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CARENETWORK RECORDS $3.3 MILLION FORIPA CONTRACT & PRODUCT DEVELOPMENT COSTS

 MILWAUKEE, June 15 /PRNewswire/ -- CareNetwork, Inc. (NASDAQ: CRNT) announced today that it recorded $3.0 million of additional medical benefit expenses over amounts previously reserved relating to the renegotiation of contractual responsibilities and the resolution of disputes involving the Independent Practice Association ("IPA") which serves most of the company's Wisconsin Health Organization ("WHO") Medicaid membership. In addition, the company wrote-off $300,000 for product development costs associated with a discontinued managed care decision support system. The per share impact of these estimated expenses is $0.73.
 Subject to fulfillment of conditions, WHO has assumed financial liability for certain medical services rendered by the IPA prior to Aug. 1, 1993 and has assumed direct control of certain utilization and quality assurance activities previously performed by the IPA. The IPA and WHO intend to enter into a new contract which will shift more responsibility and risk to WHO for the provision of medical services to Medicaid membership.
 "Our relationship with providers is vital to our long-term success," said Elwood I. Kleaver, Jr., president & chief executive officer of CareNetwork, Inc. "This action should permit prompt resolution of existing disputes and transfer future responsibilities to WHO so that we can work more closely with our providers and in turn better serve our members. This transfer will result in greater financial risk to us but will also provide greater flexibility and control in the management of our business.
 "With respect to our turnaround efforts, we have seen improvements in customer service, claims processing, and recently, in utilization management. Together, these are steps in the right direction," he added.
 CareNetwork, Inc. is the parent company for Wisconsin Health Organization Insurance Corp.; Network EPO, Inc.; Geneva Benefits Administration, Inc.; and CNI Medical Management Corp.
 -0- 6/15/93
 /CONTACT: Elwood I. Kleaver, Jr., president & chief executive officer of CareNetwork, 414-223-7712/
 (CRNT)


CO: CareNetwork, Inc. ST: Wisconsin IN: HEA SU:

MA -- MN014 -- 2363 06/15/93 17:21 EDT
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Publication:PR Newswire
Date:Jun 15, 1993
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