarkisyan

The nurses association, which led protests against Cigna on Sarkisyan's behalf, has put out a statement blasting the insurance company and accusing it of perpetrating "a horrific tragedy that demonstrates what is so fundamentally wrong with our health care system today."

Note that this girl, according to the AP, was in a vegetative state. She had leukemia. Her doctors recommended a new liver only after the bone marrow transplant procedure that they performed had failed. Our question: If it was a such a viable life-saving measure, why didn't the hospital just do it and eat the cost itself, under an uncompensated care financing system that every state has? There are way too many questions about this case to draw conclusions.

We've put in a call to Cigna, which had not commented on the situation since the teen-ager died after it said Thursday that it would cover the procedure.

- Thomas Ginsberg

Cigna Corp. has put out a statement regarding Nataline Sarkisyan, who died Thursday evening just a few hours after the insurer relented and agreed to cover her liver transplant. Cigna now faces a threat of lawsuits by the family, and we can only imagine the lawyering that went on Friday over at 16th and Chestnut before this statement emerged, signed by Wendell Potter, one of their spokesmen.

"Our deepest sympathies are with Nataline's family. Their loss is immeasurable, and our thoughts and prayers are with them. We deeply hope that the outpouring of concern, care and love that are being expressed for Nataline's family help them at this time."

One though as Cigna moves into crisis-communications mode: Perhaps it needs to get out in front of this story, instead of being on the defensive. This innocuous but kind-enough statement, for example, might have been signed by the CEO, Ed Hanway. Sometimes little things matter.

News of Nataline's death is getting picked up worldwide (see the Daily Telegraph and California local TV). The blogosphere is also lighting up. Allspinzone says Cigna's accountant has not now put a dollar value on a girl's life. Presidential candidate John Edwards' blog is making hay for his campaign.

Stay tuned.

- Thomas Ginsberg

Cigna Corp. just sent us this statement, which it describes as an internal memo to all Cigna HealthCare employees from Jeffrey Kang, the chief medical officer, and David Cordani, the division president. In essence, it's a reiteration of Cigna's defense of its behavior in the Sarkisyan affair, and also asserts that Cigna cannot really defend its actions because it has to watch its mouth in the face of "threatened litigation" and because of patient confidentiality rules.

Still, Cigna does manage to point out, in artful language, that it had two independent experts (who it didn't identify) who said the recommended transplant "would not have been an effective or appropriate treatement." The implication seems to be Cigna came to conclude not just that the treatment was experimental, but that it would not save the girl's life. And yet it agreed to pay for her transplant anyway, and to switch her from the 10 percent of transplant claims it says rejects to the 90 percent it says it grants. (We'll have to take these numbers are face value.)

Anyway, here's the memo (download) and in full:

Cigna Corp.'s chief medical officer said today that the Philadelphia health insurer wasn't responsible for paying for a California teen's liver transplant, but offered to do so out of "empathy." Cigna initially denied coverage for a transplant for Nataline Sarkisyan, a cancer patient whose liver failed after a bone-marrow transplant. That decision sparked protests on her behalf. She died on the day Cigna reversed its decision.

In a written statement on Cigna's Web site, Jeffrey Kang said the money for Sarkisyan's transplant would normally have come from her father's employer, a self-insured business whose medical plan is administered by Cigna. Kang said that Cigna decided to pay for the care itself even though it had concluded that the "treatment would be unproven and ineffective" and not covered by the Sarkisyans' health plan. In his statement, Kang said: "Given our empathy for this family and the unique circumstances of this situation, Cigna volunteered, entirely independent of any plan or coverage decision and outside of the medical review process, to pay out of our pocket -- not the employer's pocket -- for a transplant should Ms. Sarkisyan's doctors decide to proceed."

- Stacey Burling

Last month's bankruptcy filing by the maker of the Today Sponge contraceptive has spurred a Doylestown firm to cut ties with it. QuantRx Biomedical Corp. says in an SEC filing today that it would end an agreement with ailing Synova Healthcare Group Inc., which distributes QuantRx's hemorrhoid products.

Independence Blue Cross has many subsidiaries and investments. A registration statement by California-based Cord Blood America Inc. (OTC-BB:CBAI) notes that the nonprofit Philadelphia health insurer owned 17,132,624 of its shares as of Dec. 14. But before you write your state representative to complain, consider that Cord Blood shares closed at less than 2 cents per share on Friday. That makes Blue Cross’ holdings worth a whopping $325,520.

Newtown Square-based Catholic Health East will acquire three hositals in Newark, N.J., from a hospital system affiliated with the Archidiocese of Newark.
Catholic Health East, which operates the Mercy Health System in the Philadelphia area, would close Saint James and Columbus hospitals in Newark, but keep Saint Michael's Medical Center open.

"We are pleased to have the opportunity to extend our healing ministry into the greater Newark area," said Bob Stanek, president and CEO of Catholic Health East in a statement.

Catholic Health East operates 33 acute-care hospitals and dozens of other health-care facilities in 11 eastern states. The nonprofit firm said it was approached by Cathedral Healthcare System about a deal involving its financial struggling Newark hospitals in early 2007. The Delaware County-based hospital network said it would spend $130 million on new technology and capital improvements at Saint Michael's.

- Mike Armstrong

The nonprofit hospital world can seem sleepy to those fed a daily diet of earnings calls and stock price moves. But two very different announcements from two local hospital systems last week bear watching.

On Friday, Newtown Square-based Catholic Health East said it would be buying three hospitals in Newark, N.J., from an affiliate of the Archdiocese of Newark.

The week before, Radnor-based Jefferson Health System and Albert Einstein Healthcare Network in Philadelphia agreed to part ways after 10 years.

Because the Philadelphia economy depends so much on health-care and educational institutions, shifts in strategy have implications for all of their suppliers, employees and customers (read: patients or students).

Jefferson, the mightiest of all of the local health systems, was created in 1995. It has 27,895 employees and 3,761 hospital beds. Consider it a minor surprise that Einstein and Jefferson are moving to separate by mid-year. Could losing Einstein, very much a city health system, be a sign of a more suburban tilt for Jefferson? It has always been a collection of other systems, held together by affiliation agreements rather than outright purchases.

With Pennsylvania's attorney general seeking to freeze the assets of Pure Weight Loss, a now-defunct diet chain based in Horsham, and of its owner Vahan Karian, what are former employees to do?

Pure Weight Loss operated more than 400 locations across the country, including 47 in Pennsylvania. It announced on Dec. 14 that it was closing Jan. 4. The company filed for Chapter 7 protection Jan. 11 in U.S. Bankruptcy Court in Philadelphia.

The attorney general told Inquirer staff writer Stacey Burling that Pure Weight Loss employees who are owed money by the company can file complaints with the Pennsylvania Department of Labor and Industry. To find the complaint form for unpaid wages, go to the department's Web site.

Under the Quick Links section on the righthand part of the homepage, click "Labor Law Compliance". On the next page, choose "wage payment and collection law". That's where you'll find the complaint form.

Companies that do not pay employees properly face civil penalties of 10 percent of the money due and criminal penalites of $300 per offense plus jail time of 90 days per offense, said Justin Fleming, spokesman for the department.

- Mike Armstrong

A story in Sunday's Business section about the growing use of arbitration by doctors in an effort to hold down medical malpractice costs attracted feedback from lawyers and others.

Inquirer staff writer Stacey Burling's story showed how area doctors have been asking patients to sign away their right to a jury trial. Instead, disputes would be handled with binding arbitration outside the court system.

A lawyer with Shrager, Spivey & Sachs in Philadelphia writes on his blog that the article should have included patients who had attempted to sue only to realize they'd signed their rights away.

Ms. Burling should have interviewed a representative of "Give Me Back My Rights," a group funded in part by AARP to raise consumer awareness about the dangers of binding mandatory arbitration.

- Mike Armstrong